happy tuesday, everyone. welcome to "worldwide exchange." i'm wilfred frost. >> and i'm seema mody. welcome to "worldwide exchange." >> protests in hong kong show no signs of abating. >> rbs trades at the top of the european markets as it sets aside less provisions to cover bad loans improving economic conditions. the european commission effectively makes them illegal. >> we've live at the goldman

sachs leverage finance conference with a number of exclusive interviews, including the bank's chief european economist and the cfo of europe's telecom giant. >> you're watching "worldwide exchange," bringing you business news from around the globe. >> and we're just getting news out of italy. rates came in at 12.3% for all in july. it was 12.6% and it's expected to stay at 12.6%. it came in lower than expected at 12.3%. the youth unemployment rate hit a new record high of 44.2% in august. so the overall rate is falling, but the youth unemployment rate going up. >> we're getting some data on the health of the german labor

market. the seasonally adjusted jobless rate falls to 2.8 million. german september jobless unadjusted rate was at 2.65%. slightly lower. but the adjusted rate was 6.7%. obviously, a lot of focus on germany. it can rely on growth, we're talking about the biggest economy in europe. a lot of questions or concerns around what further sanctions in russia will do to germany. >> absolutely. and on that topic on sanctions on russia, which economy do you think is the worst performing thus far? i've given you a massive clue already. >> is it germany? >> it is not germany. it's ukraine. >> that makes sense. >> and the best performing? >> in europe? >> i believe it was ireland. >> not ard cooing to my data. it was poland. and the best trading economy overall was argentina. it would have been a bold move

to go into that ahead of last month, but we're recapping all of the most likely moves with one trading session left in the quarter. we'll be taking a look back in the month and the quarter later on in the show. meanwhile, today, thousands of prodemocracy protesterses remain camped out in the central district as their standoff continues for a third day. >> the crowds continue to swell here in the main business district of hong kong. and the banners that you see above reflect the sentiment here on the ground. the baern behind me says do you hear the people sing? this is a play off the angts of less miserables. it's been translated into chinese. another baper says, i want true universal suffering. where a kind of impact is this on hong kong because of these

protests? it's been quite significant. for the second day in a row, financial institutions, banks have asked employees to work in seattle offices or possible work from home. we tail shops, many of them have been closed here and in other areas of hopping congress like kosway bay as well as to the central. that is a huge blow to the retail states because we have coming up on golden weeks, a major holiday, and the retail shops are counting on mainland visitors to do their shopping. tomorrow, weapons, is national day. that's to celebrate the founding of the people's republic of china. you can bet that the protesters here will certainly want to make a statement on that day. back to you. >> thank you. now out to eunice yoon who is live in beijing. what's the response on beijing so far on protests in hong kong? >> well, so far, we're seeing

that the beijing authorities are becoming much more aggressive in the way they present the information to the public. our conversation right now is being completely blacked out. thefb blacking out not only our network, but other foreign broadcasters, as well. hopefully you guys are running some video right now so you can see what happens. basically what happens is that you see our normal programming and then suddenly it's going to be completely blacked out. that's what most chinese people are seeing because the government wants to be able to control the conversation on state media today, the focus of the description of the hong kong protests has been mainly about the cost to the city. a lot of the stories in the press here have been -- how difficult it's been for school children because the schools have been closed or the offices have been severely inconvenienced, that the markets of hong kong have been damaged and that sentiment overall has

been hurt and that this could potentially be even more damaging to the reputation of the city. so that's been the basic tone of the conversation because beijing really is very concerned about this challenge that they're facing in hong kong. a massive protests and they have very difficult choices in front of them. one would be to back down. and if they were to do that, what that would mean. could that mean that it would embolden copycat protests in other parts of china or could it potentially make them appear weak? the other option, of course, is one that a lot of people are worried about, but still think is a rather remote possibility. that would be some type of crackdown. so at this stage, people don't think that's going to happen as of yet, but as paulene was mentioned, as well, it is national taem day tomorrow and we're seeing a lot of protesters digging in their heels. the counterargument of all this is a real question as to whether

or not beijing authorities would want to crack down on a day that's supposed to be about national unity. if that is the memory that they would want on october 1st. >> eunice, thank you very much for that. head to the cnbc website for a live blog on the latest developments, particularly as that national holiday starts tomorrow. the numbers are expected to swell. you can take part in our online poll. we're asking, does hong kong still matter to china inspect long on to cnbc and have your stay. morning star is cutting its rating on pimco's total return fund b following the departure of bill gross on friday. pimco's ceo and cio will be on street signs today. you're not going to want to miss it coming up at 2:00 p.m. eastern. a lot of focus still on pimco, the treasury market after that abrupt leave from bill gross. what will that do to the markets going forward? a lot of firms are expecting

outflows from the pimco fund given the departure. >> absolutely. it's been a big hit. there was a big move in the treasury department on friday. and as well as the u.s. bond market, european high yield bonds at this stage, a slight rebound from the summer sell-off held by easing tensions and un conventional policy measures. where do we go from here? carolin joins us now from the goldman sachs leverage conference. >> hi. exciting to be here. it's the fourth annual leverage conference and it gathers up to 500 investors, up to 30 issuers and, of course, the experts from goldman sachs. let me get to one of them, dennis coleman. thank you so much for talking to us today. we've seen huge issuance in europe and hue yields this year. if we look at the first half volume set of records with more than $150 billion. does that mean that this conference is the biggest

interest just yet? >> absolutely. we've been doing this conference for four years now. when we started, the market was in the first stage of initial recover. people expected there to be a need for incremental recovery creation. over the years, we've seen even more interest from both our issuing and investor client. >> dennis, let's talk about the el fapt in the room. it's almost october. that means bond buying by the fed is almost over. tightening can't be too far away. one thing is for sure. issues and investors will have to prepare themselves for higher rates. how are they doing that? how jittery are they? >> sure. this has been extremely well signaled by policymakers for quite some time. both issuers and investors have been preparing themselves. from an issuer perspective, over the last couple of years, one of the large catalysts for them going out and raising all this capital is an expectation that

interest rates cannot remain as low as they've been forever and as a consequence, they've been accessing those markets. from an investor perspective, they manage these portfolios. they're taking that into account as they make their investment decisions now and as they look forward. >> dennis, once tightening comes, do you think that issuance will simply fall off a cliff? what are thecati catioindicatio you're getting? >> issuance falling off a cliff is not going to happen. those instruments have maturities. when they mature, they need to be refinanced. interest rates move around and are likely to rise, i think given the global expectations, i think there may be a revised capital for issuers going out to security their funding. but i don't think we're going to see a precipitous falloff. >> overall, the sweet spot isn't

over just yet. we have a couple months to go? >> definitely. if you think about it and step back, think about investors globally, asset allocation, they need equity exposure, they want to have fixed income exposure and i think there's a meaningful place in investor fort fellow these days. clearly, i think there will be a place for that in most investors' portfolio. >> there's been a big shift from bank capital to institutional capital and you said before this is a secular shift. that obviously creates a lot of liquidity in the market. in terms of the investor base which is brought out as a result of that, tin investor base, do they fully understand the risks associated to those leverage deals? >> sure. let's talk about the shift for one second. you step back from a policymaker perspective and as general participants in the european economy, increased credit creation is clearly a positive. that's helped propel us out of

the crisis. given the state of most of our commercial banks at the time being, having the onset of institutionally provided capital has been in a very welcome form of credit creation and i think something that's been supported by issues alike and the consequence of what we've seen as a result of those objectives. >> what does your pipeline look like? >> reasonably good right now. we have a consequence of different type of transactions looking to come to market. we have a number of clients still looking to term out their capital structures, put more duration in their business and lock in fixed rate cost of capital, given the low rates right now. then there are also other clients that are a bit more offensively minded and looking to security capital now that can grow their business. they can make investments in capital expenditures or go ahead and make acquisitions to grow their business. there are a couple of different reasons why issuers are entering the market right now, but those would be some of them.

>> dennis, appreciate your time today. that was dennis coleman. it seems as though the sweet spot isn't over just yet. >> thanks for that, carolin. let's have a look at equity markets here in europe so far today. a bit of strength up about 0.2%. it's quite odd that we've got this strength today. overnight in asia, there were declines, hong kong leading the way with those protests. we've had a bit of data out this morning, italian unemployment slightly better than expected. the german unemployment rate jobless number slightly higher than expected. not positive data. looking forward to the ecb meeting on thursday, expecting perhaps more easing. the ftse 100 is down just below flat. germany is off 0.1%. france is off about 0.5% and

italy off a similar amount. let's look at individual stocks. rbs shares have rallied, up nearly 4% after the state-backed lender that has expected losses from bad loans to be significantly history than previous forecast. the bank said it will release 800 million pounds to have a lot on bad loans. a different story, alas, for a similar amount. rbs is up 4% which has slumped to the bottom of the index. this after the warning it will lower its index unusually warm weather continues. shares off italia off 0.9%. lufthansa, another strike today as a dispute over benefits continues. annette joins us from frankfurt with the latest. >> yes.

departing from frankfurt, the rest of the flights are departing with pilots coming from management. so lufthansa management is struggling to keep the operations ongoing. it's really seeing the opposition of the pilot's union to management plans to scrap early retirement benefits for new pilots who are going to join the company. so bottom line is this is the fifth day of industrial action for lufthansa this year and that is, of course, holing for the reputation and also fm damage to the company. but so far, the management is very strong in its understanding that they can't budge a mill mighter here. they need to insist on getting those early retirement benefits for new pilots joining the

company out of the way because they are too koes costly looking at the competition. talking about competition, they are coming from airlines for lufthansa. that is why management will stay stay flat and the pilots in the future because there is not a lot of movement between both parties. is for today, most people are flying some other destination because they have a special night plan in place and perhaps might take flights to munich where there's no strike action. back to you. >> thank you very much, annette. let's move on to the bond market now. u.s. treasury yields, the 2.5%. perhaps getting a bit of strength amid the hong kong proactivities.

gilt around 2.5% and the ten-year german bund just under 1%. forex and the u.s. dollar has taken a bit of a breather for once. we will be reviewing what it has done over the last few kooers days after the break. seema, what's up after the break, as well? >> we have a big show coming up after disappointing guidance for walgroon's next month. we speak to one analyst with a buy on the stock. and are european slackers with low expectations? we discuss the latest controversial comments coming. plus, plenty more to come from the goldman sachs leverage finance conference. after the break, we get more from this thursday's ecb meeting and cohead of the economic theme. this is a burrito made with chocolate, soybeans, and apricots. what kind of chef comes up with this?

a chef working with ibm watson, on the cloud. ingredients are just data. watson turns big data into new ideas. and not just for food. watson is working with doctors and bankers to help transform their industries. today there's a new way to work. and it's made with ibm.

welcome back. the european commission has

findings over irish tax deals with apple. the document is part of a wider tax avoidance probe into several other multi nationals. apple has been operating in ireland since 19830. did company has invested over $100 million in the last several years and it is the largest employer. >> we're just getting more flashes through on this story. the commission has polled ireland that, quote, unlawful aid may be recovered. that's suggesting that apple might give back some of the money it's received. developing story there. we'll bring you more when we get it. >> i think this could potentially lead to the irish government recovering tax money from apple. i think that's the big question as you just pointed out. interestingly enough, it's carrying over $100 billion of cash on its books. most of it is overseas. when it's increased its capital allocation program, when it

offered its dividend and buyback program, rather than use the cash on its books, it issued bonds. it has so much tax on the books, but it went to the bonds. >> now, recap of some of the data we've had utah of europe earlier, italy's youth unemployment hit a record high in august. the overall jobless rate in the country full to 12.3% versus 12.6% in july. in germany, the jobless rate held steady at 6.7% in october. this as german retail sales posted the highest rise in three years in august. some key aprilan data we'll bring you in around ten minutes, the final read of second quarter gdp. at 1 1:00, it's eurozone unemployment figures and the flash estimate, the fall to 0.3%

from 0.4% in august. >> and inflation figures are forthcoming just ahead of the ecb decision this thursday. could another bank force them to take action? i asked him if he expected mario draghi to unleash qe. >> that's what's on the cards. i'm not sure whether it's going to be qe. but there will be announcements, the covered ones which are meant to afford liquidated conditions in europe. >> do you think it needs to go lower to help the exporters? >> no one should favor the currency because it is retaliated. but yes, i would welcome some

further space from stoppinger currency funds. >> and we'll join carolin again now at the goldman sachs conference. >> thank you so much for that. leveraged loans and high yields bonds, let's focus on the big data point. that is obviously the cpi number for the month of september. i'm now joined by the chief european economist at goldman sachs. hugh, thank you for your time. you initially expected a 2.2% print. you've revised that up. why? >> i think what we saw yesterday from germany and spain was a little stronger than we anticipated. nonetheless, we expect inflation to remain weak. even though i think the september number on our forecast is probably the nadia. as we see last year's unexpectedly and quite significantly weak number from

october, we expect the annual headline inflation rate a little bit drift up towards the end of the career. >> hugh, a lot of people are 1kr567ing their heads. it's five years after the financial crisis, almost two years after the end of the eurozone debt crisis. but still, we're seeing very, very sluggish growth. while the u.s., they're growth at 4.6% in the second quarter. what has gone wrong in the eurozone? >> well, i think the impact of the second crisis in europe, the sovereign crisis on confidence was significant. and i think it's important the to keep in mind that this second crisis was, you know, more of a european crisis. although no doubt it had a impact in the u.s., but it has led to more weakness in confidence and ultimately activity. in addition to that, and this is where the ecb's attention is currently focused, we have this fragmentation of financial markets in europe, particularly in the banking sector. and the process of healing that

fragmentation which mr. draghi initially did now more than two years ago with his famous whatever it takes statement. i think that process of healing is a slow process and one that is still incomplete. >> it is a slow process, isn't it? mr. draghi has tried everything he can. it seems as though the critics are ready, are questioning some of the efficacy of only a couple months ago. what do you want to see? do we have to see full blown qe? >> we may need to see it if the situation doesn't improve. but i think that's still some way off and substantial measures have been announced by mr.

draghi both in june and september. i think it's too early to judge how effective those measures have been. i think the ecb is likely to entertain aggressive sovereign purchases, probably until well into next year once we have a bit more information of how these measures have affected the banking system in particular, how the stress testing exercise has been complete and the ecb assuming possibilities for supervising the banking system affects its behavior. also, i think with the eu summit next week, whether the politicians of mr. draghi has demanded i think rightly in jackson hole have been able to deliver on the fiscal side, on the structural side, to create an environment that would allow for these measures and potentially further monetary measures to be both more economically effective and create an environment where they're more fiscally feasible. >> in the short-term, what they want to know prosecute mr. draghi this coming thursday is how big is the current bond

buying program? how big does it have to be, hugh, to make a difference? >> well, i think just focusing on quantities is probably not the right way to think about these programs. i think the most important thing of these programs in terms of their effect on the transmission of monetary policy on the way they affect the banking system is how much, if you like effective subsidy they provide the bank to create more credit, particularly credit to those sectors, the small business sector that has been -- credit in the past. i think we shouldn't expect with the large purchases in short order. we know the volumes of abs that are available. and i know mr. draghi has talked about rebalancing the euro back to the 3 trillion we had at the beginning of 2012. i think one of the things that will probably come out of thursday's press conference is the timeline of that has the

market in mind. they will build up to achieving that 1 trillion expansion over time rather than in short order. >> all right, hugh, we're going to have to leave it there. but it seems as though i've established myself as a bit of a defender of mario draghi. do you think the market is giving him undue credit? >> no. i think he's made a remarkable contribution in dafkt time. i think the problem is that maybe the market is relying too much on him. and as he often says himself, the other actors, the crucial actors, they're not really delivering on what they need to do. >> hugh, thank you so much for that, chief european economist at goldman sachs. guys, back over to you. >> thank you very much, carolin. we're get something flashes out of the pboc. they're expanding the definition

of first time home buyers. they're encouraging banks to issue mortgaged backed security while saying they're pushing forward files for real estate investment trust. a little bit of a sign of some potential financial liberation from the peoples bank of china. and they've also said that they've cut flaw on the mortgage rates to 70% of the benchmark. we are also just get something data out of the uk that we've been waiting for. this is the final reading on the second quarter gdp. and it has come in as was forecast. the final reading on q2 has come in at plus 0.8% and the sterling not really moving off the back of that. for the day, it is up 0.17%. the other interesting numbers in here saying that -- oh, sorry. the uk q2 gdp has been revised

to 0.9% quarter on quarter. so that has been a slight change on the quarter on kwapt quarter number, but the year on year number is unchanged from the last estimate at 3.2%. sterling is not really moving off the back of that. >> and more data to come. still to come on the show, we head out live to the conference in birmingham where our uk business editor has been speaking to the prime minister. ♪ mr. daniels. mr. daniels. look at this. what's this? clicks are off the charts. yeah. yoshi, we're back. yes, sir! ♪ more shipping! more shipping! ♪ [ beeping ]

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welcome back. european markets open higher after the session in asia with protests in hong kong show no sign of abating. >> rbs trades at the top of the european markets. recover bad loans is improving. >> european commission deals with blows saying unlawful irish tax -- might be recovered. >> we are live at the goldman sachs with a number of issues.

>> let's give you an update on the markets. we are in the green so far today. we had the uk gdp number. the final reading came in at 2.2% year on year. the quarter on quarter number was increased from 08% to 0.9%. nevertheless, the ftse is flat. investors watch the protests in hong kong. treasuries are foreseen as a safe haven during a time of unrest. that's exactly what we saw in yesterday's trade. we saw the yield on the u.s. ten-year treasury move slightly

lower, right now trading at about 2.5%. so still holding on to that's level whereas the ten-year german yield currently at 0.97%. >> now, it's the last day of september. let's have a look at what euro/dollar has done over the course of the month. as you can see there, it is down the 3.5% in the course of 30 days. significantlidy vergent growth outlook. save aiven status for the uk has come into play with positive momentum for the u.s. negative for the euro scope. perhaps 3.5% decline for the euro in one month is reasonable. >> but a very different story if you were to look at the u.s. dollar which of course is at a fresh four-year high thanks to better than expected economic data out of the u.s., a sign of

an improving u.s. economy sending the greenback to new highs. that has been seen as one of the resilient asset classes as we look at equities wobble. t the dollar index that continues to move higher, trading at 85.64 against a basket of currency. sanos, the greenback, the u.s. dollar, the resilience of the dollar catching the attention of traders. do you think it can continue to move higher? >> most likely, yes. there are a number of factors that have come together to support the dollar. is this divergence, not only with the ecb starting in policies, but gradually the tone of the fed changing and preparing the markets for tightening lood looking forward. the market did not keep the position so gaully gets to become long positions in the u.s. dollar and particularly

against -- there is still room to increase the dollar position. the other thing we have seen since may, we have seen a sharp flowing of equity flows into the eurozone. >> earlier in the year, we got some weakness. on the eurozone, on the other hand, we have seen surprises. and clearly -- so both of these factors develop and once we have some geopolitical -- you cannot use the supported dollar. >> and on thursday, b of course, we have the ecb meeting. we're expecting more color on the abs purchases taking place

and going to continue taking place. do you think that color will be enough to give investors confidence or will we need to see further significant easing measures? >> we will basically will not disappoint. what they're likely to do is to move away from a specific target, which is what they did in the last meeting. and somehow explain to the market that it's open ended what they're going to do. they don't have to provide all the details. they have to provide enough for the asset purchasing program can be long if it needs to be. and to repeat, if it is needed, they can go even further. open ended is what they need so that they will not disapoint. >> and so far, teltro takeup is fairley small. it's had a member mum impact on the euro balance sheet. has it weakened too much in recent weeks? >> the first tltro was tomorrow.

they need to explain the different -- that they have this quarter to do something big. but on the other hand, it will be enough to completely different issue. it's not just the supplies. demand for credit, particularly it remains very weak. >> all right. we'll leave it there, ahead of european fx strategy at bank of america merrill lynch global research. uk chancellor george osborne has promised to cut spending and ease welfare payments in an effort to get britain's finances back on track. osbourn said he put a stop to tech companies using the so-called bubble eye rib, a tax avoidance strategy adopted by microsoft and google. this has become the latest to affect the uk. helia is joining us with more. >> we're here to have the battle

groupeds drawn for the next election. we've had lots of rumors in the last few days that there might be a third election. there is that name out there, the former deputy. i'm joined by matthew hancock, minister for business and energy and i'll get right to that question. matthew, a defection of bonds for about four years, how significant is this? you're shaking your head. >> i just don't think that it makes a difference for the fundamentals at all. here we are at conference talking about how we can make sure that people have stronger pensions, how we can deal with the deficit still 25 billion of deficit that remain toes be cleared. the vibe here at conference is very positive. and i've never met this guy.

>> you had a sex scandal on the weekend, you had a defection -- not you personally, of course but but the party. there's a lot of concern about the risks that this is causing. what is the process now? >> we have a tradition of having scandals from time to time. that certainly happens on saturday. but, you know, you get -- in politics. we've managed to get the discussion back on to the big things that matter, the pensions, the deficit, and then today the nhs, seeing gp within a week. this is something that really matters right across the country. and so i think the vibe is pretty positive. we also have more activists than at any time in modern history

here. this is one of the most vibrant and lively conferences i've been doing. it reminds me of those conferences in opposition as we were marching towards downing street. >> and just tell us about your energy policy. we had comments from you that nobody in the uk wants to actually sign up to -- in terms of their closest villain. how do you win that argument and secure the energy power stations not being done? >> that's not quite what i said. getting the shale out from under our feet is a really important part of our future energy securities. we're very lucky in the uk that we have had domestic energy supplies from under the north sea for the last 30 yearsing on so. and we're work very hard to make sure we get the maximum extraction on of that oil and gas. but at the same time, we've discovered this potential

beneath the land and we need to mistake sure we're making the best of it. i think we need to make sure that we protect the most beautiful parts of our natural environment, stronger protections, for instance, on national parks. however, it is very important that we access this shale gas, that we find out how much is under there and that we enhance our energy security by getting it out. because energy security, especially in these troubled times is a very important goal. fast forward down the line, i hope that we, by then, will be close to completing the next wave of nuclear power station. we are well on track. and then on shale, i hope that

the potential has been realized that geologically it works, that the gap is closed and that we have a robust regime in place that allows companies to access that gap, but does it in a way that has the support of local people. >> thank you very much. back to you in the studio. >> the european commission has told lux um borg it could constitute state aid. that is another company being -- company being brought into this commission investigation that meant there was news on apple and ireland earlier. fiat, the italian carmaker, has declined to comment so far, reuters is reporting. moving on, we have not lost interest in telecom italia as long as the company keeps the

stake in brazilian mobile operator cim. carolin. >> let's talk to one of the big issuers. it's been making the headlines here. we saw that massive ibo in amsterdam. we saw that record high yield issuance. thank you so much for joining us today. six months after that massive ibo and massive phrasing in the debt markets, do you think that market conditions would be as favorable now to pull both of those things off?

>> i think so. there is a lot of appetite from the investors to support those like ourselves that are cash flowed based, that was a good operating track record. putting his own money on the line, continue to build and consolidate the european telco landscape. >> what about issues going forward? you're a ceo and you've had said repeatedly that you want to continue to be active in the markets. you see yourself as a consolidator in the fixed mobile states. does that automatically mean more issuance? >> yeah, i'm sure. we have a leverage growth story, which means if we are executing the plan and increasing the cash flows, we have more money available to us to invest into new opportunities. and i think we would be disappointed if we would not be issuing in the next 12 to 18 months as we are very much at the center of the consolidation and we see creative deals and we

think the market will support us to act. >> to what extent, though, is financing constrained by the leverage that you have? and what extent do you want to be more selective about the deals and the valuations that you're seeing out there? >> we will be selective. you know, we -- it's really -- you know, the execution is at the heart of the job that we do. we want to kind of, you know, excuse the synergy. and then, you know, we are probably focusing our m&a more in the markets where we already operate today because we have management teams in place to execute. we have a business relatively small where we have an overlapping network.

we will be divesting one of the two businesses as part of the approval. that is relatively small. first, it's not a big concession that we always planned to give in. >> dennis, appreciate your time today. >> carolin, back over to you. coming up, brazil's stock market sells off and gaining momentum in the weekend's elections. we discuss that after the break.

is. the japanese government released a slew of economic data today. we have to story live from tokyo. >> that's right. japan's industrial production dropped 1.5% in august, falling short of the market forecast allowing a 0.3% increase. the output slowed down due to the sluggish command of durable household goods. factory output is expected to drop 0.7% in july/september

quarter. marking a second straight quarter of drops. household spending fell 4.7% on the year in august for the second straight month. the government said that the latest numberserer were affected by heavy rain in japan, but it still shows that spending by households remains weak after the sales tax hike in april. on the other hand, the unemployment rate fell to 3.5% in august, but it's mainly due to unemployed -- stopped looking for a job. so it wasn't that much of a positive sign of the economy. the economic minister said japan is struggling to recover after the tax hike, but it's clear that negative data is a struggling sign for prime minister shinzo abe who hopes to go ahead with the second sales tax hike next year. it will put additional pressure on policymakers to revive the economy. back to you guys. >> thank you so much. now on to some tech news,

netflix hitting the big screen. the company has signed a deal to release the see equal to the oscar winning hit crouching tiger. it's the first major motion picture to debut on netflix and in theaters at the same time. the director is not returning. netflix is aiming to break the traditional system in which movies are released in theaters and several months later on demand. shares are flat, though, in german trade. paypal co-founder has described europe saying the block is held back by the poor work ethic of its people and run by politicians that strangle tech progress with regulations that are, quote, a cure worse than the disease." he adds pessimism in china motivates and pessimism in europe has a demotivating

effect. >> do you agree with peter thiel? does europe have a problem when it comes to motivation? are they slackers? will has tweeted in to say europe's problem is just austerity that strangles growth in the eu. if you want to join in on the conversation here on "worldwide exchange," get in touch with us. e-mail. worldwide@cnbc.com. tweet us@wnz wex. wilfred, i have to get your opinion on this given that you were born and raised here in england. do you think europeans are slackers? >> i think this is a broad brushed generalization from mr. thiel and it is rather unfair. i think if you look across both pan europe and continental europe, of course, there are pockets and that's talked about a lot that we need structural reform. but to suggest that you'll europeans are lazy i think is wrong and there's been enough significant tech innovation coming out of london in recent

years to discount his argument. >> and we did speak to that venture capitalist last week who told us about the booming scene in london. but interesting enough, peter thiel, he was positive on london. he did call london the most logical place to build technology business necessary europe. so slightly more positive on london. bearish on europe. at least the tech scenes at this moment. but you have to leave it to him. he's always very forthright. >> he's certainly forthright. but i think as a big investor, particularly in silicone valley, i think he's probably trying to fork up his area of expertise a little bit more than european tech stocks. >> absolutely. on that note, let's take a look at u.s. futures and see what we can expect in today's trade. yesterday, we did see u.s. stocks sell off, although off the of the session lows, we were looking at an employed open higher. nasdaq up about 7 points. he did give mixed data this

morning here in europe we'll see if that has an impact on broader markets. still to come on this show, ford shares did as the automaker cuts its full year forecast citing recalls and troubles in emerging markets. we're going to get you the latest after this.

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rouse markets set to follow europe higher as protests in hong kong show no sign of abating. >> the european commission deals a blow to apple saying unlaufful irish tax phase may be recovered. ford falls after warning missing losses in europe and south america. pimco's total return fund with its gold rating by morning

star following bill gross's departure. coming up on cnbc, we speak exclusively to pimco's new ceo and cfo about concerns over its market reshuffle. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. >> and we've got eurozone cpi data out and it has come in at 0.3% year on year, slowing from 0.4% year on year. that is the august reading, the september reading compared to the august reading. that is largely as expected 0.3% which is the expectation the previous month's reading was 0.4%. we can have a look at euro/dollar, it has slid today at a new two-year low.

it's 1.2635. off about 0.4%. even though that number has come in as expected, 0.3% year on year. >> interesting to see that move at a two-year low against the u.s. dollar. seems like the u.s. dollar continues to spend in. this is the story for the euro, it continues to weakness. >> all eyes will continue to be on this currency pay pair for the rest of the week. >> does this prepare mario draghi to unleash quantitative easing on thursday? i think i know that is the question and how that could help or hurt european markets going forward. going forward, let's take a look at u.s. futures right now. a look at how u.s. markets are he gauged to open here on tuesday morning. the dow up about 31 points. nasdaq up about 9. the s&p 500 indicating a higher

open this coming in after u.s. stocks moves lower in yesterday's trade, although off session highs. indicating a higher open. take a quick look at the cnbc global 300. a gauge of stocks around the world and interestingly enough, not following the move into european markets. right now, lower by around 3 points on the day. coming off of its highs. a look at the european markets given the data we've been getting out of the eurozone this morning when it comes to unemployment. jobless claims. higher across the board. we did see the ftse 100 gain about two points later on, above its session highs. the xetra dax and german market showing a lot bit after we got those numbers up about 30 points. french and italian markets showing a little bit of gain, but the focus is on the euro, as

well. >> the ten-year greek yield, 6.775%. it has been picking up over the last week on expectations an election might have to be called early in the face of possibly replaying imf loans early. sterling, the ten-year uk yield is at 2.44%. german yields just below 1%. interesting, the ten-year treasury at 2.50%. it's falling from 2.54% where it was on friday with fears of drawing people from pimco's funds. let's have a look at forex. the euro/dollar, fascinatingly, moving down. 0.45%. 1.26%, 1.27% continuing its fall as inflation data has come out.

down from 0.4% where it was the previous month. but that is the lowest reading in october 2009. slightly weak today. sterling is again just down 1.4%. moving on, we're going to do a bit of asian markets, as well, which have been weak overnight. most significantly, hong kong down 1.3% off the back of those continued protests that we're seeing in hong kong. thousands of those persons remain camped out in hong kong central business district. eunice, in beijing for us with an update, eunice.

what we're seeing here in beijing is the authorities are trying to ramp up their conversation and control the information in a way the hong kong protests is presented. earlier, i had taped some video of what actually happens here when we start having these conversations. basically, everything gets plaqued out. the authorities have been blacking out foreign broadcasters, including us, as well as vetting the information about the hong kong protests on the internet. on state media, the conversations about the hong kong protests have mainly been about the costs to hong kong. so a lot of the articles have been about how schools have been shut or that offices have been severely inconvenienced. people can't go shopping. there's no disruption to daily

life. also, the cost to the stock markets, there's been a lot of discussion about how the stock market in hong kong had fallen because of these protests and that the protests were blamed for some of the jitteriness in the global marketplace. that has been the line we're seeing in beijing. in beijing, this is a situation that the authorities find very difficult for themselves. they have this massive challenge on their hands. they're faced with very difficult choices. and what is interesting, you mentioned the national holiday. would they want to back down, would they want to compromise which could potentially mean they would be seen as weak. but at the same time, they wouldn't necessarily want to be seen publicly cracking down on protesters in hong kong. not only because it could potentially bring international

condemnation, but also because it could alienate the public. and it would be on national day, which would be a very important day for china, which is a day when they are actually trying to focus on the unity of the country. >> eunice, thank you very much for that. head to cnbc website for a live blog on the latest developments on that story. we're going to recap the inflation numbers we got out of the eurozone just a moment ago. it came in at 0.3% year on year. slowing from 0.4% the month earlier. but 0.3% was what was expected. nonetheless, that is the lowest level we've had in eurozone inflation for some time. it's led the euro/dollar to sell off almost 0.5%. that is now the lowest level for the euro/dollar in two years. >> and a read on the labor market, the eurozone august unemployment rate came in at 11.5%. that came in in line with expectations, unchanged from last month. the eurozone inflation rate,

lowest since october 2009. but, again, the overall unemployment rate at 11.5% for the eurozone. of course, important to look when you're talking about the labor market at greece and spain where we've been seeing weak job growth and we'll be getting you those numbers, as well, throughout the show. ken, just before the eurozone data, we talked of course about hong kong. it's the biggest market move today. it was down around 1.28%. do you think that these market moves you've seen in the last few days on the back of these protests are a sign of further things to come with china? is this an example of how china might deal with social instability in the future? >> i think it's a little premature to get too, you know, concerned about was going on there. i think it's something to definitely keep an eye on. it's not insignificant. yet it's too early. i mean, we have this protest starting with what is relatively a small amount of people. and their grievance, if you

will, is about events that are years away. markets are jettery now with all the data and people pushed further out on the risk scale than they maybe would like to be. their state dollars are earning nothing. so i think any news that looks like it might be the catalyst of, you know, the market tilting over is causing traders to move a lot of money around. i'd be cautious to look at this hong kong thing right now with this stage as a real tradeable event. it makes for good tv, but i'm not so sure president. >> do you think we'll see any international -- comments out of the u.s. state department are very withheld on the subject. but should perhaps the british be more involved when they hand it over? they said it broadly represented, a nominated committee must be in place. is china ignoring that agreement? should britain get more involved in this? >> i won't claim to be an expert on what britain should or shouldn't do.

but i think anyone that has a medium term history, back to 1987, it was an entirely different setup than it is today. you have capitalism and something else coexisting in that area. i think what we're seeing now was inevitable, whether it happened 10, 20, 30 years after the reunification fund comes to china was anyone's guess. but i wouldn't be too surprised about what's going on. it seems like a natural flow as capitalism is spreading around the globe. people will want to take control of their own future. it's logical whether britain or the united states should weigh in on it, i think i'm going to step out of that question. >> ken, interesting to look at the u.s. markets and the performance of september. it was a downed september, but higher for the quarter. that's fort third quarter. do you think stocks can continue to rise? there are a number of factors weighing on investor sentiment, including the fear of a correction of some sort. also protests in hong kong. what is weighing on sentiment, do you think? >> i think what we say earlier, what is weighing on sentiment is everyone is waiting for some

shoe to drop. but it's time to move out of equities. and i think that's the wrong stance. equities has been strong because there's a lot of reasons for equities to be strong. geopolitical reasons aside, those are trading excuses. stocks, equities trade on fundamentals. and the fundamentals serm in the united states has been getting better. you're seeing, you know, employment numbers, inflation numbers, gdp numbers, earnings continue to be strong. i think we're going to see a strong earnings season for the third quarter. so i think there's a lot of logic. and i think it's important to keep in mind that while everyone is ringing their hands, that this has been a very slow recovery, that's in some ways the power of the recovery. it's the slow and steady, you know, tortoise marching forward. so i don't see that really abating anytime soon. i would be more concerned if we would been seeing spikes in numbers and then, you know, month off. we had the first quarter number fall off pretty strong. mostly weather related here in the united states, but it's come

back certainly strong from there to prove that that was an outlier. but i think people should take some comfort in the slow grind upwards because the slow grind doesn't tend to come to an abrupt halt. it tends to continue the momentum. >> ken, thanks for your perspective. now let's take a look at today's other top stories. ford is cutting its tpretax profit forecast. the vehicles would cost $11 billion. ford shares fell about 1% after hours after dropping 1% in the regular session on monday. gm's ceo mary barra plans to unleash a multi year financial strategy on wednesday. gm shares are down nearly 20%

since barra took over as ceo in january, but down about 3% in yesterday's trade. now the european commission finds apple's tax deals in ireland unlawful. could the tech giant be forced to pay up to brussels? find out more after the break.

welcome back to "worldwide exchange." let's get you some headlines. ford shares slump as the automaker warns it will miss its 2015 forecast. and pimco loses a gold star rating from morningstar. cnbc speaks to new management later in the day. >> top story in the tech world, the european commission has published some of the findings of a wide reaching investigation into apple's tax dwiegz in ireland. it finds tax deals made in 2007 constitutes state aid. the document is part of a wider tax probe into several other multi nationals.

>> well, i think the first thing here, seema, is that this particular ruling today finds they were in breach of eu law is something of an opening gambut. the irish government was getting very clear and they're likely to contrast this as far as they can in the eyer european court. the judgment was sent to the irish government in june and there are quite a bit of issues with quite a lot of pressure on them to kind of fall in line with broader eu tax drills. and, of course, the competition commissioner who is stepping

down in about a month or so. those are all quite interesting questions being asked. but, of course, there's to question that they have been able to get away with some very, very low tax rates in ireland over the past 34 years. and what really, really is being focused on here is back in 1991 as it's gone through that length, the distance, just exactly what was going on and how to see the kinds of referential tax -- for jobs. >> still in the early stages of this story, thank you so much for bringing us the latest, catherine. now is a slacker with low expectations, that's how paypal's ceo has described europe. he says the block is held back by the poor work ethic of its people and politicianels strangle tech progress with regulations that are a cure

worse than the disease. now, we want to hear from you on this. do you agree with peter thiel? does europe have a problem? adam tweeted in to say maybe the co-founder of software giant sap, he's worth $8 billion. well said i think on that, adam. join the conversation here if you want to get in touch on "worldwide exchange." e-mail, worldwide@cnbc.com or via twitter @cnbcwex. our personal handle are there on the screen, as well. and coming up on this show, are high times on the way for high yield after that summer sell-off? we will head over to carolin roth who is at the goldman sachs leverage finance conference with some exclusive executives. that's coming up next on "worldwide exchange." how do you beat the number one seed? you just have to win 70% of your points at net. and keep unforced errors under 10%. on the ibm cloud, the us open analyzes 41 million data points

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the dow jones implying an open by around 4 points. nasdaq up about 15. this after the s&p 500 is now on pace for its seven quarters of gains, up about 39%. in that period, it was a down month for the markets in september. but, again, a strong quarterly performance for the dow, s&p 500 and the nasdaq. >> now, morning star cut its

rating on pimco's total return fund from bronze to gold, citing uncertainty following bill grow gross's departure. pimco's ceo doug hodge and cio daniel i' daniel ivascyn will be on street signs today. now back to carolin. >> absolutely, will. let me pick up on the pimco news. i'm joined by zach summerscale from babson capital. what do you make of the departure inspect we saw a knee jerk reaction on the markets on friday. do you think that will have bigger effects on the market you're operating in? >> i think technically we've seen a sell-off already in terms of the market on friday because of the news. but i think it's a short-term,

short lived, and i think it's -- the biggest danger is retail overreacting to this. but in items of high yields and credit generally in europe. i think it is more sentiment than any fundamental meaning. >> over the summer months, we saw volatility and outflows. the bond market has been underreported on and offers significant opportunities in your view. >> that is correct. particularly in europe today, we're finding a great opportunity by buying loanes from formerly bad banks. these are loans where they have them on their books, where we don't think thee value they are properly and we're finding a huge amount of corporate credit which is not priced correctly. we're finding new investors coming into this market, appreciate the opportunity as it looks cheapestive to the high end market today. >> and the factors about loans, it's the fact that there are variable rates, floating rates essentially. does that give you a hedge when rates are rising?

>> that's correct. so it's one of the few asset classes which benefit from rising rates and what seems like a fixed income class. we're very bullish. when you get rising rates, this will benefit, not expect them in europe in the foreseeable feature. but in the meantime, it's offering the current yield. >> over 5%, that's not too bad in an environment why the search and yield is definitely on. who are the big investors into loans? we've seen that big shift from banks funding, from bank capitals to privates to constitutional capital funding. who are they? >> so the money we're seeing flow into the market today are pension funds, sovereign wealth funds, insurance companies. and these are really investors who didn't have anything in european loans back in 2007. so these are brand new investors for the market. the market has been cheaper. it's a high yelled, starting to change purely on the basis of sophisticated investors coming in. the one that normally in europe is the fact that there's no

retail market here, forbidden by relagz. it's created a huge opportunity that you've seen flow into mutual funds, and that's created the opportunity in europe today. >> what are the big topics for the conference is what the ecb is going to do in the face of ae pneumoniaic growth here in the eurozone. what impact is that having on credit quality, on the quality of issuance that you're seeing and the default rate? >> sure. i think we saw a deterioration in the quality of issuance in the first half of this year. and that's been driven by this yield, by the fact that the ecb is clearly looking to keep interest rates low. and i think going forward, we've seen investors chase that yield. actually, the pullback we've seen in the last three months and the higher bond markets have been healthy as a result of investor issuance again. that's certainly been our strategy, the issuers are much better than what we saw getting done in the first half of this year.

>> carolin, thank you for that interview. still to come on the show, walgreens earnings are on tap. it reports earnings in just a couple hours. opportunities aren't always obvious. sometimes they just drop in.

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hello and welcome to cnbc. i'm seema mody. >> and i'm well friday frost. the european commission deals a month to apple saying unlawful irish tax base might be recovered. shares of ford come earn pressure after the automaker warns it will miss its 2014 forecast citing losses in europe and north america. a number of broker downgrade the stock. partnershipco has rates lowered on funds after the departure of bill gross. cnbc will speak to the company's ceo and cio after its management reshuffle. >> announcer: you're watching "worldwide exchange," bringing

you business new from around the globe. >> announcer: if you're just tuning in, thanks so much for joining us here on "worldwide exchange." u.s. futures indicating a higher open with the dow up about 50 points. s&p 500 up about 7. and the nasdaq, sporting a gain of around 17 points in premarket trade. of course, investors still seem to be on edge from some of the experts we spoke to this morning, given the soft manufacturing data out of china as well as unrest in hong kong. investors keeping an eye on those two areas. september inflation data for the eurozone being factored in. on that note, take a look at the ftse cnbc global 300 index. interestingly enough, it's not falling to q from european markets, currently down about 5 points. getting close to session lows on the day. diving into the european markets because that's where we've been focusing on given the data we've got out this morning. german unemployment rising in september. the jobless rate, though, held steady at 6.7%.

that seems to be what investors are focusing on. one of the outperformers in today's trade, you're looking at the french markets, up about 38 points. the ftse 100, a gain just about two points on the day. wilfred. >> how do you make money in markets like these? here is what some of the experts have been telling us this morning. >> i like japan. japan, i guess you have to hit the currency. so -- as opposed to -- but was going on in the japanese corporate scene is something which attracts my attention, it's a positive story. >> i want to see the yen between 110, 115 for the dollar examine not close to a hundred. it is getting there, but i think it has to stay there for japan to do better. >> it is particularly against high better to increase the

dollar position. we can see a sharp slowing of equity flows into the eurozone. it is contributing to the weakening of euro/dollar. >> and a look at the treasury market because morningstar cut its rating on pimco's total return fund from bronze to gold. pimco's ceo doug hodge and cio daniel ivas dr yn will be interesting to see what they have to say at his on cnbc. >> i think what is interesting about this is the actual aum

that bill gross managed is relatively small. people are overexcited about this departure. it's a big fund manager and the biggest fund manager and there's lots of other people. key to hear what their strategy is moving forward and see if they can stem any outflows taking place. >> we'll have to watch that interview. now moving on to earnings, analysts looking for earnings of 74 cents a share, investors are waiting to hear about possible payoff from the alliance boost deal. last month, walgreens dropped a tax inversion deal with a cut to forward guidance. analysts have become very cautious on this stock given the disappointing guide thans thwa

walgreens gave. but i believe you still have a buy. why is that? >> there's still a significant long-term opportunity to drive cost savings through the acquisition, including the company is expected to generate north of a billion dollars both from procurement cost reduction. and then the ability to cross sell in the front end of the store, the powerful alliance brands that they have in the stores and the uk going forward. he we expect walgreens to expand its clinic to president it on more equal footing with cvs where we expect the retail delivery model to become significant for these funds in the united states. >> do you think walgreens will change strategy going forward? >> i don't think it changes the

operating stratfy. i expect jana is going to focus on how do you accelerate revenue growth, how do you contain costs and how do you best deploy capital to drive increase trends or shareholders. we would expect them to focus on purchases and acquisitions to help driving earnings growth with a significant cash flow that walgreens shows off. >> shares are down 20% from june, up about 4% so far this year. so an underperformer on the s&p 500. how significant is this buying opportunity? >> we think it's a significant buying opportunity. having said that, we would couch that with the kch did put up a significant negative earnings division. the day that the company backed off its inversion plan. we do not think that was the big driver of the never division. so companies facing three significant headwinds. they're tied to generic drug

procurement costs where generic drugs are inflating as opposed to deflating. they're seeing increased pressure in commercial reimbursement on the front side of the business. and then about a quarter of the company's prescription comes from the medicare part d in the united states where they're seeing significant pressure. >> how many of these headwinds are near term head whippeds that will at some point create an opportunity for walgreen's? >> historically, generic drug prices have been deflationary as opposed to inflationary. the last 12 to 24 months, they've been inflationary. if you talk to the big players in the industry, walgreen's, cvs, they probably expect the drug price toes return to either flat or deflationary at some point. walgreen's is the largest retailer in the united states. we'll have the opportunity to go back to a lot of large tire organizations. the pbm and try to negotiate

better reimbursement rates. and also we're starting to see some modest relief from a regulatory perspective and a lot of states the state board pharmacy lobby are powerful lobbies. they're working on legislation in a lot of states, admittedly this will take some time and it's very regional to try to get reimbursement relief from the pharmacies from a regulatory perspective, giving the pharmacies more opportunity to push back and crawl back pricing. >> george, thank you very much. i have to say, the one thing i do not give to walgreens, you go to the states and there is a drugstore on every single corner. how often do you buy medicine? >> that's fun niece because since moving here to london, i feel like there's not enough drugstores. it should be like starbucks, around the corner.

all right. let's take a look at today's other top stories. what you should keep on your radar. the head of the secret service will face congress today over the agency's handling of security at the white house just hours after an intruder mae made it through the front door of the executive mansion on september 19th. the next day the was reported he had a knife. now multiple reports say 42 yaerld iraq veteran omar gonzalez managed to run through much of the main floor and past an alarm box that did not properly warn officers of the incident. i find the story to be mind boggling. how was the white house front door open and unlocked? >> sounds like something out of a jared butler movie. >> i don't know who that is, but -- >> google him. i'm sure you'll change your opinion. now, a new york judge is holding -- in context for openly defying his orders over defaulted debt. the judge said he will delay a

decision for fine on actionses. and a lot of focus on brazil today. the map stock index sinking nearly 5% yesterday as the fed shows the president is gaining momentum. the state oil term petrobras is leading the way south. a likely second round runoff surged from 11% to 9% a week earlier. the first round of voting takes place on sunday. we've got to see if -- who brazil picks and of course how that will help the country's recovery. moving on, a slacker with low expectations. that's how paypal co-founder peter thiel has described europe. he said the block is held by by the poor work ethic of its people and run by politicians that stringel tech progress with regulations that are, quote, a cure worse than the disease.

he adds pessimism in europe has a demotivating effect. >> do you take offense with that statement? >> i do. it sounds like a sweeping generalization. >> we want to hear what you have to say, as well, on peter thiel and his comments made. does europe have a problem when it comes to motivation snm adam tweeted in to say maybe ask the co-founder of software giant sap. he's worth about $8 billion. listen into that. join the conversation on "worldwide exchange." worldwide@cnbc.com. @cnbcwex. >> and coming up, we go behind the wheel to find out what is behind profit warnings. as the gm ceo gets set to unveil her financial targets. stay with us on "worldwide exchange."

z

. welcome back. the ftse is down 2.6%.

germany is off only 0.1%. why is that? most importantly is the divergent policies we're seeing. in england, we're starting to see where why rates have gone up. we've had significant easing measures at the start of the month and that has given markets a little bit more emphasis. strangely, that ecb loosening ohm gave markets strength for a couple of days. for the rest of the month, it has been the weak macro data that has dominated and that is why markets, in general, are a little bit soft during september. what's happened in the u.s.? >> you know, wilfred, a slightly different story for the u.s. markets in the month of september. the dow jones losing about 27 points in the month of september. nasdaq falling, multiple reasons given for the underperformance of the u.s. markets, the rise of political tensions. if you're a bull on out there, here is a stat to consider.

historically, q4 of any year is the strongest gaining on average 3.8%. that according to s&p capital iq. keep in mind, gains on the q4 higher in the three indices. take a look at the run up as seen over the past month. it's back up 4% this month. trading at a fresh four-year high. a sign of further confidence in the u.s. economy. better than expected economic data. feeling the dollar index higher. you have to wonder what that will do to q3 earnings. how will that stronger dollar impact their competitive edge when doing business overseas? wilfred. >> and part of that dollar index is the euro/dollar paring which has moved a mafs 4% over the course of just one month. 4%, a big, big move for the currency over the course of who days.

but when you consider the factors at play, maybe it's not too much of a move. very divergent policy differentials. also the u.s. has that safe haven status which has been at the forefront with a lot of fweeo political concerns. now, moving on, just three months after taking the top job at ford, ceo mark shield is slashing the profit forecasts. courtney reagan is at cnbc hq with all the details. >> that's right. he met with investors on monday and told them the number two automaker expects to report pretax profits of about $6 billion this year. that's about $1.5 buildiillion than the company forecast in july. the biggest factor is repairing vehicles that had been recalled. ford prjton red ink is low in europe through 2015 although at a lower rate.

the company doesn't expect demand for autos in europe to hit precision levels until 2020. ford expects nearly 50% growth in global deliveries by the end of the decade. >> if you go back over the previous four years, i mean, we made $8 billion or more in each of those roers. and what we're talking about in the guidance we gave today for the reasons mark mentioned, we're looking at about $6 billion a year with strong cash flow. and continuing to invest in a future that as we outlined today is going to be much better in 2015 and growing to really impressive levels by the end of the decade. >> ford shares fell 7% on monday and fell further in the after hours today. europe shares are down again another 7%. gm's ceo mary barra plans to unveil a multi year strategy on wednesday aimed at improving profits and launching market-leading vehicles.

barra tells investors she will give investors more specific deadlines for its goals and outline how gm will spend its cash. >> thanks very much for that, courtney. the european commission deals a blow to apple, saying unlawful irish tax aid might be recovered. ford shares slump as the automaker warns it will miss its 2014 profit forecast while pim cope aes total return fund loses its gold star rating from morningstar. investors get a fresh check on u.s. housing with the s&p case-shiller index due later today. we'll talk to one expert to give us an idea of what to expect. that comes up next on wex.

welcome back. these are lives shots from long coming. protesters are still in the streets. morning star cutting its rating on pimco's total return from bronze to gold following the departure of bill gross on friday. as of the end of august, investors have pulled $25 billion from the total return funds this year. pimco's ceo and cio will be on "street signs" today for an exclusive interview at 2:00 p.m. eastern. now for a check on markets and what to expect this week, john

cray, director of s&p capital iq joins us. john, great to see you. easy to take sight on what's happening in hong kong right now. investors with assets in hong kong, how should they play this? should they be selling? >> we don't they this is going to end up in a tiananmen square type of problem. but we do think that it's to maintain a market weight on congress at this point. it is still one of the most developed equity markets in all of asia and we believe in market weight for several reasons that it still provides a great deal of diversification in a number of different funds and a number of different sectors. >> how much higher does gdp groekt have to be in emerging markets for you to favor investing there rather than back at home in the u.s.? >> well, there's distinct

differentials between the emerging markets and the more stable growth markets in the -- in the developed world at this point. in the case of the developed markets, you have a really big problem in terms of achieving escape velocity during this period of structural slowdown that they're experiencing. we believe that 7%, 8% growth in the case of china is a fair number to look forward to. in cases of countries like the philippines and nations just getting off, you know, getting off to a ip neesh ya for that matter, maybe a little bit higher of 18%. but in any event, the policy making environment is our main vehicle for assessing these

markets. we believe in a more market friendly environment perhaps in indonesia and in india who will give rise to overweights for those countries and their future. >> john, prime minister modi meeting president obama right now talking about ways to bolster u.s.-indian relations. do you think that could help change the landscape in india? >> not immediately. i think the national centrist, modi is taking a approach not to sxwrup set the am cart. they're taking very important strides at this point to send the right signals to the market. it's one of the strongest growing markets in asia at this point. it does have a very high multiple, does have room for -- the multiple has some room for expansion. >> john, thanks very much. that was john cray, director of s&p capital iq. that's all we've got time for

today. i'm wilfred frost. >> i'm seema mody. "squawk box" is next. your customers, our financing. your aspirations, our analytics. your goals, our technology. introducing synchrony financial, bringing new meaning to the word partnership. banking. loyalty. analytics. synchrony financial. enagage with us.

good morning. welcome to "squawk box." in washington, insecurity. a white house fence jumper from earlier this month, he got much further into the executive mansion than first reported. we're going to talk about it. and ford hits the brakes. the automaker cutting earnings expectations amid weakness in europe and recalls. today is tuesday, september 30th, 2014, and "squawk box" begins right now.

good morning. i'm becky quick along with andrew ross sorkin and brian sorkin. walmart fired back at comedian tracy morgan, a lawsuit he filed when he was severely injured after a walmart tractor-trailer hit his bus. the s&p is on pace for seven straight quarters of gains. the index is up 39% during that period. it's the longest quarterly winning streak since it was up 14 periods in a row from 1995 to 1998. seven out of ten s&p sectors were up over the last month led by health care, technology and financials. the only looszers here, industrials, utilities and energy. is the dow and the s&p are both on