tesco's black hole widens. and more than 46 s&p 500 companies reporting, including economic bellwether, caterpillar. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe.

>> announcer: and welcome to the show. we're just getting through the october flash pmi numbers. the composite number for the eurozone was forecast at 51.5. it has come in at 52.2. we've also got that split in the services and manufacturing. the services number was forecast at 52. it has come in at 52.4 and the manufacturing number has come in at 50.7, having been forecast at 49.9. so all of those coming in slightly better than expected. that follows the suit of the german numbers half an hour ago which was slightly better than expected. but it's convert to the french numbers which came in an hour ago worse than expected. so the composite eurozone number 52.2 against the forecast 51.5. the euro has hit session highs off the back of that. let's bring in fill i didn't know shore, chief economist at

investor. phillip, these numbers slightly better than expected. >> it is a bit of rare good news on the eurozone economy. following, as he said, from the german manufacturing pmi that we saw earlier this morning. obviously, it doesn't actually prove that the eurozone is on a sustainable recovery path. but it takes some of the worst downside scenarios of the session and perhaps heading into deflation. >> and let's talk specifically, as well, about the german number, which is why the eurozone as a whole has beaten. if we rewind, german data has been getting worse. that's been begging the question. will that lead to germany loosening its view, on whether loosening is a good plan. does that mean this is even less likely? >> i don't think that is the case. a lot of them relate to august. and what we had during the summer in germany is a shift in the timing school holiday. so going back a month before that, we had some strong july numbers and then is some very weak august figures which have

overstated the degree of weakness in germany. german authorities are very well aware of this. their reading of the economy is probably, well, it's weak, it's softening if anything, but not by as much as the august views would say. i think there is probably some sort of plan to raise investment within germany. it's being september under wraps at the moment. i think there are covert discussions with france which may be getting somewhere. >> session highs. we've been looking at the dax and the cac. they've just touched into positive territory. positive macro fundamental data is actually meaning positive moves in the market, which isn't always the case, of course, in recent weeks. >> that's right. what we've seen particularly over the last week or so is that markets are particularly worried about world growth and the catalyst of that was cause for the imf world economic outlook where at least the rhetoric around the numbers suggest that they had really flashed their

world growth forecast. they nudged it down, but that really got markets in turn. so any bad news last week was treated negatively by equity markets and the converse is true and that's what we're looking at this morning. >> i noticed one of the phrases the law used, certainly -- are not comparable to history's most notorious corrections. do you maintain that view? >> absolutely. even if we go back to 2 1/2 years ago, equity markets were very concerned about the break-up of the eurozone, as were, of course, peripheral bonds. and with good reason, as well. now we're in a different situation. we're looking at a very weak outlook for the zone with downside risks, but we're not looking at a fragmentation area. that has, obviously, a lot less downside for risk assets generally. >> phillip, thank you very much for that, phillip shore, chief economist at investec.

we cross now to the 14th annual goldman sachs asset management symposium where seema mody is focused on the macro economy. but it's a big day in the microeconomy today also in the u.s., isn't it? >> absolutely. weak data out of the eurozone. of course, a topic for investors and, of course, some of the asset managers i spoke to today, that is something that they're watching very closely. the big question is how do you trade this data? how do you make money in europe? those are some of the questions we will be asking to our guest today, including andrew wilson, ceo of asset management as well as katie cox, the head of the global asset management group. so those questions we will pose to those guests and ask how did you trade the euro given that it traded below 1.26.

now bunsing off the lows of the day, that is something we'll be paying close attention to. >> seema, thank you. we'll be back with seema throughout the show. britain's biggest retailer scraps its full year guidance and says its accounting shortfall was larger than expected. the chairman will step down and the retailer says it will withhold payments to the former ceo and cfo. joining us on set now is our uk business editor helia rahimi. it just gets worse and worse. >> oh, it's terrible. we have a low in the share price. but this is a drop in tattory profits, just to give you an idea of 92%. why is that? because they've not only had to reject the issues in the trading periods that we saw, but they have to go back a year and even before that. so you have all these exceptional tunes going in between, the ivp, statutory profit, a 92% drop. even that underlying profit number is not what we expected.

we thought it would be about 850 million pounds. it's come in at 783. to give you an indication, last year, that number was 1.4 billion pounds. so it's very grim news for tesco and all their shareholders. dave lewis on the phone this morning, committing to do everything it takes to change their fortune, but not saying, a, the details of what's gone wrong, b, what the strategy was. in fact, he saidite nom standing up anytime soon to tell people my strategy. he's going to feel the changes first. and he's going to start focusing on, you know, a type of wireless tesco good. but i think that's worrying. because what people want to know now is what's the move going forward? what are they going to sell off? are they going to raise any money? >> one further question. i suppose when new management takes over a company, there's always a trend of trying to

flush out bad news and from there the only way is up. is the only way up from here up? >> no, sadly. you're right in the sense that new management always wants to -- but today, the eight people that have been suspended, dave lewis says we're not saying we have seen any fraud. the fda and regulators are looking at this. but there isn't only upward trajectory for tesco. this is a difficult trading environment where the grocery market in the uk is under pressure. so hard for him, hard for his rivals and a lot to do, really. >> helia, thank you very much for now. >> let's have an update on markets. now more green than red. we opened down and strengthened sharply over the last hour.

we're now up 0.3%. having been down close to 1% earlier. we had a little sell-off at the start of the trading day when french pmi came in stronger than expected, german pmi stronger than expected and eurozone pmi stronger than expected. that positive news out of germany and the eurozone as a whole has been correlated as the market moved. the stoxx 50 up 0.75%. let's look at individual european markets. as i touched on just now, we did have negative moves earlier in the dax and the cac. both are up now close to 0.75%. so quite a big turn around over the last half an hour. markets moving sharply off the back of those pmi datas which were stronger than expected. the ftse 100 is a relative laggard across the region. i it's weighed down heavily by tesco. it's flat so far overall.

italy up 0.6%. let's drive in to some of the top stocks. shares of nova design up 6.85%. unileaver is down 2.35%. shares trading down to the downside after the group reported in a weaker than expected 2.1% rise in sales. daimler was basically flat. it was a little lower earlier. publicis off 2.44%. stephane will be joining us during the next half an hour to discuss that specifically. let's look at bonds. bond yields in the u.s., 2.23%. the story really here is one of -- over the last week, but just coming back up. yields over the last week or so after the extraordinary moveses we saw last week. yield compression is the story. over one week view coming off

some of the yields we've had. 2.3% in the u.s. german bunch, 0.874%. 10-year gilt, it's now expected rates will be up slightly later than expected in the uk. the yield has just come off a little bit more than some of the other european economies. let's have a quick look at forex. the u.s. dollar just giving up a bit of a gain. but whenever it givers up support, usually its bounces back the next day. the euro/dollar is now basically flat. it was down as much as 0.25% following the french pmis which surprised on the down side as german and eurozone pmi came out, it's now strengthened. 1.2657. the dollar strengthening against the yen, 107.46.

cable is flat at 1.604. let's get an update on markets in asia. sri is joining us. >> good morning. pmi numbers on the manufacturing side for the month of october. yes, they beat marginally on the headline coming in at 50.4 versus september final reading of 50.2. most of the market was looking for 50.3. so a modest uptick, a marginal beat. so the markets seem to like it at first, judging by the reaction on the aussie/dollar. but if you look at the infernals, they were under roping. let me tell you why. factory output was at a five-month low. growth slowed, as well. underlying stress in the chinese economy still, especially related to domestic demand. and that is probably one of the reasons why the market was particularly impressed.

shanghai composite closing up at a one-month low. down by 1%. the other factor here, wilfred, is there's a rush of ipo activity this week and there's a fear those few listings are going to draw liquidity and interest away from the existing issues. so bear that in mind. elsewhere, we did see some pockets of resilience especially out here in northeast asia. >> sri, thank you very much for that. a gunman was killed by security officials after opening fire at the canadian parliament on wednesday. this followed a shooting at a nearby war memorial which left one soldier dead. canadian police haven't confirmed the same gunman was involved in the incident. a suspect ran down two -- on monday. speaking, the prime minister delivered this stern message to any would-be attackers.

>> we will not be intimidated. canada will never be intimidated 37 in fact, this will lead us to strengthen our resolve and our efforts and those of our national security agency to take all necessary steps to identify and counterthreat and keep canada safe here at home. just as it will leads to strengthen our resolve and redouble our efforts to work with our allies around the world and fight against the terrorist organizations who brutalize those in other countries. with the hope of bringing their savagery to our shores. they will have no safe haven. still to come on the show, crude slumps, the new record low european leaders discuss the future of any supply across the continent. christopher granville joins us in about 20 minutes time. mercedes benz profits drive higher. we preview gm earnings in the next half hour. and a shake-up of u.s.

consumer giant procter & gamble. we get the full story around 11:40 cet. stay with us on "worldwide exchange." we needed 30 new hires for our call center. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2.

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lloyd's bank plans to shed almost 10% of its workforce according to various media reports 37 the job cuts are expected to be announced next tuesday. the bank is still 25% owned by the government and has ahead off 30,000 workers since being bailed out. credit suisse beats quarter expectations with profits topping 1.3% for its investment packaging unit. carolin asked ceo brady dugan about the impact of volatility on the business. >> wa well, it is a balance, as you say. we have volatility and clearly it makes other parts of the

business more difficult, things like new issue market, things like outlook of our private banking clients becomes a little bit more challenged. it's a balance, really.. obviously we had a sharp sell-off and then a sharp rebound. we'll see how all that filters through. longer term, we would like to see more consistent markets in terms of just giving people confidence both on the institutional side and on the private banking side as far as being more opportunistic about things. >> i know you're usually pretty guarded about the outlook. i know you don't always have that much visibility because you never know how much volatility is going to return to the markets. what have you seen so far is in the fourth quarter? what is the trend? >> it's been kind of mixed. obviously, the increase in volatility and volumes has been helpful to some parts of the business. other parts have obviously been more difficult. one of the things we do have, a very large backlog of business to do is clearly whether or not the markets will cooperate with allowing us to execute that for our customers is a different question. i think that's what we'll have to wait and see how the fourth

quarter plays out. >> underwriting in alibaba, that was one of the highlights for you, i believe, in the last quarter. what are the exact fees that you reap from that deal? are you able to carry over some of that momentum? are you seeing new deals? because that went off without a hitch, essentially. >> it was a successful deal. it's a tremendous company. we had a long relationship with them. we do a number of different things with them. one of the positive things around them is the fact that it was the transition from across the bank and included the private banking side and the investment banking side. i don't think we've actually disclosed the specific total fees for revenue on all the things that -- >> but it was significant? >> it was an important transaction. it was obviously a landmark transaction, the largest ipo ever. as you say, it was executed well, which is to the great credit of the company and also to the investment banks that work with them. >> and let's have a close look at how credit suisse is trading

so far today. it's up 2.8%. it's a long back at the pmi data. it's down about 4.63%. let's get out and join carolin. carolin, mr. dugan saying the high volatility of markets has had a mixed impact on earnings overall. what else did you learn from the interview? >> yeah, first of all, let's stick to volatility. it's very positive for the trading environment. we saw that impacting positively some of the u.s. banks and that's why the expectations for credit suisse and other european investment banks which have a high gearing towards the investment bank certainly has risen over the last week or so. that is why maybe some of the share reaction is the outside to the upside. some of that was baked into the cake. jpmorgan indicating a mixed

start to october. that is a great sign. but, of course, the more volatility you get, the worse the impact on confidence and the growth margin on the wealth side of the business. we saw within the private bank of the world's management that the margin is still at very depressed levels. i also want to point out it was a huge outflow within the private bank, but overall, analysts are not too worried about that. lelths have a chat about investment here. credit suisse has the worst out of the way because it settled with u.s. authorities earlier this year for $2.8 billion. yes, that was a huge climb, but that was for the cross border activities. it settled with u.s. authorities

on the mortgage-related matters. specifically, if you look at the fx probe, which credit suisse has limited exposure to. if you look at libor, they didn't pay anything in this regard. this is why many say the earnings possibilities compared to ubs and deutsche bank, that is a lot better. that is why many of the analysts are more comfortable with owning that bank. jpmorgan, though, not too convinced this morning. they say credit suisse, fix income unit with with the environment. it's not an ideal business mix in our view. but overall, this was a solid set of numbers. >> and carolin, are you enjoying being back in zurich? >> i always do. i spend a lot of time here. this is my beat. certainly i always do especially

when banks report numbers. we see a string of misses over the last quart of quarters. shaers still under pressure this year. i believe they're down 10%. ubs hasn't done much better, but they're still underperforming the smi, which is pretty much flat this year. >> great job on that interview. we'll be playing more identity out throughout the show. >> eurozone composite pmi at its lowest level since february. annette. >> officially, the agenda is saying that they are going to discuss economic matters only tomorrow, but they probably won't get around those new data and also a darkening of the

economic picture. even though not on the agenda, they are going to talk about the budget as only yesterday six of the eu member states were prompted by the european commission than the european commission is not happy with their -- for 2015. of course, among the most prestigious ones and most hardly discussed are italy and france. let me talk about france because with the recent pmi data showing that the economy is going really badly and there is not a lot of sign of improvement. the budget proposal will be on the renewed strutny from the european commission, i'm very sure, because looking at the estimates inside the budget currently, for 2015, this is breeding european law. it's far too optimistic what they are thinking about their growth rates already for next

year. for next year, they're envisioning a growth rate of 1%. and then for 2016, even 1.7%, so it's clear that this is not really in tune with reality looking at those pmi numbers right now and also an overall growth picture in france. so that is happening here at the side lines. people are talking about the budget of italy and france and there's even reports that germany might help france to get a packet together with the european commission in order to find a way not to have its budget rejected. with that, back to you. >> annette, thank you very much for that. annette will be speaking exclusively to george soros this afternoon. catch that interview on "closing bell." moving on, at&t's third quarter earnings missed forecasts by a penny.

revenue grew but less than expected. more customers brought in their own devices when they switched plans. at&t cut its revenue outlook expecting growth of 3.4% versus the previous 5%. shares are down almost 1% in frankfurt trade so far today. now it's going to be a very busy day for earnings in the u.s., with 46 members of the s&p 500 reporting. look for the results. eli lilly, gm, 3m, american, southwest, united, jet blue. after the close, we get numbers from amazon and microsoft. still to come on the show, tesco's black hole grows even darker. should investors check out the retail giant? i'll discuss after the break.

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tesco plunges to the bottom of the ftse after saying the black hole was worse than feared and scraps its full year outlook.

and data earnings stateside with 46 of the s&p companies set to report, including heavyweight caterpillar and amazon. we just had uk retail sales numbers out, spec'd to decline 0.5% month on month. they came down 0.3%, slightly better than expected. year on year, they're expected to go up 275%. so actually better than expected. nothing too significant. sterling moving down to the side off the back of that. that would actually work in the opposite direction. i'm not sure why sterling has moved off the back of that.

one company serm not better than expected is tesco. shares slumped to the bottom of the stoxx 600 after scrapping its full year guidance. it's accounting shortfall was better than expected. joining me now, steven brigham. also on set with us is our uk business editor, helia rahimi. it just gets worse and worse, doesn't it? >> it does. these figures are pretty much in line with, to be honest, very low expectations. >> we can't got forward yet. >> all the headlines are focusing on better than expected yet. its fundamental declining revenues, declining market shares, what are they getting wrong? >> i think this is time catching up with tesco. obviously, they were a

powerhouse for so long, they outperformed the market for three years. what they didn't do was really plan for the bad times, if you like, and invest in the core and really, the markets turned down as badly as it has, it's been called out. it's the largest bear in the market. it's most exposed to most of these headwinds. >> steven, you're absolutely right. it spent a decade under investing in its uk portfolio. instead, it spent its money in failed missions in the u.s. and asia. what do you think they have to do this morning? this morning, he was saying he's not going to declare a vatgy, he's going to feel his way through it. but he has to make decisive moves very quickly ahead of the trading. >> he does. you're right in saying he kept his cause close to his chest today. he's only been in the job since the beginning of september. so i'm not expecting -- >> into the fire. >> very much so.

he was asked if he would still take the job if he knew about the accounting irregular layerties. he said he would. he's definitely up for the job, but he has a massive task ahead of him. the figure that came out today were very positive. the figures we've had since, since september, showed a bit of a recovery. obviously, it's still in negative territory. but, in the month of september, which is obviously just one month it outperforms sainsbury, morrisons and it's comfort, but -- >> >> it's a very profitable business career in thailand, might they decide to get rid of those, focus on the core, or is this a continuation of small changes around the edges? >> i don't think we're going to see any massive returns.

i don't think we're going to see a massive uturn in strategy. it was one to re-establish the uk core, which i don't think any of us could argue with. the second to shore up the balance sheet and the third was to restore trust in the brand. >> i think they said this morning it's never been so bad for tesco. what's it going to do first? is it a rights issue, is it a sell-off of asia, what is it? >> the one thing it has done, and we knew this before, they had a look at capital expenditure. they have a plan to refurbish all the stores. they kind of held back on that now so there's a sort of 400 million they've got up by their

sleeve. i don't expect, you know -- i mean, dave lewis made very clear that he's not -- the overseas markets as of yet. i think he's a long way away from reaching any decision on those. >> steven, thank you very much. that was steven spring and senior analyst at planet retail. i want to recap that data. it did appear to slightly beat expectations and it will slightly beat the dow jones forecast. clearly investors expecting more in line with the reuters forecast which it failed to beat after sterling is at a session low. it's down 0.3% on the day. uk retail numbers were down 0.3% month on month and up 2.7% year on year. but investors coming down significantly off the back of that reuters forecast.

moving on, publicis weighed on third quarter earnings. stephane is in paris with more. >> good morning. the company is now targeting an annual growth of 1.5%, which is much lower than the actual guidance. still, this is not a big surprise. at the end of july, the target would be difficult to miss. this is facing a difficult environment. two of its big clients which are motorola and blackberry reduced significantly the advertising spendi spending. also, the management of publicis blames this merger because the management was distracted by the merger. it did not focus enough on the

shortterm performance. sales drew by 11%. it's a bit more dynamic. and these numbers after a sharp and painful contract which posted for the same period of 6.5% organic growth. that's to compare with 1% for publi publicis. we had numbers from the largest telecom company in france, which posted a 2.3% contraction of its revenue on the third quarter. that's because the very tough environment in france, a tough competition between telecom operators. however, the slowdown in the third quarter was limited compared to the first half of the year and the cfo of the company believes the market will stabilize eventually, although it wasn't able to get a precise time for this forecast.

but the best option for the uk operator for now was to keep the share holding, the capital structure as it is, which means there is no change expecteded, at least from the orange point of view. with that, i send it back to you. moving on, pressure on auto partsmaker takata is growing now that the u.s. regulator has demanded wider recalls made by the defective air bags. >> thank you, wilfred. takata shares. to be hit hard. u.s. regulators now say the number of cars potentially affected by these air bags totals 7.8 million, which is 50% more than the figure it announced yesterday. the u.s. is conducting its own

investigation whether air bag inflaters made between 2000 and 2007 were properly revealed. the company released a statement intending to calm investors. it has booked an extraordinary lot loss of over $400 million for fiscal 2014. it emphasised even though the number of cars potentially affected by air bags had increased, any new costs that arrive are, quote, expected to be very limited. some market participants remain upbeat saying takata would spend less in reserves. that is because a few years ago, the company booked a similar provision, totalling from $300 million but spent less than one-third of that amount to compensate carmakers. given that its shares plunged over 25% the last few days, investors are presumably not counting on hearing good news. back to you. >> thank you very much for that. let's have a quick update on european markets. the ftse 100 is now the laggard,

down 0.45%. that move follows a disappointing steals numbers that beat the sales forecast but didn't beat the reuters forecast that came in at minus 0.3% month on month plus 0.2% year on year. the rest of the eurozone markets are in the green. just go back to them quickly, now in the green since we had better than expected pmis, both from germany and french pmi has disappointed, but still up 2.5% with the ka germany, 0.89% up, gilt up 2.2%.

eurozone has moved significantly off the back of the data we had out earlier. the dollar/yen has moved up 0.45%. sterling is down 0.2% touching session lows of the back of those retail sales numbers. still to come on the show, people who live in green houses shouldn't throw stones. the eu tries to set an example over energy policy but needs agreement amongst its member states. we'll get into the debate after the break.

unless they receive significant concessions. the commission hoped leaders would agree on a 40% emissions reduction target, however, portugal, spain and brussels are leading the objections. annette joins us from brussels once more. >> actually, the main concession the countries like spain and portugal are asking that they be allowed to export 15% of their national electricity production into other countries, such as

france. of course, france has a huge border with spain. for now, france is saying they don't want to have cheap, renewable energy from spain because it might pose threat to their nuclear power plans. bottom line is, the whole story that even some countries are trying to prekt their markets whereas others want to open markets in order to export goods. that is here on top of the jean when the heads of state and government are coming together because they need to find a united front of over the european energy market. analysts or consultants i should say are estimating that if they were going to get that energy market actually unified and liberalized, they would be savings amounting to 40 billion euro possible. but there sa long way to go until we really get a unified energy market. what needs to be there is

investment above all and credit between countries because without credit you can't export electricity from one to the other country and right now, what the european government is spending on that is far too led in order to make a really difference, i should say. while the european governments are currently spending roughly 6 billion euro on those projects, the european commission is saying what is needed is a bull's approach of 200 billion euros. so another topic that they probably won't agree on when it comes to the financing, even though the private sector is saying that they're spending ready to finance a lot of those projects if they have a good risk and reward profile, meaning if they have a long running concession time, for example.

so i would say that those ministers here today had a very hard time to get to a compromise when it comes to energy because the positions are extremely -- yeah, well, they are various and moved likely will see a compromise, but which will be only -- will only know that very late today in the evening. >> annette, thank you very much, indeed. a lot of work to be done to get to a compromise. one man that hopes that compromise will be reached is ian flesher and he'll join the team on european closing bell in an exclusive interview later to reveal why he was backing a deal from the eu. that coming up at around 1720 cet. in a letter, they said, quote, the economic cost of inaction is greater than action.

earlier in the eek, cnbc spoke with him and asked him why it was so important. >> we are all citizens of the world. we would lining for oke for our to live in a world where the climate is not going to be adverse to their living environments. and technology can do so much to improve. if you take l.e.d. lighting, which can reduce the inefficient consumption by 80% and reduce the co2 positions tremendously. let's not hide, but embrace sustainable innovation as the way forward. and this is also why we encourage europe to stand strong and to take the right measures now. i'm convinced that europe will become a stronger region by embracing innovation. >> joaning me now is christopher

anvil. there's a lot of work to get the agreement because of divergence in europe. making emissions targets in one of the regions if china continues and whoever else continues to emit and burn fuels like there's no tomorrow. >> that has been going on since the beginning of the climate change process or the revelations, the policy reaction to it. it's always the same. there is nothing original to say. that is that you've got to start someone. europe is so far. it's a sizable chunk of the economy. and the european union were to get viable policies, then that would have a strong effect on the aggregate problem. chinese, look at them. they are now very concerned to reduce emissiones because of their own solution, public

health and political challenge. so one thing leads to another. it's not a futile goal or task which the european union is extremely difficult to reach. we'll have to see, i suppose, it might be a worthy goal, but difficult to reach that goal. arbitrary rules on things like this are very hard to enforce in the long-term and it might be possible when economies are booming and it's very easy to enforce. where we are at the moment, oil prices have come back. but the global economy is very weak. this is surely not the time to be posing new rules. >> it's always difficult in tough time, but when times are easy, people don't think about

tourism so much. the answer to the problem of increased energy bills because of going to lower carbon is essentially -- or innovation is partly the ceo but competition, those two things driving down competition. if you have more competition, you reduce problems of security. more gas pipelines. depoliticize it. nuclear is another one. russia is thought to have a grip on nuclear, but make sure there is more competition. which there is. so that i think is the key, rather than simply saying they have their subsidy. that is the trab. i think that's the problem for

officials. they seem to overlook the need to open up markets and get more competition. >> central to the energy supply data is, of course, russia. and alexei kudrin says he sees no sign the west will im pores further sanctions on russia. speaking from an event yesterday, mr. kudrin suggested russia's central bank will likely have to raise interest rates in order to stem a slumping ruble and rapidly rising inflation. louisa asked when those will start to hurt the economy. >> $85 per barrel of oil is quite possible for the russian economy. and even in this case, if we were to pursue a clear policy of reform, we will see positive economic growth. at $80, the russian economy would be more challenged. but anyway, it is at a quite reasonable level for our

country. i believe we will see more active investments with the oil and gas related industries and it would be a good stimulus for the diversification of the industry. another factor i would see in play now was the ruble weakening by more than 25% of the nominal exchange rates. which means there is a new component there of import substitution. imports are shrinking and they have more opportunity to take over some initials in the market. a high production output in a number of industries. >> the ruble is off 20% in the course of this year. russia has spent more than $50 billion alone this year to curb the decline of the ruble. would it be a good idea to fix the exchange rate? >> no. if we were to fix the exchange rate, we would have to spend a lot more reserves on supporting the ruble.

i believe now the central bank will decrease its interventions in the market until the end of the year. it will cancel the ruble currency basket used for the exchange rate. and it will not participate that much in the interventions which will mean a more flexible exchange rate and this will be the right thing to happen. the exchange rate should be in line with the fundamentals of the economy and for russia we are seeing decreased oil prices, certain outflow of capital and total growth. so the exchange rate should be in line with those. >> let's talk about those sanctions on russia. how much are they hurting specifically vladimir putin's opinion polls? >> not at all is the answer. the second question is when might they start to hurt public approval ratings? for the moment, euphoria still runs high in russia. >> on that particular point, do we think vladimir putin has certainly by the winner of this

if we rewiped a few months? >> that's a matter of opinion. you'll get people debating strongly on either side of that question. the boring answer and surely the correct answer is time, falling living standards and real incomes of households falling short of expectations will erode the popularity of the leadership. but i think that my answer would be that that is not going to happen quickly and this can hold out for a long time and as the situation comes down in ukraine and the political will, especially concerns from business in europe and workers will lead to pressures to not to abolish all sanctions but to lift. i think that is the base case scenario would be be more or less okay from the russian government the as they are now and a difficult situation. >> obviously, oil prices have

come back to record lows recently. there's been reports of rumors that both the u.s. and saudi arabia kept up production levels to allow prices to fall specifically to hut hurt mr. putin's interests. do you believe in that rumor? >> not at all. i do think the sanctions are punitive. i do not think that applies also to the oil price. you shouldn't seek a cop spearsy where there is none. the fact is, supply exceeds demand. prices down. as was said, the ruble, that is the key point and on we go. >> christopher, thank you very much. after the break, we'll be joining seema at the goldman sachs conference. from fashion retailers to healthcare providers, from jewelers to sporting good stores,

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a very warm welcome to "worldwide exchange." i'm wilfred frost. >> and i'm seema mody. welcome to "worldwide exchange." here are our headlines from around the world. 46 s&p companies report today, including economic bellwether caterpill caterpillar. and european zone reverse losses after flash pmi beats forecasts. canada's prime minister is

calling the fatal shooting of a soldier at a war memorial an act of terrorism. he says the country will, quote, never be intimidated. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. let's have a look at what markets are doing. u.s. futures, the implied open is upwards. yesterday was the first move down in the s&p and dow, all moves of less than 1%. nevertheless, we're expecting a bounceback in u.s. markets today. the implied open, 14 points. the dow up 124 points. the nasdaq up 27 points. let's have a look at european markets. it's been all changed during the trading session so far today.

the ftse 100 is the laggard, down 0.6%. it's weighed down by tesco, which is off some 6%. but also weighed down by retail saels sales, which were in positive territory, up 2.7% year on year. but that was weaker than expected the and that's hurt the markets in the last hour or so. germany is up 0.4%. eurozone pmi data came in better than expected as did the specific german pmi data. that's listed markets having been down at the start of the day. france is up 0.25%. french pmi specifically didn't beat, but the rest of continental europe and the positive sentiment has helped that market into the green. italy is just below flat. let's look at bonds. the u.s. ten-year is at 2.23%. so yields have just started to pick up again over the last week. but certainly still a story of low yields. certainly still a story of yield compression over the last month as a whole. and we're at 2.23% on the u.s.

ten-year. germany is at 0.88%. uk gilt, 2.21%. they have seen slightly more yield compression over the last month than the rest of europe or relative safe haven trade. italy is at 2.49%. let's look at forex and, as we all know, the u.s. dollar over the last week or two, just given up a bit of the gains it had significant gains over the last few months. of course, the story, though, when it has given up a bit of gains, it's usually found support the next day or two. again, that's the story at the moment. the euro/dollar is flat. it was down as much as 0.25%. we're going to have a look at the euro slshl dollar in the session. it was down as much as 0.25%. it rallied here following 7:30 cet, which is when we got the german numbers out. actually, it was 8:30 cet and it's strengthened basically off the back of the eurozone pmis, which were better than expected.

we're going to cross back out to seema mody at the sympsymposium. >> we're going to speak to katie koch, the head of the solutions group at the global asset management group. thanks for joining us. >> my pleasure. >> let's talk about the die verging monetary policy. the ecb easing, the fed tightening. do you think this will continue? and how does the market respond to that? >> the consistent theme has been this divergence of policy. everyone is exceptionally focused on it.

we expect europe to continue to disappoint. >> let's focus on europe. we're looking at europe. how do you make money in the eurozone right now? >> it's very challenging. because of that, we expect them to be at an easing stance. from a relative value framework, we would prefer that to european bonds relative to, for example, u.s. bonds. i would say investors responded to any of the opportunities within european equity. we think valuations have priced in the stellar growth and we are actually overweight european equity in our portfolios. >> earlier this year, it felt

like europe was headed back to a path of growth as well as low inflation. healthy inflation. but now it seems like the crisis is getting much more serious, given the weak data we've been getting out of germany as well as some of the other countries in the eurozone. if you look at broader consensus, what poem probably underestimated is there would be slower growth in other parts of the world. europe is a very open area and independent on global growth. >> ecb's mario draghi says he'll do whatever it takes to revive the european economy. that doesn't seem to be enough to instill confidence. are you confident that central bank governors and the ecb president will be able to revive the european economy with their measures? >> i think the ecb still has

many tools to get the economy going. we expect, in fact, to see some outrooet right easing in the early part of next year. there are more things that the ecb can do to help out here. >> it's a very complicated situation, but we think it is the tool that's on the table. >> and how concerned are you about the weak data coming out of germany, industrial production numbers, export data coming in weaker than expected. germany is supposed to be the strong end of europe. >> this is obviously exceptionally disappointing. i think that's part of our view about what's going to happen early next year from a policy perspective. the good news from the global economy, of course, is that the u.s. continues to be a bright spot. so we are actually believing in terms of divergence theme that the u.s. is going to start on a pace of tight.ing. we think rates will be in the

second half of 2015. we continue to be pretty encouraged about positive signs of the u.s. economy. >> how do you place your portfolio given the rise in volatility? >> we do believe overall i should say that that sell-off was more driven by technicals rather than fundamentals. so we interrogate the data and look for places where we think there is mispricing. this one of those places with high yield. we think the sell-off was driven by retail investors who now are much more present in that asset class than they were a while ago. whereas we think the fundamentals are strong and we added to the position. we see strong global growth, added to high yields and they hedged out the interest rate

risks. so you can capture that fed without being exposed to rising rates. >> will you change your strategy going forward? >> i think when you have this divergence of the macro cycle, it is likely to mean markets are going to remain turbulent. so i absolutely believe it's possible there will be consistent volatility. there may be another sell-off here. we're going to obviously continue to be focused on opportunities to use those dislocations to add selectively to positions in our portfolio. >> katie, thank you so much will fred, back over to you. >> thanks very much, seema. we'll be back out with seema later in the show. but for now, let's give you a rundown of what to watch this trading day. 46 members of the s&p 500 reporting look for rultsd from

the open from caterpillar, comcast, the parent of cnbc, eli lilly, gm, 3m, american, southwest, united and jet blue. after the close, we get numbers from amazon and microsoft. let's take a look at today's other top stories. a gunman was killed by security officials after opening fire at the canadian parliament on wednesday. this followed a shooting at a nearby war memorial which left one soldier dead. canadian police have not confirmed the same gunman was involved in is separate incidents. prime minister steven heaarr delivered this stern message. >> we will not be intimidated. this will lead us to strengthen our resolve and double our efforts and those of our national security agencies to take all necessary steps to identify and counter threat and keep canada safe here at home.

just as it will lead us to strengthen our resolve and double our efforts and fight against the terrorist organization who brutalized those in other countries with the hope of bringing their savagery to our shores. they will have no safe haven. >> the cdc says all travelers coming into the country from west africa will now be monitored for ebola for three weeks. starting on money, anyone coming from new guinea, liberia and sierra leone must take their temperatures daily. they will by given a kit and monitor their temperatures and instructions with what to do is something does occur. now, coming up, everything is bigger than texas, so the saying goes at least. but that wasn't the case for dallas-based at&t's earnings. find out more after the break.

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welcome back. amazon, gm and caterpillar are set to error today. canada's prime minister says the

nation won't be intimidated by terrorists. and uk retailer tesco weighs on the if it is ft. after scrapping its full year outlook. now let's have a look at some of today's other stories. today is a monumental day in the world of technology. it's national ipod today. it was 13 years ago today that steve jobs unveiled the ipod and could hold 1,000 strong as it later wednesday on sale in november of that year for $399. apple made it into a must-have product. camel and other well known street brands is outsmoking starting next year. the company will still allow the use of smokeless tobacco products. reynolds plans to build inner door areas tore those who want to take a break and smoke.

the no smoking policy will go into effect once those are built. credit suisse beat third quarter expectations with net profits topping 1 billion swiss franks. carolyn asked the ceo about the bank's exposure to litigations risks. >> he certainly have some benefits from the volatility and the volume and parts of the business. but clearly, it makes other parts of the business more difficult, things like the new issue market, things like the outlook of our private banking clients becomes a little bit more challenge.pits a balance, really. obviously we had a sharp sell-off and a rebound. we'll see how that filters through. we would like to see more in terms of being more opportunistic will things. >> i know you're usually pretty guarded about the outlook and i

know you don't always have that visibility because you never know how much volatility is going to return to the market. what have you seen so far in the fourth quarter? what are the trends? >> it's been kind of mixed. other parts have obviously been more difficult. so like the issue with calendar, etcetera. we have a very large backlog of business to do is clearly whether or not the markets will cooperate with allowing us to excuse that with our customers is a different question. we will have to wait and see how the fourth quarter plays out. >> underwriting for alibaba, what are the exact fees that you reach from that deal? are you able to carry over is some of that momentum? are you seeing new deals? that went off without a hitch, essentially. >> it was a successful deal. it's a tremendous company and we've had a long relationship with them.

i think one of the positives around the transactions was that it was a transaction that works across the banks. so i don't think we've disclosed the specific total fees or revenue on all the things. >> but it was significant? >> it was an important transaction. it was the largest ipo ever. it was skoout scooteded well with credit to the company and to the investment banks that work with them. >> in quarters like this, do you regret that you scaled back from the banks? you've pulled back from commodities and schald back your exposure to rates. >> i think our view owes that don't change from quarter to quarter. a lot of that was very much structural. our view was in order to make high returns on those businesses, you have to make certain characteristics.

our businesses perform within in the quarter. we have reduced the capital. we've got great business wes great market shares. we've changed very much the approach we have to those businesses. >> that was credit suisse's ceo brady dugan speaking to us earlier in the day. at&t's third quarter earnings missed forecasts by a penny. that was less than expected as the customer signed up fewer customers which no contract wireless plans. at&t is now expecting growth of 3% to 4% despite the previous gietance. off 1.25% in frankfurt today. tesco shares have slumped after the biggest retailer scrapped its full year guidance. the retailer says it will withhold payments due to the former ceo and cfo. as you can see, tesco is down

almost 5% today. it's about 15% down over the course of the last 12 months. still to come on the show, tesco turmoil, we'll be speaking to one investors who says the oracle of omaha nearly changed his life over a charity lunch. find out more after the break. stamps.com is the best. i don't have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps.com you can print real u.s. postage for all your letters and packages. i have exactly the amount of postage i need, the instant i need it. can you print only stamps? no... first class. priority mail. certified. international. and the mail man picks it up. i don't leave the shop anymore. [ male announcer ] get a 4 week trial plus $100 in extras including postage and a digital scale. go to stamps.com/tv and never go to the post office again.

our next guest made headlines when he gave out $650,000. he says meeting warren buffett helped transform him to a real value investor. joining must know is, seema is still with us at the goldman sachs conference in london. guys, very fascinating book, of course, that you wrote following the meeting the oshging of omaha. i want to touch on a big picture. you're critical of certain areas of the banking industry, yet you're still an investor. today, so many people in the financial industry are labeled

as bankers in general. do you think the media public opinion has it wrong that there are different areas in the industry? >> clearly, there are different areas. but i think in skrrl, poem like me came to wall street because we wanted to make a lot of money. once you make a firm amount of money, you have to stop. i think the whole industry has failed and needs to take possibility and shows very little leadership at the top in that regards. >> i spoke some people i used to work in the industry myself and would have been labeled i suppose as a banker. so to other people in the industry who might be critical of your view that you're saying that the industry as a whole has failed society, but surely it's not the industry at a whole. it might be one or two people have bad morals and the focus on greed as some people point out. but now legislation is responding to that wider

criticism. >> i think the regulation is moving foo far. but there are people at the top of the industry who create the environment. there is a point in which leaders of funds have to say we're going to make less money because we want a better financial environment. i don't think the leadership of funds are doing that. it upsets me every time i see some mid level or trader who is holed up. the managers knew what was going on. why aren't they take the fall or responsibility? they have their houses in the country, they've already skeeted. they need to be about something more than just making no money for them or their shareholders. >> i wanted to jump in. you know, every investor out there makes good choices and, of course, some bad choices. tesco, of course, seen as one of the big mistakes that warren buffett made. he lost around 456 million pounds in his investment in

tesco, the world's third largest retailer. knowing what you know now as an investment individual, or expert, how would you trade this stock? >> oh, i would say far away from it. i would tell you that i think it's very unlikely for warren buffett to have gotten the economic analysis wrong. here he is selling at probably a loss in his portfolio. the only reason he would be doing that is he's out irly lost confidence in the management. this is an example of the kind of thing that should never happen at a leading corporation. >> how do you think he's handled the uk economy in his 4 1/2 years in paris so far?

>> i think he's done a phenomenal job with george as born. i have noticed in my own family how difficult it is to reign in the budget. and to coop, i think, the confidence of the uk electorate while he continues to be -- from spending, more than other european countries. img it's a phenomenal achievement and will be to his credit. >> thank you very much for joining us. and we will be speaking to andrew wilson, the ceo of goldman sachs asset management as well as the head of fixed income and, of course, given the massive move in the bond market, it will be good to get his perspective, coming up soon on "worldwide exchange."

welcome to "worldwide exchange." i'm wilfred frost. >> and i'm seema mody. these are your headlines from around the world. we're calling it super thursday, 46 s&p companies reporting today, including tech giant microsoft and amazon. u.s. markets point to a higher open. european stocks reverse losses after the eurozone flack pmi beat forecasts.

canada's prime minister is calling a shooting of a soldier at a war memorial an act of terrorism, but he says the country will never be intimidated. >> announcer: you're watching "worldwide exchange," bringing you business news from around the globe. if you're just joining us, here is how markets are fairing ahead of the u.s. open. yesterday u.s. markets were down in and around 1%. the first down day for the dow, the nasdaq and the s&p 500 for five days and the first down day for the dow in four days. we're point to go a positive open today. the dow expected to open up about 120 points. s&p expected to open about 30 points. let's look at european markets. the euro stoxx 50 has move around quite a lot. it was down at the open.

it moved down further when fresh pmis were weaker than expected. german pmi beat expectations which gave european markets a bit of an incentive. let's look at the euro/dollar. that big blip around 7:00 this morning. european time. that was when we see french pmis worse than expected. it bounced significantly when those german and eurozone pmis beat expectations. the ftse 100 is down 1.6%. tesco is weighing heavily on the stock. germany is up about 0.5%. france is up despite the pmis being weaker than expected. italy is down about 0.25%.

we cross to the asset management symposium in london where our own seema mody is standing by. seema. >> hey, wilfred. you know that strong multi day rally ending yesterday, we did see the u.s. markets end lower. a lot of market participant res mentioning the drop in the price of oil. we were talking about this earlier this week. the price of oil stabilized around $80 a barrel. once again we saw it move lower to a two-year low. that took the wind out of energy stocks. energy stocks, one of the worst performing sectors in yesterday's trade. we're going to see how that impacts the equity markets going forward. we will be speaking to andrew wilson to get his perspective, not just on the equity market, but on the bond market, as well. we continue to see the flight of

safety into the german yield. german motors is set to announce earnings before the u.s. opening bell. phil lebeau joins us on the phone from chicago with his expectations. >> good morning, wilfred. this is a quarterly earnings report from general motors that we don't expect any surprises to the third quarter because they had guidance with analyst community about three weeks ago. at that time, there was no indication that we should expect any prices for the third quarter. we know north america remains strong, china has been doing very well in china especially as it builds up the cadillac sales in china. the real question mark will surround two areas. europe, we know they are making progress moving towards profitability. general motors expect to be profiting starting next year in europe. when you look down at latin america, this has been a major

thorn in the side for both gm and ford. to what degree are we seeing an impact of lat yip america on the overall earnings? coming up at 7:50, we will have a first on cnbc interview with the ceo and we will talk to him about third quarter, latin america. and one other thing that is going to get a lot of attention, how is the company preparing for the industry moving towards more lightweighted aluminum vehicles, with more than just a transition to lighter vehicles, it is a real change in terms of how these vehicles are made, the commodities involved moving towards high strength aluminum alloy. we'll be talking about that, as well. guys, back to you. >> thank you very much for joining us on the phone this morning. the cfo of gm coming up on "squawk box" in the u.s. now, let's take a look at today's other top stories.

at&t third quarter earnings missed forecasts by a penny. revenue rose 2%, but that was less than expected as the company signed up fewer customers on the no-contract plan. at&t is cutting its full year outlook now expecting growth of 4.3% compared to the previous guidance of 5%. shares are down 1.25% in frankfurt so far today. jpmorgan executives were reportedly aware of potential problems in the bank's higher practices in china, well before u.s. regulators. examinations in asia warned that the bank had hired a son or daughter which helped it whip investment banking business. the journal says u.s. authorities haven't accused the company of any wrongdoing at this stage. moving on, the s.e.c. expected a profit.

this is higher interest income. the banking giant highlighted the fragility of the world economy. joining us now on the line from stockholm is annica. thank you very much for joining us. a decent set of results coming through. congratulations on that. i'm interested in your point, as you say, that there is still a weak environment across the globe and that that can bring your enthusiasm moving forward, stepping back, many of us often think markets -- away from global concerns. but that's not your view. >> thank you very much. no, i think i wanted to highlight the exceptional economic climate that we are experiencing with very low or little inflation, very low interest rates and no real growth. really rather a cause for caution. so i think from that angle, this is a very, very unusual macro

environment with a lot of challenges. i'm seeing domestically here that the corporate sentiment from sme corporate is turning more cautious while we had a strong quarter when it came to large corporate. >> and annica, is that divergence of opinion and -- amongst small and large also something divergent across geographies when you look at the areas you're exposed to, as it compares to the nordic population? >> i don't think that, of course, the growth space in the baltic countries have come down a little bit. i think, on the other hand, that we need to be prepared for that list of sanctions will continue in '16 and '17. of course, that will be more painful for the baltic

countries. and annica, your ratio came in at 16.2%. are you confident you'll get a good review from the ecb and the stress tests coming this sunday? how significant are they? i think they're significant for those participating in the euro. but, of course, on sunday, the results will be published. swedish banks are strong and stable. i guess it shouldn't be that much of a surprise. but, again, we don't know yet. we will get the results during the weekend here and is we will see. >> and your capital ratios are pretty strong there. but your provisions came in worse than expected. is that a concern for you? >> i think to have 13 basis points in provisioning, that shows that they had a very, very strong corporate book. we did have a credit provision. it was specific corporate in denmark this quarter that we

have highlighted. but despite that, i daresay that the corporate portfolio is very strong. >> annika, thank you very much for joining us there. congratulations on a decent set of results this morning. up next, the changing of the guard at procter & gamble as the consumer product giant shakes up its senior management rank. stay with us on "worldwide exchange." stamps.com is the best.

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procter & gamble is home to many top brands known the world over including razors and crest toothpaste. but now the consumer product giant is looking to shape shakes things up by changing up its management ranks. good morning, kate. >> good morning, wilfred. p&g is shuffling its senior management, new executives and narrowing the field of potential heirs to the throne. the head of p&g's north american business will retire next june, according to an internal memo sent to employees wednesday. she had been seen as the front-runn front-runner. p&g's u.s. business, the company's most profitable has struggled to regain market shares lost during the

recession. p&g has missed analysts forecasts for the nine of the last 13 quarters. they hand-picked successor bob mcdonald was ousted after he failed to return the country to growth. in his memo, other management changes were outlined that they said would put the new management place in structure. it may sell about half of its brand over the next two years and cut jobs to revive growth. the company previously tried to cut costs by streamlining management in a restructuring effort in 2012. and back to you guys. >> thank you very much for that update. now, let's give you an update on some of the other top stories. amazon, gm and comcast among the u.s. heavyweights set to report

on a day of earnings. we'll bring you more on those forecasts with what to expect on the u.s. market later in the show. canada's prime minister says the nation won't be intimidated. and the uk's biggest retailer, tesco, weighs on the -- after scrapping its full year outlook. more on those stories after the break. cute little guy, huh? this guy could take down your entire company. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm. to build something smarter. ♪ some come here to build something stronger.

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a gunman was skilled by security officials after opening fire near the canadian parliament on wednesday. canadian police have not confirmed the same gunman was involved in both incidents. joining me on the line, matthew,

thanks for joining us. what is the most like in ottawa at the moment? >> i've got to tell you, it's a lot of people trying to process the events of yesterday. it's been less than 24 hours since people heard the first gunshots at the war memorial. since then, there has been a lockdown that went on in the downtown area, covering the legislative building, federal government offices, downtown buildings and businesses and that was -- that went on for more than ten hours easily. so there was a lot of people getting information in drips and drabs, trying to piece together what was going on. a lot of sadness and anger that something like this would happen in the national capital. and later in the day, a lot of people posting messages on social media about what they love in this city, ottawa and canada. and people expressing condolences for the soldier shot and killed. he was part of the honor guard on a temporary posting.

as part of the honor guard, he was wearing a traditional uniform and, you know, some of the tragedy of his death is beginning to sneak in. >> it's unclear whether there are any additional shooters. have you got any update on that? >> it seems as though the search for additional shooter has lifted. there are a lot of conflicting reports in the immediate aftermath. the suspect was moving very quickly, from what we can tell, from what police have told us. they were -- the shooting started at the war memorial at 10:00. sharply after, only minutes later, the central block and east block of parliament hill, the legislative buildings just more than a block away, it was put in lockdown. and, you know, moving so quickly, there were rumors of a car jacking. there were rumors that an accomplice was driving the car

for the suspect and we had videos of him jumping into the car and driving away. so, you know, it was a lot of information, a lot of witnesses coming in and even reports of a shooting at a mall nearby that turned out not to have happened. so to say that there -- it doesn't seem that they're continuing to search for a second shooter, but the police presence is still very strong. >> matthew, thank you very much for joining us this morning. that was matthew kupfer, reporter for cbc news. let's give you an update on the markets, european markets are in the green today. there has been a big move over the last two hours. they opened in the red. we then had some positive eurozone pmi data which beat expectations coming in at 52.2 against forecasts of 51.5. that stirred european markets into the green. the german market up 0.7%. france is up 0.4%. even though their own pmi data

was weaker than expected. as you can see, the ftse 100 is the lagger, down by tess doe and some weaker broader than expected retail numbers. a quick look at the u.s. futures, they're pointing to a positive open across all three indices yesterday. all three indices declined 1.3%. the dow forecasting 130 points open. the s&p expected to open about 13 points after the nasdaq expected to open about 28 points up. >> let's give you a rundown of this trading day followed by september leading indicators at 10:00 a.m. it's a busy day for earnings with 46 members of the s&p reporting. look for results before the open of caterpillar, cost cam, the part of cnbc, eli lilly, gm, 3m, american, southwest, united, jet blue. after the close, get earnings from amazon and microsoft.

now we cross back over to seema on the ground at the goldman sachs asset management symposium in london. >> hi, wilfred. given the increased focus on global markets right now, we're going to talk to andrew wilson, the ceo of goldman sachs asset management as well as the cohead of fixed income which oversees some $650 billion in assets. i want to tart with andrew. that has resulted in bond yield trading at multi year lows. will that continue going forward? >> last week was a monumental week. given the volatility as you reference the treasury yields value sharply just over a week ago. we think there was probably sort of an overreaction. but some of the gloom and doom, and somewhat of it came out of the imf and world bank. they've had a few softer economic numbers, but it seems like an economic reaction.

so i think we had that volatility in the vix, we've had european equity markets being really soft. so i think all of that came together last week and we're seeing some sort of calm returning this week. you know, those asset that's did poorly, be it equities or even some of the supply of risk fixed income assets such as high yields or measuring assets began falling last week and bounced back quite a lot this week. so i think we're getting some return to calm right now. >> i know some managers thinking the economy was in full swing. yields were headed to 3%. but that hasn't been the case. the ten-year beat the low last week. >> i think a lot of us are scratching our heads and thinking how come yields are so low. they're lower now than where they were a year ago. i think the piece of the puzzle that, you know, many of us have mixed including the central banks is the low levels of inflation. so even in countries that are

doing relatively well from a growth point of view, clearly inflation is only picking up modestly in the u.s., for example, we know the eurozone is weak and, again, inflation right there has been significantly lower than the ecb forecast and i think most market participants. look at the uk. we have low levels of unemployment. again, i think inflation comes at 1.2%. i think inflation or the lack of inflation haas has been the piece that has bond yields rallying. >> and the threat of deflation, obviously, a big concern here in europe. what does that do to the bond markets? >> we have incredibly low yields in japan because they have ten years of deflation. so i think that threat of deflation means the central banks will continue on this very easy or accommodative monetary policy stance. that's what we're seeing in europe. the ecb is doing that with a lot of measures in place. to try and combat the fear of disinflation. where we would disagree with what's happening in the market at the moment is saying you can't translate that across to

the u.s. the u.s. economy is doing reasonably well and there are some innationary pressures there, right? inflation came out this week, it's 1.7%. that's a long way away from the 0.3% we had in europe. so, again, we still think there's a divergence between what's happening in the euro and what's happening in europe. markets are not putting enough focus on that amount. >> and let's talk about the fed. janet yellen is expected to announce that q3 is going away. the focus will be on janet yellen's language around the prospect of rising rates. how do you think the market will respond if yellen does indicate that rates will rise sooner than expected? >> i think that would certainly get bond yields to sell off. if you look at the statement last time, it was -- you know, very few words changed in that statement. i think people will come through. they will be combing through that statement to see any signs of when does this language, for example, considerable time, does that remain in the same or not? and what does that mean? and even if it goes, does it mean, you know, they raise rates

six months from now, nine months from now? we would be in the camp, at least, that we see rates rising sometime around the middle of next year, perhaps in q3. but that language will be very important. i think for guiding the market as to the next move by the federal reserve. >> and quickly, do you think this market, though, can handle rising rates? >> yeah. we think the market can. we think certainly the u.s. economy can. we haven't talked about oil prices, but remember how much oil prices have come down. i think certainly the economy in the u.s. can tolerate higher rates. >> we'll leave it there. andrew wilson, the ceo of goldman sachs asset management. thank you for your time. wilfred, back over to you. >> seema, thank you very much for that update. the european markets are just in the red. they're basically flat u.s. futures are pointing to a positive open at the moment. that is all we've got time for here on "worldwide exchange" today. i'm wilfred frost. >> and i'm seem where a mody. "squawk box" is next.

good morning. welcome to "squawk box." in canada, a lone shooter kill aes soldier during an attack on parliament. the event creates tension in the markets, but as futures are recovering this morning. here it is, the biggest day for quarterly results of the entire season. 3m, gm, major airlines, drugmakers, comcast, all on today's calendar. and applepay turns into an apple glitch. it's thursday, october 23rd,

2013. and "squawk box" begins right now. good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. as joe mentioned, today is the biggest day of quarterly results of the earnings season. take a look at some of the names of the wall. these are some of the companies reporting today. you have gm, 3m, caterpillar, lilly. after the bell, we get amazon and microsoft. you can see there comcast up to the wall. we have a great lineup of first on cnbc interviews. eli lilly's ceo will be joining us along with southwest, gary kelly, gm's cfo chuck stevens and caterpillar's ceo doug overhelm and that comes at 8:00 a.m. eastern time. as for the shooting in canada, the tension level stocks sinking on the headline. you did see a bit of a