talking about strategies in a low rate environment. tell us where you're positioned at the moment. >> no big surprises here. rates are low, they're going to stay low. that is all interesting and it's a difficult game to try and time the exact timing magnitude, etcetera. all we know is rates are going to stay low for a long time and how do you -- around that? chasing yield, which has been happening for years and the answer is being a little bit more thoughtful about how you construct the fixed income portion of asset allocations, injecting some currency issue if you can, staying high quality. looking at frns and some

structures like that that help boost both the income as rates go up, you've got a countereffect, and keep duration very short for these types of strategies. >> you've laid ought your stall today there. do the banks play a role within that? >> very cautiously, yes. we've been out over our skis for some time. i think the rest of the market has caught up with us. looking into some of the peripheral countries in europe, there was an undue concern about how bad they might be. i think with the stress test results, i think there's a healthier banking system in europe than a lot of people thought and that has been an area that we've added in fixed interest. >> so looking or a sectoral basis or individual names? >> individual names almost always, yes. >> in terms of 81s, in terms of cocoa -- not that far down, frankly. i'm sure everyone around this table knows the cocoa market is

not a ubiquitous market. some of those are extremely adverse to investors versus the issuer. lower tier two, lower tier one type of paper is about as far down as you're going. still consistent and strong. >> and you get a decent amount of space. >> exactly. >> tell us about lloyd's. >> bang in your buck with lloyd's. >> you have, indeed. that's what 900 million pounds of ppi charges will do for you. that takes the total up to, as you were saying, stephane, 11.3 billion pounds they have coughed up since the ppi came into effect. plus, a lot higher than we had expected and really the disappointing news for investors will be there doesn't seem to be an end in sight. what investors are looking for from the bank, especially lloyd's, is what kind of anticipation can they have for this to calm down?

and, really, we have no clue still whether the falloff in claims is going to start to kind of ease. the other big news, obviously, is 9,000 jobs are going, 150 branches are going. on the call just now, the chief executive antonio holister, is saying that they still expect to be better in terms of market share, in terms of branches. the libor. tease because for the last three years, lloyds hasn't been closing branches while their rivals have. but it still means the shape of their business changes dramatically. the issue for them, steve, is cost cutting. how much more can you do? they've had a very aggressive program for the last three years. antonio was on the call saying, look, we've been a low cost, low risk uk bank that's been in a

better position to support the uk economy. how can they move that forward? they're talking about 1 billion investment in technology. but whether they get that money from -- so it's very difficult areas, still. >> just looking at the multitude of issues, you've had a good internal debate there about litigation costs over uns, as well. the point remains there are a lot of risks out there for this sector, as well. >> it's interesting because a lot of the things you're discussing i think it's much more problematic. as you're trying to assess the growth and the risks as an equity investor, much more challenging than saying strong balance sheet generating stable, enough returns to make sure that my income is paid as a fixed income investor, very different kind of assessment.

>> one thing to say on lloyd's, which i thought was interesting on the call, obviously, lloyd's is a space that they've had their kind of nonforming blends that have increased substantially. where do they grow? they want to increase their market share in very kind of interesting areas like pensions like car finance. car finance is what everyone is selling, rbs, this is what they were trying to build up those massive businesses within the bank. but in 2008, we were told they need to get rid of it. but actually, when you've got the chief executive on the call saying we don't believe charging for the current account, we know our customers value it. we're not going down that route. how do you expand? it's all very well doing the

cost cutting, but where is the growth? >> movement, you're more likely to get divorce d than -- your bank. >> you still don't see that level of movement in bank accounts. this is why the breaking up of the bank seems so ridiculous. it hasn't been proven in this company that forcing competition which we think it doesn't matter having a free account. there's enough competition and innovation and we know our customers value this. but the problem is, if you force current accounts to stay free, banks like to charge for other things. and the whole reason you're seeing ppi charges go through the roof, 22 approximately pounds across the industry is

because banks were under pressure on their accounts and need to find high margin rate areas. >> stephane, let me hand it back to you. >> digi group still trading lower the start of trading. 7 cents of 1%. the net profit has dipped to 29% in the third quarter, weighed down by higher costs. an output decline. standard chartered also in focus today on the british markets with a significant decline. 5.9% lower after the bank posted a 16% decline in the third quarter operating profits. the bank said it expected underlying profit for the second half of the fiscal year to come in weaker than the time time last year prompting cost production and productivity improvement. let's move to the french markets. also a little bit higher, bouncing back after a negative

session yesterday. cac 40 up 0.3%. one stock is in focus today, it's sanofi. sanofi the drugmaker posted a weaker than expected sales for the third quarter, failing to reach the 8.8 billion euro forecast. the french drugmaker maintained its full year guidance, but the price pressure will continue into 2015. sanofi shares trading almost 7% lower. let's have a look at the markets. also in focus because of the innerings from ubs, smi, up almost 1% and let's have a look at ubs at the moment. novartis trading at 1.9% higher. novartis posted in morning its outlook for the full year. the sales, boosted by the sales

of its holdings. and, of course, r, yes, we will stick to the ceo of novartis, our colleagues from the united states will interview the ceo at 11:10, joe jimenez. ubs higher after the swiss bank beat expectations in the third quarter. litigation provisions, we expect charges to remain at elevated levels to 2014. carolin spoke to the ceo of the bank about the results of the stress tests and headwinds that his company faces.

>> i would say the results are indicating that the stress tests were credible and maybe tough enough. probably you can argue that some people felt that pain. i think it's good that we have a framework, a harmonized framework to do that. i'm sure all people involved will learn. i -- you know, i think it remains to be seen if this is going to be the ultimate way to address the issues in europe. >> but overall, you believe the sector is overvalued right now? >> the banking sector and the valuation of the banking sector is the function of the ability of the banking industry to generate sustainable profitability over time. which has to take into consideration to factor remuneration on the capital but an underlying calm and quiet that allow you to do that. so i would say for the time

being, it's still off. >> right. let us move on. george king is with us, head of portfolio strategy management. we're dissected where you're looking in terms of corporate markets. can i ask you about this? this corporate debt market, there are a lot of people beginning to worry about it and saying it's an outlier for broader equity issues. we saw the equity market had this great big wobble, also two weeks ago. i don't remember the near term now. >> i thought it was 35. >> not just the corporate debt market, but also in terms of risk as a whole, a broader equity market to worry about on the back of it. the last time we saw the spread

of yields, base points over equities. >> i think it's dangerous to think no on a broad perspective. coming off of this repressive situations, this is unchartered territory. the movements in spread reflect much less about a big macro comment about what might happen, much more around the anomalous situation we're in in fixed income rate markets. going forward, i think you were saying earlier, chris, the macroeconomic environment has been getting weaker, we're seeing more and more tailwinds. there were questions in europe.

overall, the economist view is that europe is slowly in a fragile and fragmented way slowly getting better and as the headwinds are abating in china, u.s. equity looking stronger. so not so worried that there's an ominous signal in interest rates and corporate bonds that we need to be concerned about. >> terrific question. i always think the first three quarters of the cyclical bull market, corporate bond spreads tighten and basically, high yields in particular, and then what happens is in the last yea should get rid of the high yield of your portfolio, and you should enjoy equities for the last eight months. we've had the lows and we've had the equity lows. they will trend up in the next

18 months. corporate bond spreads correlate very h highly with that. they both measure risk in the corporate sector. slow rising as george characterizes. what is interesting is we've had six years of corporate interest rates and a lot of money creation. i think that tells you it maybe shows, but there probably haent been much to at this point over. >> what do you make about the comments from carl icahn about the high yields being a total bubble at the moment? >> bubble is a strong word and it's often invoked too much. one of the down sides of qe is it's encouraged people to move up the risk curve. mom and pop have been investing

in corporate bonds for safety. now invest in corporate bonds. >>. >> the value of some of these companies are coming down so much. >> europe that the amount of coverage and analysis is very lightweight, to be honest. >> i am saying the quality of analysis of companies' debt is woeful at the best of times. hence, why you have all of these problems. >> if she's right, i guess there's more opportunity, but there's more risk. >> that's historically been the case, right? you have a contract and as long as the contract can be made you don't have to worry about the rest of the story, right? if you're an owner, the signing up is the much bigger deal.

in general on the fixed income side, you can get to a level of comfort that it might not be great, but i think it's a mess. what chris was saying earlier, the biggest risk we've shown earlier has been exactly this issue, has been this increasingly under risk, usually without the full recognition that that is what's happening. for the last couple of years, because of this suppressed environment. >> we look at some of the things people invest in like cocoa.

why are you taking this money into that. >> we say, look, stay extremely high quality. stay simply duration. including negative duration. those types of things as part of a portfolio, not of single debt, but as part of a portfolio to aggregate some of that single risk of pile in and not really understand the risk exposure taken. >> i was going to say, it's a real challenge and so on.

whtd cheap money goes, what happens to the valuation? >> let's take it there for a moment. helia, you've got an open. >> i'm staying forever. >> we'll leave it there. you can stay for more about quality of analysis in the bond market. stephane, where are we? >> european markets bouncing back today after the negative session yesterday with the spanish market being one of the best performers in europe today. the ibex 35 up 1.3%. getting to the german markets, the dax up almost 1.4% with, again, plenty of announcements to digest. the deutsche bank with increased volatility helps the deutsche bores to more than double its

profits in the third quarter. it benefited from a lack of litigation costs after previously being up to 112 million euros, for possibly violating u.s. sanctions against iran. the stock is resting positively up 2.3%. also in focus today, mann almost flat. the german engineering company has lowered its full year profit forecasts. the group says it now expects the operating margin to come in slightly above last year's 3%. first quarter underlying earnings dipped by 82 million euros for the quarter. and also trading lower, 1% lower, celesio facing unfavorable conditions in

germany, france and brazil. falling slightly from 2013. italian markets, difficult session yesterday, of course, the banking sector had a very negative impact on the italian index. the ftse mib is bouncing back today in line with the rest of the indices in europe. the banking sector, net profit fell 6.4% in the first three months of its financial years. the investment banks, one of capital gains boosted the previous year's figures. look, i have a huge apology. george, rbc, rbc, not rbs. i can't remember i can't believe i said that. i apologize profusely. i don't want to upset anyone that helia hasn't already upset. >> the other royal bank. >> the other royal bank. high dividend in the stock market, as well.

>> it sort of ties into the conversation we've been having. one of the early fallacies investors were making was as they were searching for yield, very high dividend yields in equities. let's do that instead of fixed income. it's the same topic than you probably should, but it's not the same thing, equity and fixed income. that said, if you look at that as a return component, it's a really important part of sort of long-term return generation and/or spending for real people, high net worth, you need to spend money in this environment. so for either purpose, identifying sustainablely high dividend paying and high growth dividend companies has been a strategy we've been doing for some time. >> how concerned are you, the financials you play, you play such a large part in that yield story. and it was a bubble that burst for lloyd's, which i remember the market pre'08 had a 7-8 handle and it yielded. did that concern about the

cutting of dividends, that other areas won't give us the same problems, as well? i mean, i look at tesco, for instance, but then i look at someone like vodafone, which still give you a whooping great yield of 6.1%. >> the sustainability for business is probably the first thing we focus on. so it's not just about trying to find high levels of income. it's more what's driving this with the better advantage, how sustainable is that for better advantage, management, etcetera. that's by far the most interesting piece. the interest in that varies around st world. it's very concentrated in terms of the ftse, there's a small handful of companies. >> and it's quite difficult to get the diversification. if you take a more general global perspective as we try to, i think you have a much richer hunting ground where it's not, you know, one particular company

stumbles, whether it's bp or a tesco and more recently, so on and so forth. it's quite difficult if you have a concentrated market. >> who has the richer hunting ground? where are you looking? >> europe somewhat. u.s. quite a lot. a little bit in the uk. >> i was just going to say, i can see where people play that trade, quite a hunt for yields. like helia said, you need some disease analysts. >> i look at the utility sector. it's never been more expensive on a -- basis. it seems to me there's an awful lot priced in. and it just concerns me that these sort of trades are from staples companies with good yields. they've become a crowded trade over the last few years. >> you're exact exactly the right questions. we sit around tables every week having this same conversation. that's exactly the concern and

in a narrow market it's a huge concern. if you're doing the uk dividend equity trade, it's hard to not be worried about the global trade there. utilities is an area that on the ekd side we tend to be less excited about where you have government regulations potentially artificially changing what you can do for growth. a little bit wary. >> if you take away and look at investors, there's concern times in the uk that we give out too much of the balance sheet. where they might horde a bit more money and do more with it, do you not think that a dividend culture satisfies shareholders in the near term but ultimately doesn't leak a very big company? >> no single response to that. i think return of capital is

always welcome, but it has to be in the context of what the business can generate. >> really nice to see you, george, george king. wish you a safe journey back to edinboro or is it toronto? we'll be back after a break.

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so the markets liken the ubs numbers. the ceo, telling cnbc he sees big challenges. >> every other week, we have a new iphone showing up, and ebola is just adding to the concern. so we need to see a revolution. >> a glimmer of hope from lloyd's as third quarter profits trade in the red after

increasing its bill for missold insurance to over 11 billion pounds. in paris, warning pricing pressure means sales of its u.s. dieby die diabetes drugs. bp sees a significant roubl impact of $3 billion. >> i'll probably still be there, as well. it's very, very cheap. anyway, if you're in sweden, riksbank cut its rates from 0.0

to 0.25%. the riksbank makes a significant downward revision. inflation is too low. the repo rate needs to remain at this level until inflation clearly picks up. here we see the euro gaining against the krona over the last three months. the krona slipping to six-week lows versus the euro. that was ahead of the bigger on speculation. what do you think? >> clearly, like a positive surprise to the market from the reaction, they went a little bit further. like you say, how much more of the arm can you bite off? >> how much money are you borrowing? >> 0.25%. people don't lend me markets.

global markets have reached a relative count after significant volatility earlier this month. >> i think when markets have a trend, the only way you can stop the trend if it's going to continue for a while is to have a very violent correction. so when people say they want corrections, they're not usually looking for one so violent. >> what do you think is wind this renewed volatility in financial market? >> we've been in a goldilocks scenario. as long as there are signs of growth in the united states, as long as there are signs of the banking system holding up and the economy holding up in europe and as long as there are signs that china is not having a hard landing, but without there being too much growth in any area, that is what auto goldie locks

scenario hidden into the markets. more recently, there's been questions about whether china had a hard landing and that has sort of brought to bring about the correction. >> is it about europe and deflation, china and growth, or is it about betts many people in the market have placed on u.s. growth but have gone wrong in announcing capitulation? >> i don't think the rate has declined in the market. z. >> is there a danger the policymakers at the fed are spending too much time trying to sooth nerves? >> to a certain extent, they are. they're playing in unchartered waters. it's very, very difficult. when bernanke first came out, we talked about transparency. that would supposedly help the markets to know exactly what the

authorities are going to do. the problem is, it's very dependent about what happens in the economy. they know everybody will get the message at the same time. >> i think the truth is we're finally seeing some spending. i think employment trends have been pretty good. one of the things is employment is in the early stages of the recovery, we're seeing state and local cutting back. they finally settled down. now the growth in the private sector is showing through. i think the last piece of the puzzle is to see some wage growth. we're seeing very, very early signs, but they're very tentative. do you expect the volatility that we've seen, then, to continue? >> yeah. i don't -- i mean, i think we should see a little more volatility because we've had such a trend for a long time. it's very, very hard to have that low a volatile market for a long period of time.

but we think for the time -- you know, as we go forward, the trends are still in place, so we'll be catching carefully. >> is it a very different financial market now compared with 2008? >> well, you know, you never want to say it can't happen again. i think we still have, as you just saw, that the authorities came out and said they want to start to have mortgages with very low down payments again. i think, you know, the u.s. economy became extremely dependent on credit and, you know, there is a desire to go back to being very credit dependent. but i think it's unlikely that we go back to the type of environment we had then. >> is there a danger, though, the policymakers in trying to solve the lack of expansion now will create further problems down the road when we see some economic growth and hence higher interest rates? >> when you're giving credit to people with very low down payments and they can walk away with their mortgage, that's sewing the seeds of the next cycle, but we're very early into

that. >> speaking with us now is john calamos. good morning. thank you for being with us. let's talk about the monetary policy first. what things do you expect from the fed meeting which is going to stop today? >> well, we don't expect the interest rates to be rising very soon here. not until late next year. that's a big of a change from what we have taken earlier in the year. so it doesn't look like interest rates would be rising very quickly here. >> you think that the monetary policy will be enough to support the global economic growth? >> i think it's still going to be accommodative in here. they've done as much as they can for growth. but the u.s. economy is still on

a slow growth track. that is positive. obviously, the risk of deflation in here is one of the concerns right now. >> and in europe, also, do you think it's one of the major concerns? >> i think the fed wants inflation, the markets would like to see inflation, so that's one of the concerns going forward. we feel we're in the mid phase of the cycle here.. but we're not concerned. we're optimistic going forward here on the markets. >> telling them it's the investment strategy, what are the sectors that you are favoring snl. >> well, i think as you look at the u.s. markets, it's still not a stock market. it's a market of stocks.

i think we're in this phase where growth stocks will start to perform better than the general market in here and that's consistent with a low inflation environment and growth in here. technology stocks, health care stocks, are two of the areas that we're emphasizing in here. >> so globally, will you favor a tilt in u.s. equities or any particular strong on that. there's a lot of discussion about the hunt for yield and it sounds to me as though you would move away from those kind of sectors, as well. >> that's an area that not only

has yield, but has equity participation. so that we think especially what might be a volatile market in here going forward. that gives you not only yield, but equity participation. so we think that's a good place to be. additionally, between europe and the u.s., obviously, the fundamentals for european stocks look very good in here. will growth continue, that's the concern. and you mentioned converts and other types of intrults. there's a lot of concern, too,

there are certain parts of the market where credit markets have come back to where they were pre'07 and leverage loans and so on. what worries you is my question. >> well, i think, you know, there's so much emphasis on monetary policy, i think what worries us is more fiscal policy. what's going on, what is in fiscal policy to get growth going? it's not just monetary policy, but good fiscal policy has to be there to get the economy going. there's too much emphasized on the fed. they've done all they can do. now we need good fiscal policy to get the economy to continue to grow. so that's kind of what worries us is whether or not we'll be continue to not have very good fiscal policy going forward. >> john, just a specific point, you said you like tech, as well.

it's been a really -- season for tech, isn't it? sap, amazon, google, microsoft came in really well. where are you looking in tech? it seems like such a polarized world at the moment. >> well, i think some of the midcap tax really are attractive in here in that is where we're focusing on is not so much the very large midcap tech areas and is to us attractive in here. >> i appreciate you taking the time out to speak to cnbc. john calamos of calamos investment. >> shares of standard charter is trading sharply lower.

the bank also says it expects underlying profit for the second time to come in weaker than last year prompting further cost product and productivity improvements the. >> the market is saying beat on down streets and supply authorization to capture the macro. but the ceo says the company is on target to hit targets. lloyd's banking group, the rise has increased in the third quarter to 11 billion pounds. the uk lender also confirmed it will cut 9,000 jobs. lloyd's says it will remain hopeful despite only narrowly passing the new wide stress

tests. shares continue to trade in the red. and i'm just looking at what sara fin is saying or jay sarafin quoted on the dow saying wealth management is good at ubs, but open to litigation issues which the group is addressing. however, that adds to geopolitical risks nationwide. ubs says profits beat specations in the third quarter coming in at 762 million swiss francs. that's despite higher equities trading. >> it warned, quote, charges remain at elevated levels. i think they're up by 11.3%.

6.8% of the company. net profit for the third quarter, however, it will confirm its guidance. missed expectations in the quarter. guidance slowing down because of a pricing pressure and it looks like the market is naturally pleased with the report of other extensions which will be brought under the ceo. reportedly been the body is trying to be replaced this morning. ubs shares are up 2.9% higher. they rallied around the session with 2.3. now let's move on. still to come on the show, is the bank of england setting out

her -- as a dove? we'll dig into the latest comments after the break.

gentlem these are the top stories trending on cnbc.com. don't count us out yet, that is from the apple ceo skully. more on the story, log on to cnbc.com. and is it really still a man's world? according to the world economic forum, new gender gap survey, women may not achieve a full equality until 2095. brazil election celebration could be short lived. find the story on cnbc.com. follow us on twitter, @cnbcworld.

bank of england deputy governor can shrug a dovish concern in an interview saying there was no significant evidence of pricing pressure building in britain's economy. helia joins us now. is it a big match or minutia? >> it's both. her name is manuch. >> i am not a friend of the doctor. i can tell you what she said in her first speech. we haven't really known what her thoughts are. a popular few answers in front of mps. rather disappointingly, she's incredibly dovish. she wants to spark herself as a

outline, but she will be a white outline, if anything. she's saying we have lots of slack in the economy, we've got no pricing pressures. i want to say that's very different from what some of the hawks on the mpc have been talking about, saying that the fact that inflation is very low, price of oil, price at the super market isn't going up very hyacinth really an indicator because they're outside of the uk economy's control. so you shouldn't necessarily focus too much on that. she, of course, is saying the opposite. interestingly, the majority of her speech wasn't about monetary policy, but about the area that she has been brought in to deal with. and that is market behavior. she took a -- you happen, a thundering blow against all the traders and people within banks who are responsible for manipulating the benchmark rate.

no locker penalties for the people noel involved in potentially -- those rates. so quite a big deal. >> lovely, helia. thank you. shot director, the group behind the catalog retailer has reported a year pretax profit 64 million pounds. joining us now is alex bordov. i asked helia to stay around because we've had a huge amount of dispute and debate about a lot of these companies. tell us about your model. it's more than just websites, isn't it? >> yes, it is. although we're now 86% on line. what they're working to do is

moved an old style catalog business into a digital company for resalers. >> are you a technology company? i ask that because retailers like next, which have two arms of what you're talking about, i.e. catalogs and indeed online, they trade on a retailer's multiple. i'm wondering which you are. >> we're a retailer. >> i was going on to say, we're a retailer of the department store. technology is massively important to us.. we're all a financial services provider. >> what's it like in that business? bear in mind, there's a lot in the banks. >> within the uk. we've returned the business to top line growth, meaningful top

line growth this year of 3% for the group overall. under the bonnet of that, there's a story which is our largest single brand and m-commerce, mobile commerce, which we think we have a lead on that. >> what do you sell on m-comme rr ce? >> we're a retailer, so we sell growthing, footwear, the products, the whole nine yards. >> once you get past the mcommerce, what next? >> a kind of online lay away system? >> it's an online department store. >> how much do they charge? >> i've two-thirds of our drit is on some form of interest free

products. so we think we are an excellent value to the hard working customers who we serve by the millions. >> an ipo is not on the agenda. >> around the plans you've got, are you looking at expansion on the brands? >> very.co.uk is our power brand and that's the furp of the business. it's a 700 pound department store. it's growth at 23% of the year. >> just one more for me. it's very, very expensive for traditional companies to deliver their goods at the moment, as well. >> how are the logistics in

terms of costs. >> we have 80 years of experience. plumbing is-on-neglected when it comes to e-commerce, which is where many start-ups struggle where we have those decades of experience. >> next it's a great company on many fronts. but i'm worrying about mine. >> would he have got about a minute left on the show. >> what does this tell you about the consumer? i'm curious about your take on the british consumer. there is always a lack of debate he is. >> the big picture is looking healthy and it has for a while. the housing market is up. that will percolate through to our customer in time. that he said, the take home pay

is busy. >> rather than the, perhaps, small expensive -- i don't know much about your website. you can probably tell -- >> if you want to go on that one. >> the value goods with the luxury goods that we're looking to buy and introduce next year. >> thank you so much. alex, chris, thank you. have a lovely day throughout there in the markets. banking. loyalty. analytics. synchrony financial. engage with us.

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welcome to "worldwide exchange." i'm seema mody. >> and i'm wilfred frost. these are your headlines from around the world. >> stocks trade firmly in the green thanks to positive earnings reports from some of europe's biggest blue chips. but pharma lag warnings of price pressures. >> ubs is boosted by better than expected third quarter profits. the ceo warns of geopolitical issues. >> everyee