it's the start of the european market. futures not so scary today after the volatile month we've had it's been a rough one for europe, the emerging markets and the united states. a swift reversal is what we've had. when it comes to the month so far, some of these major indices are down to high sing the digits so we're looking for recovery as we close out the door. the stoxx 600, 0.9% to the

upside let's see what we have playing out by sectors it's a broad sweep into the green. we don't have any red at the start. media to the down side now fiat is weak in the autos basket that's pulling the basket south to an extent telcos also weaker real estate a half percent higher chemicals marching north by the same amount. decent percentage levels on these charts industrials more than 1% firmer. it is a recovery day playing out. you can see in the banks, santander, the stock bouncing more than 3% and lifting the basket of ostocks

oil and gas is higher. let's see how far we lifted on some of these major indices as we look to close out october i mentioned some levels we've been down so far the ftse down but getting back to that 7,100 handle there's been some pound weakness as well which should have been supportive for the markets too many things from global events and brexit impacting the market stronger for france. 71 points or 1.4%. it's crammed t ecracked the 5,0. what you have seen and what we've witnessed is areas pulling back this month. on the italian market that's been deep around some of the lows on the italian budget

fears, it is up today, 150 points, or 0.8%. it posted a weak result that has taken it back to these levels. the ibex is also putting in a decent stretch triple digit point gain, 108 points 1.2% the smi up 0.75% the dax has been down 7.8% so far for the month, so trimming some losses today. santander, big turn up in the stock price today. 3% higher. they posted a 36% rise in third quarter net profit that just beat expectations after a strong performance in its core market of brazil and its home market in spain. that offset a loss in argentina. let's push on to the tech sector and dialog semiconductor the stock up 2% to 4%. it's managed to shoot past those

levels to 5.6% on the stock price. the apple supplier launched a share buyback up to 150 million euros and forecast full-year revenue growth of 8%. there was news earlier in the year that was disappointing for this company, where apple tried to broaden out the supply chain with this one supplier you've seen the recovery in the stock, last three months up 51%. airfrance-klm up 4.7%. it posted strong third quarter earnings, dispute fuel costs unit costs fell. a lot of analysts saying it was beat but they're concerned about the fuel bill. airbus was seen up as well 2.5% higher currently. it's third quarter revenue

surged 20% year on year beating expectations the french planemaker warned that a lot remains to bedone before it's able to meet its full-year delivery targets >> thank you very much for that. let's talk about both of those stories. charlotte joined us back on set. give us a quick run through on the eissues with airbus and airfrance-klm. >> results are better than expected net profit up 22%. that comes from a net profit down 81% in the second quarter there is a relief there on the numbers. also the background story of a new ceo, benjamin smith. he comes from air canada in the first two months the big topic for air france was finding a pay agreement. he has pushed that through he needs to talk to the pilots union next year. so air france may be able to move to the next phase and do a wide strategy review

good start for those shares this morning. for airbus, all eyes were on the delivery targets they had put 800 planes a delivery target for this year. that's important because planes are paid on delivery that affects the final number at the end of the year. so fash th so far they delivered 503 planes they talk about a great stretch to meet that target, but they're still maintaining it they've been hit by delays in several suppliers. rolls royce last week was one of them with some delays in engines. so airbus having issues meeting that delivery. >> is the time passed for -- given that your tile of

investing is cash return on capital invested, is the time passed to make money in the capital goods space around the airbuses of this world or even by extension the airline companies which always seem to have very narrow windows of profit opportunity for investors. >> i mean, i would say based on what we see on kroenke, there are some valuable opportunities in the industrial space. this is particularly the situation in the states where we've seen significant price declines happening in the last year whether it is -- i don't know specifically the companies that we've been talking about, but opportunities are coming back. i can tell you with the selloff we've seen over the last year, in certain sectors, airlines have been some of the worst performing you can start to see some

attractive valuations coming back i hear your point about, you know, the airlines in the end, it doesn't look like there are -- you make money with them for long periods of time let's not forget there's been massive consolidation taking place in these sectors that is a positive from an investment perspective >> okay. we'll come back. we'll pick up with you in a moment thank you for running through both of those businesses >> l'oreal sales surged in the third quarter beating expectations driven by strong demand in asia 6.25% higher strong showing for the company higher today joumanna has been looking at the numbers. a couple of weak spots in the business but overall strong. as we talk about fashion trends there are also beauty trends, and also consumers want some new

brands where does that leave l'oreal, an old, established play with established brands in the portfolio. >> that's an excellent question. to your point there's a couple of trends that are emerging. one, their push into digital about 10% of all of their sales now come from e-commerce this was nothing a few years ago. so they made some big gains when it comes to the e-commerce and digital activity the other is the branching into the organic. generally speaking, if you take a step back and look at the numbers, there's a lot of strength being exhibited across all the lines, but mainly in the luxury segment which is 35% of all of their sales and driven by strong demands out of the asia park recific region a lot of growth there.

i had the opportunity to sit down with the ceo moments ago. the first question i asked is looking at these numbers for the last nine months or so, we continue to see strong demand out of asia. where is that coming from? and do you get the sense that things will turn given the scrutiny on china and the slowdown in the chinese economy? >> it's mostly due to the very strong growth in asia. not only china, by the way india is doing well. korea. many other countries retail in asia but china is strong. sales are flying, especially in luxury we've seen this now for a long time it's going on. the latest news is extremely good so it's very strong. it means also we are not only

taking advantage of this strong market but also gaining market share which is very good for the future does this apply on a forward looking basis? we spent a lot of time talking about the slowdown in the chinese economy, the impact from the tariffs and the trade wars, yet it appears as though the chinese consumer is strong >> absolutely. in terms of consumption, at least in our categories, the beauty category, in luxury but also in that, we don't see any slowdown on the contrary we see a great appetite of chinese consumers. there is also more and more income that has to be spent. we also see chinese consumers not only want to buy more products, but also want to have higher quality products, better products >> in terms of raw materials, are you seeing cost price

inflation given by the narrative of the trade wars and supply chain disruption >> not directly to the trade wars we're seeing here and there some increases. with the level of gross margin we have, it wiwill not impact materially our business. >> let's talk about western europe it's an area that continues to struggle we saw it previous quarter and we are seeing it now is this a reflection of a slowing economy or a change in consumer appetite and a shift away from products, to traditional products to different types of products? >>. >> the european economy has been slow, flat for two years now this is the third year for us we had two good years, last year and the year before. this year is a bit different, but we are still confident we keep investing in western europe, we count on the gain in

market shares to keep growing. it's different between countries. last year uk was still dynamic this year much less. france is maybe improving. germany is still okay. it's mixed we are pretty optimistic for next year. of course we will not see growth like in asia, but we want to grow in western europe >> that was the ceo of l'oreal speaking to me moments ago and talking about the geographical breakdown. yes, there is a lowdown in activity in western europe, but he's confident they can gain market share the big story is the growth in china and the asia specific region he said it is not just about the chinese consumer wanting to spend more on premium, it's also

wealth effects in other parts of asia he mentioned india as another country where demand was picking up one thing i should mention, when it comes to the e-commerce activity, about 10% of their sales coming from that business. in china alone e-commerce accounts for about 30% of sales. so it makes sense putting the two together, given that it's a region growing and a type of sales distribution avenue that is also growing. i'm not surprised the stock is up because these numbers were strong and did surpass consensus expectations for the third quarter and for nine months tracking as well >> thank you very much for that. coming up, dsm beats on revenue forecasts but warns of negative fx impacts. more when we return. today is the day you're going to get motivated...

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you're watching "squawk box. we have a strong day playing out across the european indices, marching higher by 1%. lots of earnings playing out here in europe we're getting reaction to them standard chartered posted a 31% rise in third quarter pretax profit beating expectations. all this despite a negative impact on income growth. bill winters stressed the bank remains alert to broader political geo uncertainties. and he said costs are expected to remain at same level in the second half of the year. all this after saying they have not been able to bring down expenses as much so not making the progress some anticipated. the stock price is up higher we will hear from andy halford later this morning, that's on "worldwide exchange" at 10:00

cet. spain's telefonica raised its revenue guidance after posting a 36% rise in third quarter profit this was a beat of forecasts the company saying they got a boost from customer growth and a favorable court ruling in brazil but there were currency affects in latin america that weighed on core profit which moved down by 1.4% and sanofi is up this morning and bolstered its three month performance as the stock is up 7 plus percent it beat profit expectations in two key units injecting momentum into the french firm the pharma company raised its earnings estimates for the year. also on the earnings beat,

dsm maintained its full-year outlook after beating revenue forecasts. the dutch firm is warning of a significant negative impact from currency fluctuations. julianna has been taking a close look at the report >> a strong report from dsm. they beat on total sales about 2% ahead of consensus. earnings were slightly ahead the portion that beat was down to this exceptional vitamin pricing, the benefit they had from that. the stock reacting quite well. up more than 2.5%. i want to just flag this, this is in the context of a 13% drop over the last six months a real recovery, a real relief bounce, particularly after we've seen some other chemical names like basf disappoint on earnings in the last few weeks. there's two things i want to highlight, one is the strength in vitamin pricing and two is the materials business on the vitamin pricing, we had a

chance to catch up with the cfo this morning and ask about this exceptional pricing impact they're seeing which is estimated at 300 million euros for the year the key question is what we can expect for vitamin pricing moving forward let's listen in. >> we are continuing to see very good business conditions in our nutrition business across regions, and that applies to animal and human nutrition the momentum remains good. this year we had a particularly strong windfall from vitamins due to a supply disruption at a competitor we reported that separately. that's coming to an end. the business conditions underlying our business remain strong we are confident for the full-year outlook and we're confident going into next year >> that was the cfo telling us that they reiterate their confidence in the full-year outlook. i want to emphasize on this vitamin pricing development they're seeing, it's a result of

supply disruption. vitamins are a commodity product that is vulnerable to swings in supply an demand yes, vitamin pricing is strong now, but what happens when that supply comes back on the market? so that's one thing investors are closely watching the second is on materials the materials business is a cyclical business. just this quarter we saw 3% organic growth in materials. that was due to pricing. volumes actually dipped. this brings me to my final point on portfolio transformation, investors have been pushing for a while for dsm to shift further down the value chain into more specialty products that are more resilient in a downturn. as we've seen dsm outperformed the likes of basf but underperformed the more specialty defensive names.

so this is relief for dsm today. >> any regional thoughts on this i just put in to the search engine vitamin price rises, and every single story is about china. >> correct so vitamins -- china has been a major producer of vitamins in the last couple of years there's been major supply changes in china it's a pollutive process to make vitamins so china has taken offline a lot of plants. dsm has been a key ben fesh area been fibeneficiary of this. >> any cod liver oil, geoff? >> no. i think they're synthetic now, aren't they? in the old days they used to extract them, but now it's

synthetic manufacturing. >> in the cyclical component of dsm, it's a traditional value story that's been suffering in the last couple of months as people have been concernedabou the traditional chemical business in a way it's interesting to see it, they pushed prices stronger. >> that's the key positive out of the materials story today, they have been able to push through prices in the face of higher input costs that's the real positive the question is how much do volumes come off we saw basf, the massive chemicals heavyweight come out about a week ago and downgrade their kel c their chemical and industrial process for the year they're predicting a more challenging environment. >> all right we'll wrap it up on that thank you very much for that

let's pop out to karen >> it is about the overall numbers for this company, second quarter sales at ubisoft beat expectations with a steady rise in player engagement the french games developer saw net bookings surge 60% over the first half and confirmed targets for the full-year. the stock price reaction is negative, down 5.6%. let's get to next. this has been very disappointing from the outset today. we thought the reaction would be negative it's at the bottom of the ftse full price sales growth slowed at next during the third quarter, but remained in line with expectations. the british clothing retailer

maintained its full-year profit guidance the company is clear it may have been flat at the start of the year because of weather conditions and mms what has a disappointing reaction after the next numbers crossed. >> next, that's rough. >> i'm a great fan of the company and the management, but there's a steady quarter by quarter decline in those sales >> and echoing the comments you made about this being a difficult space to be in at the moment >> it is a difficult space the economic life of a physical store is 15 years. as fast as you can run your internet sales, you know, you still have a situation where this investment will yield a lower return now let's not forget that some of the retailers have been a major beneficiary over the last

20 years of production in china at cheap prices and prices on main street not really coming down so that level of profitability is high. so the key question for this company is how can they hold off on those types of cash returns, which is a real challenge. normally super normal level of profitability should be coming down to the cost of capital. this is what's happening so we see some value in some retailers, but the story is clearly a challenging one for the foreseeable future >> i hear the creepy music that the director is playing to get us to move on. thank you for that we'll bring you some spooky charts sure to make any investor's skin crawl when we come back. stay with us

european stocks not spooked this halloween banks leading gains after santander beats third quarter profit forecasts and says it is on track for double digit eps growth this year. asian demand drives solid sales for l'oreal, but the specter of currency concerns keeping the company cautious >> sales in china are flying, especially in luxury we don't see any slowdown, what we see is a great appetite of chinese consumers. there is also more and more income that has to be spent. smooth sailing for airfrance-klm which beats third quarter profit estimates, as the new ceo says he is bullish over the airline's future. and start dandard charter is

haunted bycosts. we will hear from andy halford on "worldwide exchange." happy halloween, everyone. stock markets are looking less scary than for the month of october. a lot of fwregreen on these cha. the dax, 1.4% higher going with it is the uk market, firmer again is the french market curiously what we got on this day, the italian market not catching up and keeping pace with the rest of the market. only 1% higher typically when you see down beat days, it moves up more

that's not happening today, so just an element of caution out there. the stoxx 600 1.5% higher let's get into the sectors decent percentage levels coming on to the board. 2.5% higher for basic resources. a strong mover not seen for a while. industrials, oil and gas, retail and real estate towards the bottom a lot of things are impacting what you're seeing in these sectors. retail has been disappointing thanks to the likes of next which is at the bottom of the ftse today on the back of it's up day we have had a change in recommendation from barkleys to

overweight we have got some stocks moving south. you can see nokia renkaat down 11.86% >> you put in the work with that headwear >> should i go to this crystal ball that i could steal? >> you know the joke about crystal balls, don't you >> what's the joke >> i shouldn't go there, it's rude something about having difficulty walking with them >> did someonego out and buy that or does someone at cnbc own that >> i think someone bought it >> what do you see in that >> nothing >> no visibility whatsoever. >> this is how management works

out the profit and loss for the year ahead >> there's a skull in there. >> there's someone behind you now. he lost his ball seriously? >> there you go. >> terrific. back to the business and finance show that you tuned in to watch. sterling hit a fresh ten week low versus the dollar. the risk of a no-deal brexit deal scenario had increased saying they would be forced to cut the uk's rating in the event that britain and the eu failed to reach an agreement. s&p says it expects a deal to be struck, but suggests investors should not ignore this danger. >> the european commission said italy's public debt is a concern for the whole of the eurozone. in a letter to the italian treasury it described the high

debt as a key vulnerability. earlier this month the italian government was given three weeks to submit new proposals, they said they would respond to the commission by the middle of next month but ruled out submitting a new version of the budget. the bank of japan has kept interest rates steady and gave a slightly stronger warning on financial risk than last quarter saying it was necessary to pay close attention to the bank profits from years of low rates. this is fascinating. former central bankers tend to keep their mouth shut and don't generally like to talk too much about current policy strangely janet yellen, the former federal reserve chair has weighed in saying the u.s. needs more interest rate rises to stabilize the economy. speaking at a conference in washington, d.c., she said she disagrees with president trump's view that the fed has gone crazy and added it is appropriate for

a few more rate rises to prevent the economy from overheating >> the federal reserve has never been able to orchestrate a soft landing for the u.s. economy when it has hiked rates during times of low unemployment in the last 70 years, that's according to this spooky chart from our next guest so the federal reserve is doomed to failure in orchestrating a slowdown good morning to you. shy say who the guest is this is laura frost, fixed interest investment specialist at mmg she writes for the bond vigilantes blog and has compiled some charts to scare invests so the federal reserve has never managed to orchestrate a slowdown, so they're doomed to failure? if you look at the evidence and the charts you can see over 70 years they have done their best,

but every time they tried to slow the economy down, it's ended up in recession. we hope it is not skeletons in the cupboard this year or this time obviously there's a number of hikes planned for december this year an then perhaps two next year where they then may take a pause. the data is still fairly strong. you know, there is hope they will manage that soft landing this time. >> in terms of the actual chart, if we can get this up. this scary chart where is the breakout going to be when will it happen? can the chart tell you that? >> i'm not sure the chart can tell me that maybe the crystal ball could if we listened to what janet yellen is saying, she's certainly more bullish on the trajectory that the fed are moving in at the moment in terms of hiking. i think there is worries about the wage inflation and the stock

market seems to be kind of worrying about that as well at the moment so, you know, we are late cycle. we know that have we reached peak profits is it really this wage inflation which i think the market is expecting. maybe the stock market started to expect that >> this gets us nicely into a conversation about bonds a bond specialist was talking about the flattening curve despite a weak and a half where we saw a steepening of the curve. you called it the anaconda moment you want to explain what that is. >> anacondas are big, scary snakes that sleep for a lot of time a bit like the 30-year treasury yield this is a fairly frightening chart because you have a resistance level about 3.25. we broke through that. we're now at sort of 3.31, 3.32. you have millions and millions of u.s. mortgages dependent upon this rate.

if you look at the savers out there, you have 18 years of interest rate risk basically around this long-dated bond. so once you start to see some upward movement in yields, it could get damaging and pretty frightening for the investor >> if you take this back to the last time we were at this point in an interest rate cycle, was what the early '50s coming out of the '40s the thing that differentiates us this time around is the high level of consumer and corporate debt then we had a lot of government debt associated with the u.s. economy melting down and the second world war this time around it seems the debt level is so much higher it's difficult to imagine the next 30-year rate period is going to look anything like that >> i think this is the thing you also got -- back then there

was companies that were fairly domestic they are now global. so the whole inflation sort of project has shifted. globalization has depressed that there's no longer as many opportunities for, you know, moving companies for cheap labor. >> so my point would be, it's one that the earlier guest made, that the 30-year doesn't seem to be rising as it ought to be if we believe that the cycle has normalized does that tell us that we'll have a much, much shallower, longer term interest rate peak than previous cycles if so what does that mean for opportunity? >> that's fair the terminal rate is looking to be lower than in previous cycles you look at curve flatteners, yes, it began to steepen it's flat again. there's quite a big technical at

the long end you have quite large liability investment from pension buying that was refueled by the tax sort of implementation that rolled off in september that's when we started to see the 30-year move i think it's a scary place to be for an investor because over a 30-year period you've seen essentially those bonds going up in value is this the point it stops in. >> what about this horrific chart in u.s. student credit outstanding? it's 1.$1.53 trillion worth of u.s. debt. do you know the bad -- i'm no -- i don't know, the debt that women hold is outrageous, the fact it is so much more for women. they're holie in holding about$0 million of this debt or a billion dollars compared to the men. it's down to the fact that women take family breaks, they take

longer to pay the debt back. they earn less, so they take longer to pay it back. welcome out of university or higher education in the united states with more debt than men on average >> let's go through the psychology you have taken a loan because you need to pay for university fees, living expenses then you have child care kicking in, you don't have the money then to pay for student loans. what happens if yields rice and the tougher gets bigger than the 3% range we've been in >> this is the frightening thing. when jay powell starts to talk about this -- this is hidden in plain sight. it's in front of us. this is rising it's just outstanding debt as the fed tightens, interest rates go up, these are pegged to inflation as well. that debt is ever mounting as you say, you must leave

university on a wage that you can actually facilitate paying that back, otherwise that will hurt your credit rating going forward. from jerome powell's perspective, his long-term view on this is that ultimately it could cause a slowdown in the u.s. economy because you're taking out almost a whole generation of consumers who won't be consuming >> i would try to be a bit contrarian here. if i look at this chart, i say it's a fair point, but if you compare that to subprime, other outstanding stuff in 2006 and 2007, in five years you had them going from $1 trillion to 1$10 trillion so, yes, that's a concern, but is that enough to really, you know, rock the system and to push the system into the -- >> you should compare it to a different types of loans, what

if you add it to auto debt, you add it to household debt, you add it to broader credit cards what's the average credit card in the united kingdom? 20%? that's horrendous. i'm not comparing it, i'm compounding it >> at the same time if you see what consumers are been doing on aggregate in the last decade, some of them have not been increasing the level of outstanding debt there's been a peaking of the debt the debt levels have been increasing primarily in other areas. if you look at that, i would say, yes, i can see that happening on the consumer, but is that enough to cause a hard landing? the main thing today is the fed ignored those 10 trillion of outstanding testimony on subprime in 2006 and 2007. that caused a hard landing is that enough now to cause a

hard landing >> it's probably not going to be the cause, but it is certainly a factor if you look at auto loans, credit card loans, over the last ten years they've been coming down a fraction. this is the only pocket of consumer debt that has been on that ever-rising trajectory. if jerome powell starts to mention it, maybe we should sit up and have a look as well >> it just seems to me that -- i was listening to paul volcker talking about how the fed operates and how central banks are operating at the moment. he's just wringing his hands, saying this 2% target is nonsense we need to rethink the methodology and the framework where we predict where interest rates should be going here maybe we should stop talking less about the pure rate and think more about the spread because the market determines the spread and actually tells you where the risks are rather than the central bank trying to make a prediction based on a 2%

inflation target that seems irrelevant today >> i think this is what's been happening over the last couple of years as you say, the fed set the base ret. t rate and the market sets the curve. that's where you have had a dislocation between what the fed thinks and the dots. that's why the ten-year is a lot lower than it probably should be it's not pricing in forward risk it's not pricing in as much inflation as is ramping up at the short end. >> if we look at what you're saying, i got sympathy for that sort of position in so far that the fed clearly and all the central banks have had to readjust to a system where, you know, old school stuff does not work and they have been doing that over the last bit. now they're normalizing interest rates, this is what possibly

could be the bull case for an economy is that they're still monitoring what's happening in the economy and they won't say, okay, we'll just increase interest rates because they're paying much attention to much broader types of factors >> on that, we'll wrap it up laura, lovely to see you thank you for the scary charts i'm terrified. laura frost from m & g we'll talk a break and be back still to come, how scary were the facebook numbers? we'll talk about that when we return today is the day you're going to get motivated... get stronger... get closer. start listening today to the world's largest selection of audiobooks on audible. and now, get more. for just $14.95 a month, you'll get a credit a month good for any audiobook, plus two audible originals

exclusive titles you can't find anywhere else. if you don't like a book, you can exchange it any time, no questions asked. automatically roll your credits over to the next month if you don't use them. with the free audible app, you can listen anytime, and anywhere. plus for the first time ever, you'll get access to exclusive fitness programs a $95 value free with membership. start a 30-day trial today and your first audiobook is free. cancel anytime and your books are yours to keep forever. audible. the most inspiring minds. the most compelling stories. text "listen8" to 500500 to start your free trial today. the most compelling stories. take your razor, yup. up and down, never side to side, shaquem, you got it? come on stay focused. hard work baby, it gonna pay off.

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it was a mixed picture from facebook's highly anticipated third quarter earnings they beat on the bottom line but missed on other key metrics capping off a difficult quarter. elizabeth has more you know when you go into an interview someone says what is your strength and weakness,

someone comes up with a weakness which is not really a weakness they sort of did that, facebook. >> we were down 6%, and now looking to be up 3%. the big beat on the bottom line, revenue missed, and daily active users are 1.49%, that's still 9% growth year-on-year, so a lot of people are still using the facebook platforms >> when you look at how facebook can transform some platforms that are popular, messenger, whatsapp and cram in more ads that seems a difficult process rather than just capturing new markets. >> you can see in the facebook user numbers that the asia pacific market using facebook as

a platform heavily still i want to quickly touch on costs. i brought along a chart that looks at the operating margin of facebook you can see how this has been declining over the past year we're now at an operating margin of 42% versus 50% a year ago facebook citing rising costs as a he can issue, that's largely linked to security and privacy issues >> neil kampling is bearish on the stock, he says the huge ramp up in advertising on instagram at peak saturation will cause a lot of problems going forward. and you have people leaving facebook as well so there are issues. >> athere are issues when you have stories that disappear after 24 hours that could be a tough sell to

advertisers to say you'll have a footprint here with the younger democrgraphi demographic. what about mark zuckerberg have to say about this? >> he drilled home about security last night. he wanted to continue to highlight how they are investing in these initiatives, that's sort of the most important effort for him going forward >> let's hear what he said >> i expect 2019 to be another year of significant investment i want you to know that looking out beyond 2019 i know we need to make sure our costs and revenue are better matched over time and that's something that i'm focused on as well >> mark zuckerberg, the facebook ceo. thank you very much for that francesco, let's wrap up here we had a valuation reset do we know where we have reset to represents value now or are we actually back at a point where we should have been

several months earlier in this earnings cycle >> investors should be expecting long-term rate of return on equities of around 5% in real terms. now, if you compare that to a lot of other asset classes, i would say that is a reasonable number now the risk is that as we see tightening from the fed, the risk is as we see consumers maybe more cautious investors ask for higher rate of return. that can clearly bring lackluster returns for the foreseeable future for long-term investors i would say that a 5% real return on the asset class is a good place to be >> 5%. that's it. >> i tonight feel bad about buying long-term treasuries then at 3.5% if i can get them.

>> talking nominal, not talking real >> sure. if you're worried about inflation or anything, which asset class can give you a 5% real return with very little financial leverage not many you have to go up on the risk curve, on the fixed income side to find this type of return. having said that, if you were sort of to see in the next 12 months more sort of risk aversion going up, happening, you could actually see equities being poor, as much as high news 20%. but again, forget about what will happen in the next 1 to 3 years, focus on your pension, ilcus on your education for your chdren >> we have to wrap it up on that thanks so much for being our guest host this morning. world's largest ing tode selection of audiobooks on audible. and now, get more. for just $14.95 a month,

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. it's 5:00 a.m. on wall street here's your five at 5:00 wall street pointing to a big jump at the open following yesterday's 400-point gain for the dow. we'll find out what's driving the turnaround facebook shares shooting higher despite a slowdown in user growth. we'll dig in on the quarterly earnings. a fresh sign that china's economy is slowing janet yellen is raising the red flag on the u.s. economy we'll bring you her comments and shares o