Transcripts For CNBC Worldwide Exchange 20140903

Into the fall. The two Companies Strike a deal on their stock. Thanks to the bottom of the stoxx 600. Announcer youre watching worldwide exchange, bringing you Business News from around the globe. Good morning. Welcome to the show. Were just going to update you on some the breaking eurozone pmi numbers. The eurozone august final services pmi came in at 53. 1 versus 54. 2 in july. And that follows some of the mixed data weve had early from the individual countries, as we said. Joining us now is david bloom, head of Global Foreign Exchange at hsbc. David, is it the difference between the flash estimate and the current estimate, not july . And thats much weaker. So we already got the first shout at this month. Much weaker germany and much weaker euro tried to trade early this morning. Failed. The question is will they keep the momentum going in this weakening euro. Do you think its time now for draghi to desert his beliefs and start printing euros altogether . Its coming. The Printing Presses are getting warmed up. Despite the extension call already. We dont think its happening this year, but its coming next year. Even in jackson hole, he said it himself. I think theyre getting ready for it. Hes getting ready to raise rates, ceb getting ready to do qe. Well continue to trade lower. But, in fact, there is profit taking in the bond markets, yields ticking higher. That tells me there is some degree on of reality check in the markets. Were not going to get full blown u. S. Style qe anytime soon. Not anytime soon, but look at the trend. You havent seen trends like th ag ps tquzen a its drifting ler a lower. The euro is heading lower, the fed is heading towards the doors. And ill just interrupt quickquick ly to say that we just had a flash to say the ewe crepan president poroshenko says theyve reached an agreement with putin for a permanent ceasefire. Well bring you more. Supposedly a permanent ceasefire agreed. David, that should be positive for market sentiment. Yeah. Weve seen the euro try to trade lower on the data itself. Its skipped 30 points or so low. Nowite popped back up again. Peace is always good news and good news for markets, absolutely. And especially some of the periphery european countries. The euro has been going down, but pollland has been trading particularly badly, and it may give them some relief, absolutely. What will the trigger be for qe . It will be coming. The trigger . What is the contributory negligencer . The core cpi is still very high, 0. 9 . Very high . Obviously, youre much younger than i am. I remember inflation rates 0. 9 . Thats heading towards the deflationary doors. Every single number that comes out of europe is worse than expected. So the european numbers keep getting worse, Inflation Numbers keep staying on the floor, the debt levels are still very high. The ecb has to act and theyre going to act. David, do you think now were moving babb to a world where Interest Rate differentials or at least expectations of Interest Rate differentials will drive currency for most moving forward . We see the euro dollar reacting. We had the big currency deficit karnal crash loss in em. Now we see carry, everyone loves it, you know, the beautiful thing about carry and you dont have to do anything. You bother currency and wait and sit there. Brazil has done very well. High Interest Rates are doing very well. Policy differential between the United States and the eurozone is key. Policies differential between the United States at the moment and japan is key. That is what i think is driving it at the moment. We say we also see weakness in the data. Well talk about your bearish on pound sterling coming up later on in the show. And also on todays show, super model giselle signs up to be the female space of under arm he. Net flex zieps up the new series bat mran. As the fbi gets to grip with the latest cyber attack on wall street, were live in frankfurt speaking with one of the worlds top experts in computer security. Do sent in your emails. Sent your fx related questions to worldwide cnbc. Com. How are the markets looking this morning . Lets get a look at the markets so far. Europe is very much in the green so far today. Europe has been trading flat all week ahead of the ecb meeting. And its now having opened slightly up, its now up 8el 0 basis points. Quite a big jump in the last 20 minutes, as you can see. That following that weaker than expected pmi data, if we look at individual markets across europe, it is that same story that i was saying. Much, much stronger in the last 20 minutes. Were now going to have a look at some individual stocks. Hermes is moving sharply lower, down 8 , that will see lmh deliver all of its stock and its similar. The iconic handbagmaker has been trying to prevent this. As a result of the deal, lvmh and its subsidiaries agreed not to buy any stake in hermes for the next several years. Hugo boss is off about 5 . Now, danone is up about 2 after the chief operating officer has been named as the new ceo, emanuel faber. From october, frank ribou will be flipping his role after 18 years at the realm of the consumer giant. Those shares have been under scrutiny as health food baby sales have dropped off in china. Theres slightly Less Movement against the euro dollar today. 1. 3147. Cable is about 1. 647. 2. Nonetheless, yesterday was a very, very strong day for the dollar. Along side that, it was a very weak day for commodities. Oil prices coming back about 3 depending on which measure youre looking at. Brent touched a 60month low. Natural gas also around 4 . Weve seen gold weaken yesterday, slightly picking up today, 1. 266. Now, add bonds to the flavor and theres so many conflicting messages coming from the different asset classes, we have these very, very low yields across europe, dragging down yields in the uk and the u. S. And it makes one thing, where is the disconnect happening in markets . What is that going to mean moving forward . Is there going to be a big correction . Well be discussing throughout the show. Before we do that, lets have an update on asian markets today. Over to sri. Good to see you, sir. Lets take a look at these markets, indeed. The leadership is coming from Greater China. Look at what is happening into the hang seng. The benchmark in hong kong. We are seeing sixyear highs for the market here. So looking at levels we havent seen since may 2008. Up by 2. 3 for the happening second. 15month high for the shanghai composite. That is on the belief that the economy is starting to turn around and showing signs of stabilization. If you dig down a little dye deeper into the subcomponents, some of the more granular details of this report, there is still some underlying stress in the broader chinese economy. That weak link is coming from the property market. So you can probably bet on the administration and the pboc bringing more targets stimulus into the system to try and safeguard what is still a fairley anemic recovery, one that could still be jeopardized by the weakness in the property sector. Very strong sessions for the Greater China markets. The strong session up by 0. 4 . Weve seen a much softer gsn ahead of that greenback. Thats benefiting the exporters. Elsewhere in the asian markets, we are looking ahead to what the ecb is going to deliver later on this week. Similar story for the u. S. Payrolls, as well. Major risk events, carolin, im sure youre watching, too. Back to you now. Sri, thank you for that. President poroshenko and russian president putin have agreed to a permanent ceasefire. Lets have a look at russian shares. Thefb rallying on the news, up by 2. 6 , coming off the highs of the session because were up by as much as 4 earlier. Were seeing a bit of a rally in the ruble, which just recently last week fell to a record low against the dollar. The ruble is up around 1. 3 . The euro spiking a session high, if we can show the euro this morning. Euro dollar, 1. 3144. You see that big spike. I just wonder if this is another false moment because weve seen these comments before. This is definitely the most encouraging. We were all saying geopolitical concerns havent had major impacts on markets, but now that a ceasefire has supposed by been agreed, theres lots of green in the heat map. We look at the individual markets now, germany, very strong there. 1. 2 . Italy up 1. 5 . And the ftse 100 up 0. 8 . Very interesting, the timing of this. We have obamas speech coming later today and nato tomorrow and theyve managed to agree to a ceasefire. Weve changed the agenda with that speech. U. S. President barack obama has touched down in the baltic state of estonia. Hes expected to deliver a stern speech to russia. Perhaps that will change given the ceasefire. Stay tuned, more coverage of that coming around 10 00. Meantime, banking fines could be on the rise in the g20. Eu Member States including france, spain, italy, germany and the uk are pushing for the issue to be tackled after some penalties imposed by u. S. Regulators. 6 . We dont control the timing on that, but excited to be back after a nice summer. Beautiful day today and very focused on making sure that we get back to work and restore momentum. What other top topics are you looking at until the end of the year . Market topic would be European Growth which is really what were here to discuss today. But in Deutsche Bank, we have excellent momentum to continue that momentum. Annette has been making some interesting comments with regard to the competitiveness of european banks. What did he say . Its something that he was saying earlier on, european banks tend to look compared to u. S. Banks because of regulation, of course, but also one could look at those times like being not very helpful for competitiveness, as well, here for european banks. But, you, of course, he is overall optimistic about the state of his bank. He was saying Deutsche Bank might be one of the last men standing when it comes to truly universal banks. Those banks are needed, according to his mind, in order to help Companies Like here in germany who are truly international. To both be regionally dominant or regionally strong, but also able to help those companies all over the world. That is what Deutsche Bank is sticking to, whereas a lot of their competitors feel and, as well, Deutsche Bank actually managed to into those fields. So if his play is working out, Deutsche Bank should evolve more professional in that industry. But for now, nobody really knows. A lot of problems are challenges ahead in the second half of this year. Stress test, legal charges, so the industry will be still very, very interesting. Later on during the show, well speak to the ceo of s. A. B. Of course, of sweden and also to the chief officer of sales force and will tackle the question of how secure is i. T. Still in banking with all these Cyber Attacks were hearing from. So a lot more from frankfurt coming out. Stay tuned. With that, back to you. Thank you very much, annette. Well be back out there later in the show. Now, a second video has been released purportedly showing the beheading of u. S. Journalist steven butler. The man in the film is thought to be the same british jihaddy that murdered james foley two weeks ago. The british captive was shown towards the end of the video with the isis militant threatening to call him next. David cameron has called the apparent murder an absolutely disgusting and despicable act. I want to recap whats been going on in the markets. In the last 15 minutes, weve seen a significant bounce on risk assets on this reported ceasefire between ukraine and russia. Were seeing the 10year bund yield rising 30 basis points and stocks are higher across the board. We are at a session high w for the sox europe 600. The micex is up by almost 3 . Well be back in two. For you, success is a starting gate, not a finish line. For you, the ats isnt just a trophy. Its a sleek, chiseled instrument of your ambition. And for you, the Winners Circle is just another pit stop, because youll always be. Coding it. Torching it. Chopping it. Making it. The new 2015 cadillac ats. Welcome back to the show. Just about 10 or 15 minutes ago, we got reports russia has come to a ceasefire agreement with ukraine. I want to show ur the micex. It is off the highs. We are seeing the russian ruble at 1. 6 against the dollar. Lets put this into perspective. Last friday, we saw a record low for the russian ruble against the dollar. We are seeing risk asset moving higher across the board. 1. 3156 after that ukraine ceasefire headline has come out. Lets get back to david bloom. David, what does it mean for the dollar . Because the dollar has been rising because of the increase in yields and the profit of tightening. But now with this headline coming through, the euro is starting to rise again. The flash is much lower. People ended up selling it. His announcement came back and the euro has bounced back. Thats what we argued all along. We argued the same as sterling. It didnt really price in the Political Risk and now it is. So a bit of it is coming out. Its quite mild, that the market hadnt been that anxious about it. Were ang as human beings, but it seems to everybody that the market hadnt priced enough in. No one wants to see the events unfolding and happening. Each with these slight moments, with yields in the euro, versus yields on the dollar which is fractionally higher, why would anyone european bonds at the moment . Well, it depends. You go out there in the risk curve, you pick up so well look at germany, you know, we dont look at some of the others. You cant get higher yields on those spanish spreads as they come in. Ultimately, its the policy differential that matters and the policy differential is happening because the u. S. Economy is recovering and the european economy is doing a lot worse. They are headed towards qe not because they feel like it, but because the economy is doing really badly. And the own currency, the rates of return are going to be higher because the economy is growing and another economy is faced with deflationary stress. Do you not think that the ecb on thursday, that draghi will try and stick to his physical rhetoric and stay away from outright qe and coach individual governments to stop spending . I think every ecb leader has been doing that since the invent of the euro citing structural change and ultimately some of it is happening. But ultimately, they edge inch by inch towards the qe. Consider it in the inflation data and real economy data andble it is going to happen. He will, as you say, he always carries a sensible line. I think it slowly he curves the trend at the moment, but not too aggressively as the problems. Lets go back to the move that weve seen with the dollar against the ruble this morning. 36. 8210 is what were trading at. The dollar has risen against the rouble. Do you think this move is just a temporary move . Do you have any trade recommendations for the russian ruble . My use as an averse indicator has been killed recently. What im saying is we dont trade politics. Its not something you want to trade. If youre clever and you understand politics in the political arena, fine. But thats not what we do. We cant predict the political environment. When things like this happen, we stay away from it. The bark is quite neutral because it is very difficult to focus on politics. Were not going to talk about specific stocks with you. Weve got significant sales in the region. Good people expecting celebrations. And perhaps, perhaps, but also more prolonged sales. But im interested to hear not on the individual companies, but this surprised me in its extent because weve been saying for so long that the markets managed to shrug off these geopolitical senses. Are you surprised by the moves . No. Markets move up and down all the time, so thats what happens. Any tension and uncertainty is always good for markets, no matter what it is. And were seeing that at the moment. But i think the big news will be the ecb coming up on thursday and what the fed is going to do and the payroll numbers, which we havent even mentioned coming up this friday. Those are the things that will shake markets. Is that your forecast, 300 . Its the payroll. It will be good enough a number to continue the momentum that the fed is getting prepared. Theyre getting us ready. David, stay with us. I want to bring in tim common. I want to get your thoughts on this bounceback that we have been seeing and risk assets just over the last couple of minutes. Do you think it will last . Well, i agree with david. This is a politically driven bounce, very difficult to forecast politics and impossible, actually. Peace and the reduction of hostilities in the ukraine is good news and hopefully it will last. And do you look at asia t in face of these improving sentiment towards ukraine and russia or any country thats benefit from that . No, i think its more or less a broad heaving of relief and all risk assets benefit the big story in asia has been china. That has taken holds from the middle of the second quarter. I think thats playing out today. Big moves in the china market. Some of that may be related to whats going on in the ukraine. But i think it is more a china story. This woke, we did see agreements setting up particularly in the oil sector between china and russia. Thats obviously a kickback to western aggression towards russia. Do you think that will continue . Is there a change of International Relationships happening in the world at the moment . Certainly is. We see that Prime Minister putin is not only signed this agreement with the chinese authorities, hes visiting mongolia. Mongolia priced itself on being a neutral player. Everyone is going to maintain its friendships with the russians, with the chinese, with the United States. The china, russias biggest or gasoline and theres interest there in maintaining that relationship. So yes, i see this as theres a realignment under way. Well have the we expect it will continue and well have commercial trading implications. In a rising dollar world, which asian cups are most attractive . Rising dollar is generally positive for all of asia. I think youre seeing it today. Rising dollar means stronger u. S. Growth. Stronger u. S. Global generally means stronger trade growth. That is good for really the entire region. Thats what were seeing across the board today in equity markets. Thank you very much for joining us, tim, head of research for asia. And i want to update you on the move weve seen in gold. Not surprisingly, 1261 after ukraine ceasefire has been agreed. We are also waiting for the uk services pmi data today. Were expecting a set sterling for a long, long time, but now it seems finally you have indicators. How good do you feel about that . I feel great. Some of the issues that we ascribe to happening in the markets, not put enough on the events coming up. Elections last year, possibly based on the eurozone. Finance the housing and Consumer Credit. Weve in every thought Interest Rates were going to rise this year. So weve been negative on cable. The treasure on me was incredible. And two votes out of nine in the last mpc minutes. You dont think thats significant to suggest were getting closer to that right in the uk yet . No we accepted that. To capture the other three or so votes or four votes needed is going to be incredibly difficult. Sorry to interrupt you. I hate to do that. The uk Service Sector jumping again. This is to a level of 60. 5 in the month of august from 59. 1 in the month of july. And that is above even the highest forecast from economists in a reuters poll. This isnt at all what the manufacturing data we saw earlier this week. And i want to take a look at how sterling is doing on on the back on of this. And we are seeing a little bit of a bounce. Cable is up slightly on the day. Your instant reaction. This is more important than the manufacturing pmi. Were getting loads of manufacturing data. All the data is that Second World War data. We wanted to count tanks, we wanted to give manufacturing production, durable orders, lots of manufacturing data. This is it. Its really important. I have to admit cable obviously quite sensibly goes up on a stronger than expected and those two members are going to say, you see . You see this is happening and people like myself are going to look at the average Earnings Data and go, you see they can feel that going on between the economy doing quite well and some aspects doing well, but other parts of the economy strangely not picking up. So you can see why theres a dissengz at the moment. So a little bit more humble high for you . Yeah. Its the first time ive ever seen that under par. So im getting a little bit used to the taste. Good. And, david is staying with us. Weve got more to talk about after the break. That ceasefire has pushed markets higher. Weve had the positive uk pmi data. And were hearing from u. S. President obama from estonia at 10 00. Stay with us on worldwide exchange. Ewe crane and russia say they ever agreed to a ceasefire. The news sends the euro higher and spot gold to a 2 1 2 month low. Deutsche bank tells cnbc the bank has excellent momentum heading into the second half. But Deutsche Bank warns theres a black hole going into the stress tests. No more hand bags, lvmh and hermes strieng a deal on their Share Holdings dispute. Risk assets have been gripped by the reports and the statement coming out of russia and ukraine saying there is a ceasefire for the eastern downtsk region. The ftse 100 up by 0. 9 . The stoxx 600 is close to a session high. We saw a significant spike when those headlines came out. The xetra dax, which is most exposed to the russian markets, up by 1. 6 . In the fixed income markets, yields ticking higher. The yields have been stuck at 0. 9 level for the last week or so. The tenyear treasury yield is ticking higher on the news, 2. 46 . How are we looking on the currency markets . The euro dollar has strengthened. It is up about 13 basis points today on the news. Sterling slightly strengthened. Thats are the pmi data. Across the board, were seeing a bit of strength in the euro. Moving on to the micex, the russian market is up 3 today. It is flat for the first hour or so of trade. Ukraine president poroshenko and russian president putin have agreed on a permanent ceasefire according to the offices of both leaders. Russian shares have been rallying on on the news as weve been showing you. Having said that, though, i want to put it into perspective. It was slightly lower after we got the services pmi. If you put this into perspective, maybe that was a pretty small spike. Earlier, we spoke to the acting ambassador to the uk and asked him about the situation on the ground in the east of the country. He wanted to restore inat the gral integrity with the ukraine. This should be more tougher sanctions against the aggressor, which is now russia. U. S. President obama will likely comment on the cease fear when he does his speech in estonia from a capital in less than 30 minutes of time. Obamas choice of language will be significant with the baltic state feeling the pressuappreci. Hes expected to send a strong message to moscow that the region is off limits, that washington is committed to defending them. The president will make his way to wales where hes pressure other leaders to step up military spending. Were joined now by simon kujano evans. Simon, my first question to you was going to be has diplomacy failed in ukraine and russia, but it seems like its working again. Lets see what comes out of this. President obama is going to make his speech. The big thing is that this is called a permanent ceasefire. This is the first time weve heard of a permanent ceasefire in Eastern Ukraine. And the second good thing is both president s poroshenko and putins offices highlighted this agreement between them. And the third thing is, theres a buyin of the antirebel forces in ukraine. This is as a result of the talks in the last two days and between them, russia and the kiev government, their requirements of full independence and are looking for more sort of a federal economy within ukraine. David, you mentioned before, its extremely difficult to secondguess what putin is going to do next, whether this ceasefire can actually last, how much substance there is to it. Volatility is coming back and thats great for you guys, isnt it . You can see the politics. But, you know, with the fundamentals, well come back in. As ive said before, you know, you dont want to trade on them. You can understand the reaction or a knee jerk reaction to it. But theres no strategic advantage that one can have or understand. All right. Meantime, youre looking at live pictures of the bank of estonia where president obama is due to deliver a press conference alongside the estonian president henrik. Hes passing through to the nato summit taking place in wales starting tomorrow. Of course, this is expected to be a strong sign of commitment, a strong sign of support to the baltic because they have deep rooted memories of occupation, hugely significant for them. Absolutely. And i wonder what level of commitment well see from obama. Will he say following the nato conference hes going to push to have forces stationed in Eastern Ukraine . We can go back to simon now. What are you expecting to hear from obama at this speech coming up in about 20 minutes time . It seems very clear. Estonia and latvia, 25 of the populations are ethnic russian. We dont have to look very far back, about 70, 75 years ago when russia and germany decided to basically on the baltic. I remember my father telling me when he was living in berlin, his grandfather watching the people leaving from the embassy to the baltics saying, one day i will be coming back. So we are at that stage today. And i think the message coming from president obama will be very clear. Nato signs are there at the baltics. But at the same time, what we need to see is more coordination, more communication between the United States, russia and the uran union. There has been been enough communication between all types. One of the communications that putin has highlighted in the last six or seven months is the fact that nato borders on russia, there has to be more agreement and more discussions about how the future looks like. Once we get a solution in that, then we will start to see Solutions Coming out in the middle east because all of this noise is going on in the middle east is a direct result of the fact that we have a Global Political document at the moment. Nobody seems to be in charge. Do you think obama knew about this or do you think this frantic rewriting of his speech going on at the moment . Logistically, what do you think is going on at the moment . I do not think, personally, that obama knew about this. He was obviously informed about the discussions going on. But this is really grand and we got the news come out this morning. I dont think obama knew about this when he was flying out. We just got comments from the British Foreign ministry, he said there has been an unsuccessful attempt to rescue the british host aemg being held by the Islamic State militants. The British Foreign minutester saying that the uk does not rule out air strikes against isis, saying the hostage doesnt change the strategy. This is obviously as we saw the second beheading of a journalist in syria overnight. Very worrying. Another uk journalist has same yop, i want to come back to you. Once again, i want to talk about ukraine, russia and obamas strategy now. Basical basically, you can really throw the script out of the window. What is he going to say today . He will be very cautious, i think, and see if the ceasefire holds. The nato meet in wales in the next couple of days. Nato wants to see that this holds. If it does not see this hold by the end of this week, we will see the European Union and the u. S. Move on to the next stage of sanctions. Those sanctions will be much further reaching and will provide some indication as to what the next stage of sanctions would be. I think a clear message from obama will be lets see in this holds, lets see this is realistic and they have to buy into the rebels. And simon, in the longterm, the biggest thing that can be done for the baltic state is to try and export oil to the region so they are less dependent on Russian Energy export . Well, yes. From that dependency ranges between about 20 , 30 in germany, lower amounts in romania and all the way up to 1 00 in the baltics. This is going to be the main issue. And its interesting because the European Union in the last ten years on the gas pipeline through turkey. Turkey ended up having to build the pipeline through turkey and by itself. So the year has to be very clear about its future energy policies. The United States has to be clear whether its prepared to sell its energy that its making. So all of these things have to be discussed. The main thing is to get a ceasefire in place. Lets not forget, there are about a million refugees in the ukraine. There are several million refugees in the middle east. A lot of people suffering on the ground. Its not only about financial markets. Thats secondary. The main thing is to get this in place and to get the Peace Program going again. And just one point on the currency from the emerging market currencies again, what we would be looking at in the next three to four months, its a tough time for yen currencies. We have the seesaw effect. U. S. Treasury yields go up, geopolitical rick goes down, geopolitical all right. Unfortunately, weve just lost the line of saimon. But david, he was just making comments on the emerging market currencies. We have been seeing that seesaw movement. What is going to happen to the currencies . I think the dollar is doing very well. Last year, the dollar did exceptionally well against em, but struggled against the big one. Now its smashing the big ones is and is struggling questions em. So it seems as though its flipped over. You dont have carry, the you dont have high Interest Rates and the dollar is going to smash you. I know its manic in terms of the new flow. What happens when you come on this show . All thoughts thats right. Thank you very much, david bloom, head of forex at hsbc. One further flash, the separatists in the east of ukraine have prepared for political dialogue if kiev stands by its ceasefire. So a further positive development on the Ukraine Russia story there. Well continue to bring you more on that throughout the show with obamas speech coming up. Now, japanese Prime Minister abe reshuffled his cabinet for the fist time since he took office in 2012. Makiko has the story like from tokyo. The current cabinet has been in power with the exact same members for 21 months, which is a new post war record. Abe faces a host of challenges, including another consumer tax hike and nationwide local elections next year. The cabinet spokesman and five other key ministers, including those in charge of finance, Foreign Affairs and continuity. Noted was the increase of female minutesters appointed to relevant posts. Its meant to underline abes effort to follow through on an am bishul goal, he said. As part of the reshuffle, abe chose the party leader as his top ruler in the democratic party. Takasie. Abe will hold a press conference later this evening to explain the goals and policies of his new administration. Thats all. Back to you. Thank you. A deal in Eastern Ukraine has been struck. Well bring you the latest and president obamas speech in estonia. The ats is more than a validation of your achievements. Its a powerful reflection of your drive to succeed. So, forget the gold watch; grab the brass ring. You dont need anyone to tell you that success is yours, because youre busy. Seizing it. Drafting it. Tuning it. Making it. The new 2015 cadillac ats. And youre looking at live pictures of estonia. President obama is set to give a speech along with the president henrik. It was expected to be a very strong warning towards russia, a stroong show of support from the baltic space. But now just in the last half hour, weve been getting reports and a statement of that permanent ceasefire between ukraine and russia. A huge flash and that has been sending markets higher. But essentially now, it seems president obama can disregard the comments that he was going to make and essential ly word them. Im sure theyre franticly rewriting his speech at the moment. It will be interesting to see what he has to say. Now, the eurozone banks have just six weeks to go before the ecb reverts back on the final iqr and stress test results. Nine banks are expected to further test and lenders will need to raise an additional 51 billion euros. Heavyweights in the Bank Industry are gathering in frankfurt for the handles a day ahead of the months crucial ecb meeting. Annette is on the ground with more. Annette. Yes, thank you very much. Of course, the stress tests are a topic here on the ground which is regulation, also where european banks compared to the u. S. But also one of the topics are those tensions in russia in the ukraine, i should say, and the interference with russia. So perhaps to talk to speak about that topic, and others, of course, and now joined by john bannick of fdc. Thank you very much for warning us. My question question, what are your clients telling you . Are they reluctant to invest money with those tensions and the war in ukraine . I think its a bit of a mixed picture. I think we saw a lot of faith during the spring that actually saw more and more interested. But it has gone down a bit more and everybody is hesitant of seeing how all this will develop. Its a little bit like a wet blanket at the moment. So what is your dominant scenario when it comes to economic recovery in the eurozone . Is it stagnation . Mild recovery . Thats a different question. But i guess what were all hoping for are signs of growth. What we see at the moment with extremely low Interest Rates, very well activity and changes at the same time. We see growth early. I guess a mild recession or a little bit of growth we still hope to see that. But it takes time. Im a little optimistic longterm than i am shortterm. I think we see a lot of challenges shortterm. But longer term, we have passed the woods. Thank you very much for joining us. Apologies for being so quick. With that, im sending it back to you. More to come here later on during the show. Annette, thank you very much for that. We have a conflicting comment coming out of the Ria News Agency saying that putin spokesman has said putin and poroshenko did not, i repeat did not agree on a ceasefire because russia is not a party to the ukraine conflict. And this follows comments and a statement out of the offices about 45 minutes ago saying that the two countries had, in fact, agreed to a ceasefire for the Eastern Region of donetsk. What do you make of this . This reminds me of the heavy days of the eurozone crisis when we were trading on very conflicting, very confusing headlines coming out of that region. Absolutely. Putin is clearly the biggest stakeholder. If his spokesman is coming out to say there is no ceasefire, that is probably the case. It seems as though thats not the case and its really very hard for markets to take any strength. The euro dollar is now flat on the day. It has been trading up around 50 basis points earlier. Thats moved down now. If we look at european markets specifically, the dax, which had been up as much as 1. 7 is now up only 1. 1 . This news, perhaps, hasnt fed through to markets yet. What do you think . As we take a look at the stoxx europe 600 it is off by the session highs. Gaining on the rereports of that earlier ceasefire. We can take a look at other risk assets like the euro. It has leveled off a little bit. The german bond future is cutting losses after the putin Spokesman Says russia did not agree to a ceasefire with ukraine. So once again, a little bit of volatility is what were seeing in risk asset these morning as a response. From the very conflicting to the confusing headlines coming out of russia. Indeed. If there is somebody who i think should no what is happening, its president obama. Its going to make his speech even more interesting. Thats coming up in the next 10 to 20 minutes. We were expecting him to have to change his speech. Live pictures youre seeing from the central bank of estonia and we are expecting his speech in about 10 or 15 minutes. Arent we . Yes, absolutely. So once again, you are looking at the live pictures at the bank of estonia where president obama is due to deliver that press conference alongside estonian president henrik. Hes passing through the country on the way to nato summit in wales. Xkc in our minds today is security. The question in everyones mind is ewe crepe. I just did hear that president poroshenko and president putin have agreed on a ceasefire. I just hope it works. But in the general situation, we need to be clear and consistent in the language that we use to describe the situation in ukraine. As the eu underlined last weekend, this is russian aggression. The eu and the United States are ready to take further restrictive measures in response to russias behavior. Russia must admit that it is a party to the conflict and take genuine steps that will lead to a deescalation of the conflict. We must continue to support ukraine by providing the country can the assistance that it needs. When it comes to the security of our region, the United States engagement here runs deep. Estonia is a close and reliable ally to the United States. We take our nato commitment seriously, very seriously. We have not sat back and waited for others to take care of our security. Since joining the ally yaps, as toe tone, we dedicate sufficient resources to a defense and are consistently increasing our National Defense capacity. We are grateful to the United States for sending troops here and for actively participating in the Baltic Air Policing mission. Your presence underlies the of natos article 5. Without a doubt, your bylat wall contributions have helped set an example for other nato allies. A robust and visible allied presence here in estonia is the best way of discouraging any possible adegreesers. We look forward to the nato summit tomorrow confirming this. So we face a completely new security situation in europe and we are pleased that this is reflected in many of the summits documents. We expect the nato summit in wales to adopt the readiness action plan that will guide allied nations for years to come through a set of principal steps and measures of reassurance and deterrents. In addition to our close defense cooperation, i am also pleased that our bilateral relations are strong and many, many other areas, including and especially cyber and energy security. Globally, we are working together to promote our common values, democracy, human rights, and the rule of law. Estonia is a world leader in Internet Freedom and in egovernance. We have a liberal economy offering many exciting opportunities for increased trade, cooperation and investment and this is one reason why we believe the tee tip is crucial, a crucial effort on the part of both the European Union and the United States. And let me once again welcome president obama to as tauestoni of northern europes most successful and profitable regions. Our countries share common interests and im sure together we can and will contribute to the vision of a europe whole, free and at peace. Thank you. Well, i want to thank you and the people of estonia for welcoming me here today. It is a great honor to be in estonia, especially as we mark our 10th anniversary as nato allies. Mr. President , thank you for being such an outstanding partner. I was proud to welcome you to the white house last year and weve spoken since on the situation in ukraine. Your life reflects the story of your nation. The son of refugees who returned home to help chart a path for a free and democratic estonia. As many of you know, that long journey took tomas and his family to america, to new jersey, where they still remember him as tom. It was wonderful to meet your daughter today and find out she had gone back to new jersey, as well. He said that he knew Bruce Springsteen before he is his first record. So you embody the deep ties between americans and estonians. I want to thank you for your friendship. Ive to the come here today because estonia is one of the Great Success stories among the nations that reclaimed their independence after the cold war. You built a vibrant democracy and new practice parity. Youve become a model for how citizens can interact with their government in the 21st century, something the president has championed with their digital i. D. S, acetone yeahs can use their smartphones to get just about anything done online from their childrens grades to their health records. I should have called the estonians when we were setting up our health care website. Most of all, im here because estonia has been a model ally. Estonian forces have served with courage and skill in iraq and afghanistan. And we honor our Service Members who made the ultimate sacrifice in afghanistan and including nine brave estonians. As nato nears the end of our combat mission in three months, i want to thank estonia for the commitments that you have made to help sustain Afghan Security forces going forward. As a high tech leader, estonia is playing a leading role in protecting nato from cyber threats. Estonia contributes its full share, its full 2 of gdp to the defense of on our alliance. In other words, app estonia meets its responsibilities. Estonia is an example of how every nato member needs to do its fair share for our collective events. So i came here to assure the security of estonia. We have article five duties to our collective defense. That is a commitment that is unbreakable, it is unwavering, it is eternal and estonia will never stand alone. Mr. President , i have made sure that we are fulfilling that promise. Early in my presidency, i urged our alliance to update our Contingency Planning for the defense of this region and nato forces began rotating through the baltics, including estonia for more training and exercises. In response to russias actions in ukraine earlier this year, the United States increased our presence further. Weve contributed Additional Aircraft, the Baltic Air Policing mission, the mission to which 14 other nato allies have contributed over the past decade. And were now continuously rotating additional personnel and aircraft through the baltics. I look forward to joining Prime Minister rogosav in thanking our Service Members later today. On my visit to warsaw this spring, i announced a new initiative to bolster the president initiative here including in the baltics and were working with congress to make sure that we deliver. Today, i can announce that this initiative will include Additional Air force units and aircraft for training exercises here in the northern baltic region. We agreed that a location to host and support these exercises would be amare air base here in estonia. With the support of congress and our estonia friends, im sure we can make this happen. I look forward to discussing this further when we meet with president s this afternoon. Ill have more to say about the russian adegrees on ukraine. Ill have more to say about this in my speech later today. Acetoestonia has provided assis as ukraine has worked to form their economy and because weve sood together, russia is paying a heavy price for its actions. Nato is poised to do more to help ukraine strengthen its forces and defend their cup. More broadly, i want to commend estonia for being such a strong leader beyond nato, whether its contributing forces to the eu mission in the Central African remember or supporting efforts for the syrian people, helping nations like tunisia and their own transitions to democracy are standing up for Internet Freedom and human rights. This nation of 1. 3 million people, as we say, truly punches above its weight. The world is better for it and its yet another reason why the United States will always be proud to stand with our ally, estonia. Finally, i want to say today the prayers of the American People are with the family of steven sogalah. Overnight, it was confirmed steven was taken from us in a horrific act of violence. We cannot begin to imagine the agony that everyone that lost steven is feeling right now, especially his mother, father and younger sister. So today our country grievous with them. Like jim foley before him, steves life stood in sharp contrast to those who murdered him so brutally. They make it their claim that they kill in the name of religion. But it was steven, his friends say, that deeply loved the islamic world. His killers try to claim that they defend the oppressed. But it was steven who traveled across the middle east to risk his life and tell the story of muslim men and women demanding justice and dignity. Whatever these murderers think theyll achieve by killing innocent americans like steven, they have already failed. They failed because, like people around the world, americans are repulsed by their barbarism, we will not be intimidated. Their acts only unite us and stiffen our resolve to take the fight against these terrorists. Those who make the mistake of fighting americans will learn that our reach is long and that justice will be served. Mr. President. Well, i think we can open things up for if some questions. I know two from estonian journalists and two from president obamas entourage. As the host, ill give the first opportunity to one of our tough questioners. Yes. Thank you. I have the same question to both president s. The partnership between russia and nato is as we all know. Why to keep it alive, an agreement signed in 1997 between russia and nato . Perhaps it will push some new opportunities to other regions in estonia, latvia and lithuania. Well, from our side, nato did decide to appease its relations with russia several months ago. But on the issue in terms of what are the implications of the nato russia act, i suggest to say we cant do anything because of the nato russia founding act, read the nato russia sounding act which says these conditions hold to, quote, in the current and foreseeable future. But the security environment of the current and foreseeable future. That was the security environment of 1997 when Boris Yeltzin was president and there had been no violations of either the u. N. Charter or the 1975 housing and final act of 1990 paris charter. So this i would argue this is an unforeseen and new security environment and, therefore, one has to hold on to certain provisions. It does not mean we have to give up the whole act, but certainly when an agreement in certain parts no longer hold, well, then its time to make a change. I mean, the nato russian founding act has been violated by russia. We continue to support the vision of that document, but its substance has changed dramatically. And i am confident that all of natos actions are and will be conducted in accordance with its International Commitment as an alliance. The circumstances clearly have changed. And i think this will be a topic of discussion in wales. Beyond the issue of that particular document, our top priority has been to make sure that theres no ambiguity when it comes to our article five commitments to our nato allies. And as a consequence of the rotations that have been increased, the presence of u. S. Troops in the course of those rotations and additional nato allies, we want to send a clear message to everyone is that we take those commitments seriously. And i think whats going to be clear during the course of this summit is that given the changed landscape, not only do we have to make sure that these rotations are effective and designed towards current threats, but more broadly, nato has to look at its defense capabilities as a whole and make sure that they are updated and properly resourced. You know, for i think a certain period of time there was a complacency here in europe about the demands that were required to make sure that nato was able to function effectively. My former secretary of defense, i think, came here and gave some fairley sharp speeches repeatedly about the need for making certain that every nato member was doing its fair share. I think secretary general rasmussen during the course of his tenure continually emphasized upgrading our joint capabilities. And you obviously, whats happened in ukraine is tragic, but i do think it gives us an opportunity to look with fresh eyes and understand what it is that is necessary to make sure our nato commitments are met. And that is one of the reasons that im here in estonia today. Im going to call on ann compton. Ann is on her farewell tour. Thank you very much, mr. President. Now that you say a second american has been slain, what is your response . Will air strikes continue inside iraq . Might they expand into syria . Will you have a full strategy now on isis which will satisfy those like Prime Minister cameron who call it an imminent threat to all the interests . And will it satisfy some of your supporters like senator feinstein who fears that on this you may have been too kaush justice . Thank you. Well, keep in mind that from the outset, the moment isis went into mosul, we were very clear that this was a threat not just to iraq, but to the region and to u. S. Interests. So weve been putting forward a strategy since that time that was designed to do a number of things. Number one, to make sure that americans were protected in iraq, in our embassies, in or consulates. Number two, that we worked with iraqis to create a functioning government that was inclusive and that could serve as the basis for iraq to begin to go on the offensive. And the air strikes that weve conducted in support of protecting americans, conducting humanitarian missions and providing space for the Iraqi Government to form had born fruit. Weve seen that in the mountains, weve seen it most recently in the town of amaril, which held out by a siege from isis. Were seeing progress in the formation of an inclusive sunni shia kurd central government. So what weve seen is the strategy that weve laid out moving effectively. But what ive said from the start is that this is not going to be a one week or one month or sixmonth proposition. Because of whats happened in the vacuum of syria, as well as the battle hardened elements of isis that grew out of al qaeda and iraq during the course of the iraq war, its going to take time for us to be able to roll them back and it is going to take time for us to be able to form the Regional Coalition thats going to be required so that we can reach out to sunni tribes in some of the areas that isis has occupied and make sure that we have allies on the ground in combination with the air strikes that weve already condu conducted. So the bottom line is this, our objective is clear. And that is to degrade and destroy isis, so that its no longer a threat not just to iraq, but also the region and to the United States. In order for us to accomplish that, the first phase has been to make sure weve got an Iraqi Government thats in place and that we are blending the momentum that isil was carrying out and the air strikes have done that. But now what we need to do is make sure that weve got the regional strategy in place that can support an ongoing effort not just in the air, but on the ground to move that forward. And last week, when this question was asked, i was specifically referring to the possibly of the military strategy inside of syria that might require congressional approval. It is very important from my perspective that when we send our pilots in, to do a job that we know that this is a mission thats going to work, that were very clear on what our objectives are, what our targets are, weve made the case to congress, weve made the case to the American People and we got allies behind us so that its not just a one off, but its something that, over time, is going to be effective. And so the bottom line is this, ann, its not only that were going to be bringing the justice those who perpetrated this terrible crime against these two fine young men. More broadly, the United States will continue to lead a regional and International Effort against the kind of barbaric and ultimately empty vision that isil represents and that is going to take some time, but were going to get it done. Im very confident of it. Did you just say that the the strategy is to destroy isis or to simply contain them or push them back . Were going to our objective is to make sure that isil is not a ongoing threat to the region. And we can accomplish that. Its going to take some time and its going to take some effort. As weve seen with al qaeda, there are always going to be remnants that can cause havoc. Of any of these networks and in part because of the nature of terrorist activities. You get a few individuals and they may be able to carry out a terrorist act. But what we can do is to make sure that the kind of systemic and broad based aggression that weve seen out of isil, that terrorizes primarily muslims, shia, sunni, terrorizes kurds, terror ayizes not just iraqis, but people throughout the region, that that is degraded to the point where it is no longer the kind of factor that weve seen being over the last several months. Estonia in the daily newspaper, my question is also for both president s. Ukraine is facing a difficult time and the situation on the ground may become even more in the right lane run up to the parliamentary elections there in october. In your view, what more could be done and should be done to support ukraine millie, economically and also from Security Point of view . What do you think about the idea of providing Ukrainian Armed forces with weapons to counter russias attack in the east of the country more effectively . Thank you. Well, most importantly, ukraine needs, above all, continued political support. And that is from that support comes decisions that involve everything else, economic aid, humanitarian aid, and also military aid. So and from that comes decisions on equipment. In wales, nato, Ukraine Committee will gather and well decide how to increase nato defense cooperation with ukraine. This is a kind of decision that we in nato take together. On the humanitarian side, we have doubled our human tear dwran and Development Distance and looking for what more we can do, we have already brought seriously Wounded Ukrainian soldiers to our top notch Rehabilitation Center here and well continue to do so. That is certainly one thing that is we know that ukrainians lack that and we have it on a superbly high level. Also, i should add quickly that with the assistance of the United States and the Walter Reed Hospital that we have this here. The next couple of months leading up to the parliamentary elections will be very tricky. Russia, i predict, will do everything in its power to undermine the elections. We saw this already in the case of the president ial elections. It will either destabilize the government in kiev and to keep the Ukrainian Forces from regaining ground in the east. So we should be prepared for a tough several month or month and a half. The next government, of course, that will be then will have the full legitimacy that comes with a new partmentry election must show that it is a clear and better alternative to the one that the people of ukraine ousted half a year ago. And i also see that making sure, ensuring that the elections are carried out in a free and fair manner, it will be a top most priority for us, for the osce, that and i think one of the issues should be, in fact, the kind of interference that we saw in the president ial elections that not be allowed or be fully addressed and recognized by the monitoring of the elections. I think that we all, after especially the president ial election, we all know what the Russian Forces can do to disrupt the democratic process. And i think we should be prepared to document all of that when we get to the likzs. Political support is absolutely vital. And one of our goals at the summit over the next several days is to once again project unity across nato on behalf of its efforts to maintain its sovereignty and territorial integrity. The sanctions that weve applied so far have had a real effect on russia. I think its important for us to continue to impose costs on russia so long as it is violating basic principles of international law. So far, at least, weve been able to combine efforts between europe and the United States and some of our allies around the world. And the results are a russian economy that is effectively contracting. Capital flight, putting a burden on the russian economy. That at the moment may be overridden by politics inside of russia as a consequence of staterun propaganda. But over time, will point to the thakt that this is a strategy thats not serving russia well in addition to not serving ukraine, obviously, well. Beyond that, the ukrainian economy is something that we have been paying a lot of attention to. We helped work with the imf to ensure that ukraine had the resources to get through some of the emergency financing issues that they had to deal with. But were going to have more work to do. The military efforts that have been required to deal with russian armed, russian trained, russia supported and often russian draekted separatists has meant that has meant a drain on the ukrainian economy. Not to mention the fact that you have Major Industrial areas inside of ukraine that obviously have been impacted by the conflict there. So were going to have to make sure that the International Community stands behind the Ukraine Economy in the shortterm. Even as we encourage and work with ukraine to carry out some of the basic reforms that are going to be required in order for them to achieve the kinds of models of success that weve seen in estonia and poland and other places. And thats a tough load to hold. It took a couple of decades for some of the countries who are currently in the eu to achieve the sort of market based reforms that have led to such prosperity. Ukraine knot going to be able to do that overnight, but we have to make sure we are building a bridge towards that future. If we combine those efforts with a commitment to continuing the nato Ukraine Military relationship, they are not a member of nato, but we have consistently worked with their military in terms of training and support, then, you know, i think that not only will ru crane feel that in words we are behind them, but theyll see that indeed we are working with them, as well. Steve with reuters. Thank you, sir. Following up on ann, will you have this military strategy on isis ready for discussion with nato ally these week . And in your view, what should nato be prepared to do to take on Islamic State . Lastly, how much stock do you put in this reported ceasefire between ukraine and russia . How do you assess putins motiveses . Its too early to tell what this ceasefire means. We havent seen any details. Weve just seen a couple of wire reports. We have consistently supported the effort on of president poroshenko to lead to the settlement of a meaningful conflict. So far, it hasnt helped either because russia has not been serious about it or has pretended that its not controlling the separatists and the separatists, when they thought it was to their advantage, have not abided by the ceasefire. So we havent seen a lot of followup on socalled announced ceasefires. Having said that, if, in that case, russia is prepared to stop financing army train iing are a joining with Russian Troops activities in ukraine and are serious about a political settlement, that is something that weve all hoped for. Ive said consistently, our preference is a strong, productive, cooperative russia. But the way to achieve that is by abiding to international to improving the economy, to focusing on how they can actually produce goods and services that other people want and give opportunity to the people and educate them. Thats not the path that theyve been pursuing over the last several years. Its certainly not in evidence when it comes to the strategy in ukraine. Ill leave it at others and mr. Putins psychology on this. But 2in terms of actions, what weve seen is aggression and appeals to, you know, National Sentiments that have historically been very dus in europe. And are rightly a causal concern. So theres an opportunity here. Lets see if theres followup. In my discussions with president poroshenko, ive consistently said that he needs to follow up on the kinds of reforms that he proposed so that Eastern Ukraine feels as if it is fairley represented and that russian language speakers are protected against discrimination, these are all things that part of this platform, they encourage them to move forward. But no realistic political settlement can be achieved if effectively russia says we have going to continue to send tanks and troops and arms and advisers under the guise of separatists who are not homegrown and the only problem settlement is if ukraine sees its territory or its sovereignty or its ability to make its own decisions about its security and its economic future. With respect to iraq, we will be discussing this topic even before isil dominated the recalls. One of the concerns that we have had is the development of terrorist networks and organizations, separate and apart from al qaeda, whose focus oftentimes is regional and who are combining terrorist tactics with the tactics of small armys. And weve seen isis to be the first one that has broken through, but we anticipated this a while back and it was reflected in my west point speech. So one of our goals is to get nato to work with us to help create the kinds of partnerships regionally that can combat not just isil, but these kinds of networks as they arise and potentially destabilize allies and partners of ours in the region. Already, weve seen nato countries recognized the severity of this problem, that it is going to be a long run problem. You know, immediately, theyve dedicated resources to help us with humanitarian air drops, to provide arms to the peshmoga and to the iraqi Security Forces and we welcome those efforts. What we hope to do at the nato summit is to make sure that we are more systematic about how we do it, that were more focused about how we do it. Nato is unique in the annals of history as a successful alliance. But we have to recognize that threats evolve and threats have evolved as a consequence of what weve seen in ukraine, but threats are also evolving in the middle east that have a direct effect on europe. And to get back to what i said earlier to ann, we know that if we are joined by the International Community, we can continue to shrink isils sphere of influence, its effectiveness, its financing, its military capabilities to the point where it is a manageable problem. And the question is going to be making sure weve got the right strategy, but also making sure that weve got the international will to do it. This is something that is a continuation of a problem weve seen certainly since 9 11, but before. And it continues to metastasize in different ways. What weve got to do is make sure that we are organizing the arab world, the middle east, the muslim world, along with the International Community to isolate this cancer, this particular brand of extremism that is, first and foremost, destructive to the muslim world and the arab world in north africa and the people who live there. Theyre the ones who are most severely affected. Theyre the ones who are constantly under threat of being killed. Theyre the ones whose economies are completely up ended to the point where they cant produce their own food and they cant produce the kinds of goods and services to sell in the world marketplace. And theyre falling behind because of this very small and narrow but very dangerous segment of the population. And weve got to combat it in a sustained effective way and im confident were going to be able to do that. All right . Thank you very much. To those viewers who have just tuned in, you are watching worldwide exchange. We are showingty Live Press Conference between president obama and the astonan premier. President obama says the ceasefire between ukraine and russia that has been announced this mortgage, he says it is an opportunity, but it needs follow followup. And he says, though, that it is too early to tell what the ukraine ceasefire actually means. Keep in mind, though, that ceasefire has been retracted by a putin spokesperson about 30 minutes ago and on the back of that we saw some of the risk assets coming down once again. So theres a so he ceasefire that was announced by the ukrainian president s office earlier on this morning. It was then later retracted. So a very, very forward morning for ukraine and russia. Lets have a look at the market implications. Will. Indeed, u. S. Futures are pointing to a positive open. Theres been a slight strengthening with recent developments. More action happening in european markets. European markets are very strong. They opened slightly positive at the start of the day, as you can see. This announcement came, then markets dropped back slightly half an hour later as president putin spokesperson came out and said it was not his place to agree to a size fear and one had not been agreed. Now its settled, but still in a positive area. Both president s mentioned a ceasefire, but they did not confirm it. The as we look at the individual markets here, you can see how strong they are. Lets focus on germany in particular, up 1. 2 at the moment. It has not up as much as 1. 8 earlier when we thought that ceasefire had been announced approximately moving on from the european markets, well have a look at the russian market, the micex index, up 2. 7 . Again, it had been stronger earlier. And its interesting to look at carlsberg, up 3. 378 . Carlsberg, exposure to that region. Moving on to forex, the euro dollar has stremngthened. A lot of volatility during the day and the pound earlier strengthened after its positive Services Data that we had earlier. Commodities yesterday had a significant fall, shrugging off geopolitical worries. Crude down to a 16month low. Bounced back a bit today, as you can see up about 1 . But yesterday it was down around 3 , depending what the look at. Gas yesterday was off 4 and gold weakened yesterday and has bounced back a little bit today. Bonds finally and the data moving around today following this geopolitical announcement, while the u. S. Treasury yields, prices fall a little bit up 2. 4 . German bunch have strengthened recently in the last week, 0. 96 . They have been as low as 9 the 0 basis points recently. Now were going to go back to carolin. Yes, weve been getting some conflicting flashes this morning, so we want to try and clarify a little bit. The Russian News Agency quotes a putin spokesperson saying that the russian president putin and ukrainian leader poroshenko have largely agreed on a way out of the crisis. Then at 10 00 cet, ukraine adding to the statement saying a permanent ceasefire had been reached in the donetsk region. The krem hin, then, responded at 10 54 cet saying the agreement was not again, not a ceasefire as moscow had never been party to this conflict in ukraine. Lets try and get even more clarity on this. Joining us now on the phone is charles robertson, global chief economist at one nations capital. Also we say is larry hathway. Charles, let me kick things off with you. How do you explain this discrepancy between the commentary coming out of the kremlin and out of the Ukrainian Office . Is it down to translation . Weve seen this before, havent we . Im sure its to do with putin trying to ensure that hes not saying in taking responsibility for whats happening in Eastern Ukraine. So i dont think its a translation issue, i just think theres a difference of view here and russia doesnt want to be seen as being the aggressive. Thank you, charms. Larry joins us, as well. Markets are very positive after the ceasefire had been announced but remain necessary positive territory. What do you take from that . Well, look, markets will respond positively if they think the situation is going to calm down. After all, if you go back and think about European Economic weakness that has been evident in the isil, the pmis, much of it has been ascribed to uncertainty stemming from this crisis. That said, i think with the uncertainty, the ambiguity about what is happening is a reminder that in the bigger sense of this, i think were still a long way from removing that uncertainty in the conflict area. Charles, what do you make of president obamas reaction to it . He says it is too early to tell what the ceasefire actually means. He says it does present an opportunity, but a russian follow through is needed. Will we get that russian follow through . Well, i was interested by what obama said want t im mr. Ication of what he is going on about was that russia would have to be not violating international law. That would almost include crimea, you think, under the u. S. Definition of this. It doesnt sound like the u. S. Is pulling away its support for ukraine. Theres two reasons why we might have this talk of ceasefire now. One is because putin is worried by this intensification of european sanctions opinion there are much more serious than any that have been pushed through so far. Ukraine thinks it hasnt got a chance of winning Eastern Ukraine back because russia will intervene with as many troops as necessary. So the eu is giving up or putin is giving up. Russia is the worst performer in em yeartodate. Thats the worst of any of the gem countries and people have been taking as ets out because of the weakness. Russia is the one that would bounce the most if there was a chance of this turning into something serious. Yes. Markets loving the idea of peace. Thank you so much for that, charles robertson, chief economist. And were joined now by james riccard, the author of the death of money. Good morning to you, james. Rudz in your notes overnight, obamas speech in estonia wont mean much. Is that still your view after seeing the speech . Yeah, it is. The president shows he has no grasp of geopolitics, starting with the fact that hes referring to the enemy as isil. Hes not sure about whom hes fighting. I dont think the president has been taken seriously since september 2013 when he backed away from the red line in syria leadership and gave an ultimatum. He failed to do that. Hes trading the Islamic State as if it were a street crime problem in a bad neighborhood as opposed to a serious geopolitical threat. So on every count, again, its mostly rhetoric that the white house specializes in. If you look at the transcript of what he just said, he used to word strategy in almost every sentence. I dont think that the president is taking it seriously. I think the comments, the president hasnt shown that. What do you think this means ahead of the nato summit . And he force what we want to be as a meaningful sooer ceasefire in Eastern Ukraine. Lets go back and think about some of the things the president did say. Some of them was to underscore the commitment. I think one of his big messages going ba to wales is to ask the european to step up where they have fallen short. In an era when budget cuts imply defense cuts, hes aware that this will require Multi Lateral concerted efforts. In a sense, i think his agenda is about trying to build a coalition here that is committed both in statement, but also in action to try to do what they can. Having said that, whether thats enough to change the balance of whats happening in the Eastern Ukraine or for that matter in the middle east, i think these things will continue to play out and be sources of uncertainty for investors for a considerable period of time. That is much higher than what were seeing in germany, for example, 1. 4 coming out of germany. But the germans have said its about how well weve spent the money on defense. James, i want to get back to you. What do you think of the bounds that were seeing in risk assets and equity markets this morning . Do you want to buy into it . Well, its obviously a reaction to the talk of a ceasefire. Im waiting for the bell. You have to ask whether poroshenko, you know, maybe wants a ceasefire because the Ukrainian Forces were pretty much in for a ive seen the intelligence that russia had multiple armored battalions in Eastern Ukraine. If im putin and i think im going to get two federations out of it, ill have a ceasefire. If im poroshenko, ill have a ceasefire, too, for different reasons. I think we have to look through this and say, well, what does it really mean . Russia is a federation. If they can get two more federated republics, they win. Obviously, its a knee jerk reaction by markets. The ceasefire is good for people on the ground. Theyre the real victims of all this. We understand that. But it looks like putin is getting what he wants. James, youre going to stick around along with larry. Were going a for a quick break. Were expecting a slight move to the upside even though that hasnt been confirmed. We needed 30 new hires for our call center. Im 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 webs 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. Kiev changes its tune saying a regime or ceasefire for even ukraine was struck with russia after putin said no permanent deal had been reached. The euro initially moving higher and russian stocks fighting 4 . Announcer youre watching worldwide exchange, bringing you Business News from around the globe. U. S. President obama says it is too early to tell what a russianukraine ceasefire would mean. This as president poroshenkos office retracted language thats a permanent truce was reached after putin says no such deal was made. Speaking in estonia on an official deal ahead of the nato summit, obama applauded ukraine for helping estonia has provided assistance as ukraine has worked to strengthen their Democratic Solutions and reform their economy. Because weve stood together, russia is paying a heavy price for its actions. And the u. S. Futures markets, as you can see, theyre expected to open up about 5 points for the s p, 55 points for the dow and the nasdaq up about 1 1 points. James riccard, the author of the death of money, st still with us. James, this expected positive open in the u. S. , is that a fair open following these geopolitical developments . Yeah, sure. The news is fairley good and if youre a day trader, technician, you dont want to stand in the way of this. I understand that. I think the important thing for investors to understand is these problems are not going away. The problems with putin, territorial ambitions in Eastern Europe are not going away. It reminds you a little bit of 2011, 2012 during the european sovereign debt crisis. Its called nondirection of volatility. You have risk on, risk off, depending on which side of the bed Angela Merkel get out of, something similar but more serious is going on today, which is there are going to be good days and bad days. But none of this has gone away. I think thats an important take away from investors. James rickart, thank you very much for that. James was talking about the nondirectional of volatility remind us us of the eurozone crisis days of 2011, 2012. Are we come place ept about the risks coming from russia and iraq . I think so. I think we saw a bit of volatility in the Capital Markets back in early august. That was a bit of a dry run for things that will unfold at some point. Hard to predict exactly when in the course of the remainder of this year. We do have to take very much to heart what was just said, that the conflicts in russia and ukraine are not going away irrespective of todays news. But equally, there are a lot of things we havent yet talked about, whether its the ecbs decisions tomorrow, or whether its the really important u. S. Data by the end of this week that could leave a fairley big market on capital activities. From that point of view, i think well probably be complacent to what can changed in Capital Markets. Do you think the big impact this week will be on the ecb . I think it will play a big role. But at the end of the day, its probably about the u. S. Economy. In particular, if we said a robust employment report, weve got to see some repricing of the curve. If we get a really good number, do you think that is good news will once again be bad news for the markets . I do think so. At some point, we have to recognize that the fed is likely to be much harder to read when it comes to rate policies than it has been on taper policy. The more you bring rate discussions into the marketplace, the more scope there is for volatility. Now, you just touched to the nato conference quickly. What can nato offer putin to get to nato and enforce the ceasefire . Slily, backing down from what the sanctions look like. Those sanctions are difficult indeed for russia. Theyve had a Material Impact on its economy that senses the withdrawing of sanctions is the chief instrument. Larry hathaway, appreciate your time today. I want to show you u. S. Futures. Were expecting a slightly higher open. Hopes for a ceasefire are out there even though there are reports that it happened have been retracted. Indeed and that is coming on the back of a strong day in european markets. Thats it for todays show. Im wilfred frost. And im kathin roth. See you same time, same place tomorrow. Goodbye. Good morning. Welcome to squawk box. Deal or to deal . A ceasefire in ukraine have the Global Markets ajolt. Home depot investigating a suspected Security Breach that could have put Consumer Credit and debit card debt of millions of consumers at risk. And apple says that the icloud was not hacked. The company now shifting the blame for the leak of naked celebrity photos. Its wednesday, september 3rd, 2014, and squawk box begins right now. Good morning, everyone. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. There are more Haunting Images coming out of the middle east. Radical militant group isis killing another american journalist held captive. The latest video shows the beheading of 31yearold steven sotlov. That militant, once again, taunting america. Following the gruesome execution, a militant masked man is shown holding another man by the collar. That man is said to be british citizen david hanes. President obama is in europe today and in the last hour addressed the latest act of terrorism by isis. Like people around the world, americans are repulled by their barbarism. We will not be intimidated. Their horrific acts unites aus