Transcripts For CNBC Worldwide Exchange 20140908

May vote yes for independence for the first time. This is sending the sterling sharply lower than the dollar. And the finance minister says that the 1,000 day program is on track striking a tone in the call for his government to speed up reforms. We dont need anybody to tell us what we need to do because we know that very well on the fiscal side and the reform side. Youre watching Worldwide Exchange bringing you Business News from around the globe. Good morning, everyone. Youre watching Worldwide Exchange. Good morning to you, will. Did you have a good weekend . Yes, i did. You probably went through alibabas filing and then bam, it hits you. That was 64 to the other way only two or three weeks ago. You talk about polls narrowing getting closer, this is totally reversed, very interesting. We are seeing declines in the currency today. Well get more on that later in the show. U. S. President Barack Obama Says the u. S. Will go on the offensive against the Islamic State militants after he unveils his strategy. Obama will unveil his game plan for taking on isis wednesday but stresses there will be no boots on the ground. Speaking to meet the press president obama was confident isis could be defeated. On wednesday i will make a speech to describe what our plans are going forward, but this is not going to be an announcement about u. S. Ground troops. This is not the equivalent of the iraq war. What this is is similar to the kinds of Counter Terrorism campaigns that we have been engaging in consistently over the last five, six, seven years. And the good news is that because of american leadership, we have, i believe, a broadbased coalition internationally and regionally to be able to deal with the problem. Catch more of that later in the show and head to cnbc. Com for the full interview an analysis of what to expect from wednesdays national address. Renewing fighting in Eastern Ukraine may have been fridays ceasefire at risk. Explosions hit the governments more pressure on the baltics. He calculates fromni day to day he does. E. C cf1 o suppose that a month ago or two months ago there was the 6,000 d8troops killing ukrainians. co cf1 ooops killing ukrainians. co now we are sort of like the frog in the boiling water. So you dont believe the ceasefire will last and you think the russians are going to continue pushing. I dont know ift it may las if Vladimir Putin has control of Eastern Ukraine and does not want to continue on theq adventures thatnr i justx described. And another reason why it may ukrainians militarily have noe1 real capabilities. Which means we have to do from the European Union and more sanctions from the United States . We need tougher sanctions, we need to givee1 the ukrainians military equipment, training programs, we need a group of American Military r t advisers over there with them. E. Europeans are dependentq on Russian Energy that were really not going to see ani very vigors response. We have heard a whole lot of talk and very little action. Let meco ask you a question ked you five months ago, are we in aw3 cold war wit3 russia . Im not sure it is a cold war in the traditional sense we dont have nuclear weapons. People aret co on launch 0 9akt we are certainly in an era where Vladimir Putins ambitio. a are to reestablish the 1 russian that includesq ukraine, that includes moldova and the baltics, and that is his ambition tofae1 achieve that go. We need to understand those are his ambitions and hell do things that he believes are necessary toco achieve that. Lp and if we dont show strength as we did during the coldfa war, tn he willc takejf advantage of wh hei]lp perceives ascot weaknes. And it could lead to veryjf serious crises. co meanwhile, theyxd spoke tookc about tensions between crimea and i]russia. nifa government isnt perfect and they have tot1answer. Russia has thenr latestxd part the world, 11 , but peopleokfacr dying. It used to be xd300 million russians. They losexdt every year anothe million. And they told the russians, ni gentlemen, do you think youll be a greatnb russia. People will love you. Russia. Beyond the generation is in terrible shape. All over the i]world,cfai]ok by. U aupd. Pd. So i toldlq7c jfthem, having a 7 cc1ni its very hard to fall asleep next to them. They feel persecuted. Yes. They feel threatened. The people are not fools. For Eastern Europe and the bank of america lynch, today has putin won . I think you definitely have achieved a large part of what he wanted to do, but at the end of the day, his goal has been that Eastern Ukraine becomes a state within a state. And it is still unclear whether this is an end game acceptable to the Ukrainian Government. Thats one of the reasons why we are still advising investors to be cautious and not, sited about the ceasefire because the state of negotiating position of russia which involves independence to trade policies, independent military easing seems very hard to accept to any government in the world, certainly ukraines government which has to run elections from the 26th of october. John mccain said very interesting comments and said the ceasefire could potentially last because ukraine really has no military power. Putin has de facto control over Eastern Ukraine, basically hes got everything he wants. Do you think now could be a big turning point in this situation . I know youre a bit skeptical here, but this could be it. It could turn into a frozen conflict like we had in moldova and georgia, and it is satisfying to russia. The question is again, if the Ukrainian Government can ultimately accept it or whether this sort of situation could lead ukraines government itself to ultimately fall which leads to further political instability in ukraine. So i dont think it is a problem that can last for a long time. The other thing to be mindful from the investor point of view, if this is indeed now the end game, then russia can have a bit of a bounce and we have actually recommended investors to potentially buy options on rallying in the market. But at the same time as the conflict continues and there are more sanctions and so on, then it is not clear whether russia is pricing which premium. And there is obviously talk despite the ceasefire, theres talk of more sanctions and escalated sanctions, so do you think that helps in to the russian market or not . Well, i think the currency that we are talking about, that will depend on how long the ceasefire lasts, but i think it has been well flanked. But the problem youve been pointed to for some time is that if you think beyond the shortened headlines and you look at what russia may look like in a years time, as the process continues with more sanction, and it leads to capital up flow, it becomes increasingly questionable whether you should be running an Economic Policy like a normal country. Russia has tried to move toward the exchange for next year with inflation targeting. It has free global capital. It has treated the Banking System largely as independent and as following principles. And all of this is becoming increasingly questionable. Do you want to can you run the sanctions in the economy the same way as a reasonably free market economy . And this risk is also we have Third Quarter gdp, we have the Interest Rate decision. Do you think that the central bank will tighten once again 50 basis points up priced in by the end of the year . Yes, it will go up because inflation continues to go up, but this is an example of the point i was trying to make minutes ago. The central bank has to hike rates defend the currency against capital outflow and to keep inflation low, which is rising because of sanctions. It is not about global Economic Policy, right . You have low growth and the cutting rate. And this conflict will increasingly come over the course of the next year, unless of course the situation in ukraine improves and the sanctions lighten. Thank you, david. Do send in your emails and questions to david at worldwide cnbc. Com or on twitter. Lets have a look at the markets. A little bit of weakness in europe today and the stock 600 is down half a percent. Thats a little bit more than it was at the open. If we dive into individual markets, well see that led the weakness by the ftse 100 offsetting gain there is in the dax and in the french market. The ftse 100, were over here today, the ftse 100 is down 42 basis points and thats really come about because of the Scottish Independence vote changing over the weekend. The polls are suggesting a yes vote is possible, 51 to 49 in the lead. That gallop poll. This is now 42 basis points and thats the little bit of strength in germany just bucking the trend for the rest of the market also being weak. If we dive into the individual stocks, electrolux is at the top after buying general appliances for 3. 3 billion cash. This will generate 5 to 7 cents a share in gaps. Electr electrolux is up 7 . And General Electric is up a bit as well. Ab foods is down 5 . Rbs is trading near the bottom after the proindependence happening in scotland. The poll has put the Scottish Campaign at 51 with the no vote at 49 . It is very interesting that we have the low levels of yields across europe and that has also pulled down yields in the u. S. And the u. K. Despite the u. S. And u. K. Facing tightening rather that loosening. I think that really points to a disconnect in markets, particularly in the u. S. And u. K. And we may see a significant correction either from equities or bonds in the u. S. As we get closer to tightening. The currency last week was all about the euro which stays below the 130 level but not much moving after we have big movements on thursday. The most interesting today is sterling. As you can see, sterling is off almost a whole percent against the dollar. Thats a massive move on the back of this uncertainty around tee scottish vo huge move. And still coming up on todays show, well talk about the sterling taking a pounding on the latest Scottish Independence poll. The 10 billion market, a city analyst tells us why tech is here to stay and a company you should be buying to cash in on the craze. And we are in motor city. Detroit for the rare oneonone interview with mary barra as she sits down with phil lebeau to talk recalls and restructuring. And alibaba in the 100 meetings as they kick off the road show in new york. We ask if the stock is a musthave for your portfolio. More after the break here on Worldwide Exchange. 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. And its finally here, alibaba is kicking off its twoweek road show today at the Astoria Hotel in new york. They will introduce management followed by an openended q a session. Alibaba will also hold meetings with those in baltimore, denver, los angeles and San Francisco before heading to hong kong, singapore and london. The road show could wrap up on september the 18th. If it does, the ipo could price that night. On friday, alibaba announced the size of the deal, the company and executives will sell a combined 320 million shares between 60 and 66 each. That could raise 21 billion and alibaba could be up to 163 billion making it the largest ever u. S. Ipo. Well talk more about alibaba with ron achada joining me from hong kong. Thank you so much for joining us. What can alibaba learn from facebooks botched ipo . Because im thinking, the pricing is adequate, isnt it . So we shouldnt be seeing a botched alibaba ipo . We clearly believe they would have learned from facebook ipo and would have left something on the table. So if you look at evaluations around 23 times forward, which is not expensive for the Growth Opportunity that the china market offers, as we look at aliba bar alibabas market share, they are expected to grow at more than 30 on mixed fears and for the opportunity. What does this mean for those who have a stock in the company already, will this boost the stock or take away . I think it will boost the stock but people will prefer a cleaner exposure. So in longer term, it may be negative for yahoo . And we talk about evaluation there not being too stretched. You mentioned 22 times forward earnings, but im interested in the evaluation comparison to amazon. Its much more expensive than amazon on a price to sales multiple but less on a price to earnings, which are the most important multiples for this particular company . Clearly one has to look at earnings, look at the model that has a strong operating level in place. The gross margin is at 35 , the operating margin is close to 55 . A key question that remains from the perspective that is the man able to look at some of the marketplace opportunities elsewhere in asia or are they going to look in other parts of the world. Will they use this cash for this. The growth seem s s to work fore company. Theres so much buzz about the ipo. I wonder to what extent it can cool the softening ipo market because either it will revive the market which has softened over the summer months or it could be a little bit of a death now for it. I think it works both ways. It can take liquidity out of the market, but if the issue is good, it will attract modern investors into the equity class. The offering is good but it helps to increase the content. Everyone really likes the fact that they have 80 market share of ecommerce in china. And this applies to amazon as well as alibaba, but what is the threat that social Media Companies try to take a part of ecommerce in general. I think we have been watching that for some time. We have seen the gdp tieup, but that has yet to make a debt in the revenues. Should that happen in the coming years and should the market slow down, thats a risk for the evaluation. In three years from now, we need to find new growth for the companies, whether it is marketplaces elsewhere in asia or other parts of the world or in other part of the businesses from this Company Growing up, that remains to be seen. Raul, cocio at global investments. Head to cnbc. Com to find out the latest on alibaba. Do you think alibaba is a good buy . Will it be a stock to add to your portfolio if you can get your hands on it . Obviously, its a very popular ipo. If you want to join the conversation on Worldwide Exchange, get in touch with us by email, via twitter. Coming up on the show, dont tell us what to do. Thats the fine message from italys finance minister. But are businesses listening . Well bring you that full interview after the break. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Youre watching Worldwide Exchange bringing you Business News from around the globe. Welcome back. President obama steps up military efforts against isis but rules out boots on the ground in iraq. In and exclusive interview with cnbc, he says the u. S. Will have momentum against the Islamic State. We are going to shrink the territory that they control. And ultimately we are going to defeat them. Electrolux takes on the shares market as shares jump to 3 billion. They in a bid to double their sales in north america. And the lloyds is up after it is said that london could vote yes for the first time in shocking news against the dollar. And the 1,000day program is on track striking a defying tone in the call for his government to speed up reform. We dont need anybody to tell us what we need to do because we know that very well. On the fis kical side and on th reform side. Good morning, everyone. Lets have a look at the european markets on this monday morning. The ftse 100 no surprise is under pressure after that survey came out over the weekend. The ftse 100 down by almost half of 1 . The xetra dax is holds its head above water up by 0. 1 . The cac 40 is lower by a third of 1 . Overall, maybe still some profit taking after last weeks pretty impressive gapes. I mean, the italian market was up by almost 5 on the back of the ecb moves. And that is also moving the foreign market as you can see there. Sterling sharply weaker against the dollar. Almost a percent. A very significant move given that nothing has been decided yet. Now, italys government does not need to tell anyone what it needs to do in order to turn around the economy struggling. The countrys struggling economy is the result of making good on delivering reforms. They announced 1,000 days of action including changes to the labor market and red tape. The country is back in recession and some Business Leaders are already expressing impatience at the pace of the program. Wednesday we sat down with the foreign minister who was keen to dismiss criticism that the government was not in enough of a hurry to make the necessary changes. We dont need anybody to tell us what we need to do because we know that very well. On the fiscal side and on the reform side. On the timing and the hiring, let me start from the 1,000 days that Prime Minister renzi has put on the table. 1,000 days are about beginning to see the results of the reform exactly because reforms take some time to deliver. Which means having a daybyday effort in implementing reforms. Which are being now asked by parliament and introduced by government. So this is a time profile. There is a concern that there is a raid to public finances. I think they have been saying the concerns on the savings that aught to be made are being eat up up by parliament and being used to improve the public finances. Savings are being achieved and the aim of the government is to make permanent spending cuts to permanent savings. This is essential to make tax cuts credible. And this is the government, the government is as mr. Renzi says, and i agree, the first government cuts taxes to companies and taxes to households, but those have to be credible. And credible tax cuts need credible and permanent spending cuts. Joining me now is alberto from credit suisse, something needs to be done because it seems that now along with friends, those are the men from europe. It is frustrating because everyone is telling france what to do as well as the ecb. So theres a lot of recipes around. Having said that, definitely we need to see more and i dont know if the market will be patient for a thousand days. The good news is they are starting in the right direction. They are starting they started with the Senate Reform which went through and now in italy they are taxing the reform of the legal system which should speed up the length of legal cases from the longest in europe in the eurozone of around ten years to hopefully something a bit shorter closer to the average of a year or a year and a half. If youre an investor and you buy something in italy or you land and theres a problem, you have a bad loan, your recovery to time cannot be ten years. That deters a lot of investors from coming in. So thats a good point as a starting reform, but we need to see the results in the next 6 to 12 months. I dont know if they will be patience. And france has a lot of issues, not so much in the legal system but in terms of the labor markets. But i think draghi has been clear. The ecb has delivered more than what people were expecting. Now the ball is in the governments court and the reforms need to happen in the next three to six months. Im going to bring david in here now, what does this mean, the ecb action and the weaker euro, what does this mean for the rest of Eastern Europe n particular . Well, i think for the emerging markets n particular, it just means that they have developed a lifeline. The euro is a funding currency and we think the real big content position in currency these days is basically short euro versus long of the high currencies like turkish lira. What we learned last year where the bank of japan was supposed to help with the emerging markets, you could get this sort of replay of the 2013 experience where everybody gets excited about using liquidity to fund the character rates and suddenly the fed changes its tone. So its been a positive day for em, but at the end of the day the thing we need to watch is the fed. Alberto, let me come back to you on italy because last week i was talking to a couple traders who were saying, look, it is looking very good now versus btbs. At what point do you think italian credit will be cheap again because of reforms, maybe a little later than what we are seeing in spain. Actually, the spread of these is wider than spanish bonds. You may say its not wide enough because the pace of reform is lagging, but if you actually look at equities or bank bonds, i mean, generally italy is cheaper than spain. Spain has a different pace of reform. And this is definitely reflected by investor demand versus italy and spain in real assets. If you look at real estate, if you look at investment in factories, hiring, if you look at bad loans, some funds have invested in spanish, bad loans, they were starting to be a small investment into italian bad loans but we are in the early stages. So if you believe that the government does some of the reforms, i mean, actually italy is still cheap if you have that view. When we look at the different measures announced by the ecb last week, which were the most important, does this still rest on the Banking Sector . The most important stat is that the ecb is moving to reactivate credit and they have done a very big step. That is, i think, the real game changer. We have been seeing that for over a year. The bonds help to lower the euro and can help sentiment, but the real game changer is credit easing. So qe of credit assets, assetbacked securities that are used to give credit to smes. 80 of the jobs in europe come from smes. If you buy southern bonds, you dont create jobs in europe because thats only 10 of the funding. So thats the big step. Actually, they are killing two birds with one stone because they are doing a very large program. Its aimed at credit but it also involved rnbs, Residential Mortgage backed securities, but they are targeting credit at the same time. So i think its a very good program and we need to give them the benefit of the doubt to see also the impact of the stress test and see if over the coming months, banks will start lending slightly more on the back of this program. And if demand fcomes back. Before we let you go, david, i would like to get trading advice from you. You say its all about the fed and the ecb, so in this environment, what are you buying and selling . In the emerging markets, if you look at ultimately the question is, which markets have a strong dollar and rising rates in the u. S. . Ideally you want the markets less likely to have rising rates and positive influence on the equities with rate hikes in the pipeline because growth is good and so on. But the problem is there are very few. Most emerging markets fall into the vulnerable category. So what we are saying is basically we like china still. It continues to be more resilient than the rest of them and has domestic growth there. And we want to be more cautious on markets that are more rate sensitive, like turkey, for example. Brazil is an amazing potential. We have already priced in a lot of enthusiasm about potential change in government there. But if that change actually happens, then probably the lesson from the likes of indonesia is the market has more room to run. All right, david, thank you so much for that. David from bank of America Merrill lynch. And also speaking this morning, one of the most respected members of the corporate elite, the chairman told cnbc it was time to step up structural reforms. This is the name of the game. I think that we will have to play a game to demonstrate that to answer the 40 of the population that supported him, things will happen and now its time for the programs to finish now and we need action. I think that he intends to take this action but this is going to be something that we expect. And tension has to be given and ease in terms of indication now has to transform into reality. Also terms in supporting the innovation and discount, i think if we want to have the economy grow, if we want to have growth to come back, we need to inject more innovation into our economic and industrial system. I do see the chairman of international technology, i h e have with innovation and technology, i am profoundly convinced that we need improvements, for example, in terms of investing into companies came from being able to invect new technologies into the system. When i look at Italian Companies that you referenced there, it seems that they have low growth markets, so the desire to invest domestically or even in europe more broadly, it is just not there. But italia is desperate for growth. If you look at asia more broadly as well, when i see the Growth Strategy of Italian Companies, i dont see necessarily a domestic growth but an international one. And thats not necessarily going to help the northwestii domesti we have to look wherever we are based whether it be italy or now moving elsewhere, it is not that important. What is important is that we can develop our activities and invest in the markets where there is potential for growth. So we can see that in short there is still however a lot of space. There is quite a wide area where we can invest. And by the way, the italian market in terms of results from the insurance policy point of view is quite good. I mean, last year has been already a good indicator in damages and the low Interest Rate that draghi is bringing with him, we are seeing the profitability in the future of investments but in the shortterm, we quite appreciate this with more value. What is the gross boundary to the recovery story . The time that it takes to transform projects and programs into reality. Im sure that if the transforms are an indication of what they are now into action and they need to do it quickly, i dont know if 1,000 days are, you no, too long for what it needs, but the important thing is things are done. This is the real test of the capacity gamete. Japans economy shank 7. 1 in the Second Quarter coming in worse than previously expected. Makiko from the nikkei has the story live from tokyo. Yes, this contraction could affect Prime Minister abes plans to raise the consumption tax and restore physical health. A 7. 1 fall in gdp is the sharpest drop in growth since the First Quarter in 2009 when it shrank 15 off the back of the financial crisis. The preliminary figures released last month estimated that the setback was 6. 8 . But a closer inspection shows that the impact from the cop summer tax hike have been larger than expected. After russias lastminute buying before the tax hike in april, consumers alike drastically cut back on spending. The Capital Spending was down 5. 1 which was nearly twice as large as the earlier forecast. Consumer spending also fell by the same amount with cars and clothing suffering weak sales. Chief government spokesman commented that the revised data will not change the governments assessment that japans economy is on a gradual recovery track, but the figures could affect Prime Minister abes decision on whether to raise the tax hike further from the 8 to 10 next year. They are also pressuring the government to implement additional economic stimulus measures, however market watchers say in the sharp contraction for the Second Quarter was largely expected and focus will be on the recovery during the july to september quarter. And thats all from the nikkei, back to you. Thank you very much, makiko. Still to come, sterling taking a pounding on the latest scottish poll with less than two weeks to go until the vote. We break down the latest developments. You dont want to miss it. Well be back in two. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. Youre watching Worldwide Exchange. Riot police were called in after an intense standoff between far right extremists and demonstrators overnight coming amid growing tensions with immigration in france with the presence of over 1,000 migrants trying to reach britain illegally. This as the polls suggest the National Front leader would be president after elections in 2017. Stephan, they have come out to say they need to speak differently, just how different would their language have to be to beat them . Well, lets have a look at the survey, caroline. According to the latest survey, the fed would come into a position with the 13 of the vote followed by conservative data with 24 of the vote and Francois Hollande would be in the position. However, with the french election, we would probably see some sort of union between the conservatives to make sure the extreme right would not get the power. Thats exactly what we saw in 2002 in france. So the real chances, the risk of him being president are rather limited. Using this strategy of the political strategy paving the way to become the next president is the message that i heard over the weekend. With the new probusiness agenda including 40 billion euros in tax reduction for companies, he has gaped support from the left wing of the socialist party, but he needs the support to get the budget passed through the National Assembly. And the threat is to get the support from the National Assembly in the next coming weeks. Stephan, thank you so much for that. The ftse is trading lower and underperforming in compareson with the main European Border this is morning. In reaction to gapins by the latest stock movement. A yes vote at 51 and the no vote at 49 . The proindependence has taken the lead with less than ten days before the vote. Sterling climbs to a tenthmonth low against the dollar after the poll results were released and it continues to tick down today. The u. K. Finance minister George Osborne said the independent scotland wont share the pound saying concessions could be made if scotland remains in the union. You will see in the next few days a plan of action to give more powers to scotland, more tax powers, more spending powers, more Planning Powers as to the welfare state. And that will be put into effect the timetable of delivering that will be put into effect the moment theres a no vote in the referendum, the clock will be ticking for delivering those powers. And then scotland will have the best of both worlds. They will avoid the risk of separation but have more control over their own destiny which is where many scots want to be. And joining us now is jane this morning. Jane foley, what do you think . Only one thing is certain and thats uncertainty. And this is to deal with the debt, this is to deal with the currency and also the Political Uncertainty which as a whole in the u. K. There are question marks over camerons future as the Prime Minister. There are questions over the general election scheduled for next may could in fact be delayed unless oil changes happen across scotland. But this is interesting, i have been arguing anyway that the morkt got ahead of itself with the bank of england rate hike. Im expecting that the poor Economic News and the poor position of the eurozone right now may be a drag on those expectations, which could impact scotland. Its interesting it is taking these tolls with the money market adjusts. I think it was going to happen anyway. Jane, what if we get the vote in two weeks time. Do you have a scenario for what would happen . I think it could. Perhaps we could see a bigger drop on reaction. The bigger thing is it would be volatile because theres uncertainty out there. It is very difficult to know what timeframe that scotland would be allowed to really break away. Clearly it would be gradual and lots of work to do, but there are so many unknowns out there, the volatility would increase and that would weigh and the uncertainty is not just bad for Financial Markets but it is bad for consumers and bad for businesses. It is likely to weigh on investment as well as consumption decisions. And all of this could weigh on Economic Growth in the u. K. If you look at the currency alone, a weakening pound, will surely be good for the corporates who suffer from the High Exchange rate. But look at the inflation impact, at what point should the bank of england become worried about rising inflation again. I wouldnt be too worried about rising inflation for a while, in the next two years or so. If we look at the lack of inflation, we begin to see why. And from that point of view, the eurozone having very little inflation, we are not in a scenario where the Interest Rates really are protelling growth to the degree we have and therefore we have inflation that will be moderate for quite some time. But youre right, a lower rate could inject growth but it will be outweighed by the lack of Investment Decisions that corporate is likely to make. And that will probably be the rate impact meaning that growth will have a bigger headwind than it would support. Jane, you mentioned David Cameron there, how significant would a yes vote be ahead of the general election next year for him and the conservative party . I think for all parties it would be significant. We have to remember that cameron may be hanging on to his job, but he wants to be the Prime Minister after the breakup of the u. K. The Labor Department would be under pressure with a huge amount there in scotland. If that would be taken away, that would be a big ramification to their party. So this would affect all parties. Jane foley, senior strategist at rabobank. And looking at the situation with quebec, 1995, i believe two or three weeks before there was a poll also indicating that they would vote for independence and the outcome was a no vote. So maybe this is what well see here. I think jane was absolutely right, the markets hate uncertainty and this is the first time theres uncertainty as to what might happen. Yes, we have been talking a lot about the poll because the yes vote is up slightly but the no poll is up there leaving uncertainty that the markets hate. Youre right. Maybe investors happen to see eventuality of the yes vote. Coming up, mario draghi gives us his take on the latest stimulus efforts on the beautiful shores where it was sunny after all. Welcome to Worldwide Exchange. Im wilford frost. In and exclusive interview with cnbc, president obama says we will go after the islamist state. We are going to shrink the territory they control. And ultimately we are going to defeat them. Electrolux takes on the u. S. Market after shares jump after a 3 billion deal with ge in a bid to north america. Alibaba takes its show to the road after two weeks of meetings with the ipo kicking off in new york. And in an exclusive interview with cnbc, mary barra says a shift in culture is underway following the massive 2. 6 million vehicle recall. Youre watching Worldwide Exchange bringing you Business News from around the globe. If you are just tuning in, thank you for joining us on Worldwide Exchange. Heres how the u. S. Markets are expected to open despite the weak jobs report on friday. The markets in the u. S. Finished strongly. And it looks like today it will slightly open down. The nasdaq is expected to open down one point. The s p down three points. And the dow is expected to open down about ten points. The european markets are struggling for direction today. Italy is down. 2 . France down. 3 . Germany roughly flat, but most interesting is the ftse 100 down 66 basis points based on the uncertainty of the Scottish Election coming in ten days. First well look at the fixed income market because we did see a reaction there to the fact that the yes vote took the lead for the first time in more than a year. But the reaction was not as much of a kneejerk reaction as we saw in fs. Well look at the 10year gilts, yes, they did take a hit right at the start of trading, but since then they have stabilized. And heres the tenyear bonds, slightly higher. We did see it move off the threeweek high off the very disappointing jobs report. Also, well have a look at the currency here that is stable. 1. 6135 down more than 1 . Thats a huge oneday move to tell you how complacent traders were in terms of their position in the market with respect to some of the Political Risk out there. It is actually at and t tenmon low against the dollar. And i want to show you whats happening here with your dollar near the 1. 30 level after the ecbs massive move on thursday. 1. 2942 down by 0. 1 . Well stay with the eurozone, steve sat down with the italian finance minister in italy to ask him whether the euro needs to fall further or return to growth. I always said that europes looking at the crisis over the years as two things. First of all, guaranteed fiscal consolidation, which is a huge achievement and which needs to be preserved. Second, addressing Banking Union problems in the Banking Sector problems which also has made a lot of progress. Now it has to be serious, just as serious on growth. And growth requires budget policies. We need to be serious in tackling that problem. This is why i say we need to go beyond this. Do you believe a lower euro will continue to help get the growth and get the inflation . Well, a lower euro by definition helps competitiveness and feeds in a little bit more inflation, which im concerned about because its much too low. Would you like to see the euro low her . Yes, i think it would be appropriate and good for the euro zone and good for the Global Economy because it would be part of the global revival. The people a little farther north say this is not what we want. I havent heard any of my colleagues saying that. Okay. Tell me about europe being at a crossroads. We are at a slight deflation or we perform a last gasp effort. Expand upon those comments for me, sir. I strongly believe that especially given the new numbers and disappointing real growth and disappointing inflation there, is a risk that europe as a region enters into stagnation territory. I am this is a risk, this is not a certainty, but avoiding that risk is fully dependent on what we do on the policy side. And we enact a growth policy which means structural reforms, investment, more internal market. Do you think the decision on that front is enough as well . I think many people seem very encouraged by what the new Commission President is saying . The new Commission President has been announcing very encouraging messages. Now we need to look at the implementation side including where can we find resources that are large enough and effective enough to boost investment. The european growth, steve also sat down with the former italian Prime Minister to talk about actions the ecb could still take to stimulate the economy. He provided a rather colorful analogy to explain why mario draghi is limited in what he can do. He told me this morning this is the best manufacture parachute, but hes not expected to this is out of the hands of the government. And this is why im talking about Economic Policy in europe. I like the parachute analogy. Steve also caught up with the ecb president who warned of the unintended consequences of pumping liquidity into the system. Again as well as japan, the u. K. And the u. S. , to supply a limited amount of liquidity at a rate, which is the rule, is unnecessary because of the dramatic crisis we have to cope with and because of the present situation of the economy, even in various situations still we are all so its understandable but we have to see counter productive consequences. It is prove that new bubbles are necessarily created when you have a limited supply of liqu liquidi liquidity. And thats absolutely true why the central bank and the ecb and others are really doing all that they can. They must be very strong on the other partners. Government, parliament, social partners, private sector, do your job. Brian reynolds is achieve market strategist, we have been talking about the ecbs move last week, is that strong for the market in the u. S. As well . I think it is strong for the markets in europe and the u. S. They are going to be buying assetbacked securities or special purpose vehicles. And it can go back in time throughout history. The spbs are used in the housing cycle and the history of these things is they intensify a credit boom and Financial Engineering while the credit boom is in force. And thats probably going to be the case for the next two years, but when the credit cycle ends, they also make the ending of the cycle more disastrous than it actually is. So this will probably help Financial Engineering and stop prices for the next number of years, but it is probably not going to help Economic Growth very much because we have seen the quantitative easing filter down to the real economy very much. It does in the sense that it lowers yields, doesnt it. But coming back to the point of buying abs in terms of this being a risky strategy for the ecb, it said last week it is only buying high quality paper. Why would that be a risk . When you structure assets, you slice them into safer slices and riskier slices. So the ecb only wants to buy the safer slices. That means there are more riskier slices available to the credit hedge funds that typically pump up the credit boom and leaves the bubble elsewhere. So this will lead to more risktaking behavior because the ecb will be hording the safe assets and that means the riskier assets will be more attractive with price. Im interested as well, brian, you made a point in one of your notes that credit issuance in the u. S. Has continued to surge. Does that mean that the Monetary Policy used in the u. S. , quantitative easing, has in fact worked with the Balance Sheet very strong . The company Balance Sheets are improving and the quantitative easing has helped a little bit. The main driver of the u. S. Credit boom has been the fact that our pensions are trying to reach for 7. 5 return, which is crazy in a lowrate environment. And that means the credit funds they hire, they mimic longterm Capital Management from the 1990s, that they buy incredible amounts of Corporate Bonds. Last week was the Labor Day Holiday in the u. S. Marking the unofficial end of summer. Credit investors returned to work and usually that first few weeks in september you see a surge in issuance, but last weeks surge was record shattering, which is kind of funny because Everybody Knows quantitative easing is going to end next month in the u. S. And Credit Investors are not scared of it at all buying a record amount of Corporate Bonds meaning more cash on them and they will use the cash, not for investment but will use it for share buybacks and acquisitions designed to take share prices higher. Brian, its the monday after the jobs report and quite interesting, over the last hour we have not even talked about it just yet. Why do you think is the market so dismissive about the jobs report . Does everyone think it is really an anomaly . Well, i think it is an abhorition. Their ceo was fired and consumers stopped shopping and they were laid off. They took the hours of 17 workers down to zero. So the labor statistic said last week that suppressed the payroll number by 17,000. Now the ceo came back to work at the end of august, the workers are back and the shoppers are back, so well see the opposite next month. Well see a 17,000 payroll surge. Just from that one company alone. So i think it was an aborition, but the whole bull market hasnt been about the economy. Its been a sluggish economy but a great bull market because of the Financial Engineering led by pensions trying to reach for the 7. 5 bogie. Can europe strike a balance between sanctions in europe pending its own growth . Well get a view on that question after the break. These are your headlines this morning obama vows to defeat isis on the ground in iraq with an exclusive interview with cnbc. And alibaba takes its show on the road to meet with investors on the road. And electrolux is buying out gm on a 3. 3 billion deal sending shares soaring. And we are just getting flashes through from dow jones saying the eu could implement sanction measures against russia tomorrow, so well bring you more news on when we get details on what the sanctions are, but the news is that the eu will sanction russia tomorrow. Now, renewed fighting in Eastern Ukraine may have put fridays ceasefire at risk. The explosions hit the donetsk airport friday. Speaking to cnbc at the forum, u. S. Senator john mccain called the weak response to the aggression in Eastern Ukraine shameful. We need tougher sanctions, we need to give the ukrainians military equipment, intelligence, we need to set up training programs, we need a group of American Military advisers over there with them look, during yanukovychs time the Ukrainian Military became deteriorated to the point where they are almost ineffective. And we also have to make it clear to Vladimir Putin that further adventure will be met with very vigorous responses. When you look at what he has paid for crimea, for now Eastern Ukraine, its been minimal. And im afraid that as long as the europeans are dependent on Russian Energy, that were really not going to see a very vigorous response. We have heard a whole lot of talk and very little action. Europe has to strike a balance between punishing russia for actions in ukraine while weighing the impact on the regions economy. Thats according to the trade sheet. The eu trade commissioner said brussels has been tough on moscow and was feeling the consequences. I do not agree with that analysis. I mean, its an american analysis that you are translating, of course, but if you look at the sanctions already taken, they have bid quite a lot in retaliation of the russians, so its 5 billion off exports of fruits and vegetables to russia. Thats pretty hard. Nevertheless, we are still discussing about additional sanctions. Now, its a little bit more easy to be very tough when you are 6,000 kilometers away than just next door, you know, so that when you look at the volume of trade between us and russia, the volume of trade between the United States and russia, its quantitative action, really. So i dont want to be criticized on that. I think we have been tough enough. On the other hand, lets also face reality, we are not going to launch a war against russia. We are not. Nobodys going to. The United States is not going to do that, we are not going to do that, and that gives a certain degree of comfort to mr. Putin, who will be able to win this, what you could describe as the worst confrontation since the cold war, but im pretty confident about it. If it is a cold war, it will take much less time and its going to have exactly the same in the west because the people in ukraine want to be part of the west, you know. Thats why they started manifesting and protesting when mr. Yanukovych refused to sign the deed. Thats what it is about. Its not about the trading but its about people who want to come closer to europe. And still to come on the show, wearable tech is not just for christmas and is not just a fad. The next guest says the smart watch industry could be a 10 billion market. Find out how to cash in after the break. Well leave you with a look at the stoxx Europe Markets right now. We are slightly under water as it is all about scotland. Lets have a look at u. S. Futures ahead of the open as you can see there the implied open is down across all three exchanges. The s p is expected to open down three points, the nasdaq down eight points and the dow jones down 33 points. Citi says wearable tech is more than just a fad and smart watches alone could be a 10 billion market by 2018. Lets talk to the author of that report, retail analyst at citigroup. Oliver, good morning to you. Thank you for getting up early for us. You say its more than a fad, something that could last forever. Make your case because personally im a little skeptical here. We are excited about it. Survey work indicates to us nationwide theres strong interest. About 5 of 500 people, so as we do the math in this traditional watch market over time, we think that could be 10 billion by 2018. I would agree with you, there are ideas around cautious commentary on battery life, the pricing, display visibility which consumers still have to get used to in terms of adoption on this, but we think smart watches could be 10 billion and wearables over time could be as much as 30 billion. And oliver, the mood in smart phones has been to a bigger screen. What can be digested on a little screen like a watch has . What seems to be emerging is the physical attributes and the real functionality of information and convenience. So the important thing for the operating systems is really the differentiation of the smart watch versus the smartphone as well as end grating the smartwatch into the system to add convenience and wellness benefits as well. The name we like is fossil ticker that is the licenser of armani, michael kors and others. The release for the traditional watches is for them to be real fashion pieces to wear as arm candy alongside your other watch and integrate this into your lifestyle. If smartwatches can thrive, will they thrive at the expense of smartphones or at the expense of other more traditional watches, or do you think that the pie overall can actually grow bigger . Well, in the past, if you look at the advent of smartphones versus traditional watches, we still had a great branded landscape of product. So we model that this can be incremental. I think 2 to 3 can be cannibalistic, but that still enables you to get about 10 billion by 2018. Thats a 50 compounded annual growth rate over a fiveyear period. So i would say a little bit of cannibalization, but a lot of incrementality is expected if this becomes a niche product. When smartphones took off, apple and samsung were in the lead of innovation and the others had smartphones of similar quality today. What is the likelihood of smartwatches, will apple and samsung lead the pack or will we see similar levels . I think thats a good hypothesis that they will continue to be market leaders, but theres a lot of players in the ecosystem from operating systems, the hardware to the switch watch players to the brand to the distribution. Its a little bit to be determined, but if this is the next kind of tablet in the next really big idea, then theres a lot of people off to the races to really innovate. A lot of it probably depends on how you tie these objects into the ecosystem or the operating system. And also probably the brand. If you think about fashion, you think about dior, you think about a lot of the highend fashion brands trying to embrace technology at google with vogue, in terms of putting that into your life on a fashionable basis as well. We talk about fossil, you like it because of the cash yield of 6. 7 , but overall for retail, its still going to be a very difficult environment over the next couple of months. And as we saw in the first half of the year, so far it lacked the s p by more than 10 . Can it catch up or not . Well, i am cautiously optimistic on retail. Taking it another direction regarding retail in the u. S. The environment is very promotional. The inventory levels are mixed. We have seen inventories get a little cleaner, but theres a lot of competition in apparel. Apparel suffers from lack of differentiation as well as lack of a musthave item. We are big believers in the accessory market including watches, handbags and nonapparel. For that reason we like fossil. We also like tiffany co. This is much healthier mainstream and thats a company benefiting from new management as well as the wealth effect. The other name i would highlight is tjx, an offprice retailer. And this kind of cautious holiday environment, a lot of consumers are looking for great brands at 40 to 60 off. And t. J. Maxx offers you that experience. So theres a variety of stockspecific ideas, but as we walk the mall, we are looking at 30 to 40 off. And its well positioned to continue to be like a season for great deals for the consumer. Probably at the expense of Earnings Growth overall. All right. More margin pressure. Thank you so much for that, oliver chen, retail analyst at citigroup. Im skeptical about the smartwatches. They are really bulky. Can you imagine Walking Around with a big, clunky thing around your wrist. I think it will be hard to use. We are just getting breaking news that the u. K. Prince william and his wife, the duchess of norfolk, are expecting their second baby. Fantastic news. Congratulations. Well bring you more on that after the break. We are also bringing you an exclusive interview with president obama. And heres a look at the u. S. Futures before we go to the break, which are expected to open slightly down. More news from the president and perhaps more importantly from Buckingham Palace after the break. Guys youre not gonna believe this watch this. Sam always gives you the good news in person, bad news in email. Good news fedex has flat rate shipping. Its called fedex one rate. And its affordable. Sounds great. [ cell phone typing ] [ typing continues ] [ whoosh ] [ cell phones buzz, chirp ] and we have to work the weekend. Great. More good news its friday woo [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. Welcome to Worldwide Exchange. Im wilford frost. These are your headlines from around the world. President obama rules out troops on the ground in iraq in an exclusive interview with cnbc. He says the u. S. Will have momentum against the islamist state. We are going to shrink the territory that they control. And ultimately we are going to defeat them. And electrolux takes on the market after taking over gm. All bibaba takes its show o the road debuting its ipo today in new york. And in an exclusive interview with cnbc, mary barra says a shift in gm vehicles is underway after a massive recall of 6. 6 million vehicles. Youre watching Worldwide Exchange bringing you Business News from around the globe. Good morning, everyone. It is 5 30 on the east coast. If youre just tuning in, thank you so much for joining us here on the show. Well have a look at the u. S. Futures on this monday morning. We are expecting slightly weaker start to the trading session even taking fair value into account. This is after the s p on friday hit another record high. It was up by 0. 5 . The dow rising 0. 4 . And thats despite the fact that the jobs report was weaker than expected. Maybe once again bad news is good news for the markets. Lets have a look at the european markets this morning. And we are seeing a sea of red. We are close to session lows down by 0. 1 . But its all about scotland and the ftse 100 down by 0. 7 . This is after the yes vote took the lead in the polls for the first time in more than a year. We are only two weeks away from the scott irk referendum. Elsewhere, maybe we are seeing profit taking after the sell of gain last week. The ftse was up 5 today but now it is down by a quarter of a percent. Now u. S. President barack obama said the u. S. Will go on the offense i have as he prepares for strategy to combat the group. This after a series of strikes occurred late saturday to secure iraqs second largest dam. Obama will unveil his plan to take on isis on wednesday but stresses no troops will be on the ground. Speaking to meet the press he says he is confident isis can be defeated. On wednesday ill make a speech and describe what our game plan is going to be going forward. But this is not going to be and announcement about u. S. Ground troops. This is not the equivalent of the iraq war. What this is is similar to the kinds of counterterrorism campaigns that we have been engaging in consistently over the last five, six, seven years. And the good news is that because of american leadership, we have, i believe, a broadbased coalition internationally and regionally to deal with the problem. Speaking to cnbc, u. S. Senator john mccain said the rise of isis could be blamed on the lack of u. S. Strategy. We have to stop the significant and dramatic cuts we are making to our own defense. But when we didnt leave a residual force behind in iraq, the rest was predictable. When we left libya after gadhafi left the situation alone, it was predictable. When we didnt help the Free Syrian Army and we didnt, the president overruled his entire National Security team. Then those results were predictable. And the rise of isis is the result of our failure of leadership. And by the way, if we pull out of afghanistan on a date basis rather than a conditions basis, you will see the same scenario unfold in afghanistan. Speaking to cnbc, former israeli Prime Minister said this, shimon peres. We can say the same values will be said clear and loud. That we have to fight them. But the problem with fighting is that they will be in charge of other places. Thats why you say no boots on the ground. Supposedly we go to gaza and win gaza. Then what . What do you do with gaza . We are going to be occupying gaza. It will be extremely costly and ineffective. So the alternative mean is economic. I mean, to isolate them and to put restraints to dry out the supply of money and the supply of arms. Not just against them but also against those who support them. For example, if dohar wants to help them, dohar will be punished. It has to be a clear sanction against iran. If you have mosquitoes, you have to dry out the swamp. Why have they not taken the premier position in solving the crisis . Do you think that others are just not doing enough, there needs to be more to find pace in these crises areas . Its a good question and a little complicated answer. The answer is they are destroying the arab countries. They destroyed lebanon, they destroyed syria, they destroyed iraq and yemen, gnaw are destroying libya and they dont have force. As long as they can be helped by others its okay, but they must do something. With as many airplanes that the other countries have, they have armies, they have strengths, they have money. Gentlemen, you have to defend yourself. They have to understand that the real problem is not israel. And already quiet ly we are a partner in using new technology. Attacks on socalled tax inversion deals could ramp up this week in washington as Congress Returns from the summer recess and democrats look to make them a Campaign Issue ahead of the midterm election. Cnbcs Hampton Pearson is in washington with the latest. Hampton . Good morning. Make no mistake about it, the rise in tax inversion deals has sparked political outrage as you mentioned, especially among democrats. President obama describing the company as deserters, but the issue is mostly dead on capitol hill before the midterm elections. Jack lew speaks in washington today to address the importance of business act reform to make the u. S. A more attractive place to invest, but lew is not expected to rule out the white houses strategy to tackle inversion. He could provide clues to the obama administrations approach. Democratic senator Chuck Schumer plans to introduce legislation this week to curb inversion. He tells the financial times, quote, we need to move quickly and aggressively to curtail inversions and prevent companies from using shady Accounting Practices to avoid their u. S. Tax obligation. Now data compiled by moodys shows at least 21 billion is in offshore cash. Those deals could unlock. Medtronic has 13 billion of cash outside the u. S. And Applied Materials is merging with tokyos restaurant and headquartered in the netherlands. It has 2. 4 billion offshore. Geologic says 13 inversion deals worth 178 billion have been announced since the start of 2013. Moodys says nonfinancial u. S. Companies hold a total of 950 billion in overseas cash while accessing that money is not impossible, companies are reluctant to do so because of repatrioting it would trigger a u. S. Tax liability. Remember, walgreens had considered a tax inversion by buying the rest of the drugstore chain alliance. But they decided against that. The wall street journal reports that wall greens is giving access to the jana that pushed for the inversion. The shares fell 15 in august but have come back since then. A mindboggling issue, a large of huge numbers in a tax inversion issue. The British Government is urging the u. S. Supreme court to review an Appeals Court decision over the 2010 gulf oil spill. That ruling last week found bp was, quote, grossly negligent and reckless in the spill. A move that could add nearly 18 billion in fines to the more than 42 billion in charges the company has already taken. And a friend of the court says the u. K. Ruling raises grave International Concerns undermining the confident in the fair dispute. Well have a look at how the shares are trading in the u. K. Down by 0. 9 . Keep in mind, the u. K. Market is down anyway because of the poll over the weekend. And coming up, alibabas management gets set to start marking what could be the biggest u. S. Ipo ever to investors. But should you buy into all this excitement . Well discuss after the break. Imagine the luxury. Of not being here. The power you want with the fuel economy you dream of. Performance with a conscience. This is volvo innovating for you. Its in this spirit that ingu u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. Today theres a new way to work. And its made with ibm. Welcome back. Lets give you headlines. Obama vows to downplay the momentum of isis. And alibaba takes its show on the road ahead of what could be the biggest ipo in u. S. History. Electrolux is snapping up a company to send its shares soaring. And finally, here alibaba is kicking off a twoweek ipo road show at the waldorf Astoria Hotel in new york. This follows management by an openended q a session and the road show could wrap up on september 18th. If it does, the ipo could be priced that a alibaba could be valued at up to 163 billion making it the largest u. S. Ipo. Brian frost is joining me from new york. Brian, good morning to you. Now, you are talking about the audit angle with regard to alibaba. Can we rely that the audit has been done for this ipo . Sure, thats a good question. Certainly one that a lot of folks are asking today. Certainly in this case i would say that given the level of scrutiny, given the highprofile nature of the ipo, the pwc out of hong kong is out doing the audit. I would say that its certainly one that we can trust in this case. The real question, though, is as you look at the following ipos from companies out of china, are those ones we can trust. And just sticking on the negative points, well move to the positive in a second, do you think the investors understand the implications of the structure of the Chinese Company listing in the u. S. And what that means, and should that mean more of an evaluation because of it . The variable interest entities that you talk about is certainly one that is probably not very wellknown by the u. S. Investors. In this case, what youve got with alibaba, paul dealis pays a lot of attention to Companies Listing out of china, and as he says, this really is the Gold Standard even though the vie is not a structure that the u. S. Investor typically would like to invest in. In this case, for alibaba, thats only 10 of the overall assets and revenue coming through the vie. So it is on the low side in terms of the vie structure. That again, though, still says that youve still got risk inherit in the structure and assets can be moved. It is really just the revenue alibaba gets through the vie. The underlying assets are not owned by the entity and are at risk from being moved out from under the entity of the vie. Brian, essentially youre saying if the alibaba is a successful one, it could attract a lot of companies willing to list in the u. S. That could be a field day for short sellers if they are able to spot them. Thats a difficult one, isnt it . It is. Back in 2010, 2011, 2012, we saw a rash of chinese frauds coming out of Companies Listed in the foreign exchange, u. S. Exchange, hong kong, the canadian stock exchange, i predict with the ipo, the resurgence in investing in Chinese Companies will surge. We will see a rash of Chinese Companies who are involved in some fraudulent activity trying to take advantage of that exuberance, that euphoria of u. S. Investors trying to gain access to the chinese marketplace. So youre absolutely right. Its something that the investors in the u. S. Need to be weary of going forward. All right, brian, thank you so much. Appreciate it. Brian fox, founder of capitol confirmation. Moving on, General Motors Ceo Mary Barra says the automaker is well on its way to replace the faulty ignition switches in the 2. 6 million cars recalled earlier this year. In an exclusive interview with phil lebeau, she also talked about the challenge of changing the Corporate Structure inside gm since the recall. I think its behavior starts with me. I have to lead by example and drive thaw through the organization and question my team in each part of the company, but i have seen change. Ive seen them step up for the Safety Program where people are reaching out and questions are being answered and issues are being uncovered across all levels of the company. And in the last 30 minutes, the most positive bit of breaking news we have had in a few weeks. So much so caroline and i were fighting over who would get to read it. Buckingham palace announced Prince William and kate are expecting their second child. The royal couple had their first baby george a year ago, and rumors of a second pregnancy have been right. Congratulations to them from us here on cnbc. And theres a joke from a correspondent, the things they will do to get a no vote. Obviously very quick. The u. S. Equity market is seeing a rally into the close. Will this be another recordbreaking week . We get perspective from the trading floor, next. Welcome back. Lets give you a quick update on how markets are trading in europe. Down across the board, we did have some green earlier in the day in france and germany, but they ticked into negative territory as well. The main market leading the decline is the ftse 100 up nearly 90 basis points following a poll that suggested the yes vote in the Scottish Independence vote coming in ten days time could for the first time be the most likely outcome in the uncertainty that the yes vote would bring both for the british currency and the markets has led the ftse 100 down 80 basis points. Well look at u. S. Futures as well taking fair value into account. We are looking at an implied open of minus 3. 8 for the s p 500 which hit another record high on friday. The dow jones is seen up by 36 points and the nasdaq can fall 8 points. It is interesting on friday with the below expectations jobs number, 140,000 jobs created in the month of august initially we were flat and then the u. S. Markets rose. Does that tell you once again that the news is good for the markets . I think it is very interesting, we were so looking forward to that number and expecting it to be so much bigger. When it came below, i thought the markets would fall but they didnt. I also think people were looking at the quality of the 142,000 jobs. Gains in business sectors, health care, people are suggesting that is not parttime work has to factor in as well. That matters in regards to the jobs number is whether it has changed expectations for the first fed hike. And if i look at Interest Rates, traders executions, they now have hit 68 probability with the first hike occurring in july 2015. Basically no change from the expectations before, so i guess it didnt have a huge impact. Maybe empathies this really is an abhorition and anomaly. And we are looking at the sterling dollar down 1. 3 today. Thats down exclusively to a poll this weekend suggesting a 51 chance of a yes vote in the scottish independent vote. A lot of skittish results on that vote. That said in terms of Worldwide Exchange. Im caroline roth. And im wilford frost. Well be back the same time tomorrow. Revolutionary by every standard. And that became our passion. To always build something better, airplanes that fly cleaner and farther on less fuel. That redefine comfort and connect the world like never before. After all, you cant turn dreams into airplanes unless your passion for innovation is nonstop. Good morning. Welcome to squawk box. President obama to roll out a military strategy to deal with isis while immigration gets kicked down the road. High expectations for apple. The tech giant is about to unleash new products. And an end to an era for ge selling to electrolux. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernan and andrew ross sorkin. Its the morning after for nfl fans. A big sunday of games with several big upsets including the patriots losing to the dolphins. A couple of overtime games and on nbc last night manning sees manning. Three touchdowns to beat his former team. Much more on sports coming up in a bit. In corporate news, General Electric is selling its appliance business to electrolux. The price tag of 3. 3 billion. Both boards have approved the deal. Electrolux will continue to use the ge brand. Well talk to the electrolux ceo coming up first at 7 00 eastern time. Andrew, good morning. Good morning, becky. Hope you have had a great weekend. Alibaba is set to kick off the ipo road show in new york today. The chinese ecommerce giant is looking to raise more than 21 billion in the u. S. Public offering. The expected per share price range set between