Transcripts For CNBC Worldwide Exchange 20140909

Below expectations due to bad weather and cautious spending. Another poll suggests scotland is leaning towards voting for independence. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. Good morning, everyone. Youre watching Worldwide Exchange and its tuesday. Happy apple launch day. Tech tuesday producers are very happy about the alliteration] in that cycle. It will be exciting to see what they actually launch. Absolutely. And it should be real interesting to see what the stock will do. Usually with regard to apple announcements, we see buy the rumor, sell the fact. Apple shares have been selling off, at least the last couple of days, especially last week. Well see. Maybe it is sell the rumor, buy the facts. Indeed. The wait is nearly over. Apple is holding an event at 1 00 p. M. Eastern in its hometown of coopertino, california 37 thats the same site where steve jobs introduced the original mac computer 30 years ago. Apple is expected to unveil the iphone 6 with the largest green and likely a smart watch. That will be the first category ceo tim cook says apples wearables could dominate the market through 2015. And apple shares have outp e outpaced the market in anticipation of todays event. Historically, apple tends to lag after a product release, but over time, the stock performs with the biggest gains coming six to st months later, well come to that tick chart in a men because i have a few disagreements with it. But first of all, were joined by cyrus. The most important thing for me here is will these product releases allow apple to maintain its Price Premium and therefore protect its margin . Yeah. I think todays Product Launch is probably the biggest launch since the ipad. I think we dont to attest to the secrecy that apple normally gives to these events, we dont know if its an i watch. It could be a wearable computer, something on your wrist to do with fitness or health and it could have a watch on it and have something to do with your iphone. A lot of people have said theyve definitely lost their lust ner terms of their ability to innovate, to find new products, to make a really big splash. Do you think this is tim cooks moment . I think it is. I think when mr. Cook first came along, he had a stumble when he issued the maps app. The map wasnt as good as you expect a product to be. But i think the maps app was essential for them to get into mobile payments which is something they may talk about today. This is about the big thing that alibaba is about, specifically mobile commerce. Youre much more focused on the wearable device than the iphone 6 . I think newswise, the i watch will be big. Revenuewise, its going to be the iphone. Its going to be two models of the iphone 6. Theres going to be a new operating system, ios 8 with functionality like the Continuity Service whereby you do something on your iphone and it automatically hands over to your imac. Apple and samsung have had clear leadership in the innovation over the last few years. More recently, theres lots of smartphonemakers that have caught up. When we move on to wearable devices, do you think apple will have a year or two leadership ahead the rest of the pack. Yeah. I think the key difference is they both make hardware, but they dont both make software. Products like internet tv which may also be launched today by apple, that will expose Companies Like samsung versus apple which has a sticky system. Following a product release, according to data, apple tends to lag. As time goes on, however, the stock outperforms with the biggest gains taking place six and 12 months after the release. If you look at it, its saying the most reaction comes 12 months later, but there are so many other factors that could be moving the share price on that. On top of that, there have been now six different iphones and a few more on top of that. Its been over seven years since 2007. Essentially all that chart is really saying is since the first iphone, apple has done really well. What drives the share price now, is it innovation in general or bottom line sales . That chart is pretty good. I think it still is the iphone. The iphone represents 50 more of sales, probably 50 more of profits, we dont know. Both of these products have come out since 2007. Theyre very recent products. And so i think the key is the iphone 6 and the upgrading system. But do you still want to buy the shares inspect theyve had a fantastic run over the last six months. We saw that wobble last week. Is that a good time to buy . I think it is. If you look at apple thee mattockly, in other words, what are the big investment themes apple could potentially benefit from, theres a number of thims themes in the pipeline. Mobile payments, we could find out about that today. Then theres internet tv which is coming up, then theres big data for more of the data that apple collects. Apple has a lot in the pipeline. Its going to release what it wants today, but theres a lot more to come. And you mentioned mobile payments. That links alibaba. Where do you stand on that . Do you think they priced that well . Well, alibaba is priced between 150 and 160 billion. I think on a relative valuation basis, in other words, if you take the top 10 companies that can compare, that are alibabas peers, it stands in about the middle. On a theme attic basis, alibaba does a lot for the economy. But its when you look at the risks that we see real problems. This is one of you know, in 20 years of looking at technology, ive never seen an ipo where theres so many risks. And its not just the Technology Risks im talking about, its the corporate government risks and not just china no political, but specific to this company. And were going to touch on some of those risks on alibaba again. But as we said, its tech tuesday here on Worldwide Exchange and we want to know what has been your must have gadget over the last few years. Which products are you most looking forward to coming up . Is it wearables or the new conversation . Join the conversation here on Worldwide Exchange. And weve just had some flashes from the Dutch Safety Board. Their preliminary report pointing towards an external cost of the mh17 crash. The Dutch Safety Board saying mh17 broke apart due to a large number of high Energy Objects and it says there is no evidence of technical fault on flight mh17. These findings certainly not coming as a surprise, but the dutch saw the highest number of casualties on that flight, almost 300. The u. S. Tech giant announced in february. Google could be hit with fines up to 6 billion if the two sides fail to reach an agreement. And we spoke to europes competition chief who said google has lots of questions to answer for. We happen we will work on this until the last minute. I am sure that the next commission and the next commissioner will have to work a lot on google because this is not the only case. We are working on android, not yet a formal investigation, but quite some advanced knowledge. We can work in other areas of google where some people are sending out arguments and in some cases former complaints talking about possible abuse. In other areas of the Google Business and in other areas beyond competition, going the has a list of questions to serve the attention of the European Union, the commission, big data, factors and so on. And were also just getting a breaking news that the french antitrust watchdog has opened an investigation against gdf suez. But back to google particularly, theyve carved out a wonderful market for themselves. Is it fair that they face this kind of antitrust investigation off the back of it . I think the accusation against google is when you do a search, it diverts traffic to their own businesses as opposed to giving you a fair search. And that is key. If it is doing that and its proven that its doing that, i think that is a breach of anticompetition laws. In about two months time, there wont be a solution between the two sides because this investigation has lasted for years and years. Even the smallest step has taken months and months. So what if google has to pay 10 of its revenues . How dent mental would that be to the firm . I can that would be extremely did he want detrimental. I think the incoming european commissioner, i think all understandcations are that hes going to take a more europefocused approach, possibly a more muscular approach. I think youll see more anticompetition inquiries against u. S. Tech companies. Net neutrality will be on the cards because theyre deciding about that on the 15th of september in america. So that might come here, too. I wanted to move the chat back to alibaba. You mentioned that you think its relatively priced for this particular moment for the ipo. Once its listed, what are the main factors youll be looking at . Its relatively well priced, but stock markets are on a relative high. But at todays prices for tech . Yes, yes, it is. What are the key factors youll be looking at moving forward . I think some indications are that the bankers have learned from the facebook saga and theyre going to price this right. If the price rises i expect the rite price to rise, but whats going to send it down . The vie structure, the variable interest entity structure. In china, this structure could be illegal. We dont know. Theres uncertainty about it. And two is the structure means that the shareholders in allibaa might actually own these assets. The biggest ipo in history potentially. A lot of uncertainties around. Thank you very much, cyrus. Also on todays show, tech stomps on to the cat walk of new yorks fashion week. We find out how intel is trying to lure fashionistas. Home depot shares fall after we find out hackers gained access to customer information. Now lets take a look at how europe is at the open. Were one hour into the trading session. The stoxx europe 600, we saw quite a shurnlg at the hope. But then we saw a bit of a shift to the downside. No major news flow within the last hour that would warrant such a move. We have to keep our eyes peeled on that. Overall, the moves arent huge and, once again, we are maybe just seeing some profit taking after the recent run up. The xetra dax down by 0. 1 . The notice if it is 100 continually stabilizing after yesterdays big drop, which was related to the uncertainty around stocks referendum, dtoda. The ftse mib outperforming, it is flat now. Lets get to some corporate specific news because it seems this is whats driving the market today. Lets kick things off with abb. Abb shares moving higher in switzerland to the tune of 1. 4 . This is after the swiss engineer announced ads 4 billion Share Buyback as part of a strategic shakeup. Average Revenue Growth of 4 to 7 a year. Coming up, we will be speaking to the ceo of abb in a first on cnbc interview. Certainly dont want to miss that. I was just alluding to the slight performance in the italian market. This is because Telecom Italia will hold talks to buy movil eyes brazil unit. The group said its issuing 1. 1 million shares to buy the dutch group. It plans a Capital Increase to fund the purchase. And last but not least, shares in loreal slumping to the bottom of the stoxx 600 after it cuts its Growth Outlook for the global Cosmetics Market to between 3 and 3. 5 . Shares down by more than 2 . Lets get out to stephane who has more on this story out of paris. Stephane, the ceo saying 2014 is a strange year. Is that because no one is buying lipsticks any more . Yes. Not exactly, actually. The warning is related to the market cosmetics segment which is not forms as expected. The Retail Sector remains difficult, for instance, in the u. S. And the uk despite the recovery of these two economies. And in western europe, the market was negative in july and august because of the market prices but also because of the poor weather conditions. For instance, people vote less product this summer compared to last year and that explain why the performance was negative on that. On the longterm, though, the ceo remains it will turn to a berth rhythm market year. The 20 years was resting competition in the past and is satisfied with a new pro business agenda in france which he believes will improve the mood and the confidence for French Business leaders. That being said, its a warning and thats the reason why the stock is trading lower. It seems as though we are seeing stabilization for the 10year treasury yield. Just below that 2. 45 level. Maybe some concessions for the incoming supply. Were getting three, 10 and 30year notes later on this week. The tenyear gilt yield shot up yesterday, 2. 5 . We saw a steepening of the curve after those polls coming out with regard to the Scottish Referendum in two weeks time. Tenyear italian yield at 2. 3 . Were seeing a surge to the dollar for 14month highs. The reason for that . Nobody really knows. The only data we have to contend with was the jobs expectations on friday. Up by around 0. 25 . Euro dollar still under pressure, below that 1. 29 level. 1. 2869. Briefly, i want to take a look at cable at 1. 6099. Below that 1. 61 level within worth noting that the onemonth volatility at the is the highest since 2011. After warning of a selloff back in july, Goldman Sachs changes its tune and its now bullish on stocks. We hear from the Investment Bank chief equity strategist next. Wait, wait, wait, its wait, wait, wait. Whoa, does she have special powers when she has the shroud . No. Guys . Its the woven one the woven one. Oh, oh that gives her invincibility. Guys . No, no, no. The scarlet king is lord victors son no dont. I told you you guys are gonna be so surprised when you watch the finale youre so lucky your car has wifi. Yeah. I am. Equinox from chevrolet. The first and only car company to bring builtin 4g lte wifi to cars, trucks and crossovers. This guy could take down your entire company. H . Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. David costan told cnbc that risks are fading. Ricks of higher bond yields, which had been a concern say three, four months ago, it has now been reduced. As a result of that, the downward pressure from higher Interest Rates on u. S. Stock markets, particularly in Global Equity necessary a broader sense, has been reduced. And as a result, more fundamental drivers of the economy, particularly in the u. S. And in asia is likely to be a key driver to why we get higher prices. Davids colleague, the pacific equity strategist at Goldman Sachs made his bullish argument for european equities. The equity risk premium, a valuation of european stocks still is at very, very high levels. Particularly, if we look at the risk premium priced into equities and that then is priced into bonds and look at that over a historical period, were clued at extreme levels quite favorable from equities. From a relative valuation perspective, theres a clear argument in favor of european equities. Joining us now is gary fowler. Gary, great to speak to you witness again. Your colleagues at Goldman Sachs are bullish about equities, but youve been bullish all along. You think this bull market will last another three years . Yeah. It could be a very slow cycle in our view. We may end up getting through in 2017 with the market still rallying. But thats not to say there wont be risks. So with increasing caution because a lot of the fundamentals of volatility suggest very good reason for very good low volatility at the moment. That in itself is a risk. As we progress through the rest of the cycle, the credit cycle is going to start turning. The pullbacks when we get them may be more significant as we move forward. And you mentioned the credit cycle and youre suggesting ta that is already starting to turn downward. How can markets continue upwards in the face of that . Well, its not so much that the credit markets will actually sell off. Its just that the returns from credit will start to deteriorate. Youve had so much of the Capital Gains and spreadse through. Further spread compression, we believe, will probably be in tant em with an incase in sovereign yield. Actually, the yields compress receiving Corporate Bonds may be very limited. So you can still generate your carry. What were saying is the fundamentals of credit may well start to deteriorate because youve got a lot of high yield issuance starting to come through, whether it be for lbos, or whats interesting now is the trend of companies willing to junk their balance sheet, accept a significant ratings downgrade, specifically to issue very deep threat. Thats the driver of the credit is cycle going to powered equities is that this financial releveraging is going to increase risks in the system, but in the shortterm, thats potentially favorable for equities for a while yet. Gary, if i look at the dollar rate today and over the last couple of days, theyre higher across the board. The dollar closed at a 14month high. Can carry continue to rise . And what about commodities stocks . On the issue of rising yields, its certainly a risk that if u. S. Yields were to rise, then a variety of factors would start to look less appealing. Whether its potentially globally emerging markets. However, its important to recognize how significant the supply and demand extortions are. We mentioned this last year when yields backed up aggressively. There is not enough Financial Product to buy for the amount of money that investors globally are saving. In particular, if you look at what Central Banks now hold around the world of u. S. Treasuries, its a vast proportion of the u. S. Treasury market. On top of that, youve got banks that are required to hold more aaa securities and theres a significant bias towards treasuries. So the demands and supply imbalance certainly fixed income markets means that you cant really see a significant yield escalation until those subside. So in europe, thats one of the key drivers and the negative deposit rate is that theres a significant force pushing investors to buy financial securities, but it is making it difficult for them to buy bonds, whether its asset backed securities, covered bonds, bank bonds and the cltro money itself will probably go into sovereign bond, squeezing out investors of sovereign bonds. So when theres not much else to buy, the money ends up needing to flow into other Financial Assets which includes equities. Sorry. Go on. You mentioned a buyback a minute ago. We had abb announce ago significant one this morning. How significant a driver have buybacks been and are these sustainable . In the u. S. , theyve been normally survivors, 4 billion to 5 billion over the last several years. If you said theres a big institutional investor, you take that as a pretty significant signal that its going to be hard for a downturn to be sustained. So youre right, the big question is can buybacks continue. Thats an interesting question. Buybacks so far have been primarily funded by strong cash flow, not actually the usage of debt, although in certain parts of the market, thats certainly true. But in recently, and we expect in the future as cash flow deteriorates which it already is, there will still be appetite for doing buybacks because its a companies have secure Balance Sheets and the cost of debt is very low. But those will need to be more debt funded. Our view is that even the cash flow is start to go deteriorate. The u. S. Buybacks will continue but theyre being increasingly funded and thats bad for credit but probably pretty good for equity performance because it reduces the Equity Securities available for everybody else. Jerry, theres one sector for which you see 45 upside and thats the Banking Sector. Wow, this is quite a contrarian view, isnt it, despite the fact that we should be getting more positive price flow. Theres been quite a modest rally in banks this year. Its different from what people expect, though. We arent expecting a huge increase in the profits of banks. There are still a lot of headwind toes roe improvement. But while most analysts are focused on profit trends which admittedly for the next 12 to 24 months are relatively benign, there is a profits recovery but very few analysts are focused on exactly how the markets are discounting future profits into valuations today. Our view is thats whats changing rapidly. The equity is a combination of risk free yield and the risk premium assignsed to certain assets. In europe, youve got incredibly free risk low yields. In our view, were in a lower longer environment when it comes to european sovereign yields. More importantly, the markets dont fully understand how much safer the european Financial System is after years of regulation and market stability mechanism. So youre going from a european Banking Sector twice as as it currently is five years ago to now a much more utility like sector, obviously still emitting some leverage, but far less. And that means investors at some point will end up paying a higher valuation simply because the cost of capital for banks will cheapen over time. That is something that comes through over the next three or four years, not in the next three or four months. But its significant because we think the large banks, which makes up a large proportion of the index will pass with flying colors, Foreign Investors in particular will be reminded that these are strong companies. Also very importantry, theres an enormous amount of data coming out with those stress tests. Simply that level of detaip tail itself will increase transparency and encourage Foreign Investors to invest. Thank you very much for that, gary fowler, who actually says that banks could be a utilitylike sector. Can you believe that . I picked up on that comment, too. Certainly hasnt been in the past. Perhaps in the future. Now, weve got some breaking uk data were going to bring you before the break. If Industrial Production forecast number was for july has come in at plus 0. 5 month on month, plus 1. 7 on the year. The forecast had been 0. 3 for the month and it came in at 0. 5 . The forecast for the year was 1. 4 and it came in at 1. 7 . So those numbers coming in ahead of expectations. And take a look at the sterling dollar pair. It is rising on the back of these data points. 1 1. 61. Good data can have a positive impact despite all the Political Risk out there with scotland. Still so come on the show, we will be talking about scotland, another day, another day showing the referendum is too close to call. We will discuss the upcoming vote and its impact on sterling 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. Apples big day arrives. Ceo tim cook expects to launch the first ever wearable device. Ab b woos investors. Coming up, well speak first to the groups ceo. And loreal warnings growth will come in below expectations this year due to bad weather and cautious consumer spending. Sterling continues its slide as autos poll suggests scotland is leaning towards voting for independence. They warn clients to brace for a collapse of the pound. Blets give you an update on european markets. The ftse 100 down 23 basis points. Slightly at the bottom of the pack. We just had before the break some data coming out of the uk. Industrial production for july was plus 0. 5 month on month against an expectation of 1. 3 . And 1. 7 against for the year. Industrial numbers coming in slightly ahead of expectations. We had manufacturing output that came in at 0. 3 month on month and 2. 2 year on year and an unchanged noneu trade surplus at plus 3. 8 billion. So those numbers are in line, although uk industrial product data was ahead of expectations. Sterling off the back of that is slightly flat. It had been slightly down on the day. So a slight bounce in sterling off the back of that data. Well look at european markets across the board now. As you can see, theres slight weakness in the trading day today. So far, the ftse, the laggard down 0. 3 . Germany, france, roughly flat. Italy, germany, bucking the trend. Now murrah has warned its clients to reduce exposure to the uk after the latest polls show as increased likelihood of a yes vote in the scottish referend referend referendum. They believe a breakup could be a cataclysmic shock to the market. It also sees sterling falling as much as 15 . A new Scottish Independence poll puts the rival campaigns neck and neck as we edge ever closer to september 18th. The no vote holds a slender 1 lead a, which says 39 would vote to stay inside the union while 38 would vote the leave. The others polled remain undecided. Helia joins us on set with more. A huge proportion is still undecided. A huge proportion is undecided, but weve had this massive swing towards the yes vote. Go back even six months and youll remember times when nobody could imagine a scott legion thats going to vote for independence. Its very different now. They look to be neck and neck and youve got political panic sweeping westminster. We had gordon brown, the former Prime Minister, being wheeled out yesterday to announce this major reform package which would give scott lntd more power rather than westminster. And that he said would be delivered by burns day. The problem is how will the scottish people iraqi to that . So far we havent seen any positive pick up. And youre talking about the nomura note out. There was a note out from ubs talking about quebec. And if you remember what happened between quebec and canada, even though the vote was very narrow, because it was so narrow, there was a massive slide of capital from quebec. And that money hasnt actually returned until very recently. So scotland faces huge problems. This again sfot about economics despite the fact that this is what Alistair Darling would have you believe. This is about identity. Remember, we had the pound sliding yesterday. We had companies sliding their share price value. But that doesnt seem to be making an impact because people are voting with their hartsd. Thank you very much for that, helia. Coming up, well be looking back at how ireland managed its currency transition after it voted for the uk. Are there any lessons there for scotland . That interview is around 20 minutes time. And ive got an interesting flash coming from the german finance minister. He says the ecb is doing what it can, but its instruments are all but exhausted. I think this should resinate very well with the ecb. I think this is what they would be arguing. Theyve cut rates all along, a number of times, and now it really is up to the periphery and to those countries there to work on their reformes. Moving on, car sales held flat in august while yeartodate sales picks up 3. 4 . Germanys largest automaker said it was still facing a challenging situation in Global Markets. The stocks slipping slightly on the news. Lets talk more about autos overall with christina church, director of european auto and Components Research at barclays. She joins me now down the line. Thank you so much for taking the time to speak to us today. Lets talk first about vw and the global auto sector in terms of its exposure to china. Previously, that was a very, very strong point, wasnt it, because we saw double digit growth very much driven by the chinese consumer. But just over the last couple of months, weve seen an investigation on auto parts prices. To what extent is this hurting vw and some of the other global auto players . I think in terms of sentiment, its a big issue. China is very important for the german automakers in particular. Theyre making very high profits in china and its a very large component of their overall profitability. The monopoly investigation, we have yet to hear the full extent of those. But from our analysis, it will seem that the pricing in china is not much different than the pricing in the rest of the world. So youre not comparing apples with apples if youre looking at the price of the car in china with the price of the car in germany. So it could seem on the surface that prices are incredibly higher in china, sometimes 40 higher than in the rest of the world, but at least 30 of that can be the additional spec is that consumers have on the cars. And then, of course, youve got additional logistics costs, other costs of transporting cars to china. So i think overall, in sentiment terms, yes, it is a big issue. Stocks, bmw, as well, is affected given its large exposure to china. It is the largest of the automakers in terms of percentage of overall profitability. But we do think the real effect in terms of any fines that are imposed will be keeping more minimal than the headlines might suggest. And christina, on volkswagen, theyve invested a huge amount into their modular manufacturing and technology around that. Have they raised the bar for other manufacturers that have to rise the bar to their level . Its a difficult question to answer. Their brand new modular platform is a huge undertaking for them. Its a whole change in their product facilities. Its involved in extraordinary amount of costs. But the benefits should equally be incredibly high. If youre thinking that they therefore can produce their cars and one production line they can produce multiple different products coming off that same production line. We have yet to see the full benefits of it because it does rely on the new products coming on that line. With the new passat next year, thats the real start. The mb should come into its open. We dont think theyve overinvested, but at the moment, were at that period where the costs are high. We have yet to see the benefit. From next year, especially as this new mod ewe layerty gets rolled out globally to its current already there in europe that it will be roll out to the rest of the world. A lot has has had on the currency front over the last week. How much of a game changer is that for some of the european automakers . I wouldnt think its too much of a mover for the german cars because theyre selling well regardless, but what about the french automakers . To be honest, currency is a bigger issue for the german carmakers. They do import a large degree of cars. All the automakers are trying to make sure that they have a lot of natural hedging from foreign exchange, i. E. , local production. They have a large degree of financial wedging where possible to enable them to mitigate currency risk. They can use financial hedging for the larger currencies. But in terms of emerging market currencies, its too experience to use financial edging. So there continues to be volatility. And daimler in particular is the most exposed fluctuations in fx, due partly to the scale, but also they havent uses as much financial hemging in the past. But recent moves, we still need to keep an eye on the currency moves. Interesting. Christina, thank you so much for that. Still to come on the show, as irish finance minister Michael Noonan meets troika leaders, we ask is the grass truly greener post bailout . The president told a crowd of workers the city is and always would be ukrainian. The comments came as the shaky ceasefire continued to hold, although both sides center accused the other of sporadic shelling. The European Union has agreed to tougher sanctions against russia, but says it will delay implementing them to see if the ceasefire holds. The Prime Minister medvedev says the government would react towards stupid sanctions by reducing the countrys reliance on imports. Russian Energy Companies will not be allowed to raise capital or borrow on european markets under the new measures. Russian stocks are down nearly 3 this year, although that be lies some of the volatility weve seen for the year. Earlier our colleagues at european squawk box spoke about this. We will see some of the volume will continue to felony from foreign markets into the russian market. That includes, say, the fixed income. So we definitely see some opportunities there. Nobody likes the negative tone. But we let people take risks and manage their risks, whether this means credit or equities or effects. Meantime, the Dutch Safety Board says downed malaysian flight mh17 broke apart over ukraine due to a large number of high Energy Objects from outside the aircraft. Officials stress there was no evidence of a technical fault or pilot error. They have been leading the investigation into the disaster which killed all 298 people on board. The report does not attribute blame or liability for the crash, but a criminal investigation is under way in the hague. Now on another subject, starbucks face tax woes by the eu competition, he told cnbc hes looking into new efforts to combat undue competition. Control is not the tool that can change legislation. Legislation is the mother of National Government and parliament and in any case of the council and the parliament is discussing the new eu rules on taxation. But state aid is a very powerful weapon to avoid selective treatment of companies from their budget with subsidies or from the revenue side with Tax Advantages that could be considered selective. So based on this selectivity principal, we opened recently investigations regarding several tax issues. We opened an investigation in the netherlands, certainly regarding starbucks. We opened a investigation in luxembourg and also we discussed with luxembourg because at the beginning they were not cooperating with us, sending information. Now, the luxembourg is minutester, he has promised me that this rejection of the difficulties to send us information, okay, perfect, i thank him for this and we continue working on this. But in the meantime, i will do something the last minute and i would strongly recommend to my successors from the first minute of his or her mandate to use a state aid as a weapon to compensate or to at least reduce the possible advantages of companies, the stock and competition thanks to legislation or the interpretation of tax legislation. You mentioned luxembourg. It brought to mind my recent visit, as well, after these Holding Companies for the family, as well. Its got to sit badly in a market, in an Economic Zone that you are trying to push forward fair and level Playing Field where we have a mysterious set of Holding Companies, where were in the Banking Sector, whatever the sector may be, right in the heart of europe, in luxembourg, as well, one of the paid up members of the European Union. It doesnt sit well, does it . I agree with you. I think this should not be accepted. When you listen to the political leaders of different Member States and when they meet together at the county level or when they go to the ecd, when they speak to the public opinion, they will say in most occasions, we will want and we will need to avoid loopholes. But the fact of the matter is that the practice in some Member States this possibilities still exist. Now, irish finance minutester michael noon is set to meet troika leaders today in an attempt to seek payments. The early payback plan may face the distance from some in europe. Speaking at the Central Banks conference last week, the ecb president mario draghi said policymakers would be keeping a close eye on the situation. We take note of this. We will examine the governing council and we monitor very, very closely what is being done with the sale of assets so that the what we call financing concerns are being properly and significantly addressed. And were joined now by contin jergen. It doesnt sound like mr. Draghi is that excited about the prospect of repaying loans early. No, mr. Draghi has never sounded excited about pretty much anything. But to me, his statement does indicate his willingness to deal with ireland in the early repayment of the imf loans and his concern of that against 22 billion of the ibrc legacy loans which have being held by the central bank itself. This is not legacy loans into the bonds that the sovereign issued in return for it. This is a pretty good deal from irelands point of view. The Bonds Central Bank are currently in the money. Were probably going to realize some sort of the Capital Gains in the shortterm and on opposite side, the promise of the imf deal itself is quite attractive to that government. Ireland borrowed 22. 5 billion from the imf. Of this, Michael Noonan, minister of finance is starting to refinance earlier. But the 15 billion part of that debt. And this will achieve significant savings for us. Imf loans come with the price tag of 4. 99 annual yield. Currently, Irish Government can borrow at about 1. 8 , 1. 9 for the tenyear paper. And if we are to restructure this debt, we will achieve some savings annually of about 375 Million Euros in terms of Interest Payments alone and at the same time extend the maturity of the loans. So its a winwhip. We should note that the ecb itself does not hold a significant vote on that issue because the issue of the repayment of the imf loans is really with the european leaders and european governments themselves. And we already had in august of this year is statement which supported these payments. To one of the topics that has been stealing all of the headlines, one of the biggest questions is if scotland does vote for independence, what currency it would take on. It seems like if you look at history, ireland has set an interesting precedent. Talk us through that. Would that be viable for scotland, too . Indeed. Ireland in the earliest part of the 20th century, kind of twotier if you want currency arrangement with the uk, it took on the legacy of that but never repaid those debts and never really funded those debts as a result of that chief significant savings. But in order to convert the longterm fm contact that ireland had within the uk system at the time, ireland effectively paired itself to the sterling. And this arrangement lasted for a very long period of time, despite the fact that ireland had the currency afterwards. But the different, of course, is crucial. The side of the irish Financial System at the time was the Banking Sector along is 112. 5 times gdp. Which is well in advantage of what ireland and cypress had ahead of their crisis. Constantin, im going to have to interrupt. Thank you so much. Still to come, the countdown is under way for apple, but will the new product appeal to both consumers and investors . We discuss after the break. Xkc welcome to Worldwide Exchange. Im wilfred frost. Andel im carolin roth. Apples big day arrives. Ceo tim cook expected to launch its first ever wearable device. Home depot confirmed its been hit by hackers. The attack could be bigger than the data breach that struck target last year. And a 4 billion Share Buyback announced by abb. We speak first to the ceo about his revised sales target in a few minutes. Another poll suggests scotland is leaning towards voting for independence. Nomura warns client toes brace for a collapse in the pound. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. And if youre just tuning in, thank you very much for joining us here on Worldwide Exchange. Lets have a look at the u. S. Futures ahead of the market open. The u. S. Following five strike weeks of gains, the u. S. Fell. Today it looks like its continuing in a slight downward trend. The nasdaq expected to open down about 4 points. The s p down about 2 points and the dow expected to open down about 3 points. European markets have struggled for direction today. Theres a number of factors weighing on sentiment. Italy is fractionally down. Likewise, frat france. Germany down about 13 basis points. The ftse is down. Whats weighing on markets in the uk is the uncertainty among the Scottish Independence vote. Markets are very strong last week following the ecbs action. Unsurprising so far this week, a bit of uncertainty in the european markets. And i guess you shouldnt underestimate the strength of the dollar and thats been weighing on commodities, shares weighing on energy shares. That was very much visible in the u. S. Session yesterday. Lets see how were doing in the bond markets. Were seeing the tenyear treasury yield edging closer to 2. 5 below that level. With the absence of any macroeconomic data points, we are seeing some stabilization in the treasury yield, 2. 49 , as i just said. We may be seeing some concession ahead of three, ten and 30year sale later this week. Gilt, 2. 514 . We saw that escapening up the curve yesterday relation to the worries we saw about the schoolish referendum. And the other poll we saw leaning towards independence today. Lets have a look at the currency markets. I just talked about dollar strength. Were seeing the dollar index close to 14month highs. No specific reasons for that, only that traders are selling other currencies, namely, of course, the british pound. 1. 2879, down by 0. 1 and the euur u. S. Dollar dollar against the yen, 106. 32, up 0. 3 on the day. Were just getting some flashes in from russia. Thats from Russian Foreign minister Sergei Lavrov who is saying that the ukraine ceasefire is being observed. That announcement from Sergei Lavrov coming despite various instances where each side is blaming each other for slight violations. But i repeat, sur is gay lavrov has said that the ukraine ceasefire is being observed. Moving on, Goldman Sachs upgraded his outlook to equities overweight on a threemonth horizon. David costan, chief u. S. Equity strategist told cnbc earlier that risk equities in the near term are fading. Risk of higher bond yields which had been a concern, say, three, four months ago, it has now been reduced. And as a result of that, the likelihood of downward pressure from higher Interest Rates on u. S. Stock markets particularly in Global Equity necessary a broader sense has receded, has been reduced, and as a result, more fundamental drivers of the economy, particularly in the u. S. And in asia would like to be a key driver to why we get higher prices. Meantime, davids colleague at goldman sakes made his bullish argument for european equities. The equity risk premium, a valuation of european stocks, still is at very, very high levels. Particularly, if we look at the risk premium priced into equities and that then is priced into bonds and look at that over a historical period, we clearly are at extreme levels quite favorable from equities. So from a relative valuation perspective, theres a clear argument in favor of european equities. What we want to see is some breath in this rally. Its been a bit of a selfrally, but the s p up over 8 so far this year. If you talk about breath, what do you want to see . You want to see an overperformance in the russell 2,000, as well. We havent seen that. Its been quite a volatile year. And its important to focus on what theyve been saying there. That was a positive goal in equities in a threemonth time horizon. Thats fine. Theres more liquidity in the markets from europe. Thats an understandable thing. Whats going to be interesting is as we get to the start of next year and we might see rates being tightened. Youre absolutely right. But do you really think that rising yields would still endanger stocks . We saw the tapering tantrum last year, maybe we saw a bit of an effect last year. But do you really think that markets would still fought be immune to that . I definitely do. I think the people are underestimating that inventorilty. Because theres a big, big difference between tapering, lowering the pace at which were easing and tightening. And i dont think both markets in the economy are factor dollars that in. Well have to see what happens when that eventually arrives. Tight. Ing, come pop were not going to see 5 rates, are we . No, exactly. But well see what happens as that arrives. Lets give you a look at whats on todays agenda in the United States. The monthly survey for National Federation for independent businesses is out at 7 30 eastern time. At 10 00 a. M. , we get job from the labor department. We go earnings from barnes noble, krispy kreme, Burlington Stores. Antitrust regulators are push i pushing. It was with regard to negative feedback with the deal announced back in february. Google could be hit with fines up to 6 billion if the two sides fail to reach an agreement. We spoke to europes competition chief who said google had lots of questions to answer. We will work on this until the last minute and i am sure that the next commission and the next xhig commissioner for competition will have to work a lot on google because this is not the only case. We are working on android with some problems, not yet a formal investigation, but quite an answered knowledge about the problems. We can work in other areas of google where some people are sending out arguments and in some cases former complaints talking about possible abuses in other areas of the Google Business. And in other areas beyond competition, google also has a list of questions that serves the attention of the European Union, of the commission, drive up big data factors and so on. And coming up next, we speak to the ceo of abb about the firms 4 billion buyback and its next level strategy. Thats first on cnbc here on Worldwide Exchange after the break. 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. No. Not exactly. To attain success, one must project success. Thats why we use fedex one rate. Right. Their flat rate shipping. Exactly. It makes us look topnotch but we know its affordable. [ garage door opening ] [ sighs ] i need help with the groceries. [ sighs ] [ garage door closing ] where was i . Oh, yes. [ male announcer ] ship a pak via Fedex Express saver® for as low as 7. 50. Your headlines, all eyes on apple as the tech giant is expected to unveil the iphone 6 and an iwatch at its big event today. Sterling and volatility rises after another poll suggests scotland is increasingly likely to vote for independence. A cyber attack hits u. S. Retailer home depot in what could be an even bigger Security Breach than the one target faced last year. Nomura, japans largest bank has warned clients to reduce exposure tout uk after the latest poll shows a likelihood of a breakup between england and scotland. They believe it would be a cataclysmic shake up to the markets. It also sees sterling fall as much as 15 . A new poll took the rivals neck and neck as we edge closer to september 15th. According to cnn, 39 would vote to stay inside the unit and 38 would vote to leave. Our uk Business Editor joins us here around the set. The pound has sold off around 2 since the weekend. That is not based so much around the uncertainty around the currency, but more the Political Uncertainty that a yes vote could face. In the latest that weve had in the whole of the uk, Political Risk is the biggest risk facing the uk economy and this is the most severe. Whatever the outcome, even if the Campaign Wins with a narrow vote, there will be instable in the region. Will that mean a flight of capital, a lack of investment in scotland . And the worst still is if we do have total separation, what happens to the currency and what happens to those scottish banks . Remember, the issue here is not so much will an independent scotland get to use a pound. Its more if it uses the pound and begs to the british pound, the english pound thats backed by the bank of of england, what does ma mean for the Financial Institutions like rbs and lloyds . And that will cause huge risks. Were likely to see a delay in the general election here in the uk. Many people have speculated this could lead to the resignation of Prime Minister david cameron. Remember, this is the man who gave scotland the choice in the first place. So it looks very, very bleak for the uk as a whole. What about the precedent thats been set, you were talking about that earlier and basically we saw Pro Independence leaning polls in the run up to the election or the referendum rather and then a no vote. But still capital outlook. It was narrowing in quebec. Even if you get continued United Kingdom of great britain, including this wonderful cup, scotland, that it would be narrow enough that it would create instability that you get this slight of investors. Remember, the deposits in quebec is what got hit harder and people are worried. Youve got major Pension Funds like Standard Life and you have a lot of deposits and investments. Today weve been talking a lot about the real estate risk, what does this mean for housing . Theres 45 billion pounds of assets in mortgages that are held by rbs, by hsbc in scotland. If theres anything that happens politically, they are likely to step right in new mortgages until that risk has settled down. And that wont be for another year at least. People in scotland who work hard and who are looking for houses are going to find it very hard, whenever way we go. Helia, this hasnt really been on the agenda for people outside the uk so far, but cable has fallen significantly in the last couple of days. That nomura report we just referenced suggests the pound could fall as much as 15 . Surely thats an overreaction. Well, look, i dont want to pour cold water on now murrahs report, but they come second to goldman sakes saying sterling would be hit hard. Of course, it would because the very idea of sterling is being challenged. And youre right, International Eyes are suddenly looking at this situation and weve had other analysts report saying this could be another eurozone crisis. What does separation entail . To be honest, its not just the rest of the world picking up and taking notice. Its here in london, in westminster, as well, that people have understood far too late how serious a threat Scottish Independence really is. Wow, whats the countdown . Ten days . Eight days . Nine days. There you go. Thank you so much. The difference between. Thank you so much, helia. Moving awrong, home depot has confirmed Payment Systems were breached by hackers in a cyber attack that may have stretched back to april. The breach was first reported last week by security blogger brian krebbs. Home depot says the theft too impact customers at its more than 2,000 stores in the u. S. And canada. Lets have a check off how home depot shares are trading in germany, down by 0. 2 . Remember with target, we saw some significant downside for targets share in the aftermath of that 37. Indeed. You want to keep your eye on it ahead of the u. S. Open. General mills is buying organic and natural foodsmaker annies. General mills are pay 46 a share. Annies has grown rapidly. Annies jumped more than 30 in after hours trading overnight and in frankfurt up significantly again. 37 . The s p 500 may be trading in record territory, but there are a bunch of stocks that analysts love to headache. Dominic breaks it down for us. Analysts are always pug bullish on the stock market. We decided to take a look at the stock analysts are most bearish on. Theres package food giants kelloggs which make some of the most popular cereal brands in america like corn flakes and flute leaps. Analysts who cover kelloggs stock have a prying target around 56 per share. Some suggest a buying pattern there. On some stocks, a huge outside move in 2014. Thats the case with under armour. As a result, analyst have an average target price thats 6 below where shares are currently trading. In other words, under armour stock has blown by analyst price targets. And the s p 500 companies that can fall the most based on average analyst target prices is Office Supply giant staples. Its had to deal with stiffer competition. Analysts think this stock could drop by 12 if their average target price is correct. Analysts are always looking for a new reason to change their Investment Outlook and target prices. But now its up to them to figure out whether anything has change about these company to warn a more positive outlook. For more, check out the story on cnbc. Com. Back over to you guys. And still to come on the show, high tech meets high fashion. We look at how wearables are making their way on to new yorks cat walk after the break. As we go, well leave you a view of the heat map to see how european markets are trading right now, down ten basis points so far. 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. Revolutionary by every standard. And that became our passion. To always build something better, airplanes that fly cleaner and farther on less fuel. After all, you cant turn dreams into airplanes unless your passion for innovation is nonstop. Lets have a look at u. S. Futures. Were expecting a slightly negative open. S p expected to open down a lele of points, the dow down about 10. The nasdaq off 5. And lets have a look at european markets, showing a slight downward bias. The ftse 100 still the worst performer, down by 0. 2 . Were seeing Energy Falling on the back of the higher dollar. The xetra dax off by 0. 15 . The ftse mib is bucking up trend up modestly. And if we look at forex, the sterling had been weakening earlier against the dollar, but its now ticked up about 4 had basis points. That following slightly stronger than expected. Elsewhere, the dollar strengthened significantly today which saw the positive move in the nikkei and the euro weakening slightly against the dollar. Now, u. S. Restaurant and arcade chain dave busters has filed with the s. E. C. For an ipo. The company is looking to raise up to 100 million. David busters scrapped plans to sell itself for more than 1 billion earlier this year. Poor Market Conditions led the company to drop efts to go public back in 2012. Activision is taking a gamble on its new video game, destiny. Will it pay off . Julia boorstin has the story. Activisions destiny hit stores. Could generate as much as 12 million in revenue this year, potentially outselling the call of duty advanced warfare. Destiny is the most preordered original new video game in history, following the biggest beta test of this console generation. With over 4. 6 Million People testing the game in july. This is particularly striking because its not part of an established brand. But rather the start of what looks like another billion dollar franchise for activision. Whose crown jewel franchise is the call of duty series. And activision is counting on building a new franchise. And the wait is nearly over for apple. Apple is holding an event at the flint center at 1 00 p. M. Eastern time in its hometown of coopertino, california. Thats the same site where steve jobs introduced the original mac computer 30 years ago. Apple is widely expected to unveil the iphone 6 with the larger screen and likely also a smart watch. That will be the first new product category launched under ceo tim cook. An apple smartwatch could dominate the wearables market through 2015. Apple shares have outpaced the market in aerm aerpgz of todays friends, up 6 in the last month. Historically, apple tends to lag after a product release, but over time, the stock outperforms with the biggest gains 6 to 12 months later. Its worth note b with you if you look at the options markets, theyre implying a 4. 5 move in either direction and that would be higher than the move very saw exactly a year ago. Everyone expected a pretty big release and a big move in the share price. Indeed, indeed. As we heard earlier from cyrus, he expects it to be the biggest launch from a number of years from apple. And its tech tuesday here on Worldwide Exchange. We want to know was been your must have gadget in recent years and which products are you most looking forward to, coming up. Is it wearables or new smartphones or something else, perhaps . Join the conversation here on Worldwide Exchange. Get in touch with us by email, worldwide cnbc. Com or via twitter, cnbcwex or will fredfrost. Whats your must have gadget . So far, i want to get a smartphone. Ill see what the wearables offer. So far, im unconvinced. I pledge my allegiance to the blackberry. Its so easy to type on it. Thats archaic. Thats like my parents talking about type writers. I may be a dinosaur. New yorks fashion week, Courtney Reagan has more on luring fashionistas. As spetices are not an issue for many fashionistas and women frankly uninterested. But intel is partnering working to change that. Intel and ultimate ceremony are debuting the my intelligence communication accessory. The Technology Features including a usb port inside the clasp and smart device ring on the backside. At t is the exclusive carrier. The two versions will be for sale at barneys and opening ceremonies stores for the Holiday Season at a price tag just under 1,000. We wanted to stretch the market a little bit out and tell pem come and test the technology. Learn it, but in the meantime, have an aesthetic and have it in a way that you like. Absolutely, i think theres already a ton of smartwatches. Citi predicts the market for Wearable Technology could be worth 30 billion. The Research Team conducted a survey of consumers and say 80 are interested in smartwatches that look more like traditional watches. Intel is hoping to secure their positioning with that consumer set with its opening sayre mother collaboration as well as a partnership with fossil. Ralph lauren debuted a smart shirt weeks ago and designers have teamed up with fitbit and google respectively to make their wearables more fashionable. Price is a top feature for smart accessory consumers, throw that 1,000 price point for the intel smart bracelet may not quite fit the bill. Back to you. Still to come on the show, we preview president obamas big speech on topping the rise of isis as a new poll suggests more americans support fashion against the islamic state. Well leave you a look with how the futures are trading ahead of wall street. A slightly negative open expected. Well be back in two. Welcome to Worldwide Exchange. Im wilfred frost. And im carolin roth. Apples big day arrives, the expected launch of its first ever wearable device. U. S. Retailer home depot confirms its been hit by hackers. Analysts say the attack could be bigger than the data breach that struck target last year. And loreal warnings growth will come in below expectation these year due to bad weather and cautious consumer spending. Sterling continues its slide as another poll suggests scotland is leading towards voting for independence. Nomura warnings clients to brace for a collapse in the pound. Announcer youre watching Worldwide Exchange, bringing you Business News from around the globe. If youre just tuning in, thank you very much for joining us here on Worldwide Exchange. Lets have a look at the u. S. Futures markets ahead of the open. The s p expected to open down a couple of points and the dow expected to open down about 7 points. That comes after a slightly weak day yesterday following five weeks of gains in the u. S. Markets. Europe struggling for direction today. Theres a couple of factors to this because we had a new set of sanctions announced by the eu on russia and still having a bit of negative sentiment due to the staunch independence vote that weighs on the ftse 100. Italy bucking the trend slightly up 10 basis points. France down about the same amount. The German Market down about 11 basis points, ftse, the slight laggard down about 60 basis points. How do you make money in these markets . Here is what some of the experts have been telling us this morning. Theres a bit more uncertainty about the near term trajectory. You see aus just mentioned with poorer Second Quarter gdp numbers. There was data that kiem out yesterday showing less cap ex. So the economy seems to be wobbling here in the shortterm and wage growth is not as strong as one had been expecting. Well we felt in the Fourth Quarter this year there might be more range trading as opposed to making further advances. Within the overall u. S. Equity markets, technology, Consumer Discretionary does accomplish more. Economic sensitive areas is where we would like to be. Its more focused. Given the underlying economy is getting better. We will be selling some of the stocks. But then on the other side of the stock, they tend to benefit from a weaker sterling. This is probably the main way of trading. The u. S. Has hailed a formation of iraqs new government as a major milestone. U. S. Secretary of state john kerry said it has the potential to bring together all of the countrys ethnic groups for a strong united iraq. The new government headed by the Prime Minister includes members of iraqs kurdish, sunni and other communities. And president obama is meeting with congressional leaders today ahead of a speech to the nation on wednesday. Hes expected to detail his plan to stop the rise of isis. Were joined now by ben white, chief economic correspondent at politico and a cnbc contributor. We keep hearing from president obama that he wants to degrade isis. What exactly does he mean by that . And do you think hes going to step up that rhetoric in his speech tomorrow snm. I would imagine he will step it up a little bit. I think the American People want to hear a tough, aggressive approach to taking on this group. The big question is with to what extent does he talk about targeting isis in syria . Thats been the big question surrounding this administration. Theyll continue to do targeted strikes in iraq. Theyve been much less willing to cross the border into syria. I think hell talk a little bit about his plans there as well as coalition building. I think he wants to present to the United States public a large group of nations who will gather together in this campaign against isis. I think he will talk about the other nations in that group, talk a little bit about the plans for targeting them in syria and make it clear that the goal for the United States is to degrade and ultimately defeat isis. So i think hes going to lay out a broad plan and make it clear to people that the administration has clear goals and principals. Theyve been a little bit all over the map on how theyre going to approach this. Theyre going to unify the approach in this speech and make it clearer to the American People what the goals are here. And you mentioned the word unity. Is that very important for president obama now . His opinion polls are relatively low as he comes out with a Clear Strategy against isis and do you think that could give him a boost in the polls as he goes into his final 18 months in office . In the midterm elections, were obviously coming up on november where democrats are at risk of losing the senate. One area where hes been weak is on Foreign Policy and i think some of this came to light during the summer when he was on vacation. There was some confusion as to how the administration would approach it and he had that famous gaffe in his press conference where he said they didnt have a strategy. I think the administration wants to forget about that little mistake and say here is what the strategy is. We dont think isis is containable. We dont want to make it a manageable threat, we want to make it a nonexist i cant answerant threat. So its a big moment for him, really, and its a big moment for democrats who do not want to risk losing the senate in november and turning the last 18 months of thissed administration into a fighting rear guard battle nightmare. Ben, we know congress is dysfunctional, but what is the chance that with the increasing challenges, im talking about isis, im talking about russia, im talking about the tax code that this congress could become even more dysfunctional or it could work the other way around, it could actually finally find a consensus and reach across party aisles . Well, i think it depends a great deal first of all, nothing is going to happen between now and the midterm elections. Congress, as you can see behind me, capitol hill, theyre coming back this week. Theyre going to pass a continuing resolution to keep the government open and fund in the United States. When they come back, it will be a lame duck session where president obama could introduce some unilateral measures on immigration reform. I think its possible that hell do that. Republicans will be very upset about that. Youll see a nightmare of recrimination on the hill after that happened. So a lake duck session. Contrary to popular belief, if republicans take the senate in november and you have a full republican control on the little hill, obviously, president obama still in office, he may be able to do some materials with them on tax reform, immigration, some other issues where theyre going to send stuff to his desk and dare him to veto it. I think in some instances, rather than veto it, he will get something done. Between now and the end of the year, all theyre going to do is keep the lights on and thats the best we can hope pop the. Speaking on cnbc, representative chris van holden referred to burger kings deal with tim horton saying tax inversion hurts american workers. Every penny that burger king does not pay in taxes is a penny american citizens are paying. So they want american citizens to pay taxes for their roads, for the legal system that they use, for all the other benefits they have of being in the United States and selling as they should in the United States. But they dont want to pay taxes, they want that burden to be solely on the american taxpayer. That is juchtd not right. Ben, you said seconds ago nothing will get done until we see those midterm elections in november. Does that apply to the tax code . I believe it does, yeah. Theres several legislative proposals on the hill right now to deal with inversions specifically by targeting some of the Tax Deductions that Inverted Companies try to make on their you know, they shift their earnings out of the u. S. , bring debt back. I dont think any of that stuff is going to pass. I think thats mostly political positioning for november. Democrats want to be seen as tough on inversions. Republicans say they would only deal with it through a broader hold of the tax code. I dont think thats going happen. The administration promised unilateral tax holds. My guess is its pretty narrow, pretty targeted. Theyre worried at the white house and treasury that anything they do unilaterally will be challenged in court, perhaps found illegal, tie it up in litigation for quite some time and that will hurt tax reform proposals in the next congress. So i think nothing on the hill on inversions. The white house will put out some propossessionals. I think theyll be narrow and limited in scope and probably wouldnt block a lot of the inversions contemplated at this point. Thank you so much for that. Ben whites chief economic correspondent at politico and a cnbc contributor. Some interesting steps in terms of Market Performance in the third year of the president ial cycle. The dow jones outperforms usually at 12. 4 for years three, 7. 5 for year three. Whats the worst year for the president ial cycle . Probably year six or seven, is it . No. That would be 6. 2 for year one. Oh, sorry, you mean in the second term. The fourth year, of course. No, actually, it is the second year. I dont know exactly why. Maybe because theres so much bickering going on. I imagine theres lots of other factors at play, as well. Hard to draw any firm conclusions. I think youre absolutely right. We just like to look at historical data, dont we . Indeed. Coming up, home depot confirms it was hit by hackers in a cyber attack that could have stretched back for months. More on the scope of the data breach, including how many people could be affected, next. Woishg opinion all eyes are on apple as the tech giant is expected to unveil the iphone 6 and the iwatch at its big event today. Sterling slips and volatility rises as another poll suggests scotland is likely to volt for independence. And home depot could be looking at a bigger Security Breach than the one target faced last year. And lets stick with that story. U. S. Retail giant home depot confirms its paimts Payment Systems were hit by hackers in a data breach that analysts warn could rival targets last year. Morgan brennan has all the details from cnbcs headquarters. What is the company saying . Home depot says its working aggressively to root out the virus that infected its networks and protected customer data. But it is stopping short of saying when or whether the breach has ended. The Company Began investigating the incident last week after receiving reports from banks and Law Enforcement that it may have been hacked. Since then, its been working with the u. S. Secret service and i. T. Systems such as symantec. The theft may have stretched back as far as april. Home depot says the problem could affect all of its 2200 stores in the u. S. And canada. But the company says theres no evidence Online Customers were affected or that debit card pin numbers were compromised. Home depot is promising free Identity Protection services, including credit monitoring to any customers who might have been affected. In a statement, the ceo frank blake says we owe it to customers to avert them. It is important to emphasize no customers will be responsible for fraudulent charges to their accounts. Brian krebs says home depots breach could be bigger than targets was last year when 40 million credit card numbers were stoelg and 70 million pieces of data. The largest known breach at a u. S. Retailer that was found in 2007 at tjx companies. More than 90 million credit cards were stolen over about 18 months. As for home depot, it says it will roll out pin and chip enabled cards at all of its stores by tend of the year. The stock fell about 1 on monday. Today in europe, that is trading down underuniversity a percent, as well. Coming up, the day is finally here. Will the weight bear fruit . We look ahead to the first ever apple wearable device launch. 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. Welcome back. Lets have a look at markets quickly. The european markets are in the red as you can see. We just picked into the green, but basically flat. The eu has announced more sanctions on russia. Theres uncertainty around the Scottish Independence vote. It was a strong week last week, particularly on temperatures. France down 15 basis points. Germany down 14 basis points. The ftse 100 down 16 basis points, as i said, uncertainty surrounding the Scottish Independence vote. The u. S. Futures expecting a slightly negative open, as well. The nasdaq expected to open down 3 points. The s p down about 2 points and the dow expected to open down about 7 points. Lets give you a look at whats on todays agenda in the United States. The monthly survey for nap National Federation of independent businesses is out at 10 00 eastern. From the labor department. Hd supply, barnes noble, Burlington Stores and krispy kreme all reporting earnings today. And activision is taking a 500 million gamble on its new video game, destiny. Will it pay off . Julia boorstin has the story for us. Actvisions new game destiny could hit stores possibly outselling the call of duty advanced warfare. Destiny is the most preordered original video game in history, following the biggest beta test of this generation with over 4. 6 Million People testing the game in july. This is particularly striking because its not part of an established brand. Rather, the start of what looks like another billion dollar franchise for activision. And activision is counting on a hit. The Company Reported 500 million on the franchise. Alling is holding an event at 1 00 p. M. Eastern at the flint center for the performing arts. Thats the same site where steve jobs introduced the original mac computer 30 years ago. Apple is expected to unveil the iphone 6 with the largest screen and most likely a smartwatch, too. And apple shares have outpaced the markets in anticipation of todays event. Up 30 in the past six months. Historically, apple tends to lag after a product release, but over time, the stock outperforms with the biggest gains coming six to 12 months later. Will greenwald joins us now. Will, how big is this launch, not just for consumers, but also for investors . Well, for consumers, it is always a big deal for an iphone. Here in new york, there are people lining up already at the apple store to preorder it, because not even going to be on sale likely for a couple weeks. The big question is what features are they going to add and how big a jump will it be . So far, apple has taken a bit of a tostep process where every year there haib a major iteration, but relatively mild, but enough to appeal to consumers. A lot of consumers who suffered from screen envy switched from apple to samsung over the last couple of months or years. And do you think that these consumers will necessarily switch back now . Its possible. The issue with screen envy and the whole trend of devices that are larger than a conventional cell phone but smaller than a full tablet has made the entire market a bit unusual in terms of what the feature set is and whats considered a large screen. It used to be that five inches was huge and you no its small compared to, say, a six or seveninch device which can work as a cell phone. Were going to see if apple can make something perhaps between the iphone 5s and the ipad mini. This would be a first for them, but it is going to a market. The Smartphone Market has evolved a great deal. A lot of very good smartphones available. Is it the quality of the hardware, the quality of the software or just the brands that is on the box inspect. Its a little of everything, really. Obviously, there is a lot of loyalty to apple and its craftsmanship. It is always consistently well designed. But Companies Like samsung and lg have taken Great Strides in these devices that ever similar quality, work very well but with a more open system of android. Even google themselves have devices like the lg nexus 5 and whatever followup they might have of that which you can purchase unlocked. There are other issues with apple products that make things a bit more difficult to use completely unfettered compared to android. Its a technical issue and still apple is a bit more accessible, but Android Devices are a bit more appealing to some power users who want to get the most out of their devices. Im particularly interested in the wording by tim cook later on today if he announces the smart watch, the wearable that everyone is waiting for. What if he teases it towards the end of the presentation . Does that technically still factor as a launch or not . It depends on how they do it. We are still seeing how the wearables section develops. But for smart watches, there are completely autonomous watches like the pebble which you can synch too your cell phones. But there are google wearable devices which require a connection to your cell phone to give you full in and out information and ask questions and have the information display on it. And whether apple as to a single wearable device that can work without an iphone or one that requires an iphone will be a big question if they announce one at all. And weve got about 30 seconds left. I wanted to ask about activisions newest franchise, destiny. Could that be as large as call of duty . Im not sure about the franchise, but bundy is developing it and activision is banging on it being a significant game this year. If it does well, we will likely see a franchise. Brilliant, will. Thank you very much. And weve been asking ahead of the big apple launch, what has been your must have gadget and which products are you most looking forward to . Is it wearables or smoartphones . Sglen wrote in and said im looking forward to upgrading from iphone 4 to 6 to work with my new hearing aids. At age 75, im interested in personal medical applications. There you go. Glenn. You can see how it would be helpful let me thinking in Health Devices with smartphones, smartwatches. Spshlg if youve got an aging population. Thank you so much for that. Well be back at the same time tomorrow. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Good morning. Welcome to squawk box. Apples tim cook getting ready to unveil the companys next gadget. How will wall street greet todays big reveal. The baltimore ravens, firing running back ray rice. The nfl suspends him indefinitely after the images surfaces showing him knock on us out his fiancee in a hotel elevator. Plus, analyst says home depots breach could rival targets last year. Its tuesday, september 9th, 2014. Two days before the 11th anniversary. Squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernen and andrew ross sorkin. New Jersey Governor Chris Christie taking steps to save Atlantic City and add more revenues to the states coffers. It could mean allowing Sports Betting casinos. We will talk about that later in the day in sports in just a minute. Right now, we are less than seven hours away from the big apple event. Shares of the tech giant have fallen about 4 in the last week ahead of the expected products announcement. Since 2007, there have been seven iphone announcements and the stock has fallen on four of those days. Shares have been averaged small gains in the week or two following the introductions, but, of course, thats because a lot of stuff leaks out ahead of time. A lot of expectations are built into this. Check out this chart, though. Apple