Transcripts For CNBC Worldwide Exchange 20140922

Europe growing again after g20 leaders turn up the heed. The country like germany definitely has a surplus. The more they can do the better. The big get even better. Alibaba is the Worlds Largest ipo after they allow the option to find more shares for the investor at hand. Youre watching worldwide exchange. Bringing you Business News from around the globe. Good morning, everyone. Im seema mody. Coming up on todays show, well look at what is impacting european stocks and wall street bracing for Climate Change after a huge demonstration in new york city. We have all the details. Prada misses estimates as consumers tighten the purse strings. We ask if it is time to clean up your portfolio of luxury stocks. And big moves in the commodity market. Silver hitting a fouryear low. We give you a technical view of where the price is said to head by the end of the year. Youre watching worldwide exchange. Bringing you Business News from around the globe. Good morning, everyone. Youre watching worldwide exchange. To be honest, i was pretty skeptical after the alibaba ipo. You think, there is so much buzz that it will signal something. It was adequately priced, no fumbling, and didnt dent consumer sentiment. Not just for the investors it we want well, but for us because we have talked so much about it. I am delighted it was a blockbuster opening. Seema, was it all that you expected . I had to delay my friday night plans because i could not leave the tv. A 25 billion ipo, some investors think that successful debut from alibaba indicates riskier assets meaning investors are more confident in this market. Now to give you a look at european markets trading for an hour or so today. Quite a lot of red as you can see behind me. Markets, the stoxx 600 is down a half percent stemming mainly from a weak bit of trading overnight in asia ahead of a flash pmi data coming from china tomorrow. European markets across the board, the ftse 100 down about 66 basis points bouncing down again after a reasonable down friday after the nova in scotland. Germany, france and italy all down about a half percent. Lets dive into the individual stocks. Tesco is down 7. 2 at the bottom of the stoxx 600 after it issued its third profit warning this year. Tesco disclosed an overstatement of the first half earnings by 250 million pounds. Four senior tesco employees were put on leave while the accounting issue is continuing to be investigated. Glencore is down 2. 5 opening sharply lower after London Mining is in dispute with the company after an Offtake Agreement and is considering all its options including terminating contract. Sulzer is down 5 after being outbid by seimens. They made a 7. 6 billion euro offer beating sulzer from last week. And air france shares are down 3. 26 after the pilots extended their current strike until friday. The walkout is costing the company 10 to 15 Million Euros a day. Lets look at bonds. Theres quite interesting move in the u. S. Treasury yield on friday. For a while now the yields stayed above 2. 6 , but bond prices did rally a little bit on friday. The yield in the tenyear u. S. 2. 56 . Is that a search for yield . Is 2. 56 enough for investors to get back to the bond market . Well keep an eye on the trend to see if its meaningful correction or not. Tenyear gilt is 2. 5 . And tenyear bonds in italy 2. 5 . Fsx rates, most interesting here, the euro has bounced back a little bit still around a 14month low against the dollar. So its come back a bit this week. The yen similarly seeing a little bit of a bounceback but still around a sixyear low against the dollar. And sterling similarly rebounding a bit after a weak last couple of trading weeks with the uncertainty surrounding scotland. Now, lets check in on markets in asia. We are standing by in singapore is sri. Mr. Frost, the time may be green but no green on the board with asian indices. All of them seem to be frontrunning, exactly like you said, data tomorrow tuesday our time will be critical for regional markets. Weve got the flash pmi estimates. So, really, these markets are expecting some pretty bad news. The big question is really whether this 50 level, the level that separates boom from bust, whether thats going to hold. The pessimists say we could see a drop below that level so the chinese factory activity in contractual mode. Hang seng and shanghai composite down by well over 1 . The nikkei really moving it to the cartoon of the currency markets pointed out the yen is a little further. So thats exerting some downward pressure on the exporters by implication the broader index as well is up by. 70 . So all in all, a fairly risky day when you look at the market sentiment. There are a few pockets of strength, i would say. So some of the markets in our neck of the woods are consolidating, but the real pain is in the Greater China markets just ahead of the pmi numbers tomorrow. Back to you now, carolyn. Sri, thank you. Britains Opposition Labor Party pledged to raise the minimum wage and balance the budget ahead of the annual conference in manchester. The u. K. Business editor is in manchester catching up with britains shadow chancellor and asked if the minimum wage pledge would upset businesses. In tend, im afraid the labor government making tough decisions is not going to praise the unions at the job conference. It is my job to say that i know business doesnt want the minimum wage to go up, but many people need to accept it to make work pay. Were doing this in a careful way over five years. Every year the low Pay Commission will look at the numbers to make sure it is done in a sensible way so that it will not cost jobs. I understand some people in the Business World dont want to see this, but we have to say we are pro business but not business as usual. There are going to be changes and a raise in the minimum wage is necessary to make the economy work in a fair feature. Lets go out to manchester. Safe to say, it was an awkward weekend as mr. Cameron has posed the english demolition question. Does this overshadow his Campaign Agenda essentially . Reporter well, potentially, carolyn, because the weekend news has been dominated by issues about demolition rather than labor party policy, which im sure wont be enjoyed by the labor party leader. Im joined now by shadow business secretary chica moon. How important is the scotland debate . Obviously, there was success there but how is this going to be managed in england to dominate the weekend rather than the wage increase . Well, first of all, we should celebrate what happened in scotland. Huge turnouts of people. 89 turnout. People getting involved in our democracy. And secondly, of course, for the Business Community and Market Makers watching this program, of course this presented huge uncertainty, the prospect of the breakup of the united kingdom. We have maintained solidarity togetherness which was the goal, but what has happened now is the inevitable debate, which i always thought was going to come around what further demolition we need to see in england is very much at the forp front of the national agenda, and thats a good thing. There are many people watching this Program Trading in other jurisdictions where youve got democracies where youve got demolition into your cities and regions. We want to devote power in the same way that you see power devolved in other western countries in our nation, particularly in england where the regions frankly havent been given enough tools to be the masters of their own destiny. Manchester is a great example. They had the former chief economist of Goldman Sachs that helped put together a great manchester growth plan. And this part of our country is going guns blazing at the moment. Reporter yes, theres a lot of technological advances here in scotland. But going back to scotland, theres information about the british mps from gaining power and voting on english laws. Do you think your leader had been hoodwinked over this . Far from it. What has happened over the last 24 to 48 hours is that the Prime Minister or some around him have attempted to hook english mps to a deal done beforehand. Hang on just a moment, let me finish, there was nothing said before the referendum about making further demolition in scotland contingent on having english votes to english mps. To seek to change that deal after the event, theres not only dishonorable but in bad faith. It seems whoever has been briefing this out had wrote back. They are going to proceed with what has been put before parliament, there will be a draft bill in january. That is going to happen. In terms of what happens in england, if you want this to illustrate the problem with manchester, one of the many problems, westminster politicians are talking about everybodys lives. Yes, there are constitutional issues to resolve in terms of how power plays out in england, but let that bottom out with the people. People are fed up with the greater good. The Prime Minister is convening senior mps to talk about everybodys future. Thats precisely what turns people from politics. What about what turns business off politics because obviously this pledge to bring the minimum wage up to 8 pounds. A lot of business like cbi and iod are talking about how this could damage the u. K. Economy. In fact, pushing up unemployment and taking us backwards. Well, in fact, just to be fair to the business organization, some of which you have cited, thats not quite what they have said. Their principal issue with what is proposed about reforming the National Minimum wage is their risk of wpoliticization of it. Many businesses will accept the warnings they said about job losses when introducing it in 1997, but some people were paid one pound an hour. They said, it would lead to job losses but it didnt. We know because we have seen what happened in australia which already got a National Minimum wage similar to the 8 pounds we aspire to belgium, germany, you can set a higher rate without job losses, so long as you make the change. And we are setting this 8 pounds target over a fiveyear period to give Business Time to make the productivity changes and efficiencies in their businesses to be able to do this. Were working with them in this. Im consulting with them and have already med with the cbi and will be meeting with a cluster of the entire Business Community in the coming weeks and months to make sure we get this right so it works for your viewers, it works for my constituents and works for business as well. Reporter well, a utopian vision there who will be taking to the state later on to talk about the relationship labor has with business. Thank you very much. Im just going to talk about the tesco announcement from today. The ceo is doing a Conference Call as we speak and dave lewis said he confirmed four employees have been asked to step aside while the accounting investigation takes place. He says the investigation is linked to the timing of payments to suppliers and a whistleblower brought this to the attention of the General Council on friday. The stock is down 7. 5 . Alibaba holds the crown of the largest ipo surpassing chinas zag bank. The first day profit of 38 prompted underwriters to exercise the green shoe option by buying 48 million additional shares from the company to cover stock they sold to meet huge investor demand. The ceo of Telecommunications Group Liberty Global says it is exciting to see a company outside of Silicon Valley to make a huge impact on the markets. Listen in. The engine of Value Creation that they have in this massive market is an estimate, i cant give you a number on how big it is. Im not buying the stock because im not sure how to get any, but it is exciting to see another International Market demonstrate the power of the internet. And it is not just a u. S. Driven business and it shouldnt be. If you look at Silicon Valley as such, i mean, they have great voice and a strong command of the issues in the u. S. But they struggle a little bit in europe sometimes, so its important and nice to see, even if it is not a european company, an International Business becoming a global hypergiant. Thats a good thing for all of us and it would be great to see it happen in europe. That excitement just referenced in the interview really didnt seem like an end to alibaba up 38 . In the interview, he said alibaba wants to grow internationally. It will be interesting to see if they grow in the u. S. And europe. You can argue they dont need to move outside of china because that market itself is big enough and they control 80 of the ecommerce market. A lot of people have rates, question marks over the expansion strategy. Also, its paid a lot of money for the acquisitions. But i would argue, do they need to do International Expansion . Probably not. I would say recent data out of china has been suggesting that china is slowing down. You have to wonder if that will impact sales or growth in china as well. You could be right. And we have just had total earnings released which have come out to say they are continuing to plan to generate 50 billion in Free Cash Flow in 2017, but they have cut the target for 2015. This was broadly as expected that they would have to cut shortterm earnings with a number of issues ahead of them. But their longterm from 2016 onwards outlook is quite attractive. They said it would step up plans to selloff assets really focusing on the Financial Performance of the company and they will deliver on their promise from 2017 onwards to deliver 15 billion of Free Cash Flow. Im going to interview the cfo later this afternoon and will bring you that. We head to australia after the break to hear the latest. The all new, head turning cadillac ats coupe. Its irresistible. The ceo of a german shoe maker is denying allegations he vanished with millions of dollars of the companys money. Speaking to a chinese news outlet, he said he had been on holiday and lost his phone. Shares in ultrasonic plunged after it was said that the ceo and coo went missing with most of the cash reserves. Well, lost phones aside, whats the best excuse you have heard for going awall from work . If you want to join the conversation, get in touch with us by email worldwide cnbc. Com. Or by twitter, cnbcwex. Whats the best execution you have given for getting off work . I havent used it, but the dog is sick or my cat is sick. That usually works well, doesnt it . Food poisoning is a winner because after one day its cleared up, you come back to work and youre fine again. Now we know when you say food poisoning, we will think twice. Exactly. Threeandahalf weeks into the job i havent had to pose sick yet, so doing all right. The g20 says its close to adding an extra 2 trillion to the Global Economy in a bid to create new jobs. The meeting of finance ministers and Central Banks chief ended with agreement to proposals to boost growth although the Organization Called on europe to do more. Matt taylor is in australia with more. Reporter hi, seema. Well give you a wrapup of the g20 over the weekend. Of the finance ministers and the Central Bank Governors, they have come very close to achieve the 2 growth target that they did set down back when they met in february at the Central Bank Governors and finance ministers meeting in sidney. They said they were 90 of the way there and the imf and oec says the 900 recommendations they managed to bring to the table would grow the Global Economy by 1. 8 above current expectations. But more does need to be done and we saw a number of criticisms leveled at europe during the twoday talk. In particular, the u. S. Treasury secretary jack lew who pointed the finger at germany as a country to do more and could use some of its excess firepower. Now, i sat down with the managing director of the imf, christine la guagarde, and asker the same question, and heres what she had to say. A country like germany definitely has a surplus and is balancing its budget. It is committing to invest and infrastructure, which is clearly needed. And there is an economy that will allow that and will help the rest of the your row zone. The more they can do the better. Equally, they have to be mindful of the equalibrium they have on the domestic market. I also asked the french finance minister if we thought similar, if germany rather should take the lead when it comes to the eurozone. And this is what he had to say. Germany is in a situation that at this stage is quite positive because germany knew before france in the past ten years how to undertake necessary reform measures. There was the time that chancellor schroder plut in place reforms that were beneficial for germany. So germany is in a better place than many countries in the eurozone. Germany is aware this situation allows it to put in place investment programs. For example, infrastructure that would be very positive for the entire eurozone. Its not just about accusing or putting a country on the spot and not a country thats successful. So we should try to take an example there and for each and every one of the countries we can probably implement some of the reforms that buffet germany. But the eurozone has a sold version of it and each country needs to face its responsibility. Germany has more capabilities at this stage to stimulate demand. And its this good balance we are currently seeking. Now, another hot topic that was on the agenda here at g20 was the subject of russia and whether or not the president should be at the g20 leader summit which takes place in brisbane in two months time. The broad consensus was that Vladimir Putin should attend and a number of the finance ministers keep saying thats so that other World Leaders can tell him exactly what they think of what has been going on over the last couple of months. Back over to you. Matt, thank you so much for that fantastic work over the weekend. Well stay with the topic, french Prime Minister will make his First Official business to berlin today as the eurozones two largest powers present differing plans for the future. Well go to stephane in paris and annetta in berlin. It seems to me that germany is looking increasingly isolated with its stance of fiscal discipline. Yes, thats very much true. If you look at what came out of the summit last week and in milan that yeah, it could lead to the conclusion that germany is increasingly isolated. But nobody can really threat germany into spending more when it comes to its aim to keep or to target the balanced budget. Also for this year, next year. So bottom line is that the German Government is extremely worried about the situation in france because they want to have a Strong Partner in france. Its so important to have both countries in good shape to also bring forward or to have a good future for the eurozone. And that is the main concern here among german officials. So what they are going to talk about is most likely reformed progress in france above the labor market. I think they also made it pretty clear recently that the labor market needs to be reformed in france, that also means the 35hour workweek they still have in place. So in general, this meeting here today will most likely be full of pleasantry. Also, yes, stressing that the german French Partnership needs to stay intact. But big news on spending here in germany, i would say, will not get. Over to you. And in france i will take it from here. In france they hope to convince germany that the country is doing its homework, that it has implemented reforms and will continue to do so. For instance, even if the Prime Minister doesnt want to ditch the 35hour workweek, it is possible for Companies Since the reform implemented last year, it is possible for companies to ask their employees to work more hours if the situation is not good, which is the case obviously currently. Same with the pension system. The government didnt want to change the low for the Pension Scheme at 62 years old. Thats the local age of retirement, but in practical terms, the government is gradually increasing the number of years you need to pay for your pension. Its now 43 1 2 years, meaning in practical terms, people cannot get retired at 62. The usual age of retirement is more or less in line with the rest of europe. So even if there are no major announcements in france, the reforms are being implemented slowly and slowly. And thats specifically the method that Francois Hollande wanted to implement. It prefers some negotiation, some social dialogue instead of harsh reforms. Actually, the social dialogue is something he had implemented from germany. And thats precisely what manuel valls is going to explain to germany, if government has a soft approach to avoid a strike on the administration. You know france is known to be cop trite difficult reform people, easy to get angry and demonstrate. So thats the method to avoid clashes with the union. Stephan, thank you for that. And that saga will continue. We want to bring you the latest on tesco. Pwac has been reforming results. The tesco chairman said that shareholders will decide if i am part of the solution or if problem. Meantime, reuters is reporting that tescos ceo is investigating all the possibilities for the new cfo. Lots more to come on tesco holding an investor call this morning, which our reporter katherine boil listened in to. Find out what the management had to say after this short 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. Youre watching worldwide exchange. Bringing you Business News from around the globe. Welcome back. Tesco plunging to an 11year low as a serious accounting issue prompts the u. K. Supermarket giant to issue its for profit warning in three years and four executives are put on leave. Money stocks also leading global stocks lower as they avoid a flash pmi in china. But mario draghi will take center stage later today when hes expected to defend the ecbs program in a speech to european lawmakers. Share makers welcome the plan to try to meet medium term flash flow targets. The oil giant is also lowering expectations for next year. Fiscal fighting. Germany and france will meet in a clash over how to get growing again after the g20 leaders turn up the heat. A country like germany definitely has a surplus. The more they can do the better. Lets get back to our top story. Tesco has suspended a number of people including four executives after an overstated half year Profit Guidance by 250 million pounds. Shares are trading sharply lower. They are off by 8. 5 trading at an 11year low. Katherine boil is joining us after listening to a tell Conference Call. What have you learned . Today looks like one of the worst for the past couple of years using share prices diving to the lowest level since 2003. We have learned whats going on with this particular investigation is it sounds like four executives are involved. One of them is the head of the business in the u. K. According to sources, hes been replaced by someone else who has been with tesco since 1982. Hes a tesco lifer, much like the former ceo bill clark. So it looks as though the investigation is really focusing on the potential at delays and payments or bringing payments to suppliers to make the profits look higher than they, in fact, were. And this is something to really call into question just why pwc didnt pick up on this and why the chief Financial Officer didnt pick up on it either. The allegations first came to light on friday. And a whistleblower went to the General Council and immediately brought the issue to the attention of the new chief executive, dave lewis. He must be someone feeling like he had bitten off more than he thought he had when taking this job. So not a great day for tesco and for the executives involved. This is the third profit warning this year. The first two were based on market fundamentals. This one, an accounting issue, does that make it hard to quantify with investors not knowing how big of an issue this can be . The executives were saying this in the call, that 250 million is the figure to put on it at the minute, but that may change subject to the future investigation. Something else, which is also potentially bad for the company, is they have had to report it to the fda, which suggest this is may ultimately end up being a criminal matter, which is something extremely worrying. Yeah. And theres obviously the new ceo in place. And theres also a new cfo coming in and its possible that it hit his stock moving forward the similar way to cfo is. Of course, it doesnt seem to be in today. Well have to question how much he knew about this. So i think that is worrying for investors. We have already seen a 75 cut to the dividend, but there are also people in the market today speculating that may have to go even further. Tesco is one of the stocks in the ftse 100 that is a battle for the u. K. And those investors. We have the startup of the last 12 months with shares down a whopping 44 . But you say the dividend could be caught even further. You dont want the buy at these levels, i would think. Well, its always any kind of real dip in foul weather storm because were always going to looking at meaning a bit of an orphan to something riskier. Thank you so much for that. Well just recap the total results that came out a half hour ago. They are going to step up their plans to sell off assets and cut investments. That he reiterated a 15 billion cash flow target for 2017 but did cut next years target to 7 billion of Free Cash Flow down from 10 million. That was largely expected from analysts that the shortterm performance was a bit overstated and therefore share prices react slightly positive into the news given it was not worse than expected. I will be talking to the cfo later today for an interview to play out tomorrow. Well also talk about the results and about those in russia. Well see how the markets are feeding that. And the ftse 100 is off by 0. 6 . Food retailers are down on the back of tesco which is down 8 . Also, some of the miners are down as we see ironore prices slump to fiveyear lows. The xetra dax is down. 24 . And well look at the move in the u. S. Tenyear yield going be below 2. 57 to push yields slightly down across the board in europe. And in the currency markets, the dollar is posed for an 11th week of gapes. The dollar yen fare is slightly higher after the 109 level. 109. 07. A year ago we were stuck in the range 128. 81. Now that the scotland referendum is out a ways, all these folks will be divulging in. This and the euro dollar is stuck at 163. 42. We saw buy on the rumors, sell after the Scottish Referendum just slightly higher for the day. The investors will look at the speech for the tellall program, he is set to address the Parliament Coming after decisions to buy assets backed by germany. He said the new measures remove the incentive for reform. Meanwhile, a fiscal fight could be brewing between france and germany. The french Prime Minister is due to visit berlin today amid differences on paris and berlin meet foreign targets. Policymakers have been weighing in on the debate whether the french or german line is the way to go. It is up to this government where the governors bond works. To work on cutting expenses because its the only way to create this. Most economists would agree the loss of trust and the economing impact are moving away from this kind of fiscal policy, would be much worse that investments would be financed. However, that is why im ready to argue with every economist in the world to spark growth in germany and how we should not do it in order to not destroy it. I do think its essential for the euro area to have credible fiscal rules and to underline their commitment to have strong public finances. In that respect, i do think its important to apply the rules of this liberty in growth package. We have to ensure that this credibility is reserved. In other words, france has to do more. Thats a very short bottom line, i would say. I would note call it austerity. They are in a weak fiscal situation. I would call that going back to sound policies. And its a different world, but i think it kept yours better. Now, if you dont go pack to some policies, the market, we may not have frances fine business below the u. S. To be checked today. And its because credit is given by the Global Investors that what has been committed will be delivered. Its part of the it is excellent, i would say, from the overload of outstanding debt and foreign policy. To have new market interest rates. Im convinced when i look at the new government that is now there in france. When i see what my former colleague and friend now has in mind among other calls. That they are ready to do the right things. Now. I have the european Global Economics director at Citi Research joining us now. Ibrahim, over the weekend mr. Kept calling for how they felt on austerity. Where do you stand on that debate . I dont think germany is calling for more austerity as such. There are a difference in opinions to identify the spirit. The first line of defense should be more structural reform and fiscal policy could affect the structural reform to come forward. Whereas, on the other hand, many concluding the french government and International Organization think that the fiscal side has something to contribute to make it, in fact, easier to use the Structural Reforms to generate growth in europe. Ibrahin, draghi is speaking in brussels today expected to address the lack of takeup of ecb bones. What do you think hell say when it comes to the tell program . I think draghis main point will be to emphasize this is a long game. As far as the short ones go, the second one in october is more important than the first. It is still true that the kcup is seen as disappointing as will the overall credit situation for firms in europe. So i expect that hell be safe from the members. What is the most likely option for the jer mans because right now they are saying no fiscal easing, but one of the two they have to go with, right . Thats an interesting question. The germans are still on balance more likely to agree to more monetary stimulus. I think the fiscal position in many ways is more weighted. And germany made it clear as far as its own policy is concerned, they dont see a need for fiscal support. As far as europe is concerned, they think sticking to rules is much more important than fiscal statements. But that probably means they have to go along with additional monetary easing in the future. Ibrahim, thank you so much for that. Hes the director at Citi Research. Alibaba now holds the croup as the Worlds Largest ipo by raising 25 billion. Reports say fridays first day pop of 38 prompted underwriters to exercise the green shoe option. They bought 48 million additional shares from the company to cover stocks. They sold them to meet investor demand. Speaking to cnbc on friday, the founder said he was pleased with the result. Hear it. Today what weve got is not a lot of money but the trust from the people. Cell, business, shareholders, i am very honored and so excited. Ive been thinking about next five to ten years, how i can make sure the shareholders would be happy. These guys, people standing there, if they are successful, well all be happy. Thats what i believe. Meanwhile, soft bank shares have reacted to the alibaba flotation. Makiko is live with this story from tokyo. Reporter yes, soft bank is the top shareholder of china ecommerce with a 34 stake in the company. And softbank purchased them for around 18 million back in 2000 which ballooned into 17 billion with the ipo. The expectations were behind th that. There are no plans to sell alibaba shares and will see 4. 5 billion profit for the gains it made. With that, soft bank decided to lock in their profit and the firm suffered a wave of heavy selling in tokyos top market today with the shares falling over 6 . And it became the top traded stock of the day trying down the nikkei 225 with it. Thats it from makiko. Still to come on the show, shares in prada sink after profits slump. Can it get its struck bag . We talk all things designer in two minutes. Anncr now you can merge the physical freedom of the car, with the virtual freedom of wifi. Chevrolet, the first and only car company to bring builtin 4g lte wifi to cars, trucks and crossovers. Hi mom. You made it anncr its the new independence. Youre watching worldwide exchange. And now lets talk fashion. My favorite subject. Prada has been hit by a series of downgrades after the italian luxury goodmaker missed profit estimates on friday due to weakness in china. The first half net profit fell by 20 compared to the Previous Year sending shares to a 26month low following weak Second Quarter sales figures from gucci and luis baton due to weakeni weakening chinese demand. Europe is also showing weakness, so now now luxury makers are sa they dont see the cop summer as strong as before. On top of that, you have the unfavorable currency mix. This is what and lists pointed out with regards to prada. The remedy was twofold. Deutsche bank said you need to have a better product mix because leather is underperforming. Others say you need to have is a better pricing strategy. Prada had a massive cut to margin and even luxury brand that people are suggesting to cut its prices, investors get spooked about. Interestingly enough, thats not the situation across the board to look at luxury. Salvador says the groups profitability will rise this year and the remainder of the 2014 would be, quote, good period. Well bring up claudia in milan, what is helping him stay there with a sign of weakness . The ceo did say the geopolitical situation and the weak economy globally speaking is weighing on their business, but they managed to pull in top sales down by 6 . Also, in terms of net profit, they are up 10 . So they managed to hold on mostly because of the fact they rely strongly on travelers spending. While they did see a decline on the foreign side. More african tourists are traveling on passenger roads by 7 . They rely on that number. They have not worked and are historically a shoe, leather and pur purse. The newest thing they launched was the perfume as they continue to work on the beauty segment they continue to see important. And they are also trying to bring in younger people. Well see how it does today in possible territory as the market weighs in lower. Silver selloff has continued with the precious metal tumbling to a fouryear low. Our next guest says the breakdown suggests an implied target of 16. 17. And Richard Moore is here. Im looking at the positioning last week and that showed us for the First Time Since this happened, can you go below the amount . Well, first of all, you have this confirmation of the big descending triangle to give us a downside target of 16. 70. Now, just the pressure that were seeing in silver is just enormous. In terms of the Downside Momentum is three months of almost consistent selling pressure. And that just generates further down. I can just see this move down to 16 billion at least. And thats 5 in terms of the downside. Gold is not fairing any better. Usually silver would do better because of the industrial use as well, but gold is seeing declin declines. The pressure we are seeing from gold, this is key to december 2013 at 844. 50. This gives us a downside target back to 1200. So thats the nearterm technical target we are looking at. The momentum again is up credibly weak across the board showing consistent selling pressure. We have also had a death cross in the 89 movement which is a medium term. It is a collection of cell figures we are getting. And anything below 1200 will see asian buyers kicking in. Well, youve also got the wedding season coming up for india and then obviously china as well with some significant time of the year as well. So just plan on the supply side. Certainly the industrial side of china is not helping either with the slowdown there. So certainly thats helping to drive silver prices down or gold. I think we are still seeing further downside. Cop summers in india many times see gold as an appreciating asset, because of the moves, we are seeing less demand from the indian consumer, that would be something to watch especially when the volley kicks off and you typically score goals. Having touched the 14month low for the euro, in the last week or so, the fundamentals suggest, what does the chancellor suggest . Well, as you said the 1. 3 level is sit on a require owe dollar. Again, another decline in the r euro being broken down to the downside, but this suggests the selling price will continue. I have a bit of a longterm show he here. Very technical leaders. We have the 120 up to 139. 91, which is at 127. 86. But also just below that, youve got some key level. So you have 40 cases of key support. If that were to be broke up, it would open the people to this area. Its get iting some traders e beginning to take profits on the short positions. And you may well see support coming in from other levels. Thank you, richard perry, market analyst at tantics market. He says he was on holiday and lost his phone. Earlier we asked yo what is the best execution you have heard for going awall. Michael tweeted, i have to take my grandmother to the doctor. Alibaba the 25 billion ipo. Should you add it to your portfolio . Well discuss next on worldwide exchange, coming up. 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. Welcome to worldwide exchange. Im seema mody. And im wilfred frost. Mining stocks lead markets lower as investors flash the pmi reading out of china. But mario draghi Takes Center Stage today. When hes expected to defend his program in a speech to european lawmakers. Fiscal fighting . Germany and france are set to clash after g20 leaders turn up the heat. A country like germany definitely has a surplus. Now the more than they can do the better. The big get even bigger. Aliba barks alibaba is now the countrys largest ipo as they look to meet surging demand. Youre watching worldwide exchange. Bringing you Business News from around the globe. Im carolin roth. Coming up on the show, europe is asked to up its game as the central bankers move down under for a g20 meeting. We go live to australia. And wall street bracing for Climate Exchange protests after a huge demonstration in new york. We have all the details. Its cnbc survey time. Were asking how your nation views corporations. Are they faceless bohemuths or job creating necessities . That is up next. Youre watching worldwide exchange. Bringing you Business News from around the globe. Last friday was really all about ibo alibaba. Well watch to see how shares trade. Interestingly enough, the market cap of 240 billion, wilfred. There are only Nine Companies on the s p 500 bigger than alibaba. Astonishing return given that people are saying they priced it well, but they only expect a 38 return. It went above 90. Thats bigger than expected. Im pleased after all the time we spent looking forward to it that it went so well. Clearly all eyes will be on alibaba today as well. This does indicate stronger assets, thats what one investor said on friday. Well look at the premarket trade because last week was a recordsetting week for the s p, the dow hitting new alltime highs. The nasdaq trading at a 14year high. Right now arrows are pointing to the downside indicating a lower open for the s p 500, the dow as well as the nasdaq. Perhaps some profit booking after what was a recordsetting week for the u. S. Markets. A quick look at the european markets and a similar picture there. We are looking at the ftse 100 up 41 points after the no vote from scotland. We did see markets move higher on friday. Today perhaps a little bit of profit booking in todays trade. Were looking at the german and french markets trading a little bit lower. Italian markets outperforming here by a bit up two points. Now, top stocks to watch today, tesco shares at the bottom of the stoxx 600 after the third profit warning is issued. Four tesco employees were put on leave while the accounting issue continues to be investigating. Tesco says the first half expected earnings are down by 250 million pounds. So the investors are looking confident in tesco. You would have thought with the incoming ceo that was pension seeking but thats not it. Well see if we are seeing any buyers at these costs. I want to talk about the bond markets because weve got seven beneficial speakers. Maybe theyll finetune the mixed messages we got from the fed last week. Some saw the tenyear treasury prices gain on friday with the gild dropping. And the yields, 2. 5 . 6 not necessarily attractive, but hey, its better than some of the other yields we are seeing. The tenyear bond yield at 1. 03 today. Look at the currency markets. Once again we are seeing the dollar against the japanese yen. Above that 109 handle. Keep in mind that the japanese yen have fallen quite significantly, 6 against the u. S. Dollar over the last month. Euro similar 1. 2847. And the downside for the aussie dollar down by 0. 60 . Prices are close to fiveyear lows. And markets in asia, sri is joining us from singapore with a lot of red arrows. Reporter absolutely, carolin. Think of the risky move cops traited in the Greater China markets. Once again, growth concerns from the worlds second largest economy are haunting the major indices. Remember, well have very important data out tomorrow. That is the flash manufacturing pmi for the private forecasters, hsbc and market for the month of september. The big question in the minds of the markets is whether this level from boom to bust is going to hold. Broadly, the market doesnt think so. They are fearing they will be below the 50 level. The shanghai composite and the shanghai are down. Cyclicals like the steel makers are down in the china markets. Elsewhere, fairly risky all though the markets will fritz and consolidate at lower levels. Thats why tomorrow is a big data day. Back to you. Joining us is piers current at amplified trading. Is this a sign of more things to come . Over the last couple weeks we have had a lot of significant m macrodata, but so far the markets have been unaffected. We have been through a couple or a few big factors last week with the scottish vote with the fed, with draghis target for the longterm financing operation. And i think it is okay in the u. K. , but the other two banks causing concern and will do for the weeks ahead it seems like they may be overreacting a bit negatively given this is the first and always expected to be the smallest option. Perhaps banks are dipping their toe in for the first time and when they see how it works they will go for more in the later charges. The banks are still carrying funding from the ltro operations in 2011 2012. There are two reasons why they were a little bit sensitive. Yet the december range should be a lot better, but the problem draghi has, he told us literally two or three weeks ago he wants to expand the Balance Sheet back to 2012 levels. But thats up to a trillion euros. Where is the trillion euros going to come from . I cant see that this december range for longterm financing being 600, 700 billion. Is this the sign that qe has to come in in order for draghi to reach the Balance Sheet target . Global investors are really waiting with baited breath to see if mario draghi can revive the your meeuropean economy. But what else does he have in his tool kit . I think they are reluctant to do it and will fall short on this Balance Sheet. What does that mean for ultimately the prospects of finally getting the recovery going in the eurozone in its a clear negative. So these are things weighs on the markets this morning. I think the fed importantly will go hawkish. That statement was really hawkish compared to how markets initially reacted. If they want rates at 1. 5 by the end of next year, but they want to wait until june to start hiking, they are going the have to hike rates by 5. 2 from june to the end of the year. I think thats too far. I think thats going to concern markets. And this is another reason why risky is up this morning. The dollar index at a twoyear high. At what point is this negative for the u. S. Corporate operating in the International Market . Because usually when we see a stronger dollar, thats positive for equity market but can be great for the corporate Balance Sheet. I think youre right. The dollar is at a twoyear high, not just because of hawkishness from the fed, but look at the dollar index or basically the euro and the yen, they make up the vast majority of that basket. And each of the currencies have been very weak for their own reasons. So i think the dollar strengthened dramatically. Yes, i think as we go into the quorter for the u. S. Corporate space where these companies are generating significant revenue overseas. So that may come in. Who knows, maybe the fed believes this will happen and perhaps on the curb for the momentum a bit and perhaps this means the fed can hold off until june, but i think they will raise rates before june. Well, we know investors are watching the fed. And the prospect of rising rates is very closely. Piers current, thank you so much for your time. Lets go to give you a rundown of what to watch this trading day. September existing home sales out at 10 00 a. M. The forecasters expect a 1 rise. A tree of of fed officials speak today. Bill dudley,ester george and president kocherlakota. And autozone and Ascena Retail will announce their earnings as well. Reports say underwriters exercise the green two option buying 48 million shares to cover stocks they sold due to investor demand. And alibaba jumped 48 in the first day of trading. Following the record flotation, tyler touche filed this report. Reporter alibaba is up and running. The chinese ecommerce soaring above its debut after pricing on thursday at 68 a share. The Company Founded in the apartment of jack ma with a dozen partners now responsible for 80 of chinas ecommerce. And valued today by the Public Market in the United States at 240 billion. All obamas Business Model is described as a matchup between amazon and ebay but now a formidable challenge to Tech Companies in the u. S. It is bigger than disney, ibm and jpmorgan chase. But ma said he draws inspiration from another u. S. Corporation. We hope in the next 50 years the world changes because of that. We want to be bigger than walmart. We want to be bigger its not the fight, we want to learn from walmart. They changed the business. And we hope 15 years later they say, this is the company like microsoft, like ibm, like walmart because they shaped the world. Alibabas platform sold 269 billion dollars in goods last year. And its vendors were responsible for 60 of all packages shipped in china. Alibaba helps Small Businesses connect to new customers and in turn help chinas middle class. Thats the main reason investors are clambering for shares. They are willing to pay more than the 68 share price set by the company, but ma didnt want to take that from the shareholders and wanted them to make money. He also wanted to avoid the disastrous start of facebook taking two hours after opening to carefully manage buyers and sellers debuting baba in an open described as textbook and seamless at 92. 70 a share. And formally mentioning jack moss as the richest man in china. But his fight to grow alibaba is centered on the little guy. One hes often reminded of by a famous movie character. The thehero i had was forres gump. And i watched the movie again before coming here. It was telling me that no matter, you are you. And im still the guy 15 years ago. Reporter alibaba is now far bigger. That said, shares of ultrasonic have jumped. He denied allegations of vanishing millions of dollars of the companys money. Speaking to a chinese news outlook, he said he was on holiday and lost his phone. So, earlier we asked you, what is the best excuse you have heard for skipping out of work . We have been getting the tweets here. Heres some of the best ones. Michael from western massachusetts tweeted, got to take my grandmother to the doctor. Okay. And another one from anthony who says hes too busy watching carolin roth on cnbc. You have a big fan base. Obviously, what else would you do if you are not at work . You have to be watching. Either watch seema or wilfred or carolin. Mr. Real batman wrote in saying, they broke into the apartment and stole all the clothes. Cant go without them. Thats lame, isnt it . Its interesting to see because of the smartphone revolution you expect every employee to be on their smartphone and plugged in. Absolutely. Now coming up, the g20 says the Global Economy will be boosted by plans for growth, but europe must do more. We head live to australia for all the details after the break. Youre watching worldwide exchange. Welcome back. Lets give you some headlines. Another profit warning for tesco. Four executives suspended at the Grocery Store launches a probe into an accounting error. And the french group sets up plans in a bid to reach the cash flow goal. And the french Prime Minister meets with the german chancel r chancellor. Deutsche says the u. S. Still deserves to keep the top credit rating. On friday the agency confirmed the aaa rating on u. S. Debt with a, quote, stable outlook. But says the u. S. Can take on more debt than other countries because it has the worlds deepest capital market. But they say the u. S. Has the weakest economic policymaking as seen by recent showdowns over the debt ceiling. The g20 is close to outing an extra 2 trillion to the Global Economy. The Organization Called on europe to do more, u. S. Secretary treasury jack lew says this is a top priority. Matt, he also spoke about philosophical differences between the u. S. And some of its partners in europe. But thats an understatement, isnt it . Yeah, that was one thing that he made perfectly clear here at the g20. That europe really needs to get any internal squabbles amongst countries sorted out and focused on the growth agenda going forward. Those comments made here at the g20 finance ministers and Central Bank Governors meeting which wrapped up yesterday afternoon. With the latest in the communicate saying they are close to 2 growth over the next four or so years, out to 2018 above current expectations, the australian treasurer joy hawke chairing the meeting, saying they are 90 of the way there. And they are saying about 1. 8 on top of current growth levels is what would be achieved with the 900 policies with the nations putting on the table that were enacted. But the u. S. Secretary of treasury jack lew says the countries need to do more. I idea him at the press conference just what his message was to germany. Heres what he had to say. I think that the discussions over this weekend have showed growing recognition that europe is going to need to do more to get this economy where it should be. I certainly hope that europe can resolve these issues in a way to increase demand and to also make those Structural Reforms that are needed to have good, long and mediumterm prospects. Jack lew there. Also on the agenda, russias attendance at the latest meeting that will take place in november in brisbane. Whether or not russia should be at that meeting. The concern is that the finance ministers here are saying yes, Vladimir Putin should attend the meeting. And there was a russian delegation here at the g20 finance ministers meeting. So the deputy finance minister from russia here. The latest from jack lew saying so the other World Leaders can tell Vladimir Putin what they think if they are concerned as he has been dominated in results by then. Seema, back to you. Coming up next, its cnbc survey time. Were asking you how your nation views corporations. Some fascinating data that well bring to you next on worldwide exchange. Returns and fewer choices in retirement. Know that proper allocation could help increase returns so you can enjoy that second home sooner. Know the right Financial Planning can help you save for college and retirement. Know where you stand with pnc total insight. A new investing and Banking Experience with personalized guidance and online tools. Visit a branch, call or go online today. This morning cnbc launched a global first called the corporate perception indicator. A Global Survey from the executive suite as a snapshot of how people around the world view the corporation. More than 25,000 individuals from the general public and more than 1800 Business Executives and 25 Global Markets responded to the survey. And the differences make for interesting reading. All this week well breakdown the findings for you, but for now becky quick has been taking a look at some of the headlines. Opportunity, politics, perception. Just work, right . In the cnbc corporate perception indicator, we asked more than 25,000 people across the globe whats the first thing that comes to mind when you hear the word corporation . In the u. S. , greed, big business and money are top of mine. In the united kingdom, they follow suit with profits in the mix. But the chinese have a different idea, in the most popular word, profits was a strong word for other less negative words for enterprises and even responsibility. Americans are more likely than any population to look to Small Business as the engine for economic growth, but whats the first thing that comes to mind when americans hear Small Business . Emotionallytinged words like mom and pop shop and struggling. And words like profit, flexible and difficulty top the list. There seems to be a key divide when it comes to developing views of corporation. How favorable do you view a corporation . 47 said somewhat favorable. Here in new york we seem to be a lot less favorable to big business. Only 33 of the public in germany and the u. K. Think very favorably towards the corporation. And in france and italy, that dropped to a quarter. While in the netherlands, 14 of the general public have a very favorable view. Well take a look at russia, 12 of the public surveyed had a favorable view. While china and europe are well in line with europe. 12 , thats low. Still to come on the show, hes a billionaire but alibabas chair is still the guy who only earned 20 a day. And were expecting a lower opening across the board. Well be back in two. , our fina. Your aspirations, our analytics. Your goals, our technology. Introducing synchrony financial, bringing new meaning to the word partnership. Banking. Loyalty. Analytics. Synchrony financial. Enagage with us. Sometimes they just drop in. Always obvious. 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. Welcome to worldwide exchange. Im seema mody. And im wilfred frost. Investors are waiting on mar mario draghi to defend his latest plan to u. S. Lawmakers. And tesco is issuing a warning after a profit error is discovered. And alibaba exercised a plan to buy more shares to help meet surging informs or the demand. And from main street to the executive suite at cnbc, we will unveil very divergent views on big business around the world. Youre watching worldwide exchange. Bringing you Business News from around the globe. And if youre just tuning in, thank you for joining us. Heres how markets are faring ahead of the u. S. Open. Were seeing red across the screen with the dow indicating a move down by 40 points. The s p 500 and nasdaq coming in after a recordsetting week for u. S. Markets. The s p and dow hitting new alltime highs to transport index. This could be the leading indicator for the markets hitting an alltime high. Alibaba shares provided a boost to u. S. Stocks and sentiment. Well see if that follows through into this week. Of course, the fed also providing a boost to stocks with dubbish statements. Well look at the european markets. Once again, its red across the screen with the italian and french markets trading lower. Germany did have a seller run last week, down 29 points. And the ftse 100, a little bit of profit booking there down 54 points. And the stock in focus today is tesco shares at the bottom of the stoxx 600 after issuing their third profit warning this year. Four tesco employees were put on leave while an accounting issue is investigated. Tesco disclosed first half earnings by 250 million points. We are looking at shares down by 8 . Tesco is not a viable investment any longer, so that aside, how do you make money in the markets . Heres what the experts have been telling us this morning. Europe is not really recovering, so we have a credit crunch taking place. Potentially, we are in the deeper Balance Sheet recession. And trade for that region is going to be linked directly to the u. K. That means that sterling may do better than the euro, but therefore i think it is better against the u. S. Dollar. The pressure that were seeing is just enormous at the moment. In terms of the downward momentum that takes three months to see consistent selling pressure, and thats generating further downsides. And i can see certainly this move to a 16 to 17 billion team in the next month or so at least. I think the dollars strengthened dramatically. And yes, i think as we go into quarter four or the u. S. Corporate space it will continue. The markets were not led by china overnight. But hong kong and hang seng is down ahead of the flash pmi reading tomorrow. Im surprised by this and wonder as the week kicks off, are we moving into a phase where we can see the volatility market follow what the current market is. You have to wonder if the weaker china concerns about the european economy are pushing investors into the u. S. Because its been seen as the best house in a bad neighborhood. And then you have the Retail Investor who is probably missing out on the games so far this year. The s p up 8 . Some Institutional Investors may have seen that performance, but last year Retail Investors chased the performance into the end of the year. That could be a possibility this year. Well also take a look at the other top stories that could impact trade. Seimens is buying the oil maker for 83 a share in cash. This purchase will boost their presence in the north american oil and gas market, particularly in the fracking business. Dresserrand and sulzer right now are trading all down right now. Enc is facing pressure from activist investor Elliott Management in the retirement of their longtime ceo. The wall street journal reports stocks between emc and hewle hewlettpackard broke down weeks ago over price, but the discussion is also saying they are holding talks with dell. They have had a strong threemonth period. An operator of a major u. S. Toll road is expected to file bankruptcy today. The indiana toll road is backed by centra and struggles with nearly 6 billion in debt. And the roads backer pays the state of indiana 3. 6 billion in 2006 for the rights to operate the 157mile highway that stretches from chicago to ohio. Shares in spain are doing this, if we can get the board up, they are higher by 0. 4 . So, its the ipo everyones been talking about. But when is the time right for you to get in on the action . We talk more about alibaba after the break. This is a burrito made with chocolate, soybeans, and apricots. What kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Youre watching worldwide exchange. Protesters plan to flood wall street, wilfred. To demonstrate the role big business is playing in Climate Change. Hampton pierson is joining us with more. Hundreds of environmentalists plan to take to the streets of new yorks financial district today with the goal to highlight what they say is assistance that perpetuates Climate Change. On sunday thousands of protesters marched in new york and other cities around the world as part of the peoples climate march and what organizers say was the largest ever demonstration over Climate Change. No specific companies are being targeted by todays action, but organizers say the movement is broadly aimed at polluters and those who profit from fossil fuels. Participants plan to stage sitins around wall street. A statement on the flood walls website says they will unveil a 300foot banner and inflated carbon bubble. The new York Police Department says it will have an adequate number of officers on hand to respond. The protest comes as World Leaders gather in new york for a Climate Change summit at the United Nations on tuesday. The u. N. Isnt expected to announce any major grievances this week. In may the white house issued a report asserting that Climate Change is real and will only get worse in the future. For now, Richard Branson is doing his part to affect Climate Change in conjunction with his nonprofit carbon war room. The billionaire is launching an initiative to cut Greenhouse Gas emissions by 20 in north america by 2016. A move that could save a combined total of some 40 billion. You can hear more about bransons initiative when he joins joe, becky and andrew at 8 00 a. M. Eastern time on squawk box. Quite a week ahead at the u. N. Thank you, hampton. Alibaba the biggest ipo ever bringing the total range to 69 billion so far this year. Thats higher than what was raised last year. Last year we saw u. S. Ipos raise just below 60 billion. According to geologic, there are more than 100 deals in the pipeline. But that just shows that u. S. Investor sentiment could continue to be bullish with more ipos expected. A record year this year and well look to get more off the back of the alibaba ipo. Now, on friday we spoke first to jack ma. Lets listen in to what he said. I believe that customers are number one and shareholders are number three. But today weve got money. All we have is the trash from the people. Middle to Small Business shareholders. Im very honored and so excited. Ive been thinking about next year or five years and ten years how to make sure that the shareholders will be happy. Its a very important thing to make these guys, people standing there, if they are successful, well all be happy. Thats what i believe. Now well bring in r. J. Hatabi, thank you for getting up early with us. Thank you for having me. R. J. , we got to talk about International Expansion because jack ma did say that he wants to grow alibaba outside of china. Do you think alibaba has a brand name to resonate with consumers in europe and as well as the u. S. . Yeah, i think thats going to be the largest challenge for ipo. I think the Companys Network effect really is confined to mainly china where its attractive to a number of users and sellers. But we have difficulty believing thats going to translate borders. You have other Strong Companies like amazon and ebay in north america. Amazon in europe. It will be difficult for them to expand outside of china. You dont see them being anything more than a niche player. That being said, they have a tremendous amount of opportunity still left in china. Well look at the data, r. J. , recent data suggests that the country is slowing down. Isnt that a concern for alibaba and its Growth Prospects . It is a concern, but at the same time when you only have 20 of the population of the user base at this point, thats a lot of white space for expansion. You also have the opportunity as you see Wealth Creation in the region through wage growth and urbanization. I think that will have a huge opportunity as well. The other thing you have in your favor with alibaba is the fact that you dont have the traditional Retail Market like you do in north america and europe. Thats fragment and that will give them an opportunity to reach a lot of consumers before the retailers do. I think they have an exceptional amount of room to grow in china and thats the attractive part of the story. R. J. , your note from thursday said you thought fair value was around 90. Congratulations, you were pretty much spoton on that. Looking forward around that level, what kind of signs do you lookout for for when it is right to exit the stock . Yeah, i think at this point of 94, it is slightly overvalued. Things i would be looking for, the topline growth attracted most investors to this name. We did see deceleration on that, that would pressure the stock. The other thing important to watch is the company is about to embark in a major investment cycle and new mobile products, new technologies and even the marketing. So well see margins pressure in the next couple of corners. It will be interesting to see what the u. S. Market reaction to that is. Certainly a margin story is quite a bit different here, but im curious to see what their reaction is. It may push the stock down to open up an attractive point. The current levels looking to take a little bit off the table r. J. , it seems with investors because we were off to such a strong start with alibaba on friday, maybe they are looking for reasons to sell the stock and consolidation in china. They are talking about a maturing Retail Market in china. Youre not concerned about any of these factors, are you . I would say competition would be the largest thing that were concerned about. That being said, if you look at the size and scope of the reg n region, they are treaty small players and a fraction of the user base and sellers contribute to them. But you also have other factors. If you look at the structure, that is concerning because you have a limited voice to as a shareholder. And you have a limited situation where management owns it with a larger estate in the company. All in all, i think its a pretty sound story. Well have to leave it there. Thank you so much for that, r. J. Global director of Consumer Equity Research and senior restaurant and analyst at morning star. Another profit warning for tesco. Four executives are suspended as the grocery giant launches a probe into an accounting error. Time for total to deliver. The French Oil Group sets up plan to reach its Free Cash Flow goal. And its survey time. Cnbcs Global Corporate perception and indicator find youre less favorable to big businesses than other regions. Well, would you like fries with that big mac . How about jalapenos . Mcdonalds is set to expand their build your own burger test concept underway at four locations in california. Customers can pick out various burger combinations on the touchscreen. Mcdonalds has long shunned this due to food efficiency, but they are trying to boost revenue after posting the worst drop in Monthly Store sales since 2003. What would you put on your burger . Well, i mean, it is hard to beat the classic big mac. But if you can add extra cheese and tomato, beef, basically just double it. Why not . The hope is that youre going to make that decision very quickly. Otherwise the lines will be so long. And it wont pay off for mcdonalds. Well, exactly. Either way, i welcome the move from mcdonalds. And back to the markets, a trio of fed officials speak today. Could that influence the market . Well speak to a couple experts after this break. Worldwide exchange is coming up next. Want to change the world . Create things that help people. Design safer cars. Faster computers. Smarter grids and smarter phones. Think up new ways to produce energy. Be an engineer. Solve problems the world needs solved. What are you waiting for . Changing the world is part of the job description. Join the scientists and engineers of exxonmobil in inspiring americas future engineers. Energy lives here. Its in this spirit that ingu u. S. Is becoming a new kind of company. Ing u. S. Is now voya. Changing the way you think of retirement. Welcome back. Tesco shares are at the bottom of the stoxx 600 after issuing their third profit warning this year. And four employees have been put on leave while accounting issues are investigated. Tesco disclosed the overstatement of the expected first half earnings by 250 million pounds. It is trading down 8 at 211. Jpmorgan came out cutting their price target to 185 furthering down from the current low of 211. Youll go to the european markets, and europe is struggling today off the back of weak markets in asia overnight. Hong kong is down 1 ahead of the pmi manufacturing data out tomorrow. The ftse 100 way down by tesco down almost a percent. Germany, france and italy are down about 9. 2 . What are we expecting in the u. S. . They are taking cues from your. If you look across the screen, the dow, s p 500 and nasdaq trading lower in premarket trade. This after the dow and s p 500 hit alltime highs last week. The nasdaq trading at a 14 1 2year height. A lot of excitement behind alibaba, but today we are seeing investors booking profits ahead of the u. S. Market open. Well give you a rundown on what to watch this trading say. September home sales are out at 10 00 a. M. Eastern. The annual rate is 5 2 million. A trio of fed officials will speak today. Bill dudley, george and president kocherlakota will meet today for the fed. And autozone and Ascena Retail are going to report their earnings. And now michael is here with us this morning, a guest earlier on told us this market is a little depressed because we are coming off a very busy week with alibaba with the Scottish Referendum. Where are markets headed this week . Well, i will say this, if it is slightly positive, then you are up double digits on the year. Ive already noticed equity markets are clearly riding the tide very well in this environment. And for those reasons, im not going to be too surprised if we see some positive growth here in the numbers and upcoming week. And also the fed is going to get on all the right tones in regard of where their direction wants to be. But at the same time being very cautious and not implementing it immediately. That being said, im not surprised at the yields and the tenyear that start to peak down a bit now because of the recent pricing we saw last week. Again, im rather bullish in the equity markets with things Getting Better here in the u. S. Michael, the s p 500 is trading at 15. 6 times projected earnings. When does evaluation concern investors when looking at the u. S. Market . I think in this environment right now that is still not a bad number. And theres reasons to be cautious and always a learning from our past, but right now at least those numbers can be exceeded, not by a great deal, but clearly in enough fashion to where 15 will be something to look back at and think there was clearly still value there. The commodity market as a whole we are starting to see them slope the other way. And i think crude oil is in the middle of a very nice light bearish channel here that potentially could get down to the 86 level sometime in this quarter if things get abrupt quickly. But in the meantime, i still think the did very jeps of the two markets alone are giving the indicators that a bond market is sufficient sufficiently booeyed. Which do you like in the face of the stronger dollar . Well, i think one of the things you have to mention on the commodity side is just the whole aspect of how australians and the aussie dollar is going to trade against the u. S. Thats one scenario we are starting to see really get into a trend. And i think the trends could be a little bit long and estimated. At the same time, i see the british seeing too much of an upside and the downside channels are starting to see it start this week already showing prevalence. I think a lot of the numbers economically that well see in the future will bode very strong against the u. S. Daughter. I had to do business overseas that well be watching. And a move in the dollar, twatc out. We have been getting your responses. Michael molan says from western massachusetts, got to take my grandmother to the doctor. Thats a good excuse for skipping work. While anthony says hes too busy watching carolin roth on cnbc. Thats my favorite one. Stay tuned because later well speak to the ceo at 10 00 a. M. On squawk in the street. And well be speaking to barclays ceo antony jenkins. In the meantime, whats the best excuse for pulling off sick . I would never do that, you know that. Obviously, my best excuse is based on what the tweet said before, because i want to watch you. I lost Battery Power because that happens to me all the time. I have to charge my smartphone throughout the day. I was thinking on holiday it has to have a mixed bag to not get back to email too soon. Everyone expects too much these days. No reception is an excuse. Hopefully madison is not walking, but no Wireless Connection is a great one. Always a valid excuse. Those will be the excuses, but i also want to know whats going to happen with the ceo of barclays at 7 20 eastern time. Also, tomorrow well be playing an interview with total. Well have those results earlier today with the market staying relatively flat ahead of that. Thats it for todays show. Im wilfred frost. Im carolin roth. Squawk box is next. Good morning and welcome to squawk box. As a lot of mergers today, it is a monday, though were going to go with the phase merger monday. Siemens is looking to a multibillion dollar acquisition while data giant emc could be shopping itself around. The alibaba hangover. The ipo party is over and it turns out more shares were sold to officially make it the biggest debut in history. And another round of nude celebrity Photos Leaked again. This time rihanna and oh, my word, stop the presses, kim car dash dashan. Shes mortified. They are the target of hackers. It is monday, september 22, 2014. 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. Most of the major indexes closely sharply lower. In china shares that tomorrows manufacturing data could show more evidence of a slowdown there. You can see the market for the hang seng down by 1. 4 . The shanghai was down by 1. 6 . Meantime in japan, the profit taking looks to be the name of the game following a sevenyear high on friday. That stock market is down by. 70 . A lot of red in the early european trading as well