Transcripts For BLOOMBERG Countdown 20140508

Accommodation remains warranted. Hello. Welcome to countdown. Justin on 6 00 a. M. Here in london just gone 6 00. Manus cranny looking ahead to the strategy update. Alking us through decision day zeb eckert is in hong kong with the story on alibaba on one of the savviest investors. From metro,nings hans nichols is in berlin today. What could be the effect on turmoil on germanys biggest retailer . Theark bristow will be on show. 7 00earnings breakdown a. M. , the finance director from bt coming up after 7 00. Getting earnings from deutsche telekom, a narrow miss. 4. 21 billion euros. 4. 15 were estimating fo billion euros. They have confirmed the fullyear forecast and they are scaling back ambitions in content in media and focusing instead on Network Investments to internet and phone customers in europe. The tmobile u. S. Unit adding more subscribers than both at t and Verizon Communications combined in the first quarter. Sprint, the big Japanese Company controlled by softbank division calling forward to push for a bid for tmobile after meeting with banks to secure financing. Thats according to people with knowledge of the situation. Thats the big elephant in the room. The earnings in the room tell us that earnings are just narrowly missing estimates for the first quarter. Like strategy day for barclays. Pressure has been mounting for targets over job cuts, and what the business was to focus on. Manus cranny joins us now. Youve been following this for a long time. Focus will be on the jobs story. Whether jenkins in his second review, been there nearly two years, but it is just aggressive or substantial. Will it be within the Investment Bank . Its hard to talk about the consequences but thats the reality. Thats one of the biggest costs speculating now that the bank would drop 20,000 jobs between now and 2016. Originally, they had said it would be around 15,000 jobs by 2015. I think the most critical piece be whats strategy will and how many changes within the Investment Bank you will do. Throws a much bigger question up for jenkins. What are you . You spent years building this part of the business. Are you still truly a Global International Investment Bank . Where do you want to go . Do you want to be a beast of fixed income . Do you want to be one of the top players in Foreign Exchange . If you make these changes, where will it come from . The numbers speak for themselves. Probability is dropping. A study barclays problem. Its a global problem. The targets that jenkins set, he has missed his return on equity. The return on equity within the Investment Bank is singledigit. It is just over 8 are sent. The target is 11 . Is a time to shift the goalposts . And on costs as well . Down tonts to get costs 15 of income. This is just simply not happening, the return on equity. Some say it is too ambitious and you need to push out the timeline by another year. Legacy assets. Rbs had done it. Ubs, Credit Suisse have done it. I think this legacy asset that he is going to create is a little bit if rent in that the huge loss of those other institutions with the bad banks, the assumption is what Anthony Jenkins will do today in terms of creating his bad bank may not it will have Legacy Assets and exit. European retail, they have been trying to flog it for a couple of years. Fixed income commodity, which part of this du not want to be in . Along with that, i think theres a big issue about culture. If you do and dammed if you dont. Some people resigning in leaving the bank impacting the culture. How much of an issue is that, you wonder. You have the big rainmakers and big names leaving , they exit. Is this is the beginning of a death spiral . Anthonye the words that jenkins actually used. The question for me is are you a . Ostage to rainmaker are you possible of prospering without key names . Do you have enough business to survive as every business knows, you should be bigger than the people within it. Manus, thank you very much. Anthony jenkins will join on the move just after 8 00 a. M. London time. Jonathan ferro is here with details on the ecb. A big day for everyone watching the Central Banks. Thistations coming into are pretty nice. We are expecting a closed meeting but not much from it. We had improving data and thats one reason that the ecb has remained on hold. Inflation not low enough. That theyo remember think these price rises or the actual lack of them are transitory. Abandonfood, likely to the second half of this year. As for the stimulus debate, is that still ongoing . Is there any agreement over which policy talks are used next . If we look at bank lending, it has been contracting for over 20 months now and that is something a lot of people are looking at saying you need to do something about it. Theome companies would like ecb to do something about the strength of the euro. It pushed up to one dollar 40 cents. Corporate executives, politicians in france very concerned about the rise of the euro. Mario draghi used his strongest words yet. If it carries on rising, we will have to do something about it, inferring he could use stimulus to push it back down. We are at 1. 39. What struck me in one of his recent speeches, april 24, he basically says that it matters. If this is a symptom, a consequence of flow into europe in italy, spain, and elsewhere it has a stimulus effect and we should take into account the overall balance of forces. That is a very central point. It did not tell my command that was about to push down the euro. Anytime of rhetoric, the euro gets near 1. 39 and he has an opportunity, he gets the back of his hand out and tries to slap it down. Many people thing going into this meeting he needs to do something right. The oneyear chart, it is just doing this. Its the last meeting of the boe under its current guise and that could make rings interesting when it comes to divisions. The composition of the bank of england could get very interesting over the next 12 months. May 14, inflation report. The Financial Policy Committee meets. The ftc will be the interesting one. House prices and what is the bank of england going to do about it . May 14, june 13. Going in my diary as we speak. Jack ma is undoubtedly the star ipo butpcoming alibaba the softbank ceo is expected to be the biggest winner. This of that thing like its a that thats about to pay off in spades. Said, good morning. Zeb, good morning. Earn 58eal will billion from an early investment in soft rank that he made an investment rather that softbank made in alibaba. He met with a Young Jack Ma starting alibaba out of his apartment. Son gave him more than five minutes for that meeting so that he could explain his business strategy. He said he saw great promise and now he reaps the investment reward. Him in themparing recent acquirer of Sprint Nextel to warren buffett. This gives him significant leverage. He is likely to have a board seat on alibaba, significant and noe with the Company Conditions on the ownership. Quite a strong net payout for that original 20 million investment. Its not bad. The other big story looking at today is china exports and import numbers. Whats the take away . What does it tell us about Global Demand . Anit is certainly improvement and a surprise gain for chinese exports and imports. The market was looking for a numeral three percent drop in april exports but look what we got. Zero point nine percent compared to a year earlier. That is when the trade data was distorted so thats even more encouraging because it suggests that there is real demand, real improvement with the markets rallying in china stocks headed for the biggest gaining four weeks. Another were watching today is metro releasing numbers within the next half hour, germanys biggest retailer. International correspondent hans nichols is in berlin with the details. Good morning. If you want an indication for why there is so much and for further sanctions on russia, look no further than these metro earnings in about 20 minutes. They have been hurt by the currency depreciation, sales. 26 of their sales are in Eastern Europe. You want a good sense for how the economic situation, the political situation is affecting it and we will have some hard numbers for you. Must see how we todays ecb and the boe decisions play into the strategy of annexed guest coming up on countdown. It is 6 12 a. M. In london. Stay with us. Time for todays company news. Hayward haso tony been named as the chairman and the appointment may be announced as early as today. He has been interim chairman since may of last year. The chairman of bloomberg lp is the nonexecutive director of glencore. Firstquarter operating profit fell by a high singledigit number. They were impacted by weakness in difficult Market Conditions that began will continue into may. Shares of tesla falling in afterhours trading as sales of the model last came in short of the highest analyst estimates. For batterieslies and china shipments would hold deliveries to about 6400. Welcome back to countdown. Im anna edwards. The ecb and the boe making decisions today discussing several options. Is it time for the ecb to pull the trigger to tackle deflation or not . I probably not this month, expect. But something is probably coming. Thatxpectation, wisely, is there will not be anything to unconventional happening ahead of the european elections but at some stage unless the increasing unlikely situation of prices are starting to accelerate occurs, then i think we will have to see something from the ecb to tackle the issue. Calexico even after the may elections though quantitative easing will be a tough political or any Monetary Policy have pmi,ough if we that measure of strength in an economy on the improving side, even slowly and we have not seen a deterioration in the inflation picture. Numbers on the inflation front are stabilized, i suppose, but obviously you have an increasing number of economies that are experiencing deflation. Bundesbank might like to give the impression that it is due to energy prices, does not seem consistent that they are so much weaker in the core. Thats clearly an inflationary problem there or deflationary problem. That is the mandate for the ecb. It is not to try to hold back pmi but to achieve price stability. Todayco is there a risk if and when the ecb, as you were saying, does nothing . Likes it will be driven by the press conference. Froave seen a bit of to and from mario draghi and other members of the ecb board. They have not done enough, in my mind, to suggest that they are totally against qe. A controversial policy. I think there are serious questions about how effective its likely to be but nonetheless they refuse to rule it out. Unless there was a change in tell him at press conference, then i think it is probably coming sometime in june or july. If there was a change in town, that i think you are right that the euro will be doing better. England has their Rate Decision today. You mentioned questions about how it would work in a eurozone context but the bank of england is still debating just how it will take it into a u. K. Context, something you have been looking into. Collective published the paper earlier in the year which really i think was an extraordinary paper suggesting that the way textbooks say banks create money is wrong and that it is much more driven by volumes of deposits but driven by Monetary Policy and ultimaly the demand for loans. Iscifically, what they say that the impact of quantitative easing is really only on the rebalancing channel. Its really about squeezing people into higher risk Asset Classes and reducing borrowing costs and ultimately capital. Questioning whether it really creates more lending in the economy. Ultimately they are saying it does not do it through the Banking System but through the Financial Markets which i think is huge applications for the policy. Bringing it back to the ecb, mr. Draghi talks about trying to boost Small Business lending. Ultimately, if you believe quantitative easing works in this way, it will reduce a borrowing cost to Large Companies but only do it for Small Companies by very indirect routes. Guy foster stays with us. When we come back, more thoughts from him on strategy. Bloomberg tv will bring you the ecb Rate Decision and president Mario Draghis press Conference Live at 1245 and again at 1 30 p. M. London time. Stay with us. 21 minutes past 6 00 here in london. Countdown will be back in two. Welcome back. This is countdown. Six 23 a. M. Guy foster is here with us. Trade data out of china signaling an improvement in Global Demand. You been focusing in the decline of the currency in the first quarter, the biggest quarterly decline ever. What are the deflationary pressures that might emerge from a continuing decline in the chinese currency. Is a scenario here where you give very disparate views and whats going on specifically with the currency some very firmly asserted, but for one i would be fairly upfront in saying there is a lot of uncertainty coming from this. We have to entertain different hypotheses about what the chinese are attempting to do. The court cases they are doing what they said they are doing, risk and move into a situation where they have a liberalized currency regime. And then situation, after a bit of volatility, we will end up concluding that we are somewhere approaching fair value for the rmb. The concern would be, it is nonnegligible, that china is experiencing a significant tightening of its economy and it needs to do something to try to keep growth momentum. Its way of doing that, one improvear, would be to export competitiveness, the value the currency, and that will be one more deflationary things like the euro zone we just spoke about. How do you invest around this then . You need to shape a tragedy with theund five years lows in the markets postcrisis. Does this feel like a normal recovery . Does that mean anything . Feel like aot normal recovery. That begs the question if it ever feels like a normal recovery. 2002 felt like a jobless recovery. Certainly, this feels anticularly strange as economic situation. How we work strategically is to try and think in terms of the type of roles that tend to work, an economy that is trying to tighten its policy, trying to contain credit tends not to be a good equity environment. It tends not to be a good investment environment out all. Butorry to cut you off, thank you for joining us, guy foster. Coming up here on countdown, breaking earnings from germanys biggest retailer, metro. Welcome back. Im an edwards. Lets go to Jonathan Edwards for the fx check. Wake high. To a two better jobs data out of australia and better import data out of australia pushing this one. Another that will be focused during the day, eurodollar. Pretty flat right now, but what can the ecb do except push this one back down. April 12, mario draghi said this could mean more stimulus at the ecb. The push higher has been relentless. But can mario draghi do . Conference coming up and its wonder watch. Federal reserve chairman janet yellen says growth figures for inflation and employment remain far from central bank goals. A high degree of accommodation remains warranted. Under questioning, janet yellen said there is no timetable for the end of asset purchases or the raising of benchmark rates. Aker and caret place placing doubts amid the possibility of thailandrotest has put in a caretaker government. Russian president Vladimir Putin says they have pulled back from the border with ukraine. The u. S. Says they see no evidence of that move. Almost 3. 5 on that earlier news. Back to the program. Just getting numbers from germanys biggest retailer, metro. Giving us sales coming in at rg 33 billion coming in at billion. And net incomen at 182 million. We have sales for the second shader and that is just a below the estimate which is 14. 5 billion. Cluding coming in. Level, things look a little better than estimated. A lot of uncertainty surrounding the eastern part of this business. No doubt question surrounding the russian strategy and the rest of Eastern Europe will be forefront surrounding this. For more, lets bring in hans nichols and has more on the story in berlin. The numbers are not great but they are not horrible. Yes, there is a bit of a mess on revenue but not nearly as bad as some had been expecting because of metros exposure to Eastern Europe. If you look at where the revenue comes from, it is the largest german retailer and elsewhere in western europe, but 26 of their revenue comes from russia. When you look, the currency has done there, you have seen a 4 im doing the math in my head so forgive me. There has been a loss in the euro against the ruble. Is a longterm plan. They want to be there. They have delighted the ipo of the cash and Carry Business that clearly they have a footprint. And 28,000ets employees. We will take a real close look at what the currency effect has done. We may have hr there of the last 15 orover the 16 months. It does seem that these numbers are not as bad as they could have been. Revenues. Till down on we will just see what the ruble did for that result. Hans nichols joining us there. Federal reserve chair janet yellen said she believes that the government still requires stimulus because unemployment and inflation are well short of the goals. For a discussion on the u. S. Havemy and fed policy, we the executive Vice President and director of research at the. Ederal reserve bank its good to see you on the side of the atlantic. Unemployment and inflation is still well short of the feds goals. How big a gap is it . Than it was one year ago. Because of that, we have begun part ofess of removing the policy in place with the tapered. Estimates, at the the projections of the federal , we stillt committee have a year, maybe a year plus before the Committee Sees those goals getting into the range of something that feels like success. When do you think the federal open Market Committee strategy will start to change again to take into account that Interest Rates at some juncture were were ever tapering ends, is actually going to happen . Depends whatt, it you mean by policy. For some time it has been described as, depending on the state of the economy, contingent and sometimes the language of the economist which means that things will change when the economic circumstances on the ground change. You may be asking the question of when it will be time to Start Talking about the exit out of rateero percent interest and it will depend on the evolution of the inflation and other things that the committee is looking at, but i think its been pretty clear that probably we will not even feel like were in a position to do that until the middle of 2015 or perhaps later. Likely laterore than sooner. How concerned are you about housing . Wasthing janet yellen alluding to was weakness around the housing story in the u. S. Although some economists have been saying that any weakness in the Housing Market data can perhaps be explained by far andr distressed sales default rates and you can turn that into something of a positive story. What does housing mean for you at the moment . I will speak from our point of view in atlanta. We are not looking to the housing sector to be a leading sector as we go forward. I think we have seen a fair amount of strength in the last year, yearandahalf. We dont really expect that to be persistent. There was the effect of whether, but i think chair yelling said that it was probably more than the weather in the weakness we were beginning to see and we would agree with that. Theuld not raise it to level of concern. There are some peculiarities. The one strength in the Housing Market is still prices that suggests that there might be some supply constraints on the sorts of properties that people will actually buy and want to buy going forward. I think we still have some work to do to come up with a firm interpretation of whats going on there but i dont think we are in a spot where we think it will derail. Nonfarmabout the recent payroll number . It was tron comparative estimates. The longterm unemployed is a concern for janet yellen, of course. Shes mentioned that a number of times. How usual or unusual is this recovery in that sense . Its not unusual compared to the last couple of recoveries and that the labor market has been very slow to recover. It has been dimensions that look to us to be symptoms of still quite a bit of underlying weakness in the labor market. Our favorite example, the thing we are really focused on right of is the large number people who are working parttime who say that they would really like to be working fulltime. The Participation Rate sec liquor or cyclical . Both. David, thank you for joining us here in london. Executive Vice President and director of research at the Federal Reserve bank of atlanta. We will bring you more on huaweis been in paris and the race to catch up with samsung and apple. U. K. Housing market constrains. Thats the wording of a new survey. We go inside the report next with the senior economist next on bloomberg. Time for todays company news. Confirming the new chief executive at the Biggest Energy company. Shareholders will vote later today at the annual meeting in rome. Calzi has overseen the biggest natural gas discovery off the coast of mozambique. Vodafone starting arbitration to solve the longrunning dispute with the Indian Government over the sevenyearold acquisition. It goes back to vodafones purchase of hutchison. Orissa meyer is betting on mobile after analogy that yahoo had failed to capitalize on mobile potential for growth early enough. It was one of the biggest missed opportunities. There were very few people working on it. Now we have hundreds of people working on it. We have made big advances. To see mobileg approximately doubling along every metric we have in terms of traffic, revenue, users. We are at or hundred 30 million monthly unique users. Welcome back to countdown. In london. A constrained market plagued by weak supply and high demand. A survey and from we are joined now by joshua miller, senior economist. Its his first time on bloomberg. Thanks for coming in. Its a supply story for you. Has been the overriding issue for a number of years now. Quite strong and some interesting developments at the regional level particularly movingrowth in london quite substantially over the last six months. Also activity strong and still rising but were still seeing early signs of moderation in the growth of activity. Why are things going down in london, do you think, joshua . Constraints are kicking and. High times is a historical. At the margin that is having some impact. Everybody knows that a lot of the houses are not bought by stay in them. N the house earnings ratio just reflect that the newre is a that there is a mortgage element. Mmr is just come into place the Mortgage Market review. Is there any sign of the coming into effect . Even in the runup to the Mortgage Market review, we have seen a moderation in new inquiries. We have also seen that starting to move through the official mortgage approval numbers. There are very early signs of potentially the Mortgage Market review is taking some of the froth. Are they just getting used to the questions that have to be asked and educating their employees . They have to ask potentially more tougher questions and apply more stringent criteria. Thought a land tax would be something that should be considered in the u. K. Housing market. You fiddle with the Mortgage Market but a lot of the money he coming from abroad and does nothing to do with the borrowing rate in the u. K. Is a land tax something a land or property tax is something that increasingly will be in the political discourse going forward. It will certainly increase prominence in the agenda. I dont know if it will make it to the top that it seems to be that sooner more later, Something Like a land tax will be inevitable. Policythe Financial Committee meets next month on june 14. Joshua, is it time to roll out further measures whether it is Banks Holding more capital, looking at some of the ratios between salary and loans . Ofyou think these sorts macroprudential measures are imminent . From the verbal intervention, we are already getting some senior policymakers and the next stage would probably be a tweaking of the parameters and they might lower the ceiling or potentially give it this focus and beyond that, they have to consider the toolkit and what other measures they might be willing to introduce notwithstanding the cyclical will it work . The ecb has a doubts that it could slow down the Housing Market. Microprudential is a relatively new policy setting. Nobody knows whether it will work but they need to try and experiment. Joshua miller, senior economist at rics, thank you for coming in. Picking paris for the global unveiling as being of the new phone, the ascend. Chinese cell phone maker huawei watching a new cell phone in paris. Paris is a fashion city. Europe will always be our key region. This new handset will compete with the latest iphone from apple and galaxy from samsung. The ascend p7 is slimmer with an 8 megapixel camera to keep those selfies crisp. This is the Third Largest cell phone manufacturer with china as the biggest market. U. S. Sales are nonexistent after they accuse the company of spying against american interests. They plan not also to sell handset but higher local talent. We think europe should be the center. Everyone is watching europe. Is hoping customers in france and the rest of europe will fall over themselves for these new handsets. Coming up on the program, another case of man versus machine as easyjet sent in the drones. The newspaper segment is coming up next. Welcome back. Crank 653 a. M. And its newspaper time. Hans is in berlin. 6 53 a. M. Here is the bild. Sound makes you fat. There is a study that says people who live in the vicinity of an airport and the sound because of hormones released because of stress have an average waste 1. 5 centimeters acre. Interesting story. I know you live on the leafy part of the thames, but be out of the flight path because you can add weight. You are pretty close. I am in the flight path. Ive noticed lately ive got a little extra. Castr be it for me to doubt on the scientific study. Why arent there always naked women on the cover of das b ild . Marketd is maybe a down tabloid. They give you a little tease on the front. I err on the side of caution. Pages 4, 5, and six there are a variety of naked models. Very sensible. Hans, thank you very much. Jon, football. Forbes top 10 most valuable football clubs. At the top at over 3 billion debt in. Manchester united. The one that depresses me slightly, Manchester City has taken over ac milan. Team that has been regulated. We dont have any man city fans here to defend themselves. They are indefensible anyway. City, this is man the front of the guardian. One step from heaven. Its a rainy. Two point ahead of liverpool but this is the story i really wanted to talk about. This. He has spoken to the bbc for the First Time Since all of these rumors erupted that he will be the next manager. I hope i shall be the one. Its the biggest club in the world and its a fantastic challenge. Lewis, we love you, too. Easyjet sent in the drones. This is in the times. They are thinking about using drones to survey the integrity of aircraft after bird strikes and lightning strikes using a drone to just work out how damaged the aircraft is. Apparently it will take them only one hour to do a survey that would take them only two days. You can see why that makes a big difference. There will be fast turnarounds. You program it to hover just a meter or so away from the surface and it manages to relay the data back to a 3d modeling computer. Drones are taking over. I thought you were going to say they were replacing pilots and i was very concerned. They dont need to hover. Jon, thank you very much indeed. A strategycting update from barclays breaking in a few minutes time. We will speak to the ceo of randgold in a few minutes. Barclays revamp. Revise the units profitability. We will speak to ceo Anthony Jenkins at the top of on the move. Germanys largest retailer shrugs off problems in russia saying the performance in the country remains good. Is it too early for a new era at the ecb. They are expected to keep Monetary Policy unchanged as they continue to wait off the threat of deflation. Hello and welcome to countdown. Init has just gone 7 00 london. We are waiting for news from some big u. K. Businesses. Bt, they are expected to report numbers. Ark was expected to give us a strategy update. Both of those companies front and center for us barclays expected to give us a strategy update. Bt likes toc at announce is the Third Quarter billion pounds. That is the sixth consecutive quarter they have eaten earnings estimates. A, how many broadband customers have they managed to attract in the previous quarter. Well . Bt sports going as two factors i will be focusing on when i speak to the cfo. Revenue for the fourth quarter, 4. 78 billion pounds. Analysts estimating 4. 72. Earnings and revenue have been. We are waiting for the breakdown on customer lines. They have been declining. Broadband subscribers, and any news on bt sport will be welcome as well. I will speak to the finance director in eight minutes time. Do not miss that. Lets talk about barclays. Thea strategy update coming th rough. We have numbers on job cuts. This the Investment Bank, is the critical piece of this business 7000 jobs will go by 2016. This is the area where there has been the most amount of pain in fixedincome commodities. They will create a bad bank or a non core business. They will house assets of 115 billion pounds. 7000 jobs are to be eliminated at the Investment Bank. It has 26,000 employees. The question for jenkins is, are you a global Investment Bank that is more than 1 4 of his staff. Where those jobs will go, we made for more detail and the strategy update later today. Overall, at our police they are telling us 14,000 jobs overall at barclays they are telling us 14,000 jobs in february, the guidance with 12,000 jobs. 14,000 jobs to go by the end of 2014. It looks to me is if they are pulling forward at the timeline on those headcount reductions. They are targeting a buffer of capital of 11 by 2016. On equity were talking about earlier, costs, a couple of headlines crossing now. We have cost guidance, ok. Billionng to be 16. 3 pounds in 2015. In 2014, thats 2015. The job cuts have come t hrough. The return on equity, an ambitious target of 11. 5 . They said it will be more than 12 . Target more that 12 . It does not give us the timeline. Already it has been delay and he is upping the target. Trying to get the cost as a proportion of overall income down to 11 . You have been suggesting all morning that this is very significant for barcallays, because this is a company thats years building up the Investment Bank. The question is how far that investment is being rolled back. In terms at which businesses they want to operate, the only clues we have gotten is that there will be a focus International Bank with four core businesses. They will be pushed on where they will not be operating. Absolutely. Lets put this in context as well. I sat down with sergio monti. In other businesses when headcounts are lost, there is a great deal of pain to be had. A lot of people grandstand this as retribution. It is tough to let 7000 people within an institution go. The difficulty that has been found at other institutions, ubs trying to let 10,000 people go. They only managed to let 4000 people go. You cannot whine down these businesses like that. You need credit officers to look after businesses. It is not an easy execution to do. For somebody like jenkins, this will be a tough announcement. It seems as if the financial target for 2016 that is bringing his target up from 11. 5 . I will get my cheat sheet. He said 12 . And bring enough for by one year. That is important. This is saying to the shareholders, give me the time to deliver on these new targets. So the questions are are you, global Investment Bank, still . These cuts, can you achieve them . And are these targets realistic . Thank you very much. More on barclays. The ceo will be joining on the move late. We just had numbers through from randgold. Say we are joined in the studio by mark bristow. Mark thank you for coming in. Give us the top line on your numbers. It seems as if you have managed to meet your eps higher, and your profits higher in the first quarter. What is moving around underneath all that . We have had a fun last six months in the group. Last friday, we delivered on our mine and we had the official opening. It made a big contribution to our numbers. I think the take away for this quarter is first quarter, if you look at our run rate, we are wellpositioned to break that production mark for the year which is an important step or milestone in our companys evolution. Did you finally deliver the bottle of wine . The start of production for those who do not know, there was a bietween the ceo and mark, the bet was if you start production by the end of last year in kaballi, he will buy a nice bottle of red . It is from an estate in south africa called windfall, and it is called cabal kabali. And he has received the invoice and he assured me this last week that he will send the check. One of the targets . What are the targets . Under 600 an oun ce. You are looking at eight sides and three over the next two years. Ultimately that mine is going to have five open cost operations and it has got the Critical Mass is an underground mine, vertical shaft, declines. It looks very much like South African traditional mines. Head gear sticking up in the middle of the jungle. You have been in russia and some point of the future. How to their plans look . How do their plans look . We went into the drc after looking at russia because we felt that drc was less risky a couple of years ago. I always say that one success is often the things you do not do. I think that was one. We looked in russia court a few years ago. A tweak in their mining code. We just finished the cote divoire review. We are debating, a big public debate on the mining review in the drc. But everyone is engaged and i believe we will find something that works. What is your outlook for gold prices . You try to make your mines profitable of 1000 an ounce. We are above that, but what is your outlook . Supplydemanthe equationd is starting to work through from our point of view. Gold price is higher than i thought it would be, given what happened last year. The industry is still struggling across the board. There are a lot of bigger companies, the bellwether companies in our industry are struggling to find the right balance. Think there is a lot of production to come out. Demand is very healthy. Thats what keeps the gold price at 1300. Listening to the banking issues, i do not think the Global Economy is settled at all. So it is a good hedge. Delivered to view the labor dispute in south africa. It continues. The platinum market . How soon before the government gets a grip of labor unrest . These sorts of things are a breakdown in their partnership that, a partnership that is so important in exploiting their true resources as a country. That is the fact that capital, government, and labor Work Together so that all stakeholders benefit. It is not just focused on one aspect of that relationship. And that platinum industry is in a situation where you have really gotten build that partnership back. I think the blame has to be apportioned to all three of those partners, not particularly one. Great to get your thoughts. Thank you for joining us. Mark bristow, the ceo of randgold. Next up, we will dig into the latest numbers from bt group, with their finance director. Stay with us. Welcome back. This is countdown. Justfocused on bt group, releasing earnings for the fourth quarter. Lets talk about their numbers. Their finance director is in london. He joins us. Sir, thank you for joining us today. Good morning. I think i am right in saying your fourthquarter earnings have beaten estimates for the sixth consecutive quarter. Six in a row. What is the secret behind the success, tony . Actually, i think it is a lot more than sex but i will not get into the detail on the. Look, reality is we have had a good quarter, we have had a good year. We have delivered what we said we would do and that is really important. Highxpectations have been and we delivered that. We delivered that by focusing very much on the key investments we have made in making certain that those investments deliver. You have lost 49,000 home phone connections, but you have gained 170,000 broadband subscribers. So that balances that out. Is that the trend now . Do you think you will continue to add more broadband prescribers than you lose home phone connections . The level of line losses we have had, it is 6000. It is a better position than we have been in before. In terms of broadband connections, the whole sporting content is based on delivering more in terms of broadband. Our market share has been very good. We have done 79 in the quarter. Ever since we launched sport we have averaged 77 . If i compare that with it before we weresition, where around 50 , it is a good position. It is materially better than we thought it would be. Bt sport. It has been a big success nine months into this experiment. You have got 5 million subscribers after nine months. 3 million take the service directly from you. 2 million from wholesale. Can you explain to me who pays for it . The subscribers, the broadband subscribers do. What sort of money are you getting from those who are not bt broadband subscribers . Got is notl weve looking at sport as a single entity. It is part of an integrated package. Bts proposition is about bundles. And it is about integrated packages. In terms of monetization of sport, it comes from the wholesale deal we have done with version. With virgin. It is about attracting new customers. When you look at the broadband net ads, 79 , it is vindication of that. We get smaller sums of money in relation to advertising revenues and revenues from pubs. When we look at sport, it is part of an integrated package. What is it going to make money . We are right on plan. Actually, we are better than plan. In terms of our overall investment, im very comfortable the way we are now. When are you going to charge for it . Because he said for a second you will allow your subscribers to watch rugby, football, and all sorts of sports. Long can youw continue to give all of this for your way to all of your subscribers . The key is that while we might be giving part of the sports package away free, the reality is that we make the money in terms of attracting new customers. In terms of a direct pay sports channel, while we have said is when the Champions League comes through in 2015, and we already have the rights for that, we will look at our model and our model will be charging. It does not mean that none of the channels will be free. It means there will be a direct charging model and play. Is sky going to get no wholesale access to the Champions League when you show it in 2015 . No, absolutely not. The door is always open to sky. We have a price in mind. Price acceptable. We have a price for existing content. We would delighted if sky took that. We cannot agree the price. Tony, talk to me about inflation for sports rights. I saw a report saying that sportswriters globally could tsse by 14 sports righ could rise by 14 versus five percent growth in the previous four years. Does it get to a state as we approach the next time your league auction, doesnt it to a stage where you are thinking that is crazy. We are in a bubble here. Yes. There is a very great danger of that. We have got a view in relation to what we have seen the rights. There are number of things we ave bid for and stopped for example, the cricket, the ashes. We have an economic model in place. In many ways, we are insulated right now because we have the Champions League, and we have that for three years from 2015. So our commercial model is intact over that period. Are you suggesting that if the premier League Football rights, which come up for auction possibly in the next six to eight months, if it goes too high, you are going to walk away . Surely bt sport is built on having the rights to these games. Two things. The first piece is if the price is not right, we will not be there. That is absolutely right. So this is not we bid at any cost. Secondly, we are insulated for that because we have the Champions League. You factor that in, and you get more games. Than you doin the premier league. What are the audience figures like . I see in some games, youre averaging one million. What about some of the other sports. You are showing football in scotland, germany, italy. Youre showing motor fc, nba basketball. What are the viewing figures like . Ande just lost motor gp, the audience is there with 365,000 for the first weekend. That is a good position. If i compare our rugby compared with what espn and sky were doing, the audience is 1 3 more. In terms of premier league, compared to what espn had, we are about 1 3 more. We are comfortable with the audiences. Bear in mind that the average Consumer Population were dealing with is much les les thn much less than sky. Tony, who is going to win the premier league, Manchester City or liverpool . I think that was decided last night, dont you think . I think it was. Always good to chat to you. Bt Group Finance director. Thank you. Ahead, it is decisions day for the bank of england and the European Central bank. We will look ahead to both of those announcements coming up on countdown. Welcome back to countdown. A big day for barclays. Manus cranny is logging in as we speak. I am going to drag this out. He knows his stuff. Give us the headlines. It is a big move money Investment Bank. Overall, youre looking at job cuts totaling some 20,000 overall at the bank. The big piece of news is the Investment Bank, 7000 jobs are to go by the end of 2016. Overall at the bank, we were told in february. If you think about barclays as a whole, they will lose 12,000 jobs. That has been raised slightly, up to 14,000. The big piece of news is within the Investment Bank. The question is this where will those jobs go . Will they go from trading desks or the operational side . What does it mean for your statement about your position, your position in the global leaderboard as an Investment Bank. Fixing saying, commodities and currency which is where the biggest problems have been is something you no longer want to be present . A couple of other facts. Capital, the critical issue in banking. The buffer is 11 . By 2016. Achieve that return on equity, the benchmark is now raised to 12 . Nowe know a little bit more about the Investment Bank, about how big they wanted to be in relation to the rest of the group. Taken down from 50 of assets within barclays. Thats now going to drop to 30 . No more than 30 of the assets will be at the Investment Bank and that is critically important. Thisuestion for jenkins is looks death spiral like . The bad bank will hire 115 billion pounds worth of noncore assets. The biggest proportion of the bad bank will include 90 billion from the Investment Bank, nonstandard, fixed income, and commodities. It isnt asked to that part of the business. Its an axe to that part of the business. The global launch of the p7. The high hopes that they will be put in the race to catch up with samsung. Welcome back. I am an edwards i am anna edwards. We will kick it off with the twoie dollar, kicking off a week high. Better import data out of china. It is australias biggest trading partner. Aussieushing mtye he dollar higher. A little bit of movement through the last couple of hours. Flat on the day. The big one is the ecb. Mario draghi, his strongest words on this one. That the strength of the currency may require extra stimulus. 139. 16. He cannot talk that one down. Time is the press conference. These are the top headlines. U. S. Growth says figures for them ploy meant and inflation remained far from the Central Banks goals. Yellen said there is no timetable for the end of asset purchases or for the raising of rates. Says Russian Troops have pulled back from the border with ukraine. But the u. S. Says there is no evidence of that move. Putin called on separatists to postpone mondays vote in Eastern Ukraine and express support for a nationwide pressinidential election. Byclays will cut 7000 jobs 2016. The focus is part of an overhaul of the division across the bank. The bank will cut 14,000 jobs, up from 12,000 announced in february. Anthony jenkins will join bloomberg and roughly 28 minutes time. Lets continue that conversation about barclays. The head of research joins us now. Number of pieces to the strategy that berkeley is updating us on today barclays is updating us on. I think the headline is the reduction and what will be the Investment Banking assets from 50 down to 30 . That is basically what shareholders have been asking for. They havent asking for the bank to be cut down to size. That is been an extremely difficult thing for jenkins to do because they have a business that 15 years or more has been built up. And driven by this engine of growth in fixed income that has become extremely large. Hes finally in a position to parent down. Pare it down. This will be politically challenging. Why wasnt this in his original strategy report . The answer is, he did not have the power. Democratic a more board and some. Some banks run much more autocratic way. I think it was very difficult with the power struggles going on to do this reduction. Now we see jenkins saying, i am in control. You focus on the risk weighted assets. That comes up that Credit Suisse bs, but what he is trying to do, is he facing a better market to reduce his risk weighted assets than the others did . How tough is it going to be to do this . It is tough to sell assets you do not want, because more than likely, nobody else wants them, either. If you look at what is happening puthe 115 billion being aside, 90 billion coming from the fixed income currencies, commodities business. A lot of that are derivatives. They will know the duration of the derivatives. They will know how quickly it will run down. Jenkins use the word death spiral. 7000 jobs to go. Is this what a death spiral looks like . Is this no longer an International Global lawyer or am i fishing for a headline . He was talking about a position where you lose control over who leads the bank. This is him being in control of who leaves the bank and keeping the businesses, the client facing businesses, that he wants to keep. I think this is absolutely about avoiding the death spiral. Whether they will be able to compete at the highest level, i suspect regulatory pressures here and those building in the states against foreign owned Investment Banks will make that an extremely difficult how much was a how much of a blow was the americas head . They will of know what is happening. Is wonder when, anyone that worked in Investment Banking know is that there is a handful of guys putting on a huge position for the banks capital in the Derivatives Market to make a lot of money. They are heroes. The bosses lineup for them. Knowing that business will be downsized, a lot of people jump ship, because that was their big payday, gravy train. No one is going to pay out of fixedincome derivatives sitting in a bad bank. People talked about the Lehman Brothers culture. Is that gone now . Ys the new culture . That is the message they will be given. Im not sure theyre necessarily was a Lehman Brothers culture. There was within the u. S. , but theas a cultre oure of Investment Bank, built from the ashes. A Global Positioning when everybody outside said they could not do it. Everybody outside the bank and said downsized, downsized. This is barclays giving in. How much of this is tied to the rate environment . The building up of the Investment Bank and then the rolling back of that now . Ys andbarclas deutsche, if you look at the 12 month forward roe, you get a cost of capital very similar for both stocks. Both of those built their global businesses at a time when fixed income was booming. That was the obvious place to build it. So they are more exposed than some. This rate is facing environment. Every bank is facing this situation. This is to do with regulatory pressure. This is to do with highcost space. This is to do with not quite d enough spread of businesses to handle that slow down and rates and stay at the top table. This change that hes reducing theay is Investment Bank, and reducing the risk weighted assets, but he has got to balance that out for investors. Has he got enough other businesses to equate to why you stock . Own barclays as a the key for that is return on equity. If we look at the forecast a couple of years out, 2015, 8. 9 . He is talking about a drag of three percent by 2016. You are nearly at the 12 forecast that he wants to hit. I do not think there is a lot of longterm upgrade here. I think this is what has to happen to deliver what people already expect is going to happen. And that is because i think people then realized dont realize how tough it is. There is a risk of downsizing shares . On the headlines, i would be surprised given the weak performance. If i look at the way the shares were trading on tuesday, they dropped on the initial bad numbers, but the rest of the day, there was nothing. They traded in line with a basket of their peers. No buying interest at all. I think people were waiting for todays announcement. There will be enough in the headlines for those who are waiting and have got something. Longerterm, when we reflect on what this means, i think we will definitely say that there is not 6 lot of upside to the 201 number, and there is a risk that if the macro environment does not pan out, they will not get their. Great to hear your thoughts. Ok, 7 38 in london. Huawai, the worlds third Biggest Smartphone nacre, picked paris for the unveiling of the ascend p7. Chinese cell phone maker huawai has launched a new device in paris, part of a campaign to win over western europe. We always want to find specialty markets. It is a fashion city. Europe is our key region. France is such a big country. It is our key country. Will competeandset with the latest iphone from apple and galaxy from samsung. Slimmer. D p7 is wei sold 14hua million smartphones during the first few months of the year. With china its biggest market. U. S. Sales or nonexistence after an official accused the company of spying against american interests. In europe, they plan not only to sell handsets by two hire local talent to hire local talent. We think europe should be the center. Everybody works in europe. We are the pioneer of the technology. They are hoping customers and france and the rest of europe will soon start lining up and then falling over themselves for these new handsets. Program, up on the metros Third Quarter loss was narrow as an estimate but it is not all rosy. We will look at the effect the ukraine crisis may have on germanys biggest retailer. Glenco will namer tonye hayward as its new chairman. He has been interim chairman since may of last year. Xstrata will named tony hayward as its new chairman. The uk broadband provider lured new subscribers with the promise of free football and rugby games. Earnings rose 2 . Reported a 3. 9 decline in firstquarter earnings. It tasted spending in the u. S. To gain survival. The company has killed back ambitions to focus on Network Investments and hpone customers and phone customers. Welcome back to countdown. 7 44. Metro, germanys biggest retailer, reported a narrower than expected loss for the first three months of the year they stunned strong wholesale food delivery and online sales. If faces challenges in russia and with this consumerelectronics unit. Hans nichols is in berlin to break down the figures. Hello, hans. Good morning, mark. It was a loss of 40 million euro s. The estimate was for 43. Ssive increase. Revenue were down 7. 6 . They came in around 14. 3 billion euros for the quarter. A little bit off. They are not seeing a huge shakeup in the german market. There is not a big growth area there. When you look at where their growth is, germany is the biggest market. They have a big footprint and western europe. What they have done for their forecast is say it is going to be the same as 2013. No nReal Movement there no Real Movement there. They have tapered it back a little bit. They need to pick up from their russia exposure. 26 of their business is in there. We did not get any sort of update on just what they plan or when they plan to ipo a partial ipo of their russian cash and Carry Business. Someadidas they have seen of their profits being eroded away by their exposure to russia. You look at their foot print, they have 131 stores, 28,000 outlets. There for a time. Now they need the currency to come up a little bit. We will see the latest geopolitical situation. As long as the ruble stays slightly less than the euro, and continues on that downward trajectory, Companies Like metro will have a hard time in Eastern Europe. What is the outlook for the consumerelectronics division . Well, so flat. There are all kinds of troubles here. The leader of that division resigned tuesday. Basically flat. They are expecting flat sales. So they have got to reorganize this, especially when you look at these are saturn and media marks. Doing myto say, i am share for that because i keep buying microwaves there is because i keep exploding them. Clearly, i am doing something wrong. I know them very well. Manus, dont put metal in microwaves. No eggs, either. Ad idea putting an egg in microwave. Thank you very much. And insight on metros numbers. To bring you up to speed on the bp bps former ceo tony hayward has been named chairman of glencore xstrata. Lets look at the big themes today. Manus is here. It is centralbank day. Lets not forget. Your forget what mario draghi has to say. A, theyre going to cut rates. Cuts prefer this. 2 out of 58 say they will see a rate cut. Again, inertia . What does it take to break the metal of the European Central bank. Does it take 1. 40 . Which we are close to. They would not say it is 1. 40. Even though they target the currency they target inflation. Weidman, there is a man who knows a thing or two about on buying. It is increasingly important, the exchange rate. You are barclayed out. We are not boed out. I thought we were barclayed out. Up 5 . That is something worth mentioning. I know jon ferro is going to yellen you and fed you, so i will take you to china. Look, it is such a hard one. Every time china misses targets and we all talk about stimulus and the prospect of stimulus, then then when you have got a trade surplus and exports or something and imports are doing quite nicely, we talk about well , we are saved. The chinesefloor in economy we do know longer need to worry about. I do not really know which way one should call it. China is doing better. Yellen we will get the inside track from jon ferro. The bank of england will meet. I think it will be underwhelming. The u. K. Service i had uk housing firmly in the uptrend. June 14. The Financial Policy Committee meeting. Macro tools. It might be so last cycle. If you do not know about macro prudential, tune into bloomberg, because mark barton will give you a full and comprehensive the london market is showing signs of slowing down. Manus, thank you very much. That is what is ahead on the agenda. Coming up, it is all about Central Banks. Ahead of from the decision of the ecb, we will take a look at the latest from janet yellen as she spoke last night. We will have analysis next. Welcome back. This is countdown. I am mark barton. I am anna edwards. You sounded like you had to think about that. Jonathan ferro has much more pressing things on his mind, such as fed policy. Jon, what did we learn yesterday . We learned what she has told us before. She does a brilliant job of giving you absolutely nothing yesterday. I think she read Alan Greenspans guide to fedspeak. She did not give anything away. My yellen map is very similar to my previous. Gdp, she blamed that on the weather. Inflation, lwow flation. Bubbles. What bubbles . Jobs. Beneath the headline numbers, wages are still very flat. She did not really surprise anyone yesterday. You will get a repeat of this at 2 30 uk time when she goes in front of the Senate Budget committee. Banknk one investment called her the brooklyn dodger yesterday. She was pressed on the amount of time between the end of tapering and the Interest Rate hiking. That is prettily when she said that six months frame. She was not having any of it. For just short of two hours, they pushed her. She gave nothing away. Housing is a risk. Our guest earlier from the fed in atlanta talks about that. We are starting to see a slowdown. He get the general Investment Bank, centralbank talk. They are keeping a close eye. We will see what happens. What you cannot get away from is the fact that continue to taper 10 billion every month. At monument securities is not so concerned about the Housing Market. I read some research and he said that some of that weakness in the Housing Market in the u. S. Can be explained by far fewer distressed sales, if you are doing with these, a lower default rate. That is coming down and you can spin news around the Housing Market it is clearly on her mind. To come back to the boe, it is all about june 17. May 14 for the inflation report. I wrote that down. It helps. Two dates. The pressure is building to do something about the Housing Market. The oecd put in their two pence worth. The Mortgage Markets review is beginning to have an impact. I wouldve thought it is too soon. Yes, i think and some of the research i was reading ahead of the interview there was a suggestion that some banks had seen that coming and have been changing procedure, making it just a little bit tougher asking more questions about mortgage applicants, even before that regulation came in. Did you hear about some of the questions . No. They are very probing. Eating habits. How many times do you have a haircut . When do you eat steak . That will do it for countdown. A reminder you can see the ecb Rate Decision. The boe Rate Decision as well. We will leave you with on the move. [inaudible]. Welcome to on the move. I am Francine Lacqua at Bloomberg European 500 in london. Joining us in just a moment is the chief executive of barclays. First we are Just Moments Away from the start of european trading. Our markets team has everything covered from companies to currencies. Manus cranny and jonathan ferro. Manus, we are seeing futures higher. A little bit of a better tone to the futures this morning on the back of yellen speaking. German data was a little bit softer. ,he chinese export data story it is waxed and waned with china. I am lost. A lot of people are very bullish on china. They say even if it is not great , they have a great handle on it. I am with you. Buyers beware. Jon, centralbank action will be the other big story. Things are starting to get interesting at the bank of england. There is a Division Starting to emerge in the ranks. Report. S the inflation june 17 is when the ftc meets. That could give you an idea of when we might get some new rules for the Housing Market. We have the ecb and bank of england, and the other big story, barclays. It is probably the single biggest story. The stock is 5 higher