Transcripts For BLOOMBERG Countdown 20140715

Good morning and welcome to countdown. Im Jonathan Ferro. And i am caroline hyde. Airbus dominated the first day of the show, a 21 billion dollars sales blitz. The deals gave airbus an early lead. Could boeing fight back with more deal announcements today . Edwards is onna the ground with more. Day two,ou expect on and i . Airbus to see you, jon. Netted 24 21 billion of orders on day one. Theyre also stealing the headlines by talking about the nore efficient version of a older model aircraft. Will others be joining that list of buyers today . That is one thing we are watching. Could be boeing stay in the sun . Thele familiar with situation are telling us that we need to watch the Leasing Companies today. Particular, could there be 9 billion worth of orders from a aviation. R and boc Leasing Company also is one to watch today. Could that be a buyer . Leasing very much in the bit as he headed into day two of the Farnborough International air show. Yesterday we saw a spectacular flying display. It featured everything from vintage biplanes to the a350. The red arrows were here and also the euro fighter. A very noisy display, obviously. You might hear some of it in the background during the next interview. Started asking him about overcapacity in the industry. Lufthansa and air france, we both know our warning on profits. What was his take on that overcapacity debates . We are desperate for capacity with the 787 delay of over three years. And now the 350 is making a huge impact in Qatar Airways expansion plan. Air france and lufthansa are talkingngs about patching up their problem and not industrywide. It is their problem. Theyre not keeping the costs under control. This is not the case with carriers in the gulf. Our costs are well in control. Qatar airways. Om lufthansa and air france have to blame some of the middle Eastern Airlines for the level of capacity were seeing on some of those longhaul routes. Qatar is not is saying is not a problem. He says their spaces are not competitive. Hasays that Qatar Airways an under capacity problems because of delays. Why are they not taking delivery of the superjumbo . It seems to be a bit of a mystery. I asked him what was holding back the deliverys. We have issues with the 8380. I would not like to say it in front of the camera. I would prefer if you asked the same question of airbus. Are you angry with airbus . Im very angry because it is making an impact in our expansion plan. Can you tell us any more . Something like that. He is very angry. He did go on to say that in general terms, his relations with both airbus and boeing are very good, to use his words. When we watching today . A big role by the Leasing Companies. Could be boeing stated today . Boeings day today . Im going to have my Running Shoes on. We will be talking to ge engines. We have an interview with airbus, plenty to discuss with them about what is happening here carried also the euro, could they start selling airplanes in anything other than dollars . That is a topic of conversation. Caroline, you have been having conversations about that recently. The score and air asia as well. Ecorp and air asia as well. The onevery similar to behind us, john and caroline. I am afraid it is not that big. Back to you. Anna edwards, you have made my morning. I am such a happy man now. Bring it into the studio and i will place it on the bloomberg terminal on my desk. Thank you very much. Maning about euros, another that is talking about the euro is mario draghi. He is testifying on ecb policy and the euro zone economy. His message to legislators was pretty clear. The new round of cheap money should stimulate bank lending. Incentives in strong for banks to expand their lending beyond original plans. Both banks with a recent record of positive lending and those that have been deleveraging. , the measures adopted last month have already provided additional Monetary Policy accommodation. More about this. We are now joined by bank of new. Ork mellon currency strategist what you take away from the statement that mario draghi was making yesterday . Hes truly trying to get across the idea that money is meant to be going into lending, but we have seen such tightening in maybef the sovereign the money is really going into sovereign debt. I think lending has been a problem throughout this last two or three years, it is the other side of the equation, it is demand for loans. It really is that simple. The eurozone is still in such a dire state that is lacking momentum. It has a risk of faltering right now. That is a great concern, especially weak german data lately. It is very difficult for firms to throw caution to the wind and demand a large amount of cash to invest with. It is a chicken and exit to a ecb mario draghi finds the in. He says hes hoping demand will pick up. When he does, he wants to bridget. To bridge it. Theres going to be a lot less than what there was last time around. That is actually one of the things that i think is going to drive the euro lower later in the year, because it has lost its appeal. People are buying sovereign debt because italian and spanish yields have been so high. Now there is talk that it will turn into a funding currency. That would be great for the euro, because thats what it needs. The other side unique to side of the equation against the dollar. How much can we expect that the dollar side will help the euro start to lower . Will we start to see janet yellen turning more hawkish . She has rather spoiled things because everyone was looking forward to her testimony. She said even if all these headwinds go, it will require a lot of monetary accommodation going forward. It is unfortunate that the two has not changed. The spark was lit last year when they talk about tapering. They keep those pointing that time. It really is the case of watch and wait. Should we have been expecting this dollar to rally for the last two years and it has not happened. Is she going to introduce some form of tightening today . What do you expect . , the tapering will continue but the problem of putting your hand up and saying right, i will start tightening or raising Interest Rates, look what happened to the bank of england. That is what she is trying to avert. Rates, itnterest becomes ingrained in the economy. Threshold. S the when you start raising Interest Rates after that long. , it will be very painful when it comes along. I think she wants to make sure the economy is Strong Enough to absorb that currency first and who knows when that will be. It is a big concern. Neil, stay with us. Lets talk a little about the u. K. In inflation data as well. Now, it has been a weeklong conflict between israel and gaza. It could come to an end in the next hour even. Egypt has proposed a ceasefire to begin at 7 00 a. M. London time. Israeli leaders are discussing the plan. Our middle east editor Elliott Gotkine is in tel aviv. How likely is this ceasefire within 15 minutes time . Good morning. The Israeli Security cabinet is meeting as we speak. The newspaper here has reported that netanyahu is minded to accept egyptian ceasefire proposal. He doesnt people to the right callingnd his cabinet for tougher response against hamas. The thirdlargest faction has said that we can demolish hamas. That, they probably were not put a ceasefire proposal if he didnt think he would win it very to the israelis are well aware that they dont want to be seen to be the ones that are to be blamed for the continuation of this weeklong conflict. Perspective, they have they reject the ceasefire proposal, but they will wait and see what the Political Leadership says. Have a couple of good for the gander wins, but civilian casualties are mounting in gaza which helped some depict israel as the aggressor. Hamas is also well aware that it could of sympathy from around the world for the current conflict, they dont want to lose being seen to be the ones that turned down the ceasefire proposal. Ones possible that we get in 45 minutes time or so, but theres no guarantee, caroline. Cairo, kerry heading to how important is this for the inches egyptian new president as well . It is very interesting, caroline. Have a statesman who has carried out a coup against democratically elected mohamed morsi. Now he will be seen as the goto guy for the u. S. And also improved standing in the arab rocher ahe helps ceasefire. William hague steps down as Prime Minister David Cameron revamps his cabinet. We will look at the strategy behind the shuffle. Time for todays company news. Citigroup agreed to pay 7 billion in fines and consumer relief to settle a mortgage bond probe. They allegedly misrepresented the quality of mortgagebacked bonds for the 2008 financial crisis. But it also reported secondquarter profit that beat analystsestimates. Barclays reported a decline in the number of u. S. Shares. That was during the week that it was sued by new york for allegedly lying to customers. 190 7 million shares were traded according to data from the financing financial industry samsung and bmw have expanded a supply deal to make batteries for the german carmakers future electric vehicles. The deal is worth ilions of euros. The agreement with him w helps samsung as it seeks a larger share of growing demand for rechargeable power cells in electric cars. Im caroline hyde. Im Jonathan Ferro. Cameronsrn to david shakeup. Lets talk about the breakdown of who goes where first. This is a big reshuffle. It comes 10 months before this countrys next general election on may 7. That is indicative of why this is happening. Theres a sense that this cabinet is out of touch ,iddleaged man, too many men and so the idea is we will see generational switch. We will see younger ministers, more women and we will see fresher, more Diverse Group of people in there. People leaving, ken clarke is one. He was a minister without portfolio. S a real representative hes a character. He is 72 and has been in and out of for 25 years. He is around for a very long time. Not exactly a scalp. Way thingssensed the are going and before anyone came after him and said he decided he was going to resign and write about. Hes been around so long that it is a perfect example of the generational switch theyre looking for. William hague also out. , but nonetheless, houston in and out of for the last 20 years. He was a leader in opposition, wasnt he . He was. This gives cameron and opportunity to bring in new people with the foreign secretarys job. It will perhaps be taken by another member of the cabinet. At least you get here is an opportunity to get people up and shipped over. But he is a big one. Who takes his job . Hammond, who is currently defense secretary will get the job. You do get this opportunity to backfill for the defense secretarys job. Lots of the jobs. This is really an ull, ifheboard c you would. Hes one of the few ministers that are out there on the record saying that unless brussels is written back more of its powers, then i would vote against the eu. That is interesting that we have not just a generational switch but hardening of the line ahead of a referendum on eu membership. We will get more to come. This all cannot yesterday evening. Morning, today in almost all certainty we will get some of these new ministers coming through the front door of number theto symbolically fill airwaves today with these new faces as Prime Minister can say look, i havent been seen theme. You yesterday, not all of them, but you inside the house of commons so you have to go through the embarrassment of walking back and forth from number 10 with all the cameras. Is amazing, when he was first made leader he said i will have 30 women. Getlly he started to through the door. A little too late maybe. Normally when you reshuffle reviewed about 2. 5 years in. This is interesting and uncommon to do just 10 months before the general election. A lot of people say that is because they think this will be close and maybe it will make different. More on that later today show. Biggest news this week a welcome from janet yellen. Unemployment data out tomorrow. Inflation data out today. Neil miller will be with us after the break. Im caroline hyde. Joined by Jonathan Ferro. New, lets talk about the u. K. Today we get inflation data. Midnight. A is out at it is pretty poor. It surprised many analysts. What is your feeling, we still great guns for the u. K. Economy . The cbi did as well has been interrupted by some very big increases. It tends to have a ripple effect. I think it takes a few months really before the bank of england and analysts really know what is happening. We know that unemployment has been coming down and in comes up instantly moving higher. That is been one of the biggest drivers of the economy going forward. Is moving in a nice steady fashion. Now that we are on it one way stop all the way to bank hike. It is really matter what happens. Remaking slowdown, but we would have to cease of the rebate to stop that journey, right . Think youre right. Theres a diode effect when it comes to sterling. Weak data does not have an impact. They carry on buying it. That is a problem the bank of england have a moment. That is why is trying to keep some restraint on the whole rate hike for the tour. Assume you do start to raise Interest Rates. Re is not a lot of time theres a big move higher, tentatively speaking. They will have to contend with that. How much is actually a strong pound concern for the british economy . , we are trying to inflate is that much of a concern . Is a good point. It is not had as much of an impact as people expected to, but it is the last thing we need right now. If you start raising Interest Rates, people are living on Interest Rates. Last thing you want is any Service Interruption to the recovery going forward. You need all the strength you can get on all fronts. Would be ae destabilizing force, i think. What did you make of governor carneys introduction. Tore is some uncertainty rates. We made a hike. Did you do the right thing . He did introduce the notion a process. Is it was a good thing to do. As i see it, he still retains a diverse message. I think you will continue to roll it out until he feels he has to change. When is the first hike . Give us your call. I think theres a good chance it will be the Second Quarter or possibly beyond. Second quarter, you people are thinking this year. Is the bigthis year call. Well be back after the break in about 30 seconds time. Into his settles pre2008 mortgage bond business for 7 billion. What does it mean for wall street . We will have more after the break. Welcome back to count on. It is time to head out to manus cranny for your fx check. Virtually flat lining through the asian session. On theon, were waiting cpi data that will come at 9 30 london time. Does that give carney and the mps the ability to deny the need for higher rates . Consumer prices estimated at 1. 6 . That would be a pretty long run below target. Sterling is going to be the focus of the later in the day. The minutes from the rba reserve bank of australia. Lining. Re or less flat traders are actually beginning to think about what happens next with rates. , difficultrest rates to adjust to the impact of fiscal consolidation. You have Goldman Sachs is the only outlying bank that says get ready for a rate cut from the rba by september. John, back to you. The top headlines from bloomberg. U. S. Secretary of state john kerry heads to cairo. Israeli leaders are set to discuss an egyptian proposal for a ceasefire to end the weeklong conflict in gaza today. The heavy fighting between israel and hamas militants has left at least 170 people dead. Both sides are seriously considering the proposal. Several rockets hit the International Airport at libya leaving 25 people injured. Rival militants have been fighting for control of the airports since sunday. All fights in and out of the airport have been canceled. Mario draghi has appeared before the European Parliament to testify on ecb policy. Speaking in strasburg, he resisted rumors that he was going to step down from the ecb. All the rumors to the contrary coming from some interested parties, perhaps, are unfounded. Job. Meone wants drug use there is no change at the boj. Earlier, the bank said theyre keeping its records in place. They also reaffirmed their forecast that inflation will meet its 2 target in the next two years. Data out of beijing today. China released the latest figures for credit growth. For more, were joined by david inglis live from hong kong. Money, moret more than people expected. Theres a lot more new money, right . Look at those set of numbers for june. They did step in, loosening the grip of the lung credit on sport growth. All of these measures, all were clearly higher than estimated. Much higher than compared to the previous one. When you look to china, you look at m2 money supply, 14. 7 . That is the biggest increase since august of last year. Look at bank lending, local currency loans, 175 billion in one month. Thats 34 billion compared to may. Loans plus other forms of credit, 317 billion, 90 billion more at if you compare it to may. The big one tomorrow is Second Quarter gdp. Beijing releases that tomorrow morning in asia. Also, more stimulus from local governments seemingly taking matters into their own hands here. We are getting reports that several of these provinces in china have at least outlined with a plan on spending. That is putting it lightly when you look at their jurisdictions because these are big enough to be countries in themselves. 300 50 billion. Would use in your screen, it is the province in red. Bottom isblue at the cuong she. Is unclear whether they will get this money. Whether it is new money or whether it is one that has been budgeted already. Ubs says it is very hard to decipher at this point whether or not this is money that is been budgeted. To put this into context, the two provinces i mentioned, those are the target growth rates for the year, 8. 5 percent and 8 . The first one there has the slowest growth in china in the First Quarter, two. 9 . They have to do something that they have not done so far in order to meet the 8. 5 target. Back to you. David inglis in hong kong, thank you very much. For a difficult balancing act, isnt it . Caroline, you cant do both. Another rock and a hard place. We have earnings from citigroup yesterday. Profit beat estimates. The 7 billionw settlement into the progress mortgage business. We will have jay the morgan and Goldman Sachs later this morning. Bring in chris for wheeler. How much can we draw from. Itigroup, the numbers we got the trading volumes big poster blue eyed. How much to me follow that through Goldman Sachs to jpmorgan . Clearly we will see another decline in trading revenues, which is been going on now for a number of quarters. I think the light at the end of the tunnel is that it appears at a much stronger june. Have we actually bottomed out in terms of the very weak fixed income news we have had over the last few quarters. In terms of jpmorgan, in addition to that, they have really big commercial banking business, much more parallel with what city have. Mortgageave seen is fees falling off a cliff. We also have seen that a pick up in credit card, auto loans and the bigal lending challenge for goldman is that it is a Foreign Investment bank. 10 return on to equity which wouldve been unthinkable six years ago. Obviously, it has a little more capital now. Is a something we need to get used to now . I have pretty talk about something that is quite structural and that cyclical at all. To behink it is going both, cyclical and structural. A lot of backers have been arguing that it is more cyclical than structural. I dont believe that in terms of fixed income. Changes a product mix since before the crisis no longer are able to produce those on the back of capital. Market 01 so, margins get squeezed down. Qe is finishing. I think there are structural changes in the fixed income market. The question i keep thinking is, have we bottomed at this stage. I fear that barclays call the tom one day withdrew particularly since income. I asked the question at the meeting of the cfo, would you put more capital to work when fixed income picks up. Im not sure there convinced it would be willing to do that. Talked about the u. S. Banks. Fromuch would you take what you have learned at citigroup. One of the things the europeans will be hit by is a weakness of the dollar. Credit suisse was saying they were talking about 15 percent decline. They get that additional lag, but they people like me will be starting to think just maybe it will be quite as bad, but also i think at the end of the quarter we saw some very strong am an a and other dialogue. That may have been a saving grace for the european players. Something we have seen on both sides of the atlantic, where we talked about citigroup yesterday, no one was talking about the earnings in the lead up to it. Everyone was talking about 7 billion fine. You see reports that the department of justice has come to the u. K. , theyre coming after the banks, arent they . I think it is fair to say that is always a wake up call for everybody. To heless, when we got it was them an absolute market manipulation. The same with foreign exchange. It is such an enormous market. That kind of manipulation really gives a markets these finetuning to keep coming home are the settlements will keep coming. Market anda big there are so many of the big banks involved. Exactly whatrk out the magnitude of any settlements might be. Any investor looking at the plethora of banks that he could get in and out of, who would you say, even if they are facing fines, who is Strong Enough to battle this. Barclays and Deutsche Bank are looking very cheap on fundamentals. Thetalking about the swiss are in a much stronger position partly because he got of some other businesses. Actually, Credit Suisse probably looks in the best position. In terms of litigation, it doesnt appear to be in the middle of the eye of the storm in quite the same way. It had a similar situation with libel. Other one is hsbc. I keep finding it interesting. I dont dare say the Word Investment bank because a color Global Banking and markets. The head of unit says i dont have an investment bank. Mainly focusing on the corporate market. Thank you very much indeed. Chris wheeler. It is great to have you on as always. The Worlds Largest luxury carmaker teams up with the Worlds Largest smartphone maker batteries for bmws line of electric cars. More after the break. Time for todays company news. I guess will replace nike us official supplier of the english Team Manchester united. The company signed a tenyear deal with the Football Team to supply its kids. The deal is worth a minimum of 750 million pounds. Sales should exceed 1. 5 billion pounds over a 10 year term. Alibaba has teamed up with lions gate to screen hollywood movies and television shows. Landscape will be delivered through its new alibaba settop box. It will include titles such as the hunger games franchise and tv series madmen. Microsoft is planning its biggest round of job cuts in almost five years. This comes as the Software Maker plans to slim down and integrate nokias handset units. Reductions could be unveiled as soon as this week. Welcome back to countdown, im caroline hyde. Im excited about the audi gas deal. Meant to sign a deal with Manchester United months ago. The nike pulled out. What is nike sensing about Manchester United . Are they thinking about this club, this business, this i did us that i did us arent . Look at the rewards are getting, 1. 5 billion pounds over a 10 year term. This is a very marketable franchise for want of a better word. Man u has deteriorated, but if they can get back on track, they still have top layers and managed to sell an awful lot of shares. Bmw, on the hunt for batteries. Hans nichols brings us the story. How big is this order . Is theythe company says talk about billions of euros. It really comes down to how many its and theney i. E. All electric eye threes, how many will they sell and how well will they sell against models like tesla. We talk about the auto sector here, and between bmw, audi and mercedes, this is a subset of that. It is between audi, bmw and tesla and mercedes. When you think about competition in the electric and hybrid space. The company that won the order is samsung sdi, that is a unit of the samsung unit. It was up from 2. 6 . The question in all this growth a. 2brids, it could reach million by 2020. That would be about 7 of all passenger cars. The Global Market for the automotive lithium ion batteries, were talking about some 4. 4 billion to 21 billion. Cost. 40 of the cars a remarkable amount of infrastructure goes into this investment. Here is your german lesson for the day. The germans have two different words for rechargeable batteries and the battery so you throw away. Accus. Ll these are hans, im going to forget that really quickly. The church of england will now allow female bishops. We will have more on that story in countdowns newspaper segment coming up next. Im caroline hyde. Lets have a little look at lockheed martin. As been forced to bring a model plane to an air show instead of the nextgeneration fighter jet. It cost nearly 400 billion to develop and was meant to have its first foreign flight in the u. K. Yesterday. One of the test pilots talk to bloomberg about what the worlds most expensive fighter jet will eventually have to offer. I am billy flynn. I am an f 35 test pilot for lockheed martin. This airplane is all about technology. You get to drive cuttingedge technology that you will never get to see in the commercial world. One of the most interesting parts is the Single Button in the hit and it transforms into the short takeoff vertical landing mode. You hover hands off. You can see the geometry and get a sense that it doesnt reflect greater energy. That is not the whole story. Remanufacture this airplanes every panel and every edge, every bold him every not is covered. That is sophistication. The level of manufacturing does not exist anywhere else. That allows us to be essentially invisible to everything on the ground and in the sky. I see from six cameras embedded in the skin of the airplane. Cameras. T fed by here are two of them. Theres one on the other side. There are two on the bottom. There are two in the top. They build this spherical image around me. Whenever i turn my head, i see the structure of the airplane is not there. I base my experience of more than 20 years of experimental test flights. It is the most robust airplane ive ever been in. Mosts the most powerful, robust engine ever developed. 43,000 pounds of thrust. This is an airplane that is magical things. We have great confidence in the future. To 7 00 just coming up a. M. In london. I will give you a feel for the newspapers here in the u. K. Ryan chilcote joins us here on set. Middleaged the man . This is in the daily. Check out that headline there. K. D. Out in the call of the middleaged white men. Apparently theres a huge Cabinet Reshuffle in the u. K. Lets call it reelection musical chairs. Runup tout pr in the next his election. Is about promises that have not been fulfilled. David cameron said 30 of his cabinet will be females. Females innts more prominent positions. Theres all that talk about maybe theyre being promoted to fast, but you have to set a standard terry gou have to start putting them into the roles. Is largely at females. Quite often older females. The problem middleaged men is that the electorate is comprised of more middleaged men. We are 10 months from election and obviously the current Prime Minister wants to stick around for a little longer. He will bring more women in and younger people because the conservatives right now in their current composition in government are received largely as out of touch with most of the electorate in a country that is really changing. What you think williams you follow the ukraine story very closely. Do a bad job did he . Kind of unremarkable, though. I watch a lot of it. Think hes a real statesman i actually interviewed him. He is gracious, which is always appreciated by reporter. His versatility giving a nonanswer, which is not appreciated by reporters. Hes kind of unremarkable, in britain has that been unremarkable in its foreignpolicy in many parts of the world for many years. The United States leads, the ,uropean union does very little they follow. Britain follows more than the european union, but that is not saying much. I will be interested to see what he does. Hes a very good after dinner speaker, as i understand. He is only 52 or 53. He im sure William Hague can afford. Lets talk about women a little more, because history was made yesterday because you now can have ordained female bishops. This is part of a huge majority. Thereur and 45 against. The archbishop of there is huge roars and excitement. History made. That was two years ago that the vote was rejected. The whole idea. That was a bit of an embarrassment. Not unlike the cabinet in this country at the moment. Overtook onto door, twotime Tour De France champion, he is out. Not only did bang up as me and hurt his foot so bad that he had to change his shoe, he got back on the bike, road for another halfhour excruciating pain before he pulled out. Heres the problem, exhibit b. It is the most powerful weightbearing bone in your body. He broke it and he wrote, remarkable that this man was able to write his bike for another halfhour. He is out. Now it is that in time guy, what is his name . He is set to win, fromm is out and concertgoers out. I am totally gutted. Count is back in a couple of minutes time. Dont rely on draghi. The ecb president says banks should not count on a fresh round of cash to trade sovereign debt. Airbus beat knowing. An earlyny rushes to d with a 21 billion sales im Jonathan Ferro and i am joined by the amazing caroline hyde. Dayus dominated the first of the air show with a 21 billion sales blitz. Could boeing fight back with more deal announcements . We expecting a day to . Wo . Oneirbus really winning day with 21 billion worth of orders and commitments against boeings 7. 7 billion. A classic version of 20yearold aircraft. As a real theme we are seeing in aviation, taking older aircraft and putting the rent is on them to produce something more uptodate. Could we see other Companies Come forward and place orders 8330 neo a330 neo . Leasing companies could be the ones to watch. People familiar are telling bloomberg got to Leasing Companies in particular could place an order for more than 9 billion u. S. Dollars today. That is air Lease Corporation boc aviation. The 737ose to purchase maxi single aisle jet. Definitely in the drivers seat. Overcapacity has been an issue. He said that it was an issue for the legacy european carriers and actually they were experiencing at Qatar Airways was under capacity because of the delivery delays they experience on a350 and the 380. It is been a story of noshows in terms of some of the aircraft that have been on display. Jets. Htning two fighter fifthgeneration aircraft we had been expecting, lockheed and others, has not made it. We still dont know if it will come by the end of the week. Doesnt seem to have stood in a way of their orders, because they announce a number of orders for the regional jet yesterday. Interesting Business Model there. Theyre trying to fill the gap between regional jets and the smaller Lowcost Airline jets. Really, that is where a lot of the focus has been in terms of the aircraft that are here. A few disappointments about some of the aircraft that have not jon. Up,jon if you dont have a couple hundred mill for fighter jet, you could stop by to look at some of the other displays, right . Within the air displays on day one. A two we have more in store. Yesterday we had red arrows, we had a euro fighter, we had the a350 and eight 380 and even a biplane. The biplane was flown by bruce dickinson, who is the iron maiden singer. We will be speaking to him in about 25 minutes time. He does have a connection to aviation, as you would think. He is clearly a pilot. He also has business interests in the aviation field. He is a green energy enthusiast when it comes to aviation. Well be asking him for his take on what is new in aviation. He kind of looks like an oldfashioned airship. Ask them about that and the eclipse jets. Well be talking to ge engines. Nd airbus plenty coming up here. Im still excited about my model dreamliner. I cant wait to get hold of that. Thank you very much. We have breaking news from israel. After a weeklong conflict in militancy,gazabased the cabinet seems to have just approved the ceasefire. The skilled live tour mideast correspondent Elliott Gotkine. This is a positive step, right . Certainly if it comes into effect. I received a text message from the Prime Ministers office saying that israel has decided the Israeli Cabinet has decided to accept egypts proposal for a ceasefire beginning now, basically. Of course, it takes two to ceasefire. If hamas does not accept it as well and other militant groups are accepted, then obviously israel would continue responding to that rocket fire. It is a very positive development. The only real positive development we have had after a week of fighting. This is a proposal by the egyptian president to call for both sides to stop fighting by land and by sea and by air and also underground. Talksalls for further within 48 hours to be hosted in of cairo. He capital positive development and hopefully an end to rocket israeli airstrikes into gaza, which have cost 170 deaths, a number of them civilian casualties, caroline. Lots of life going on at this moment. Thank you very much indeed, Elliott Gotkine. Mario draghi has it for the parliament to testify on easy the policy and the house of the euro zone economy. The message to legislators was very clear. The new round of cheap money should stimulate. To build a strong incentives for banks to expand their lending beyond regional plans. Will banks with the recent record of positive lending and those that have been overall, the measures adopted last month have already provided additional Monetary Policy accommodation. For more on this, we have hsbcs stephen major joining us. Welcome to the show. Good morning. He seems to be optimistic lending. K are you . Theres going to be a significant amount of money available, probably 700 billion euros over the next couple of years. Maybe about 300 and the first round. We will have to wait and see, because the market is always skeptical. People seem to be waiting for something to go wrong. The typical view is, it might just get to the wrong place, back into the sovereigns or sit in the banks. I think we have to be a bit more optimistic than that. The ecb has done its work. Thats a good handle on the health of the banking system. It knows which banks are strong. It has been studying this field reveals ltr owes and a qr. It has information. I dont think we will go on a limb here and take a bunch. We have insights and theres a view based on information. From a very low base, pick up lending. Whenully a stronger the metal gets pushed in and you have got to live into these lending accords. For 30 years do with it what you will, but after that youre going to have to start lending it out. Banks could in fact take the money and put it back into sovereign bonds. I think there is no need for the antigaming clauses that people talk about, because the spreads have been compressed. It is not like it was two years ago. Theyre not attractive anymore. About years ago you could spain for twoyear maturity at 6 . To do there not going same trade in the same size. They better find something else. They can find some lending or they could do it near 245 there that is more attractive to the bank. It is about demand. The opportunity is there. Work is being done. The banks themselves need to hit their own our oe targets. Theyre not going to do it by buying sovereigns. They are going to be looking for business as well. It is about the demand. Mario draghi was talking about the prospect of doing more than was needed. That. Ays says things like is he inducing Unrealistic Expectations from the ecb . You wouldnt bet against anything he has said so far. His track record is quite phenomenal. The ecb is using a very strong forward guidance. Basically, theyre setting a rates are low and they will stay low for the best part of four years. It is a very strong commitment. As no other central bank is doing that. Abs, are they going to do them . That is next year. Abs markets are calling to the data is a shot by trillion euros or more since prices. The market just isnt there. It would take a long time to get the structuring process in place. It is not going to happen this year. Thank you very much, stephen major. We will he will be staying with us. Bmws multibillion euro battery deal with samsung, the Worlds Largest luxury carmaker teams up with the Worlds Largest smartphone maker. Will make batteries for bmws line of electric cars. Willis is that the actually worth it to b w . We will have more on that after the break. Time for todays company news. Citigroup agreed to pay 7 billion in fines and consumer relief. Citigroup is among the banks investigated by the u. S. Justice department for allegedly misrepresenting the quality of mortgagebacked wants before the 2000 eight financial crisis. The Bank Reported secondquarter profits that beat analysts estimates. Theeley saw 30 decline in number of your shares are traded in its private training venue known as a dark pool platform. It was sued by new york for allegedly lying to customers. 197 million shares were traded according to the regulatory authority. Meanwhile, microsoft is planning its biggest round of job cuts in five years. This comes as a Software Maker looks to slim down and integrate nokias handset unit according to people with knowledge of the subject. It could be unveiled as this week. As soon as this week. International correspondent hans nichols is everywhere. Bmw on the hunt for batteries. It is a great to order billions of dollars of them from samsung. How big is the deal . That might get better question to your cohost mr. Major. Ask him how many i8 hybrids, i three hybrid electrics are going to be purchased. It is really a gamble. Is a mark for how strong bmw wants to chase the selectric market. Were talking about an order and the multibillions of dollars. Theyre going up against tesla. In that their model as. It was samsung sdi that one the order. On the up some 2. 6 news. The question on all of this, the growth of hybrids. It could reach 5. 2 million vehicles by 2020. That would be about 7 of the total vehicle passenger cars out there on the road. The Global Market for lithium iron batteries will increase from 4. 4 billion to 21 billion in 2012 in 2020. That is remarkable growth. Costs look at the fixed of these batteries, there are 30 to 40 of the cost of an electric vehicle. Big order for samsung. It shows how strongly bmw is chasing after the electric and hybrid market. We asked mr. Major, are your traders buying hybrid and electric or are they more traditional . Guy . What was that german word again . Accu. Is a rechargeable battery. A bachelor he a normal battery. The things you need to know on countdown. You get it right here. What is german for electric battery . This week has all been about Central Banks. We had bank of japan today. Ofcourse we have the chair the Federal Reserve janet yellen delivering her semi annual testimony to congress. Her update on Monetary Policy will be coming in to where the their the economy in the world is strengthening. Can we expect anything vaguely hawkish . Anything hinting at late rises to come from janet yellen . These testimonies are in opportunity to deliver some stagemanaged policy. It has happened in the past. You can go back to bernanke. He is it is an opportunity. Articulate have to the exit strategy because a market has been a bit confused. Many in the market did not understand the entry strategy. To get to the exit is going to be a challenge. It is about the handoff from the asset purchases, the bond buying into their form of forward guidance. As expliciting like as a full guidance from the ecb. The fed has got to transmit this message. It is a very delicate balance. Theyre walking a tightrope. That goodreally compared to previous recoveries. We all know this is a poor one. It is quite late into the cycle. You dont want the fed tightly tightening policy aggressively when in fact the recovery is turning into a downturn again. It is not out of the question. How does this play in to treasury. You call the rally in treasuries. When it happened many people were scratching their heads. Whered you see treasuries at the end of the year . We going at 2. 5 the one thing hours are my people is that if it remains unchanged, you would have made over the next six months, they carry. Do you talking about a return that could be close to 2 for doing nothing. If you can get some of the range, were talking five or six. There are investors in emerging markets and equities who would say that is not bad. Can you afford to be out of the treasury market . I know the yield seems optically very low. You better be sure the yield is going to go up a lot or you will lose money. Janet yellen knows that. Keeping the funds rate at zero makes it very difficult. Theres a strong gravitational pull on that yield. There are other factors, but i think we will end up with low yields. He will be staying with us. Coming up after the break, David Camerons cabinet shakeup. We take steps down as Prime Minister David Cameron revamps his cabinet. We will take a look at the strategy behind the reshuffle with christina major again. Welcome back to countdown. 7 22 in london. I am joined by caroline hyde. Ryan chilcote is here with us for the details. Of hsbc is also joining us. Give me the breakdown of the positions. This is a big reshuffle. Is coming 10 months before the general election. Most observers say this is about the election. All ideas to change the image of the conservative party. Too old, too many men who have been around and in power for too long, and old boys club. They are shedding some of those folks. Can clark is been in government since 1974. Sorry, 1972. He is 74 himself. That is perhaps the most symbolic manifestation of this change. William hague, much younger but nonetheless he has good 20government for a years. He is a foreign secretary. It is much larger than this. T of them were about their if either announced the retirement themselves or perhaps they were surprised. It happened in the Prime Ministers office in the house of commons. It would be embarrassing for the people, but what you can expect next is the people to come in, i. E. The younger people and more women. They will make that walk down the street in front of number 10 downing street. Voters know ahead of election that things are changing. Monumental . Nonmonumental . How much you taking for them how much should we be taking from this . Classmates make snippet worried about what this malaise is all about. I am not so young myself. Im ever cap clark from way back and you lose part of the tribute era. Only 20 oddellor years ago. It is inevitable that these people move on. If you would stay there another 10 years, how would you then . Is the fifth longestserving cabinet minister. Is one of the youngest. It is amazing footage of him getting up and giving a public address for margaret actually he was only 32. The other interesting thing about this is that a lot of people are saying this is a move ahead of the referendum or a referendum in the direction used chemical. Andefense minister now should become foreign secretary. He is the guy on record said look, i will vote against it unless you get more power for. It is a something meaningful in this shuffle . There is another referendum. There is a scottish one coming up. Maybe that is another date in the diary of the government or thinking of. Then theres a january election. Theres a potential european referendum. If the government wants a constructive policy towards europe, they will have to start thinking about how it is set up now. The guardhanging of is inevitable, isnt it . That is all we can really say about this. It needed freshening up. Theres some key events and dates coming up. It really puts the government in a strong position. Stephen major, head of Global Research at hsbc. Thank you for joining us this morning. We will be back at farnborough air show. Stick with us we will be right back. Welcome back to countdown. Lets head out to manus cranny for the fx check. At that we would kick off with what looks like a rather boring dollar sterling chart. Cutting their long positions. Theyre cutting those positions. Commerce bank says it is not over yet. You can see the overall trajectory on dollar sterling. I data. Waiting for the cp i da a marcon he goes in front of the treasury select committee. Another reason perhaps to argue about keeping rates where they are for a more protracted. Of time. When you look at the aussie dollar, we have had the minutes from the reserve bank of australia reiterating Interest Rates it will take time to judge impact on Interest Rates. Down in eighth at the moment on the aussie dollar. Traders have pared back the best overall in the market in terms of a rate cut coming from australia. Inng back to the outlier terms of a rate cut, you can see the momentum overall in the aussie dollar. It will be cpi today. Back to you. Bloombergo bring you headlines. Israeli cabinet has accepted a ceasefire agreement. This follows weeklong fighting between israel and hamas militants. The ceasefire came into effect immediately at 9 00 a. M. Local time. Several rockets hit the International Airport at the libyan capital leaving at least six dead and 25 people injured. Rival libyan militias have been fighting for control of the airport since sunday. All flights in and out of the airport have been canceled. Mario draghi has appeared before the European Parliament. He dismissed rumors that he was getting ready to step down as head of the central bank. Ecb. Will stay at the all the rumors of a contrary coming from some interested parties perhaps are unfounded. Lets get back to the farnborough air show. Airbus dominated the first day with 21 billion in sales. The deals give airbus an early lead. Rollings tally coming in at about 7. 7 billion. Could going fight back with more deal announcements today . Expecting what are we from day two of the show, anna . We are expecting that boeing might have a bit of a fight back today. It could be Leasing Companies that we need to watch out for. Day one really did go to airbus. With the headlines from airbus was the launch of the 8330 neo making a a330neo, more energyefficient. Today we are looking out for the Leasing Companies in terms of bowling for sure. People familiar with the situation is saying that we need to watch out for these leasing businesses, in particular air lease and boc aviation. Are we going to see both of those win orders that total more than 9 billion u. S. Dollars . That is going to be something to watch, particularly the 737 max single aisle. An irish Leasing Company owned by Japanese Business is also going to be in focus in terms of whether they place orders. Lease is very much in the drivers seat or the cockpit as we head into day two of farnborough. He saw plenty of flying displays. The euro fighter was flying well i was speaking to the ceo of cathay airways. You can see one of the dreamliner jets behind me. The ceo of Qatar Airways. Was Qatar Airways take on this going to be . Some of the middle Eastern Airlines have been aggressively increasing capacity on longhaul routes. I asked him whether he thought over capacity in this aviation and the Civil Aviation space. We are desperate for capacity with the 787 delay of over three years and now the 350 delay of nearly four years. It is making a huge impact in Qatar Airways expansion plans. Other airlines have a different story to tell. Air france and lufthansa are talking about overcapacity. Because their problem theyre not keeping their costs under control. This is not the case with the carriers in the gulf. Our costs are well in control. From thes that perspective of Qatar Airways, they see themselves having an under capacity problem because of delays. That is their story. It is a bit of a mystery what is a380. G up we have issues with eight 380 80. I would not like to say this in front of the camera. Are you quite angry with airbus . Im very angry because this is making an impact in our expansion plan. Can you tell us more about what is holding back his aircraft . It is Something Like that. He says he is angry over the a380. S surrounding the eigh to put it in context, and the bigder picture, qatar is a customer of airbus. It is going to be a busy day here. Things getting noisy on the airfield. I will be speaking to ge and airbus in some of the leasing businesses and to air asia later on today. Ill headed back to the studio as this jet prepares to take off. Noisier and sunnier. Theyre said to be plying the biggest round of job cuts in five years. That is according to people with knowledge of the peoples plans. Today. E been a busy man what is the number on the microsoft job cuts . Good morning, it could be north of 5800. That was a number of jobs a cut in 2009, which at the time was 5 of their workforce. That was a massive number according to the bow familiar with the matter. It could be even higher than that. This is all part of Satya Nadellas Restructuring Plan and remember, he issued the companys firstever Mission Statement on july 10, just a couple of days ago, talking about the importance of mobile devices, Cloud Computing. Otheroft would be joining Tech Companies in consolidating their workforce. Announced anrd additional 16,000 job cuts on top of 34,000 ard have cut. It is important to remember that microsoft is still very profitable. They all but print money out there at redmond washington. We see a restructuring in some of the programs at some of their departments. Including the global xbox team which could mean the european ,box team based in reading united kingdom. Just for a sense of how big the company is, it had 1000 it had 100 27,000 employees as of june 5. The absorbed 30,000 from their acquisition of it had 127,000 of june 5. S the absorbed 30,000 from nokia. Of these proposed cuts are actually about just absorbing nokia . What theyre thinking about doing with the engineers, they have programmers and testers. Youre thinking about consolidating some of that and just having programmers test the very products of their programming and engineering. This is true with Cloud Computing than with other software bugs. At least on the engineering note looks like you quick on the scene behind me. Those are satellite trucks preparing for the german team. They will arrive at the Brandenburg Gate in a couple of hours. Maybe we can convince everyone to send me out there and do some real reporting, man on the street interviews. I would be some real reporting. I have to admit i look at the scenes and im feeling a tiny bit jealous of the germans right now, hands. Have you managed to get yourself softly with rihanna like the german team did . That is what i want to see, hans and rihanna. No tall order, you can do it. All right. Thank you very much, indeed. A Small Company is trying to snatch a piece of the Aerospace Market amongst them. Have builtmpany himself a flying car. Is an off terrain or on road buddy. You can flip the switch and take your glider out from the bag behind, lie on the ground, clippard in and ride forward. The glider comes up above your head, accelerate and off you go. Moment, there is no set cost, but something in the region of about 80,000 pounds. Point is an at this project to shore engineering capability. At the moment, it is just that. We are evaluating the target market that we want to use. We have a lot of interest from the military. What better thing to be doing with your time than flying around in a car. It is very james bond. Coming up on countdown. The market may well be american. We will discuss with the markets will be watching as janet yellen compares to testify to congress. Stay with us. Time for todays company news. Adidas will replace nike as the kit supplier for Manchester United. Minimum of worth a 700 50 million pounds. Adidas expects sales from the project to exceed 1. 5 billion dollars 1. 5 billion pounds. Alibaba has teamed up with lions gate to stream hollywood films and tv shows. Lions gate will be delivered to a new set top box which will include titles such as the hunger games and tv series mad men. Makeromes as a software looked to slim down and integrate nokias handset unit the foreknowledge of the companys plans said. Lance could be unveiled as soon as this week. Be keeping an eye on another Software Company in germany. This is a big player in terms of software. Outlook inthe 2014 terms of year on year growth. Profit margins are being downgraded. We see little hints and snippets of where things are going. Itll be interesting to see how jpmorgan and Goldman Sachs. A desperate to costcutting and it continues to be the scene here in europe. We dont just one and induced recovery, we want corporations to start spending money and driving profits. Software will be a big thing. Janet yellen speaks today. We are joined now by our market analyst, craig burling. Or just going to get a hawkish and from the lady in charge . I think it may not come to this. She is been very careful in the last few months. Weve seen how much the Economic Data has improved. Five months of job numbers above 200,000 in terms of job creation and she still refused each and every time to get that little bit of a hawkish tone for even one rate hike even slightly sooner than the market is pricing it in. I think it is very deliberate. She will continue for a month or two and that we may start around september or october start to get those early hints. Did just give one little inch away, we could see quite a market shift . That is what the market is waiting for. That is why right now we see all these positive numbers feeding into the market positively. Record high, record high. What we have become accustomed to is when people start to worry about tapering or rate hikes and we start to see these positive numbers feeding into the markets negatively. I think the only thing that is stopping that is the first hint from janet yellen. Off,e longer she puts it the longer she puts us off without giving a verbal hint that we could have her repeat of last year, just on the hint, we might get a rate hike . At think theres a danger of this, but i dont think it is something the markets will necessarily be too bothered about now. Theres a bit of cautiousness in the markets right now. Or 30 pointeeing 20 games, were seeing to a twopoint gains. For a marginal increases in the indices. I think there is a lot of caution there. Theres a lot of risk, but i itit is for delivery is very deliberate. Sign of german business sensitive sentiment. Give us a sense of the german outlook. You have started to see slightly softer data. About the inflation data were seeing . Is it about europe as a whole . People pay a lot of attention to these numbers. Theyre very forwardlooking and it gives a good indication of what we can expect later this year. We cant really overlook that. It is a fact that weve seen problems elsewhere. We have even seen rises in an employment number, not necessarily the rate. We have seen signs and other areas of the economy. I think all of these combined is worrying people. Germany is that main engine of growth. People are going to worry that we dont have a strong eurozone. Were youk at yourself, and more of these banks there are across the eurozone . How cautious were you last week . I think everyone was asking themselves. It is still fresh in the memory what happened only a couple of years ago. I think people are really asking themselves that and that is why we have such a big selloff in european banks. Arethese headwinds we seeing and the banks becoming the latest of these. The scenes over fairly quickly. We get a few reassuring words and the people looking for the next bit of positive news. Have thinner volumes right now. Waiting . Ne just are they just kept where they are in terms of their holiday . Have people going on holiday. That would contribute as well. I think because Central Banks as such a key driver, the fact that it dont expect the next and untilanet yellen september, the bank of england and some people are getting hawkish and saying it could come next month. I think it will still be the First Quarter of next year. People hold off until that september or october. With mark carney later today. Walk. Such a tight walk to thank you very much. It is a great thing to have you here. The worlds biggest marks phone maker signs a multibilliondollar bacher deal with bmw. More after the break. Battery deal with bmw. More after the break. Welcome back, im caroline hyde. Six minutes before trading. Bmw on the hunt for batteries. Our International Correspondent hans nichols brings us the story. How big is the order . The statement from samsung is multibillions of dollars. It depends how the germans behind me celebrate the victory by going out and buying it i ate or highbridge or and i three. Look at the growth of electrics and hybrids. Theyre taking on tesla. They need the batteries to power these cars. The batteries are up to 40 of the cost of making the vehicle. You get a sense of how big a deal this is. Million batteries electric cars by 2020. These are remarkable numbers. You look at the growth of electric vehicles and theyre all going to need batteries. That is good news for samsung sdi. They are the subsidiary of samsung that is behind this. It will be a big deal for them. Cons in berlin. Do you have and i on an electric vehicle, jon . I am born to be driven. I still do not have a license. Maybe bloomberg will pay for it. I bet you are in abusive jonathan will be back live. Were bringing you the latest in european equities, open after the break. Fully a target for 2014. Im excited about janet yellen talking about that in about two minutes time. Welcome to on the move. We are moments away from the start of european trading. Today. Ellen later will we get the most looks like it could be doubtful. Day one for airbus, 21 billion worth of orders. Day one, this is day two. What are we watching out for today . Will it be boeing past day in the sun boeings day in the sun . Microsoft job cuts, big numbers out there. The mws placing a new order for samsung batteries bmw is placing a new order for samsung batteries. Leaders of five of the worlds most powerful emerging economies meet today. China, russia, india, and south africa will discuss how they can get more of a say in running the world. Thank you very much, ryan chilcote. A busy day for european markets. It is not just about janet yellen. You have u. K. Inflation and unemployment out tomorrow