Exclusive. We are joined in the studio. Russian sanctions on the International Art market. Lets stay with russia. The west has hit russia with a fresh round of sanctions. sd includes Vladimir Putin allies. We spoke about the impact of russian sanctions on business. For the moment, we are investigating the significance of the sanctions and coming back to practical implications. Bp has a lot of exposure to russia. In profitst a drop today. There is a list of stories today that are making headlines. Impact. Me about the we knew people close to Vladimir Putin would be on this list. It is just him and it has a role bp. Ct on and puts them in a pickle. Largest 20 of russias oil producer. The corporate entity has not been sanctioned and the ceo has. If you are bob dudley, you have a 20 stake and a seat on the board. As a u. S. In citizen, can you go to the Board Meeting or not . We heard them say they would have to investigate the sanctions a little more carefully and that is what we already heard from bp and i suspect we will hear that from bob dudley later in the day. One thing i will point out is that there are two lists. He is sanctioned in the united states. In the united states. We got the eu list and he is not on there. He is theoretically free to come to london and have tea. Have tea. Why not . In irony is that he was png russia for a wild. Not officially. What is the relationship with bp . He masterminded the deal bp. Nd us the tie up with it was not originally what they wanted to do. He really pushed this because people will tell you that the into an to build international and major oil company. This was seen as the best way to do it. This complicates the relationship. From the dublin perspective, it is about the long term. Russia,ake exxon in they will build the most Important Oil well of the year in the arctic. It is a bit of a oneoff. If the oil well pans out, that is good for exxon. Bp is different because they are in equity stakeholder. They get a fifth of the cut. Ryan chilcote with the latest. Bank this morning. The shares are climbing and are beating estimates. We are joined from berlin to break down the numbers. A difficult trading environment could have been worse. It could have been must much worse. We will start with the unknown this time around. For Deutsche Bank, it is unknown what the litigation cost will be. That is where they are at. They expect additional litigation costs. Were not as bad as expected. You want to get a good sense of that. Take a look at what they did with the debt trading unit. They were down 10 in this area. This is not apples to apples. Only compare the industry peers, the average decline was 13 . It is a 10 drop. That may be causing the jump in the price. Point. Lmost one trading around 31. There is still bad. Revenues are down 34 . Estimates were 39 and not as bad as expected. Deutsche bank may have a capital problem. They hinted at this in the call. That could mean additional rights and what the german newspaper reported last week. A 5 million Share Offering to increase the capital and give their tier one ratio a better position. This is a bit of a surprise. We were reporting that which it was considering capital increases. I dont know. Theyonger answer is that did. They gave themselves an opportunity to have a capital increase. He would not answer the question when it was posted to him on the Conference Call. He hinted at it. He hinted at the Regulatory Framework. Look at the tier one ratio. It dropped down to 1. 5. It was at 5. 9 . This is a bank that is in better shape and will have to be in better shape because of the new Regulatory Framework that is imposed in the next couple of months. The bar gets higher and higher. Thank you. Hans nichols. Lets switch. We are watching a smart phone maker beat estimates. Cheaper galaxy devices. Nokia has appointed a new ceo. Lets put it all together. Caroline hyde is here with the breakdown. Lets start with nokia. We have the winner. Not much of a surprise. He had nokia network. The sales. T of the dominant force in the company. They had it for four years. Just over 20 years. Knows the Business Inside out and needs to. They need to turn it around. Nokia it used to be a 300 billion euro company. It is now 19 billion, in terms of market capitalization. That they want to return money to investors. What will they do with the money they are getting for the microsoft sale . They sold the phone unit to torosoft and they agreed that back in september. The money is coming their way. 3 billion euros goes to shareholders. They are looking to cut debt and want to get back to investment. They are reducing the debt. There is focus as to where the company is going in the future. They said they want to be important and a leader in technology for the connected world. They want to be integral to using the smartphone and accessing data. They are building the equipment. That is the glut of their work. They want to be in maps and technology. Yeah. Lets talk about phones. The sexy part of the business. Up and is better than analysts had been forecasting because think of what they do. They do not just do galaxy devices. Also do cheaper phones and that is where they managed to dominate because they are getting market share in india and china. 130 millionld tablets and smartphone devices in the Third Quarter alone. Justare really able to manage to take on the competition. Whether it is the cheaper end or the higher end. Chips. Elevisions and they sell more powerful and cheaper ones to india. It bodes well in terms of televisions. In the second quarter, they hope that the world cup might get a few more. You. Ank caroline hyde, the International Business correspondent. Deciding on a bid. Is german industrial giant countering an offer from general electric. Thechief executive met with french president yesterday. We will have more on this story later. The Prime Minister offers condolences for the massacre in turkish conflict. Is not possible. Genocide haduch a been the case, would armenians the in this country . Armenians who are here in our country who have left armenia and we do not exclude them. You can watch the full interview on charlie rose at 10 00 p. M. 10 00 p. M. A Quantitative Easing Program is not imminent. According to the official president at the meeting, the central bank stands ready to start a Quantitative Easing Program if needed. Come, prudently optimistic is the line we have from the bristol post this morning. Mark carney is the governor of england. The governor of the bank of england. We will have plenty of analysis. We will take a short break and see you in a couple of minutes. Than the short term, other being a market operator, which we are not, we buy assets on a longerterm basis. It is time to watch. This could have a variety of outcomes from going back to business as usual or some other direction. Ceo telling us that doing business in russia is now on hold. To him at the conference in los angeles and we will be there later on today with some of the biggest newsmakers around. Welcome back. We are streaming on mobilerg. Com and any device. The bp influence. U. K. Reported results today. For more on all of this and we have been, covering this. Say, into theuld frying pan and out of the fire. We watched what happened in the gulf. They have made a decisive switch in the russian business. Now, we have the ceo. If you are bob dudley, how do you manage all of this . Longterm for bp and with regard to the business of having an equity stake, seven percent of production, as well. Fromrms of what you get being an russia, unfortunately, if you are a major oil company, it is the biggest Resource Base in the world and a massive andrtunity in the arctic the long term. You have almost as big in the u. S. And people are trying to figure out exactly what impact it has on their business and the country. Most exposed . Bp is the most exposed. When are we going to have a final breakdown of who is at risk here . If you think about overall exposure, in terms of size, bp is by far the biggest. Sharesquity stake, it is. In terms of assets in the ground in russia, there is very little, indeed. Think about it. Shall. Gest one is they are trying to expand, as well. What they have done and what dudley did was a brilliant piece of business. They need a lot of money from the initial state and they got out. They got the impact. Contributions the this morning. It was much lower than First Quarter results because of depreciations. Because of depreciation. As an investor, should i look at this and say that the upside outweighs the downside . Oil and gas or natural resources, youre going to be involved in countries that you do not want to have the chief executive at a dinner party. Wachs that is a good way of putting it. And theyions escalate are likely to if russia does not pull back. The biggest problem is flat gdp growth in russia and, because of economic impact, the demand for Business Products in russia will be much lower. Therefore, the earnings will be lower. You are talking about a lack of a dividend for bp this year. If you see the First Quarter cashts and the 84 in because of the change of market ,apital and the improvements the operating cash position of vp is very strong indeed. That that 1 billion is what mr. Dudley said they wanted to do. You are optimistic about bp. But i am. I think they are in a good stage. , withngterm picture regards to russia, another thing is that you talk about the joint have in that they and bp,nd the arctic because they have a 20 stake, they have investments. More exposed. No, and 20 oh, no. A 20 stake. They have a presentation for exposure to russia. Bp is the biggest. It is an equity. It is not actual assets. If you want to exit an equity position in bp, how easy would it be . I am not sure. As far as i am aware, the shares are held in an offshore island somewhere. Lets say that the share price has an impact on it . It is sold in the russian republic and does not make any difference, with regards to if you put sanctions on transporting oil or not. It has been the mastic. Hey have the biggest exports thank you for joining us tonight. Still to come, we look at the impact of russian sanctions on the International Art market. Do not miss it on the pulse. Morning. Welcome back. You are watching the polls. It is time for hot shots. Riders showednt off skills in shanghai ahead of the world extreme games. They wowed the crowd. A double grab backflip. The dash cam video capture this. Was causedlaims it by national no one was hurt in the explosion. Lets watch that again and again. A ufo. S like this is the latest on manned spacecraft. Morpheus. It will be an instrumental addition. Lets see how emerging markets are trading. Jonathan ferro has the chapter. We checked out equities. The ftse is up. 4 . 1 trillion is the magic number. That is the value announced this year. Driving across europe again today. Corporate deals today. It is a big deal for macro data and fx moves. Not because of german inflation data. Down year on year. Showing an improvement. For the at bank lending 23rd straight month. Will the ecb address it . German lawmakers. He says that she we is not imminent. It is unlikely, for the time being. 1 00 p. M. Ne number at u. K. Time. The sterling. In four minutes. Expected to come in at 0. 9 . The bank of england chief had comments this morning and talked about the considerable slack in the economy. Reflectthat it does not what the bank of england thanks. We know that it is not clear that there is any agreement. Ecb number beach today, you can see the policy members in the coming weeks. Thank you very much. Jonathan ferro with the gdp numbers. We will get the breakdown of the number. Were back in a couple of minutes. Welcome back to the pulse turco im francine lacqua. And im guy johnson. Number was 0. 9. The slightly weaker number coming up. The breakdown comes next week. Lot morehen we get a detail. Nevertheless, an interesting number. Maybe taking the pressure off carney. Lets get more on what the data are telling us right now. Markets editor marcu manus crany joins us now. First reactions on a read, maybe it takes the pressure off the governor a bit. Think there is debate about how broad this recovery is. Confidence in manufacturers is at a fouryear high. Amount of both commercial construction and private construction. Is that rents are rising, not just in london but outside the u. K. Drivers is the building and the confidence and the accelerator of wages. 1500 homes are under construction in this area. Wages are rising, but theyre not in a panic stage yet. Some of the conversations ive had is that is is a u. K. Based m 25,ry, not a singular london centered economy. Mark carney is saying there is a considerable slack in labor markets. I think this is probably one of the most important messages. Is look,ey is saying there is considerable slack. The economy is broadening. , they willses come be gradual and limited. Make inold statement to terms of one rate rises come, they will be gradual and limited the question is what is the real rate of interest . These are the kinds of calls making these kinds of statements are very brave. It is like forward guidance. You make the calls but you change your mind. Our markets editor, manus cranny, talking to us. Expectedeconomy is not to be 0. 6 below its peak. Were are still not fully made up that cap yet. Next we will be joined by james ashley. Rbc. A chief economist at the annual profit is almost tripled, and sales are surging. A crowded market for leather goods, this company is trying to lure customers with affordable luxury. This is one of our bestselling bags at the moment. Designer, retailer, brand owner, and founder. He is nothing if not hands on. His company, osprey, makes affordable leather bags. For 547. Ells it is being labeled affordable luxury. Is all about the quality of the italian hide. It is about how well it has been stitched in how well it is supported here. It all began in 1980 1 a. M. Graham and his friends decided they wanted to set out on their own. We had 500 pounds. Full of dreams. That was our start point. Andey now counts both rock reel royalty as among its clients. They just opened a Flagship Store in regent street. We have got butterflies, beetles, bugs, taxidermy, skulls, bones. These are the things which i really enjoy. Im a frustrated naturalist. Banks on its british roots. The companys success lies in its ability to think globally. I think it is been the story of our times in many respects. We made many of the projects the product of their own hands right here in england. We actually 2014, make for a little in the u. K. Ourselves, and we manufacture whole array of products globally. Graham knows he can no longer do it all himself. Osprey is growing up, and for that he needs help. People that00 30 work for us who are also part of the same collaborative team. We are a big family put together on this. Luxury. Dable yeah. That is way forward. Enlisted is a little bit of michael by michael kors. One of the bigger m a stories were been covering over the last few days, the battle for tom is intensifying. Siemens stepped up to launch a counter bid to ge. Our europe editor david tweed joins us from berlin. David, lets start with you. The board meets today. What are the pros and cons of m. Ther offer for alsto is quite interesting. The Board Meeting just got underway. We cant say when the announcements will come after that. It is quite interesting when you look at this it or this potential bid in the context of what siemens is trying to do with its whole strategy review. , is toa behind that s. Prove siemens margin alstoms margins are even lower. It is interesting to see why were they why they would go into a full bed. Bid. L there are be hiding off something which would be the lowest margin businesses. Their board is made up half of union or employer representatives. The rest is onerous. They will also have to take into account the wishes of the employees, guy. They certainly do. We have the ge ceo showing up. We also had the same for the office. We had this rather curious statement around midday, the french government saying not to om. Se the ge bid for alst the french government is walking back a little bit some of this reaction to ge that we saw over the weekend, which is quite fiercely negative. He was very quick to say that this ge bid was something that he was not for happy about, and to essentially solicit this interest from siemens. On monday, cooler heads prevailed and we did see noises emerging from the french government to the effect that maybe e. G. If it would not be so fat, and actually they are much more open to considering his options. The messages are little bit next. I think, hopefully this will be treated more as a big transaction, then a political transaction. Was in paris sunday and monday. Im sure someone in his position has plenty of places to do. This is obvious a very important transaction for general electric. This would be the largest deal ever, which is quite remarkable for a country that is owed a company that is over a century old. The head of ge in france has been helping on the political side of this. She is very wellconnected and wealthy, im sure come deeply involved in the lobbying effort very what is your sense of the ground areas a much of the germans really want this . Youre talking about some of the trade unions and labor unions involved in all of this. How desperate is siemens to get alstom . Ds on it is interesting to see the german governments reaction to this deal. You have the spokesman for the who is from the centerleft party, saying that they support the deal. Siemens is out, desperate to make sure they fend off competition from general electric. One of the things i found most interesting is that any bids and get his depending on the the same Financial Information that has been provided to general electric. Probably alstom doesnt want to provide those facts and figures to one of the biggest competitors on the continent. Here, iser happened as a standalone entity is over forever. Proposal goes through, and asset swap the being a muchstom bigger rail manufacturer. Alstom is another, going to look for a very different at the end of this process. Abbhen you look at the figures, theres a disappointing, they have to have about why theyng are having to pay for it. Let us continue. It is time for todays holes number. Four. They are back on top. The copenhagen restaurant regained the number one spot last night from a spanish homeurant which has been to back down to number two. Looks dinner by Heston Blumenthal here in london made the number five spot. Wishful thinking. We are back in a couple of minutes. Welcome back to the pulse. U. K. Gdp numbers came out in the last few minutes. The economy ticked up speed in the First Quarter on signs that the economy is picking up. James ashley is chief european economist at rbc and joins us now. All, it actually shows the economy expanding above its potential. We have to wait for the actual breakdown, james. Any idea why we have the slightly disappointing figures . I think it is probably an appropriate response. Result to take the first with a pinch of salt there is appropriate to wait for the full set of Services Data and so forth and then we can form a more balanced picture. The key point in the policy indications is that yes, this is downside news down slightly from the fed expected. This is much in line with what theyre thinking about. I dont think this is going to impact in terms of moving those projections. How much of his credit and how much is housing . A significant portion yes. The situation has become much less volatile. That means theres a direct impact for the u. K. , but also on the economic outlook. On the directct and indirect challenges. That is a more significant what about the bank of england . The number they have had today is going to shift the projections materially. I think it would downplay little bit until they have that second estimate that you are referring to earlier were you get on the background of what is really driving this. For now, we will see this as another above potential gdp. Ae economy is growing in subtle, substantiated case. Us look at the way the f pc in the mpc. The output gap is still fairly substantial, but there are hotspots in the economy with the s bce potentially having the capability to deal with. Ty involve . Pability involv expectationsour that we may see macro prudential used more aggressively . That is very much the point advocating. Been abdicat you touched upon the Housing Market and construction earlier. There are some concerns surrounding that. I think a far more appropriate response is a macro prudential target. We could still see the mpc on hold. Fpc very good chance of the starting to think about using their maximum potential. We have been looking at the bank of england in the past, we have tended to be quite lazy. More recently, these well the easing scenario where we are seeing much broader range and the channels that we need to reach to affect the economy. When you think about the f pc in thanks together for your analysis. Chief european economist at rbc. Big hollywood names own vineyards. We sat down with a professional wine taster to find out. As you can see, we have a lot of wind behind us. Bergman to try to drink it all tonight. This is a 2010 vintage. Full black foods, black raspberry black currents. As one is rich, powerful, and the wine i could put away my wine cellar for the next 20 years. Medium and style, good acidity. Without acidity of wine will never age. I can see this wine all day and not drink it. One of the great food wines that is ready to drink when you buy things aboutf the pixar is a label. This one is a blend of mel back, Cabernet Sauvignon and a little bit of cabernet. They have actually done a great job in blending the different grapes to make a whole line. That is what im looking for. One of the great things about wine is it is made all over the world. Countries like croatia, which might not think of growing grapes and making wine, as is a , and awine, a spicy wine ready to drink wine. Andngelina jolie, brad pitt wine. Yes, its true. I think that is something people should know about celeb rewind. People are not just giving a name or a pair they want to make sure it is goodquality, because you cant fool anyone anymore. I love the color of rose. And for is refreshing the best part is inexpensive. Put me on the spot, i will go with her director, francis ford coppola. Unlike his wine and a like his movies. Cheers. Vanitys the ultimate project, owning your own vineyard. Vw is out with its numbers. We will give you a breakdown that is slightly better than anticipated. Well come back after this short break. We will see in a moment. See you in a moment. Back. Come were just getting some breaking news from volkswagen. The ebit number has come through at 2. 9 billion. That is ahead of expectation. Vw brand in particular slipped back when it comes to the operating line. And skodas done well has done really well. Interesting you just mentioned what happened with skoda. When we saw the numbers coming up for the latest european car sales, skoda was also one of the ones that was really doing well. Think that is her affection youre seeing at the european common is economy is recovering. Some of the more moderately priced cars like skoda. Of a jump. N is a bit stock is up less than one percent. Talking about 8 10 of one percent. Straight line indicating that it was going higher. Hugeales overall, not a amount. All in all, i pretty good sound results, guys. Interesting, patel is a contrasting picture about what is happening in the european space. For those listing on bloomberg radio, bloomberg is the first word. Up next, a second hour of the pulse is coming up. We were talking to christies ceo about russian demands. We will also be talking about russian sanctions. Russian risk. Rosneft ceo is added to the sanctions list. Keeping up the pace. U. K. Economic growth accelerates, but not as much as anticipated. Good morning to all of us in europe. I am guy johnson. I am francine lacqua. We are live from bloombergs European Headquarters here in london. Another bloomberg exclusive. The ceo of christies is joining us this hour. But first, lets stay with russia and the west. It has hit the nation with a fresh round of sanctions. The boss ofoke with norways to get Energy Company on the impact of russian sanctions on business. What it would lead into is a conversation about ep, which has posted numbers today. It has got a lot of exposure to russia. Lets get all the angles covered. Of course, that means talking torrential cost. Lets speak about the russian angle. Basically, bp is in a pickle. Sneft. Wn almost 20 of ro as a corporate entity, rosneft itself is not sanctioned. So what does that mean . It is awkward for someone like bob dudley, who is not a u. S. Citizen, and sits on the board as a representative of bp, can he go to the Board Meetings, what can he do the Board Meetings. Yes, he heard from the investors saying we are longterm partners with russia. The us is that were setting this announcement from the are real or in a situation for bp to be. Onehat we know is that party is from the u. S. And one is from the eu. It couldnt be simple, could it . Sevene u. S. Came out with additional individuals for their list, and 17 companies. Yesterday, the European Union came out with a list of 15 individuals. Actually didnt give us the funny thing for the ceo of personally he will have to rely on someone elses Vantage Point or however, you can come to europe. We just got the european list and he is not on there. Bpcan both go to headquarters and christies. That is a good link. He doesnt give a lot of interviews. I ask for one yesterday and did not get a response. I get it is very large, but it is very russian. It is like gazprom which as you just journal markets. Rosneft is basically internal. Is the Worlds Largest publicly traded oil producer and even on either side of the watch. Company that produced 250,000 barrels a day, which is not a whole lot, to the giant that it is today. Mostly, what are the existing assets in russia, at least initially, that came from you goes, that was a. Ompany we failed it is very russiafocused. He come as part of the type of bp wouldve been hoping and remains hopeful that at some point rosneft can become a global major oil company. Staying on top of the sanctions, and of course impact on all the oil majors, and the art market. The Christies International ceos coming up in 20 minutes. Shares are climbing. Its profit beat estimates. Hans nichols joins us from berlin. The details are bad, but theyre not so bad as youre expecting. Your one indicator, one metric. The the income from that and thatdities and comfort is one of the reasons why people are saying, Deutsche Bank had a better quarter than expected. Andistened to ceo call there was clear interest that the u. S. Should be a capitalist economy. The bar is simply getting higher for a much capital they need to have on hand. If you want to look at one negative number, you get the tier one ratio. Their last win was at 9. 7 . 5. 9 . Ars ago, there were it done a lot to straighten the balance sheet. It may need to do more. He heard it pretty strong ceo cap. Guy, francine . What us to do talk about during the Conference Call . To talk about litigation. This is a big question hanging over so many banks. Of litigation costs will he have . They have set aside 1. 8 billion euros, but that is their old number. They say theyre going to have litigation cost is quarter, but theyre not really clear on how high those costs are going to be. Results,ng always bank we still dont know how hard the hammer is going to come down when all these occurrences are eventually shaken out. He was going to be culpable, what kind of fines will he have to pay, and of whole blood low in these balance sheets. Guy, francine . Our International Correspondent on Deutsche Bank from berlin. U. K. Gdp could have been better. Growth is not accelerating, but not as much as anticipated. 9, i got a. 8. Manus cranny is here to talk with us about this recovery. You know, sometimes we have to deal with numbers, and the we argued theers, talks, about whether it is a good number or disappointing. Building. King at is manufacturing and employment. This is this guy strippers of london that are being built, and to a certain extent, Financial Services are also hiring again. Services are rising, particularly in finance and business. Is it a broadbased recovery . Its getting there. That is according to the chancellor. The accusations that we have an alanced recovery from the we are on track, were back on track heard that seems to be the message. Keeping rates low for long, that is a whole other debate, isnt bank of England Governor Mark carney says there is considerable flak in labor. Arkets, manus i think, francine, this is incredibly important. You have carney making comments. In original post newspaper, consider us considerable killer s is the rates will rise. When they rise it will be gradual and it will be limited. Is a very brave statement, and let us hope it is true. Back to you. Either member mortgages were 15 . Now they are at five percent. Manus cranny for the very latest on the gdp figures. We will have more on what the first sanctions mean for russias economy. We look at the impact of the sanctions on the International Art scene. We are live with christine later this hour. Stay with us for that exclusive interview. Welcome back. Siemenss board meets today. There is a pretty big tugofwar for this french industrial giant. Matt campbell helps us break the story. Tuesday morning, wednesday sounds like a pretty big day. What are the key things that are going to take place between now and tomorrow . From a market respective, shares are still not trading. Theyre been suspended since friday. Initially, at the request of the French Market regulator. That is pending a decision that is supposed to come by tomorrow on which of these bits to go with, ger siemens. Siemens board is meeting today. They will decide whether or not to effectively go after alstom, but there are some strings attached. It is ae alstom, pretty risky proposition, given that siemens is one of your biggest competitors it and will remain so. Siemens is going to take your Energy Business and give you its trains business. You are denoted energy numbers look like. Youre going to give that it is siemens. Twoputting much nor your trade statistics like in your men to the trains business from siemens very its is a really matter . Perhaps not. That is a bit interesting. If any open the books and will seeay his problem that ends up being. It is interesting that siemens is not just doing this for the sake of doing it very they want to get some thing out of it and m is to know that alsto serious. They dont want to use be used as a stalking horse for ge. Of course, ge has an advanced proposal on the table. You do still remain the bidder beat. Over the weekend there were some parties right words spoken. The government seems to have backed off a bit from that position. Just yesterday there were noises coming out of the french presidency to the effect that the government does not have a preference. The government just wants als deal. O make a that does not necessarily mean a yes or a no to siemens. But, there are still very important constituency who want to see a deal with siemens. Rumblings around telecoms about what could be the fallout from this . Anybody in prepositioning . Money, willa ton of we start to see something happen . In particular, there is a telecoms angle here. As you mentioned, the big french owns Action Company buig now percentage of alstom. They were just part of this failed deal to buy sfr and france. You could imagine a scenario wants to take some of this cash and employed in a buycoms world, perhaps to the number four company in france and then merge it with this unit. Perhaps it is more than a theoretical possibility. Matt, talking thet alstom and some of companies we will be looking at. All of us has an effect in the currency markets. This story has a Ripple Effect into fx. This is the cable rate youre looking at right now. Is trading at 1. 6812. Then we saw an unwinding of that trade where the gdp number came out at 0. 8. Nevertheless, maybe you could it isnt that big. A number of significant stories still surrounding the pound, but it does feel as if the market still has a glass halffull approach to the british pound. Russias government says that new sanctions will not go unanswered. Eu has issued additional sanctions against russia. Our next guest says that these measures are unlikely to change russias strategy in ukraine. Richard, great to have you on the program. Have been auld we little bit tougher on sanctions . A lot of commentators are saying look, these are really targets for women because theyre deliberately soft so russia can change tactics. If this is not working, we shouldve gone stronger. The difficulty is, the intention from every round has been to persuade from the kremlin. We have had no signals from russia yet that they accept that or feel that. Really the standoff is about a calculation. This russia believe that if it were to continue in ukraine is going to suffer much more serious sanctions, particularly given the Economic Cost for European Countries of the world economy, if the sanctions move into the energy center. Everyone is making a lot of the fact that the sanctions are not enough. See these back in transactions as a process. Youre communicating that there will be further steps to come. Youre making people aware of the fact that things will get tougher down the road if action is not taken. Im simply saying that at this stage in the game we dont have super tight sanctions is missing that point. The strategy is about drawing a red line. It is showing a theory, it is youre willing to take action, and this is action we would take if you cross a red line. The difficulty is, obamas presidency has seen a number of these redlines and very few of be followedemed to through, every think about syria and some of the situations now. Is about redlines or is this something more flexible . Estates coming out as policy, and i think states like to be a lot tougher, the europeans are doing are holding the bag. Therell be a series of illusions of this. ,e want your policy to change we wanted to evolve in a more we want toion, create a series of hurdles. I would argue that the red line is Russian Military forces invading eastern ukraine. Yes, but that is one part of the process. A week and half ago we had a geneva deal signed. All of this progression rebels in his plans be disarmed and disbanded. Has the state department been saying and what the european powers have been saying , russia has taken no action. It is done nothing. A week and half later, we have this new sanctions announced. Is a lot of commentators in the market are seeing them as weaker than they should be. Richard, when you know that Vladimir Putin is starting to take notice . Should be given a couple of days . Do you actually assume that he is going to ignore this until the last minute . Do know he is thinking about . I think if we are optimistic, certainly, putin would not announce that he is backing down. It will be a discrete process where he withdraw support from forces. Orussian can he disarm them and control them . He may have been able to get them agitated, but a lot less easier than it is to put them box. We have all the way up to the president ial elections. It might escalate, but it is unlikely to go away in my view. Richard mallinson. Look at how the sanctions are crippling the art market. This will be an exclusive conversation. You and i and you and you and you or a you asyou are you a little asou do is and he is a is is is a is is is is is is should you sell in her beat estimates. Nokia hasile, appointed a new ceo. Caroline hyde joins us with the details. So, nokia. We have a new ceo. Kind of the old ceo, but new ceo. He was artie head of nokia networks. Hes going to become the leader of the entire business. Why did you take them seven months to choose him . Nokia been heading networks for four years. Heres been in the business from is 20. He is ingrained. He knows the business. He says this is just nokia networks, this is also potter maxx business and technology. Hes trying to spin it to be sexier. He might not to smart phones anymore, but they still will be integral to the data were getting from her smartphones. It is about equipment and base. Tations and antenna he trying to hammer what is therefore to grow the business. Revenues have been down. The market cap in the year 2000 was 300 billion euros. Hes planning to return money to shareholders. Is going to hand back 3 billion euros. Eurose getting 3 billion back to investors. 2 billion euros to try to cut their debt. Samsung . Up seven percent. This is the biggest one in the world in terms of mobile maker. Also, it is in televisions and chips. Up 80 . Ofit they go into asia and china. They have more powerful chips also, a cheaper cost. Phenomenal numbers and what youre shipping. First quarter, hundred 13 mobiles and tablets shipped. Theyre not all at the high and, across the board. Still a dominant force. We went to see some improvements in televisions. Maybe will get it thanks to the world cup. Ok, still to come, a list alcohol. Celebrities and ceos alike are making wine. We would take a look at how the bottles stacked up. Reminder, you can follow both of us on twitter. Ofwill be back in a couple minutes with an exclusive conversation with the ceo of Christies International. We will be talking about russian demands. Welcome back to the pulse. Were live from bloombergs headquarters here in london. Im francine lacqua. The latest u. S. Penalties against president vladimir policies. The new u. S. Sanctions against seven officials and 17 Companies Wont go unanswered. Include rtargets osnefts ceo. He did not recognize the incident as genocide. Genocide had been the case, would there have been armenians living in this country . We have citizens who have passports, also armenians who are here in our country who have left armenia. We dont exclude them. Now you can watch the full interview tonight on charlie rose at 10 00 p. M. London time. Draghipresident mario said that the central bank is ready to start hud program. However, it is relatively unlikely for now. We turn our attention now to what is happening in the markets. Jonathan ferro has more. But started regular sterling. 1. 6813. Look for 0. 9 on the quarter. Amiss, but lets get real. This is a still this is still a year on your figure. Be then track to fastestgrowing g7 economy this year. It is not low. Mark carney in the press talking about the economy. He can talk about it all we want all he wants. Months, at some point, someone is going to put their hand up and defend low interest rates. Mario draghi says qe is not imminent. Look at the euro. 1. 3868. You have bank lending contracting for a 23rd straight month. You have a strong euro run parody of germany taking back towards that mandated two percent, at least in germany. The big one for the eurozone comes out tomorrow. And itget low inflation moves gradually back towards target . Look for tomorrows number for any indication of that. Europe surgesother day. Up by 6 10. Plenty of m a and corporate activity to talk about. 1 trillion worth of bills so far. If you look at earnings, not so good. 44 of the companies on the stock 600. Only 40. 4 . You can see the pessimism around you is earnings. So far. Missing european stocks are higher. European futures are higher as well. Jonathan ferro, thank you very much, indeed very earlier, we looked at how bps business in the country could be affected. Now, lets look at a different side effect, possible side effect of sanctions. Ceo. E joined by christies he joins us for an exclusive conversation. His gray chevy here. Thank you for coming in. Soon. A bit too next week we have our impressionist sale in new york city. Our impressions right now is that there wont be that much change in the activity of our key russian clients. I dont know theres going to be a big effect. We will see what happens next week. What francine is hinting at is that art is a fungible asset. Around, is not as strict the monitored as some other assets. As you get into a situation that we are now beginning to evolve into with russia, you do jurrjens has to increase. We are pretty diligent all the time. Since 1766. Added would christies does is represent our clients who have consignors. Diligence is very very strict. That is why we are still in the building. The real answer is this. We do not see, though it is a popular opinion, that many of our clients around the world, even of great wealth, are using art as a fungible asset. There is a small percent of our business. We did seven billion dollars in sales last year. Theres a 70 increase in the sale of works on paper and multiples. 52 increase in the sales of. 00,000 pounds the people interested in art are building this story. Is not just a very wealthy. Theyealthy, quite frankly, are in love with art. Why would i know that . When someone buys a 9 million. Picture, within 24 hours the pas on the phone saying we wanted on the wall tomorrow afternoon. The idea of storing art in geneva and having it as an asset is a very tiny percent of the business. We keep on having these record prices. It is still a great deal. We were in dallas. A lot of them said they would buy art. I would rather see something that i love every day in my house. Is a value. Utep something you leverage inhouse, and is increasing value. Wise is increasing value . Increasing in value primarily because the demand is increasing , and the number of fires it always levels is increasing exponentially. For two percent of the lowrent, under 100,000 pounds. 40 of the buyers coming in online were brandnew to christies. Is based on the demand. Why is the demand growing so much right now . New millionaires. Quite frankly, it is also because we are experiencing for the first time to advance of the facility of being able to communicate online. , this isr registrants a huge number, almost half of all registered for all sales is online. Taipei, losn angeles, sri lanka, or london, you know what is for sale, hd image. That has exploded the activity, quite frankly. I bought a few pieces online. And i am sure it was a christies. Is becoming easier. Simply a revolution issue . You can see in hd image. Is its as simple as that. It is two things. First, the image is so fantastic areas i would say with all knowct and modesty, people if they buy it from christies, theyre getting exactly what we say this. We will back it up. Pronouns, the, authenticity, the condition report. If we say this drawing budget trimming, science this kooning, signed, is worth soandso much. What a lot of people dont know yet is that you can just walk in to christies and have a look. You dont need an appointment. Just come into the doors and see the art. The art is touring. It is also available online. I cannot over emphasize the andnce of what Iphones Ipads have done for the communication of what art can be. Would people actually buy them on the tablet . Would i bid for it on my ipad mini . 16 bidders in 2013 spread over a million dollars. Dollars. Over a million great conversation. Stick around. We will be talking about what is going right now and the value of ceramics in china are some of the russian art. We will be back in just a couple of minutes. Welcome back to the pulse. We are back with christies ceo Stephen Murphy who joins us for an exclusive conversation. Talking about prints and a monet. I want to talk about the digital side of your business. Youre talking about how much it has picked up. View, christies point of how much of a revolution have you had to go through internally to deal with this . You are set up for traditional auctions and the way that functioned is probably not change that much for some. Time. Anyone who has a company that is moving into the online space as well as rick and mortar, knows it does not come cheap. You have to have the courage to build the facility. We had 60 online auctions. The best news of all was that everything worked. The cards work, the shipping worked, the box was a very christies walks that arrive your home. Now we know that the Machine Works and we are expanding it. I firmly believe that what has happened in the book is missed and the music business is happening in the art business. Having looked back him us to other industries, we decided to embrace the change and get ahead to beingve as opposed intermediated. What is that mean yeah could means we have built an online and digital relationship with our potential customers that allows it makes it easier for them to come in to christies. 40 plus percent came to us online. What about the sellers . You are a facilitator. Does it also encourage people to say look, i have something, i really dont know if i want to part with it, but i would like to approach you and get it valued. Advantages has been, in terms of consignments, is that we can say to our consignors, given what the work is, it will do better in an auction, in a private sale, or online. The Andy Warhol Foundation is working with us on a five through seven year program with 50 works for the foundation. Summer with the auction, some are private. A lot of the sell theirompanies artwork. Do you see them selling them off . It depends on the market and the geography. We are here to serve that kind of client as well. We are not seeing too much of the koan, but we are here to help with that. That going on, but we are here to help with that. You are up 70 . Why . There are five reasons, but the three i feel confident about , number one is cultural. You can see an ipad, your iphone any pictureck very you want, anytime, realtime. Millions of people can see the jasper johns print or the rembrandt etching. But there is only one. Real thing. People want to have the experience of eating in front of that object at home. You can buy a wonderful work of art, signed, for 3000 or 5,000. That is available at christies. The whole little story i just told you did not exist a few years ago. How easy is it to predict these trends. You said you have a monet watercolor coming up for auction. Always ating trends is dangerous game. I think the answer is that it is not simple, but it is basic. Company should base its strategy on the behavior of their clients and their prospective clients, not their own ideas. All of our clients, like everyone watching this program, are already living have to life online. Why wouldnt we build a company that lives half its life online to serve that environment the people are already engaged in . Terms of the water lilies, it is one of my favorites because of its story. Monet painted it, so the to a dealer, and that family is now putting it up for sale. It is never been in a museum or anywhere. It is not in the market, so to speak. It is a perfect waterlily. It is available at christies to be seen by anybody, by the way. How much is it valued at . Than 25ld be more million. Anything can happen at auction. Would you like to have it for the weekend . Im really fascinated that you talk about your business so aggressively online. We have had luxury ceos of companies that make handbags and nice shoes and scarves come on. They talk about five percent of to talkess being about five percent of the sales being online. Was it searching you saying what is the difference between you saying you would lead half her life online and half in bricks and mortar and these guys selling handbags and shoes saying five percent must be reasonable . I think it is a dangerous position to take. I believe in the repetition of narratives. In the music business i can tell downloads. Cent amazon used to be seven percent of the book business. Thats six and seven percent at the beginning of things, and then as Malcolm Gladwell says, there is a Tipping Point. I think we should be ahead of the Tipping Point occurring to us. I would like to make sure that we are already there to make this facility real. What doesnt change is that we are also building out bricks and mortar. We have a new building in shanghai, a new building in beijing, a new gallery opening up in the fall in new york city, in addition to our space. All of this is the bricks and mortar expression of the same very christies experience. My goal by christmas is that whether you come online are you walk through the front door in Rockefeller Center or in paris, you have a neat a unique experience at christies. It does matter where you have the option areas you can buy a picasso and shanghai. Used to traveling in our first true option in mainland china, which was on saturday, there were 600 people in the room. It was a hugely exciting event. 30 of the people there were internationals. The new these works were available, because they could see it online. They have seen some of them in new york and london, and they pressed go during the sale and shanghai. Are the people that are bidding online younger . Demographics working in favor of that . Clearly that is happening. I would like to tell you straight ahead that are 70yearold clients are very sophisticated and are looking for information in realtime themselves online. Very quickly, do you speak differently to the chinese at an auction . Is there different process than here in europe . Very importantly, for christies, is that we have a wholly owned entity in china. Chinese language auctioneer, of course. Is exactly theo same. Interesting, stephen, thank you for coming out to speak with us today. Ceo, Stephen Murphy. Venue recovers the first spot after being bumped down to number two. In the tiein restaurant comes in at number three. We have some breaking news on a stress test. Jonathan ferro for details. They will be tested with an on home21. 2 hit prices. 19 hit on stock prices. 13 euu look at unemployment rate. I would say were pretty much there on inflation and unemployment already. You can call them quite severe. It has to be severe. These are the stress test. We are not talking about a break for the euro. No. If you look at the atms, how far you go . Is impossible to predict the unpredictable. To clearly,e theres not that much confidence in european banks. We are still not at the end of this game. Have been kept alive so early in the game, they are lending again. Me isumber that strikes gdp growth, seven Percentage Points below forecast area that minus 6. 2 . N to that is a fairly big gdp rolloff. That is horribly a big headline number. The stress tester may factor this morning. Earlierwas pointing out , you can see the points at which that number came out. See the full story here, credit, housing, etc. Thattheless, i would argue the pound is not that big, given the numbers. Surveillance is up next. You can follow both of us on twitter. We will see you all tomorrow. Have a great day tomorrow. Will do it all again here in europe on wednesday morning. This is bloomberg surveillance. A wall street adjust to trillion dollars of deals. Does it signal the top of the market . To newe putin adjusts sanctions. Good for so cheap olympics happened this day . There is no envelope the internet oscars. This is bloomberg surveillance. We are live from World Headquarters in new york. Tuesday, april 29. Im tom keene. Joining me, scarlet fu and adam johnson on a busy day after a trillion dollars of deals. Our morning brief. In the u. K. , Economic Growth accelerating in the First Quarter. Signs the recovery is broadening. 0. 8 i know it does not sound like a lot. But if you deal in europe. At 9 00, the case schiller home price index. Our home prices moving up . 10 00, we get consumer confidence. How do we feel about things . Earnings before the bell weve got a bunch. Coach, forest labs, merck, twitter, ebay. At 2 00