Bloomberg reporters standing by across the world, ready to deliver the stories that will drive your day. Ryan chilcote has the details on rising tensions in ukraine. Jonathan ferro is digging into samsungs second straight decline in profit. Tensions heightening again after armed men stormed government offices in three cities in Eastern Ukraine. Ryan chilcote this here with the story. If you take the surrounding area, youre talking about a couple of million people, the fifth biggest city in the country. Donetsk is an interesting place. It is very important to ukraine. Ukraines secondbiggest city. Armed men moved in. You were running battles throughout the night. The ukrainian interior ministry, representing the federal government, has just posted that they have taken that building back. We will have to check that. Then there is another city called lujan scott luhansk, another building was taken. Not sure if theyre Still Holding it very all in all, this is an area that includes 10 million people. Majority in the cities or ethnic ukrainians . Ukrainians, perhaps. I dont know the answer to that heard it gets messy, you have ethnic ukrainians who speak russian and ethnic russians who speak ukrainian. Ukraine says this is russia trying to pull ukraine apart. These demonstrations and the seizures of government buildings is basically what happened in crimea and as a pretext of them moving in Russian Forces. They say they will take these territories and these buildings back. Russia, for its part, has come out with some extraordinary statements calling on ukraine to halt military preparations to the east of the country, saying that americans have dressed themselves up as ukrainian americanorces and that private Specialist Security Service people are working in dont ask donetsk. To the peoplee it in Eastern Ukraine if they want to join with russia. We have not heard from anyone higher up in the white house, saying that if the russians going to Eastern Ukraine, there will be more sanctions. What has happened in moldova . The former soviet republic a region called transmr. They got a bunch of Russian Forces. It is a world of its own. Yesterday, the president came out and said they to are seeking to join russia. Ryan, see later. Isng demand is curving curbing prices for samsung devices. Jonathan ferro is here. Let me give you the breakdown of these results. We only have headline numbers. As expected, First Quarter after christmas for these tech. 3panies, we expected a trillion. 8. 4 we expected 8. 3 billion. We got 8. 4 billion. Youre squeezed as well by chinese producers. Exactly. Hows it going to play out, the samsung apple, smartphone space battle in 2014 . Samsung absolutely dominated its market. Samsung took on 31 of the industrys revenue. Apple took him about 15 . Samsung is still very big right now. This is what will take the headlines. Apple inc. First is samsung electronics. We talk a lot about innovation. 25 of samsungs workforce is in research and development. It is huge, absolutely massive. When we talk about tech innovation, we talk about fingerprint sensors. The likelihood of it s five being waterproof. We talk about disruption like there is no tomorrow. The me make it simple for both of us. This year could just be about screen size. The s five comes out on april 11. Samsung have dominated this market. There produced big screen phones. The asians and especially chinese like a bigger phone. This led the likes of apple. The story can really build up by september time. It doesnt matter what goes into the iphone at this point, but they could release to iphones. They could release one at 5. 5 inches. They could really dominate china and asia with that. They could put the squeeze intentionally on samsung. Jon, thank you for that. Japan is resisting extra stimulus. With this months sales tax hike , it is expected to trigger a contraction in gdp. Details. He the economy is growing moderately. No change there. Going up. Us is one change was in fact the use of fluctuations. At the beginning of this month, it will continue to use until the inflation target is stable. By april of next year. That theonfident recovery even after the sales tax rise will continue. Boost we have a very Important Development here. The alternative is looking to perhaps increase etfs as an alternative to stimulus. It may be happening in the next week or so. The crucial thing today, is the its of japan beginning first Live Press Conference in about an hour and a half. To the liveard press are coming up shortly the live presser coming up shortly. We have trade numbers out today as well. Is the first surplus in five months. What was the catalyst . The reason for that was investments. Oil, ironamely crude ore, electronics. January was a record deficit. So far, the surplus is one of the brighter lights of the economy right now. Look at thed, we bank of japans decision from a different angle. Us. With time for todays company news. The banks Wealth Management business in the region jumped 38 in the past two years. The recruits will boost the number of ubs client advisors and asia to the biggest pool since ubs started its operations in the region. The stake is a reflection of the confidence in the companys future. The stake was valued at 1. 3 billion euros at yesterdays a combined 9 billion after a u. S. Jury found that they hid the cancercausing certain medications. The biggest fine since 2009. Having refrain from the stimulus program. Joining us now is global strategist. When is it going to change . I will go with may. People of got a bit excited coming forward. It seems the bank of japan is in reactive mode. It wouldnt take much to get them to do more. They want to anything until we get the first reports on what is happened to retail sales since the beginning of april. It is only a week since the sales tax has changed. You want to get a bit of a look. Will hard to believe there wont be a negative impact from a higher sales tax. We want to see what it looks like after at least one month. How about the tinkering of the monetary how much of how much tinkering of the monetarybased you want. He warned against that, didnt he, the boj governor, early on . See with happening, decide what they need to do to offset this. The yen is pretty much unchanged since november. One of five to 101 since november. . Hat breaks the bottom range was 101. Started tost rates move lower. All that snow weather. More confident that we would make a move up to 105 toward something more between 105110. Of u. S. Interest rates grinding ever so slowly higher again. I think everything is in place for that to happen. I expect to see dollar yen by july. 05 and 110 this was the meeting when in the conference afterward suggested that rates could be raised six months after the end of tapering. What will we learn . We would love to know how much conversation that was around the detail of what came out, in the sense that we have all these dots. Thatve a sneaking feeling it is not all preplanned and scientific in terms of how theyre doing it. Minutes might confirm that. My sense is that they are more interested in making sure the markets are comfortable with the idea that the final destination for rates is not too high. Something below four percent. Time, prepared to prepare us for the idea that rates are going to go up. To get from zero to four you need to have a brisk pace for the middle of 2014. Have investors not caught on to that . How close are investors to that do you think . Market rates pretty close to the feds path. Equity markets have been pretty strong, credit markets have been pretty strong. Money is flowing back into emergingmarket assets. They were all quite alarmed by from last year. They dont want to repeat. Theyre being very careful. Why the volatility . Dropping to the lowest since july 2007. The forward Interest Rate in the states settled since last july. The train 3. 5 and four percent in five years time. Ever since we have been in that very benign range, current see volatility has been following. The idea that Interest Rates are going to stay low, high that without a year ago, but still low, is like pouring oil on the waters of markets. Fororcing investors to look places where they can earn some yield. Themeand some Central Banks dont mind too much of that. I think now money is flowing back toward some of the emergingmarket currencies in a pretty steady fashion. Do have faith in that or not . We had a big rebound in emergence in emergingmarket currencies since january. There is a huge split. Some have weaken so much that theyre not expensive heard others still are. Beenouth african rand has bedeviled by politics. It is so low you would not necessarily sell it. The mexican peso is still competitive. The turkish lira has fallen far enough. Ruble, mostssian obviously, which is still pretty expensive. There is much more of a spread in terms of valuation. Overall, what investors are looking for our places were the yield and the carryon market currencies are compensated for some of the volatility. It is appealing that the most youre going to get in the u. S. Is 2. 5three percent. Not very much. Matters closer to home will be our focus next. More about events within the eurozone, too. Ecb, lots going on there. Stay with us. Welcome back, this is countdown. The ecb, we are told, has been theyre deliberately getting it out there. , it increases the probability that they will do something at some point, particularly if we see inflation surprise them on the down sign. Which a couple of the policymakers yesterday said, we are ok on deflation. They are going to have to say that, arent they . They had numbers that were lower than expected. You can see fingers and toes crossed underneath the table on their part. I think the odds of them coming in with something, certainly more easing is very likely. As in a rate cut . Quantitative easing gets much easier for them to do and much more likely if we slip into deflation. What form would take . Private assets, government bonds . What would be palatable to both parties . You can do more government bonds. Quantitative easing only works if you go in pretty big in terms of trying to boost the economy and boost asset prices. You have to buy them in the right ratios for no one to complain. You still have to get through some of the hurdles of what theyre allowed to do and what they cant do. I think in the inflationary environment, the hurdles get lower because a price stability mandate matters. My only question with all of this is that given the quantitative easing, the most bond yields and boost asset prices didnt affect quantitative easing. As with lt ro the first time around, if what you do is boost violations of european assets, isnt that how the euro went up as furnished as foreigners came in and bought up assets. Has it peaked, or can we revisit the size . It think it is piqued. I think the euro is 1. 35 and 1. 39 for another six months. The euros future will be determined by fed policy to much greater degree than the ecb policy, unless ecb come in was thing like economics, a massive program aimed at weakening the currency. That qe news or threat of qe pushed bond yields lower right across the periphery, didnt it . That was the one that stood out. Is this a time to start questioning some of the performance of the periphery or not . Is been like our earlier conversation in the sense that peripheral european bonds or the safe harbor for the kerry investors in europe. Spanish yields are lower than when they lost their aaa status, and obviously they have not got it back. We have seen a huge amount of money flow in. Volatility is very low. Some equity valuations are very high. Has a potential to jolt the market . Yes. I dont think the likely bad news in the next threesix months comes in spain and italy. There are other places in the world with the news could get worse. Now, thatorried doesnt get away from the fact that the longterm structure looks unsustainable. Right now, we are probably not going to get any shocking bad news. Our arsenal going to reach a Champions League places . Not going on losing games at arsenal. I fear. It is that simple. 6 26. More people around the world become smart phone owners. Companies are faced with this problem. Well see whos in the best position to steal customers from its rivals. Lets go over to Jonathan Ferro for the assets check for the fx check. This one right here, the secondbest performing major currency so far this year. What happens over the next nine months . One of the best forecasters over the next over the last 12 has been invest x. Many analysts, the weakness comes from outside of australia. A broadbased u. S. Recovery driving the dollar higher. More significantly, slowing growth in china. Waiting on the ozzy dollar, as well. Im mark arden in london. These are the Bloomberg Todd headlines top headlines. U. S. Is warning moscow about a very serious escalation in Eastern Ukraine. The white house says there is evidence that are testers were paid provocateurs from outside ukraine. Is refrainingpan from extra stimulus. The Central Bank Says the economy continues to recover, even with last weeks sales tax increase. Banks say proposals to overhaul risks choking securitization walk lashing with efforts to boost lending to businesses. Deutsche bank says the rules seem very punitive. Barclays settles the first u. K. Lawsuit. The comes a week before trial that wouldve featured testimony from former barclays officials. Stalling demand in the smart phone market. Turnings andrecent posted the second decline in quarterly profits as the market becomes more saturated. Joining us now is francisco geronimo, Research Director of European Mobile devices. Thank you very much for joining us. How much of a big deal is this second straight decline in quarterly profits come a the First Quarter is traditionally week for technology companies. What should we read into this . This is something that we were already expecting. The First Quarter is ditionally much lower than on the other hand the market is saturated, particularly developed markets. Smartphone saturation is much higher than it was a couple of years ago. So most consumers in most unit users already have a smartphone. Is not about attracting the users from the very basic phones to the smart devices. It is about keeping them motivated to replace the devices and buy another one. That is what samsung and apple and the big guys are trying to do on the very high hand. Mark market is moving towards much lower price points. There is huge competition there, isnt it . Exactly heard samsung is being squeezed in the top of the range but apple. They have been able to come peaked with lower price points compared to the iphone. On the other hand, the market is going towards lower rice points. The chinese guys are as well squeezing samsung. Most of these new chinese guys and the Indian Companies are completely new names. Where not talking only about wellknown chinese vendors, were talking about completely new vendors. It is about low prices and good experience. They are not spending much on r d, are they . Exactly. The cheapestgo for phones they can. We often talk about this trend in emerging markets. Exactly. In western europe we are seeing the second wave of smartphone adoption. Basically, those users who never wanted a smartphone. Dont really need a smartphone, but at the end of the day they end up buying one because they have no other options in the stores. Most operators are pushing smart only. Most vendors are only selling and developing smartphones. So they need to buy a smartphone. But because he dont have a need, they wont pay the highest price for the best smartphone they can find. Is samsung the better place because they have the full gamut of smartphones from the high and to the low and . Apple just goes for the niche highend. Whos better placed . Betterung has a much portfolio. From the very top of the range to the very low end of the market varied of course, the low end of the portfolio does not give them the margins compared to the galaxy s5 or or now the stly launched x five. Five. On the other hand, they have been investing a lot at the pointofsale to promote their devices. As they do not have a brand is strong as apple, they need to give better commissions to salespeople and give more money to operators to promote their devices. That is when the reasons why samsung has been growing so fast in the last years. Lower price points for their devices, a huge market investment at the pointofsale, and this has been driving their market share and their position. Is not going to get any easier, is it . The apple competition will get they are set to unveil a bigger screen in the near future. On the one side, they cannot continueinvesting the same investments at the pointofsale. This is impacting the margins. Under the hand, one of the key things for samsung has been about launching new concepts like the galaxy note, the larger screen, because users are quite interested in larger screens to consume multimedia. , ore is supposed to launch is rumored to launch a larger screen in the near future. If that happens, again, it will continue to be squeezed by apple. Apple is still the dominant player on the highend with dominant prices over 600. Under the side, the chinese guys, the completely new players moving to develop in the market, they have a very Good Opportunity in the developing market for it they should focus on some of the new devices, the smart watches, for instance, which theyre obviously making inroads into, try to bring in new types of customers. That is what theyre trying to do. It is not about growing the pie, it is about adding more slices to the pipe. Oftrying to take advantage potential future strong tranzyme wearables, they may be attracting new users to the entire samsung system. The biggest of Consumer Electronic Companies in the world. That tv, their laptops, their tablets. That the full range of devices. It is in our homes. Userey manage to lock the into their own ecosystem, it is very beneficial for them in the future. That is why the smart watch and the tablet, etc. , they are investing on all fronts because he really need to lock the user into their unique experience. They will continue to pump money into r d which is a massive part of their business. They need to. At the end of