Transcripts For BLOOMBERG Countdown 20140423 : vimarsana.com

Programm welcome to the it is just 6 00 year from london. We are ready to deliver the stories. He breaks down the latest china manufacturing data. David is in berlin and he is in berlin any of the latest on the escalation in ukraine. Caroline hyde talks tech today. She is covering the earnings of our molding arm holding. Ceoe will be talking to the following the companys earnings release. Int is the first interview the second hour. Begin with chinas Manufacturing Activity. Away thetech takeaway . It singles another month of contraction for the chinese manufacturing sector. Were talking about the hsb project economics. It came out of the of 48. 3 for april. It signals a level below 50 which is contraction in terms of Manufacturing Activity. Weyou take a positive view, see some stabilization in manufacturing in china but it does suggest that the Chinese Government may be forced to roll out some additional stimulus measures to counter the slowdown that persists. Railwayasures include action, investment, and energy projects. They may not be having a strong is an impact. We say that in terms we see that in terms of the markets. A fourth month of contractions. We will be watching this closely to see what investors think of this. The government in beijing reluctant to roll out a massive stimulus of the likes we have seen in recent years. Now to hong kong. Ukraine is on the verge of resuming operations to oust militants. They had agreements with russia which now seems to be lying in tatters. David, the situation seems to be deteriorating by the day. Bring us up to speed. Yesterday, two dead bodies were found in Eastern Ukraine and the acting ukraine Prime Minister saying that they showed signs of torture. One of these bodies has been identified as a member of the Political Party, also the Political Party of the former ukrainian president. After these bodies were found, he has ordered the special forces, Ukraine Special forces to resume those operations to try to oust these prorussian separatist from the Eastern Region from the Eastern Ukraine, from the Municipal Building their occupying. If that goes ahead, we will be back to where we were before the geneva agreement. That agreement is almost nolan avoid null and void at this point. They are putting pressure on the ukrainian to cancel his order to move the special forces back in line. We have a situation where john kerry and the u. S. State department they are considering sanctions. Supportingas there the ukraine yesterday promising aid. Speaking of sanctions, ukraine needs money. You mentioned the eight conversations with the u. S. Where are we on the loan from the imf . The imf is actually expected to get that staff report of aid to the ukraine in the next few days. What theyre aiming to do is actually start making some of those payments by the beginning of may. We are talking about 27 billion altogether. The imf will be coming up with 18 million worth of that aid. That is something positive. Ukraine needs the money. The u. S. Yesterday, joe biden said the u. S. Would provide 50 million to the ukraine. 11 million of that is supposed to be going to supporting the elections, president ial elections that is supposed to be taking place on may 25. It is the rest of that money that is put towards paying ukraines gas bill with russia, it would be Something Like two percent or less than two percent of 2. 2 billion ukraine owes russia. Russia threatening to turn off those switches. Gas for cash. That is the big threat for ukraine which relies on russia for 50 of its gas needs. There is a really good story on bloomberg going towards all that. I just tweeted it. You can see that story if you follow me. Thank you very much. They designed ships that i nearly mobile or tablet on the planet. We will get an update on the companys performance. It is crucial, isnt it . I am guessing most if not all our viewers are not aware of its existence. It is not glamorous. It does not have the socalled the spaceship headquarters that apple is currently designing. I have been to the headquarters in cambridge and it is very runofthemill. They have a small salad bar. Some open bottles of champagne. It is really pretty basic. Basicallycompany that more than 4 billion people touch something that arm has made every single day. 60 of the population think about it there are more mobile phones in the world than there are toothbrushes. This is a company that powers our very existence. It is in most tablets. Why is this a company that only makes 1 million a year 1 billion a year . They designed the chips, they dont make it themselves so therefore they get several hundred millions of dollars when they sell you that design. They take a royalty. A tiny percentage of the money each time apple makes an iphone that has one of its powerful 64bit chips within it. We have to say this is a company 50 billion chips so far. Since 1990. Sold frequentlyd really about whether were seeing saturation or smartphones being sold around the world. What does that dynamic mean for a company like arm . This has been a concern. It is perhaps the shares have been sold off slightly. There is some concerns about the tech bubble. Some people feel that smartphones are not going to be the same pace they used to be. This is a company that has so many avenues of growth. D more and moreee powerful chip designs for graphics. They wered me how using the games, using the chips in games, they managed to recognize i was female. The screen could identify me as a person and even put in age on me. Was the age right . A bit older. The wearable watches we are expecting to come toout. Wearable devices are going to have these powerful chips and the virtualreality headsets. Things, what on earth is the internet of things . Philip makes it and you can connect to the internet. Nest, you can track your thermostat. Some of the things that are being used already barcelona has chips that can be arm chips on bins. It will make sure that the bin men go around and collect bins. When i went to the headquarters, they had streetlights that sense whether there is movement. Having these chips within the streetlights will save billions for councils, countries. This is what the scale of opportunity is. At thee smart towels point. They are saying, we need people to come to us and tell us what the opportunities are and how we can connect to the internet. We will see. What are we expecting on the earnings front today . Nothing to glamorous sadly. Sales are about 10 . We are expecting 188 pounds. Moreew iphones have powerful chips, they get more bang for the buck. Profit might be up about five percent we want to get a sense of where the next drivers of growth are. We are going to be speaking to the ceo of the business later on today. We will get more on those up. Ings from the ceo coming of the nations inflation slowed. Is it time to have an Interest Rate entry . In time for todays company news. Firstmobile posted its quarterly profits. They subsidize the apple iphone networks. Ut the proposed merger between omnicom is moving slower than anticipated. Omnicom said the deal is awaiting antitrust in china and u. K. Tax Residency Commission for the new company. Is financingatrick the commissioning of the phone units with the world against offering. It is part of a 23 billion euro bond. Pays 7. 75 interest on some of the junk. Welcome back. 6 14 a. M. Lets talk current cities. Currencies. For more on this and other matters, moving the currency markets we are joined by simon. Australian inflation rising slower than expected. Does this take off the table any chance that the central bank raising rates this year . Something that people were beginning to price in. The domestic economies are raising higher. The inflation is keeping firm. The data has taken off the board. Well, performed very certainly this year it has been a surprise. I think the data has taken that heat off the table. I dont think it gets it off the hook. If we do see the domestically produced inflation higher, there could be some gain on the top sector which could create risk. It is not such a bad thing. Onesmember, they were the desperately talking last year and now it is a few percent higher. Sticking with that part of the world the central bank in new zealand became the first of the western Central Banks to embark on a rate tightening cycle. Where do we see that evolving . For the moment, probably not. I think they will put up rates again. We have better inflation data. There is disparity among tradables so i think they want to put up rates against the three percent. They just want to see how things go. We want tom there see how inflation develops and probably see the currency side itself, the appreciation and gain. How much is priced into the currency . At its 10 biggest peers and the new Zealand Dollar is the top performer year today. Is there more upside are not . If you look at it. Was one of the strongest in the world of currencies. Pretty much all through the year and a bit of a pause in the middle. People are looking for some divergence there. There were still probably a cut rate so you have this classic divergence. I think the market has jumped on that train and they squeezed all the juice from it to be honest. They will struggle more. Implicationsany from the chinese manufacturing pmi number, the first glimpse of a new month and how that is performing in the manufacturing site for china . It showed contraction, didnt it . China is struggling. We want to see Slower Growth, manage the balance slowdown to slow the growth rate against the backdrop of what is clearly has been a boom and a lot of bad loans and that is a very difficult thing for china to engineer. In terms of the medications implications, that was seen as a classic china currency. I think it is very interesting how they will trade in march. We saw the bad news in china and i think that relationship between australia and china will be quite a lot. That is another interesting aspect in terms of trade. What about the chinese currency itself . It was weakened in december 2012. Does it have further to fall . Probably yes. Given what we have seen from china over the last three to four years, we had a stimulus package in april. The currency is one of the areas they could take the pressure off. Morerms of them being stimulus package, nothing to the extent that was available in 2008 which is one of the reasons why china is in the situation now because of the huge lending that was undertaken at that time. The currency is probably one of the easier release valves. Thank you. We will talk a little more about the european economy we come back. Welcome back. With simon smith to talk about currencies. We are talking about why things dont move in the direction people expect them to. Talk about the dollar. It has been a little bit elusive this year. December read in the u. S. Economy was improving what does that not mean we see this . That was by februarys move which was fabricated on these week results weak results. It is interesting. The fed has clearly been managing their expectations. Number two, the data has been coming back which i think is ok. We have seen strength in other currencies so is it is not panning out in the way we have expected it. It is a multiyear loan and some of the volatility. We are in this sort of world of monetary policy. We look at the divergences and the chain of expectations and unconventional policies. The the divergence and centralbank policies. You see what the ecb might do. It doesnt seem to be reflective. In the old days, you are seeing changes in the shortterm rates which we are not seeing. You were talking about the feds weather if they will protect silly potentially heighten. Big matsncy is not a are in essence matter in essence. The qualitative easing has had some impacts on it. In marjch 2009, there was lots of underpriced assets. Now, we are in this much tighter world. We have seen Mortgage Rates heighten. The world is very different so the way we think of qe is a lot different. If they move down that road pmi data out of the eurozone, france, germany. What does that tell us about the jigsaw that is the european economy . The jigsaw looking a little better than a few months ago. It is above 50. There are arent more pieces that are fitting into place. In terms of the core markets, we are seeing a better tone. This talk of recession has moved away slightly which is comfortable. The story has moved on to deflation and what degree they should be pursuing the policy. Not overall deflation. What is more likely . 145 in theing above next six months . 130 . Low in the next six months to 12 months. Below 130 and i wouldnt see it in six months because i think whatever the ecb does in terms of policies to cataract the risk of deflation, i dont see it being negative. The impact of policies will be pretty limited. What is the best they can do when it comes to qe . It comes to managing expectations. They are very, constrained by their mandates, the monetary union, the whole set of the banking side. It is what happened in the u. S. It is a much more banking centric economy. There were few policies they could do that is going to get the same bang for the buck as we saw in the u. S. And we have seen previously in history. Thank you for joining us, simon. Coming up, facebook makes friends with finance. We will take a look at its newest Business Venture and a link your money handling your money. Welcome back. It is 6 30 a. M. Here in london. Collects this is this is the big mover of the moment. Stayse manufacturing data in contraction for the fourth straight month. That is australias biggest trading partner. The biggest move was australias cpi. Inflation coming in at 7. 9 . Is that the space the reserve bank of australia needs to keep a record low . By the end of the year, the median forecast is for this one to drop to . 88. It could go lower. Thank you. Ukraine is considering resuming operations to oust lydon militants from eastern cities. The president says the move is needed after discoveries of two bodies possibly killed by the prorussian militants. A new move would cost an agreement to collapse designed to reduce tensions. A fourth straight of contractions for the chinese manufacturing sector. The index is 48. 3 in april. That is up slightly from article below the level of 50 that separates contraction from expansion. U. S. Tech Companies Apple and facebook are set to release results later today. Lets bring you up to speed of where we are. John is here and he has been looking at facebook and apple. Lets start with apple. We are always expecting big numbers. Would never ceases to amaze me is the sheer size of the product. If you look at some of the estimates for the quarter iphone units, 37. 7 million. Ipads, 19. 7 million. If some Tech Companies, they would be pretty happy. Those two products generate 70 of revenue for the company. These numbers today could be almost a replica of last years number, that is flat revenue. That is not good. For the company as a whole. You want some growth and theyre not showing any signs of that. This goes back to that transition story. Apple has not hampered entered a new one since these jobs left. How patient are invested going to be . Investors want growth and they are not delivering that. They have entered a new product category. Both facebook and apple are pushing to finance, arent they . Potentially. We talked about apple and how they have these 400 million credit card stored in their itunes store and what they could do with a mobile paveme payment system. We havent talked about apple and facebook to the extent of what they could do. It is the First National bank of facebook because they are closed to receiving authorization by the irish centralbank to become and it and it an electronic banking institution. 50 you want us send money back to africa, say to india, you could do that with the likes of facebook at the fraction of the cost of the bank. I brought up the potential that they have in terms of size and numbers. Ofle with those millions credit cards and facebook with those 1. 2 billion users. You compare that to a big national bank, 50 million customers, you can see potential. The reality is can facebook get any of those 1. 2 billion customers to come banking . A lot of people are skeptical. Will facebook go to emerging markets were some of these guys are not even facebook users and draw them in by giving them the ip of the potential to do those banking things . When i look at these Tech Companies going to finance, i think of privacy and trust. Would you trust these Tech Companies with your details . Would you trust them to conduct those transactions for you . Would you trust them to maintain privacy . There is a big question mark over that. For more on apple and facebook and the push them to partner. She is you heard what john had to say. Should we, will we trust the likes of facebook for these types of Financial Transactions in the future . I dont know if we should but i believe people are arguing. They have some limited transfer license in the United States that allows them to take payment for games and everything you use on facebook. The cost is 1. 2 billion worth. People already do without realizing it. They might they may not think a bit of a bank but they are ready to facilitate money transfers, facilitate payments. They take a healthy cut out of those payments they facilitated last year and i think people will start to use that more and more from the convenience standpoint. Apple, already millions of people have their credit cards stored with them. There are businesses that look of the Banking Sector and think they could do it more cheaply and want to offer something. We have seen supermarkets in the u. K. And u. S. Or whether it is mobile phone companies. Almost 20 years ago, there was conversations about mobile payments. What is it that facebook and apple are going to bring to their other consumer businesses while . What will make them more able to tap into that financed pie . I think consumers are more amenable to working with brands and trusting brands. People are more amenable to trusting people in line with their sensitive information. You have seen more privacy breaches, it is happening more and more. There is no way 10 years ago, 575 Million People wouldve given their credit card information to a computer company. The other thing is how nimble these companies are and how quickly they can offer really convenient and easytouse payments. Apple with its touch id or fingerprint sensor makes it really to makes it easy to verify you and facilitate payment. Would argue at least 30 of those transactions, people didnt even realize they were paying. They just thought it was an easy upgame experience and an end being something they used for transactions. They have been operating under its own bank license since 2008 so it is been ages in this internet era. These new companies have more at disposable with access on mobile devices to make this much more seamless. Apple releases earnings today. Ipad, iphones are slowing. Is it right to look at apple now with shares down five percent this year as a valued stock rather than a growth stock because of the lack of Breakthrough Ideas . Since the jobs passed away and before . I dont think it is related to steve jobs. Mike was saying you are not seeing new Product Innovation introduced. You are seeing a lot of spread between analyst about whether or not it is a growth stock. There are a lot of peoples it will do what others are saying it is a risk to go down to 400. I think everyone is looking at the tea leaves and tried to figure something out. It is depressed in terms of the pricetoearnings ratio. You have amazon and google and the likes of facebook up in triple digits. People are thinking of it as more of a hardware business. Easily easier to compete with. I think you are going to want to look for a bigger emphasis, whether it is payment or otherwise, on software and not just the hardware. They are doing slightly different things. In the world of banking, it is a big place in the world of money transfers. Whether you are talking about just one person paying another or talking about paying for something online with a credit card, what are the two Technology Companies squaring up to be able to provide . I think it is anyones guess but it sounds like facebook is coming out from both sides. As much as two years ago, it had banking licenses for at least 15 states in america. It was looking like he was going statebystate to get full banking licenses which has been reported. In ireland, theyre looking to license. Money they might start in emerging markets, maybe eastern europe. It is not banking, it is sending money back and forth which is 400 billions within any given year. Apple, with credit card information, they could fulfill transactions for any kinds of goods and the emergence via m erchants. Probably not going to start, probably going to stay on brandon b highend. I have to ask you about the tech bubble. Is not my term. Dave einhorn is the one behind Greenlight Capital said we are witnessing our second tech bubble in 15 years. A lot less public excitement. Far be it from me to say i personally dont think of it as anything comfortable as what we saw 13 years ago. I think you are looking at a tech sector of the world and at the composite index is stronger than it was, in some cases 40 , i think it had a little bit of room to deflate for people to take money off the table. I dont think you are seeing companies that dont have revenue that dont have significant user base is adding value. Itfacebook, you valued higher than 98 of the s p 500. Is that right or not . It is hard to say because it is an outlier. How many brands touch more than a billion people in the world everyday . You are hardpressed to find that. Any kind of commercial brand google cocacola, they dont touch a billion people in a month. Elon musk hands over chinas first model asked and hopes model s and hopes tesla is ready for takeoff. We have a report next. Welcome back. Tesla aims to plug into china delivering its first cars to customers in beijing. Elon musk is seeing strong a Stephen Engle reports, there could be roadblocks along the way. Elon musk has said model as sales could top u. S. By early as next year but he admits he is not sure. This is just day one. What we see is pretty strong demand. I think probably more demand that we can fulfill this year. In terms of the absolute figure for charging stations, it will be quite a big number. My instructions to the team are to spend money as fast as they can spend it without wasting it. There are 70 unanswered questions. A range of unanswered questions. Can fulfill its order book from china quick enough . Will tesla for my joint Venture Partnership or go it alone when it plans to build the cars in china . Tesla is still at the very early stages. We are only delivering our first cars in china today. Now, we will be quite young is a company. I think we we want to hit puberty before we start upgrading. One of the owners is the president of the chinese car website auto home. He says he is happy with the car but if thinks the cramped backseat is not ideal. The external design is that of a 1 million car. Its backseat is half that. 15 to 20,000 car. Others were less forgiving. I am really disappointed. Im sorry. The woman claimed to be a was upset of delivery delays from the factory in california. Some of the customer deliveries were delayed for a few months in order to ensure that when they get the car, they will have a great experience. Some of them were upset. I met with them today and personally apologized. He wants to avoid chinas 25 import tariff. That is easier said than done. Are you getting any indication that the government here perhaps it is not encouraging a joint venture . They want to promote their they have been very supportive. In fact, the level of support has been great. I really have nothing bad to say. Are you expecting this kind of crowd . No. Do you have a clear china policy . I think we just want to do everything that is needed to encourage electric cars. We just want to do the right thing. It is likely to be a sharp learning curve for the 42yearold behind the wheel at tesla. Can test the convince the skeptics and crack the Chinese Market . Matt joins us now. What is holding them back in china . We heard the package of the need of investments and the infrastructure surrounding these cars. Good morning. That is the right place to look. There was no real fundamental supply issue. Elon musk and make 500,000 cars out of his factory. On the demand side, you clearly see a lot of buyers ready to go and the price doesnt seem to be an issue. Right now, youre on this crawling stage in terms of building out the infrastructure. Tesla needs a robust infrastructure of all kinds of charts points. The trick in china is that it is different than northern california. You have a lot of buyers that will be in an apartment building, not a home. Dental have a chance to plug back in when they are home. Already people on the mainland are doing this and musk is building its own Supercharger Network as well. How was a progressing . The infrastructure build . We have seen it already mostly in the south. And other electric Vehicle Manufacturers are headquartered, there has been a lot of build but it hasnt suited customer need. It has been hard to identify. What were seeing is that tesla is building its own Supercharger Network and hopefully they will be closer to the point of need. If nothing else, they are very visible. They offer a free charge for the people who have a tesla. What does it mean for emissio n in china . It is not to think of his vehicle as zero omissions. I think there is a very large smokestack in the province belching out co2 emissions from coal powered fire that is supplying the energy for the battery. It is about 35 kilograms of coal that goes into each charge. What is important to note is a local air quality notion. While there might be omissions at the smokestack, the air quality for the people on the ground in beijing where the air quality is usually less than ideal, it is quite a good selling point. Not just for drivers and the families, but also for the government itself that is looking to clean up the local air. Matt, thank you very much. Coming up, we will tell you what politics passed over. Countdowns newspaper segment is next. Welcome back. Elliott is here. Carolinas here. Lets start with you elliott. Before,brought you news i felt obliged to bring you news that happens after the end of passover week when jews and israelis no longer eat the matzah. It is an article entitled the worlds most flatter. It is a traditional north african fried pastry. Moroccan jews often bake it or fry it at the end of passover. They were attempting to make not just any, but the worlds biggest mufleta. They wanted to get into the Guinness World records. The defense minister was there. Everyone was lined up to see this amazing thing take place. It was overseen by firefighters. The reporter was a little on impressed by it all saying that only one side of the food was fried and therefore it didnt constitute a real mufleta. It was handed out to the crowd who according to the reporter were not overwhelmed by the taste. Some say they tasted pita that tasted better than it. I guess that is the way the mufleta grumbles. Crumbles. We knew that was coming. What was the defense minister doing their . Not clear on the role of the defense minister. They were getting their hands very. There were all kinds of kneeding the dough to make this massive mufleta which was putting off the onlookers. They say didnt want to take it because everyone had their hands in it. . Ks thank you thank you. A prisoner has been told he has to rape the rap music because he managed to escape a prison by climbing over the wall. The main concern was the day in, day out hounding music that they have in this particular cellblock. Had largelyy, they rap music. What made me chuckle was that he was then found 20 days later. He had been in for 21 previous convictions, 45 offenses, once for robbing another branch. Very quickly. The guardian is going on this angle. Ferguson will have a say in appointing the next manager. We know how that ended. Why on earth has ferguson have a say . He is very influential. So says the guardian. Shakespeares birthday is looming. It will be celebrated widely across the country. We will have more on this later in the week. This is a piece in the guardian about shakespeares preparations. We will have more on arm. Their numbers will be breaking at the top of the hour and we will speak to the ceo. More signs of weakness for chinas activity. Signaling the economy is yet to respond to stimulus efforts. Ukraines acting president urges Security Services to restart antimilitant operations in the east of the country. There is a great agreement with russia to reduce tensions. Arm is branching out. We will so you what the microchip designers pushing into services is paying off. We have the first interview with simon segars. Welcome to count down. It is just past 7 00 here in london. We have a date interview lined up shortly. We are going to be speaking to the ceo of arm holdings, simon segars. This follows the release of the companys Earnings Report which is just coming through now on the bloomberg office. That will be in around nine minutes time which means we have a little bit of time for the numbers. Caroline hyde. We have firstquarter revenue climbing. Not quite as much as expected. It is up about nine percent. 186 Million Pounds. Normalized pretax profits or the profitability they get from the sales is up more than expected 97. 1 Million Pounds. That is about 30 in terms of profitability for the first quarter. The reason theyre using more powerful chip designers and many that canes, tablets charge more. The way that they get their money is they charge you a license fee to use the design but that also charges you a royalty every time you use that ship in any smartphone. Both those figures are coming out right now license revenue up 33 . World t royalty revenue up. There was a lot of lip service paid to the fact that you and i dont need somebody smart phones anymore. We are hitting a saturation point. The royalties they get from the smartphones is the whittling. Dwindling. It was 32 earlier. Where is the Growth Opportunity . For arm, this is a company that the numbers are not sexy. 19 Million Pounds in terms of profitability. Is not term it is not sexy in terms of headquarters like apple or bruder google. 95 of all mobile phones in the world have arm products in it. This makes me very worried about the state of people steve. Peoples teeth. People touched and armbased product. Access of people have to sanitation, highend sanitation. This is how all enveloping smartphones and mobiles have become. It is not just about mobiles and tablets anymore. Talk about the cows. The internet of things has become this saying that we talked about nowadays. What on earth is it . Iny could be that your cow one of its stomachs has a chip that monitors how well it is. I will put it on my cap. Ow. Farmers have said they want their livestock to be monitored on the internet. Farmers are so busy they want to know how their yields are doing on their fields. How well their cows are, how much food or water theyre taking in. You can do that by putting a chip in the stomach of a cow. Are we getting excited how allencompassing the chips and internet of things can become and how much they need companies and individuals to go to them and give them ideas. For yourlso use it smoke alarms or thermostat. Nest, a really Interesting Company bought by google they monitor the elderly. Frailt of having your began instead of having your frail grandmother in your home, they can be in that home. You can monitor how the routine is, whether the routine has been changed or whether you need to be worried. Barcelona has chips on their trash bins which will direct the fo men two been better two bins that are full. The internet of things arm is at the center of that growth. We will continue this conversation with the ceo when he joins us momentarily. Lets go over to hong kong and have the latest reading on chinas factory activity. What was the take away from todays number . Are not talking cuttingedge chip factory for example. We are talking factories that produce many of the worlds most commonly used goods such as the clothes you may be wearing now. The latest gauge indicates of this sector continues to experience weakness. The fourth month of contraction, according to the flash pmi number. Market economics gauge and it came in at a rating of 48. 3. That is slightly better than the month before when the reading was 48. It demonstrates stabilization in chinese manufacturing consistent with the slowdown that continues in that country. Others are more cautious saying this shows a continued deceleration trend because any reading below 50 indicates contraction. Anything above 50 indicates expansion. The Chinese Government has recently been very clear in rolling out some targeted stimulus measures to tackle the slowdown. Of it. Facturing is part they have unveiled additional rail spending. The question is what will come next . Toestors today reacting stocks in china and are trading generally lower on this news. Thanks. The first get readings of services and Manufacturing Activity for germany and the eurozone later. We will take a look at the numbers and what they will mean for the ecb and any stimulus plans they might have. It is another part of the jigsaw. It is the survey data they are referring to. The hard data, the survey data. We are in expansion mode, things are not running away with themselves. You have growth in manufacturing, but it is going to be the weakest growth. That is for the whole of the you are zone put together. Of the eurozone put together. That is the weakest growth since december. You had a conversation so far the tone is improving but the backdrop going into this data is that france is expecting to dip ever so slightly. Germany will power ahead. A small dip on their Services Number but that is near a threeyear high. Things are getting better. You have to think about the Consumer Confidence numbers a sixyear high. And there repairing danger is this you have more confidence, you dont get it a strong number in terms of manufacturing and services. It gives the ecb more time. Because on the one hand they are talking about deflation and whether there is a need to take action to try to bring inflation back, but it might be quite difficult to take the measures they would need to do that if that theevidence economies around the eurozone arent improving. This is the point for every tick on the checklist of how we got away with it. Things are getting better. Sit back. We dont have to do anything. Every time you get some of those pieces of data, it reduces the probability from the analysts mind. If you think about it this way, the golden cross that is a euro. That is the ultimate direction they wanted to go. They want to get the markets across. Of the ecb objective and to do with the need to take some sub central action. You got a 40 probability that they will get the opportunity to do something quite unconventional, but it is going to be really hard. They are so constraint on what they can actually achieve. They cannot do qe a la bank of england. Two thirds of company barring that borrowing go to the banks. They dont issue bonds. Greatwas this relationship between sovereign bonds, corporate bonds, correlation, i am not the arbiter of correlation but they moved in steps. Bang. Crisis came in that relationship disappeared. The desire is there. The ability to deliver is imminent. We will give you a key insight on those arm Holdings Earnings and the first interview with ceo simon segars. That is next. Topper todays company news netflix is pressing ahead with its International Expansion and want to reduce its streaming service in france by the end of the year. The script and this inscription service is almost concluded. Toyota outsold all other carmakers including gm and volkswagen for a Third Straight quarter. There was rising demand in china and japan. Sales rose to 2. 5 Million Units in the january to march. Period. China mobile posted its Third Straight drop in quarterly profits. This came as a subsidizing apples iphone and building out fourthgeneration networking. About 4. 4 to billion. Welcome back. The time in london is 14 minutes past 7 00. Lets get more now us is on the arm holdings numbers. Simon segars is here. Paint the picture for us of the first quarter. Should we be at all concerned about Slower Growth in royalty revenues . Help us put these numbers into perspective. We had an excellent 2013 and we had a good start this year with what we see as solid q1 results. Revenues were up german by very strong licensing performance. We signed 26 new licenses in the quarter. The license revenue was up 37 and that is a precursor to future royalty. The number of license we do is very important because that does signify engagements with customers to design more and more products based on technology and that drive royalties. Royalties were up eight percent. They only went up about six percent so we are growing ahead of the market and growing in many different applications. There was a question about saturation in cell phone markets. Does that give us any clues . I know youre going to tell me about the internet of things and the other areas your product is using. What do we see in the Smartphone Market . It is still a binary a very vibrant space. Smartphones are going to continue to gross to grow strongly. Driven in strong numbers by entrylevel smartphones. What we see that is exciting is we see the price point unsubsidized for smart phones are down below 50 in some places. More and more people begin access to smart phones and that is good that is going to drive more services and products that use smartphones. Smartphones have a lot of growth. Even though the entrylevel smartphones have high degree of content and that drives more loyalty. How was the push into servers and connected devices . That is very exciting for us. We spent all day talking about any day any one of those markets but we look at connected devices about one third of the units reported by our customers in the last quarter were in microcontrollers. That can be a wide range of things. They could help you make your washing machine smarter, help your smart watch be smarter, helping connect anything to the internet. You were talking about how is earlier cows earlier. In opportunity for multiple places. Those interconnected things are trading data. The creation of that data that smartphones also have produced means there is more data being moved around the network and that is driving an upgrade. You talked about the china mobile and the rollout of 4g services. You are wearing a device . This is a smart watch. It is connected to my phone. I get Text Messages and calendar with alerts on my wrist. Why did you choose a pebble . How do you choose what to charge for the chip that goes within pebble . How will pricing of all of evolve . I like to experiment with lots of different technologies. I have a few. In terms of the pricing, the company is more than 23 years existence. We have built up a model for how our pricing works. Typically, the royalties that we charge is based on a percentage of the selling price of the chip so prices come down and then our share purchase goes down. Per chip goes down. How do you charge the internet of things . A lot of things will be in counsels. Become cheaper and cheaper and the new technologies you develop means you can charge a higher license because it is superior technology . Does everything distill out . Timevices get cheaper over but they get replaced by more sophisticated devices and that helps replenish that kind of price model. Our models for royalties or models for licensing are pretty well. We do have different pricing structures for different markets. Lighticrocontrollers, bulbs, or watches, or dishwashers or every parking space on the planet are going to be very lowcost devices. Our world tees per device is very small but it is multiplied by massive volumes. It is a very profitable market. Is there a limit to the internet of things . Can we have microchips . Can it be in everything . What are some of the more unusual requests from companies . Onbased focusing technology that our customers are sending to companies that are using to integrate into these very low powered vices devices that can be used in different ways. One of the great things about our model is we dont have to understand everything about every market because we work with such a wide range of customers. Our goal is to make the technology that is useful in lots of devices. We find once we focus on some in markets and design something, we have used in other places. Where is this exciting innovation happening for the next five years . Is Technology Going to come from we talk about the internet of things and what potential they can have. You say you supply so many different industries. Are they innovating and telling you what you want their chips to do . Do goat out and talk to future at do you go out and talk to futurists about where demand might come from . Licensees. Over 315 we have over 1000 licensees for technology. Pretty much everyone in the Semi Conductor industry. Talking to time other people in the supply change to get as much information as we can. We will talk to anyone about the trends in technology and try to work out what we can design today that is going to be suitable for the products in five years. Quickly, intel did a very wonderful marketing ploy of having intel on the inside. Seeying to get help how crucial more than 4 billion people touch and armed product everyday. You want arm to be known by someone in africa that is using a product . You want the flamboyance that apple gets . We are not a consumer company. We are a b2b business. To thinkelp users about the devices in the device. We believe technology should be seamless so that people can get on and make their lives better through using technology and stood up worrying about the geometry or the design. Who cares . It is important in making the devices but the consumer shouldnt have to wary about that. Thank you very much. The ceo of arms holdings. The standoff between prorussian protesters and the Ukrainian Government continues as the agreement falters. The Ukrainian Government ways another incursion. We will have more next. Welcome back. Ofaine is on the verge having operations to oust militants on the eastern city. David is in berlin and has the story. This situation seems to be deteriorating once again. Bring us up to speed. Joe biden had been speaking to the acting ukraine president. There was a revelation that two dead bodies had been found in Eastern Ukraine in this area that has been taken by the prorussian rebels. One of the bodies are both of the bodies had been tortured. One of them has been identified as a politician from the acting ukraine Prime Ministers hearty. Party. He ordered that the forces resumed their actions trying to oust these prorussian militants from the buildings in Eastern Ukraine. Now we have what is basically that geneva accord in tatters. There waiting to see how the russians are going to respond. They are threatening to cut off gas supplies to ukraine. That is why this ukraine, imf deal is coming into focus now. We expect to get a report from the imf committee to the board very soon aiming to get aid into ukraine at the beginning of next month. Thank you very much. Pmi data coming out in roughly 30 minutes. Frances first to release data. A chief economist will join us next. Welcome back to countdown. I want to look at the chinese currency on the year. This is the dollar getting stronger and the chinese currency getting weaker by over three percent. The hsbc reading, a fourth month the manufacturing data has been in contraction. The companies that are likely to have very tight margins if they are exporters. When does this weaker currency start to filter through into this data . You will have to make you will have to wait until may 1 for the official emi reading. Ukraine is considering resuming operations to oust militants from eastern cities. A new move would cause the collapse in agreement reduced reached last week. Have broken out in Rio De Janeiro following the death of a young man. He was allegedly eaten by police. Beaten by police. Angry demonstrators set barricades with tires alight. U. S. President barack obama arrives in tokyo today. He will hold talks tomorrow with the japanese Prime Minister. Japan is engaged in a territorial dispute with china. Obama is also traveling to the philippines, south korea, and malaysia. It will expand for the first time into the United States. The Department Store chain is hoping to be operating in the northeast towards the end of next year. Expansioncompleted into france and reported an operating profit that was 26 ahead of the same period last year. We will get the first readings of services in Manufacturing Activity later today in the shape of pmi numbers. Philip, good morning. We had the numbers overnight from china. We will get our first glimpse of what the eurozone looks like. What will we see . Continued growth. Ignoring that the shortterm fluctuations in the numbers the pmi is telling us the recovery is taking place. It is not a powerful recovery, but it is in line with the ecb baseline scenario. We expect to see more of the same and we hope things cross. We would not be concerned if we see a fluctuation of half a point or appoint either way. The amalgam of the two. Point three. 3 how does that influence the ecb when studying policy . When it comes to setting policy . What it does not tell you about our price pressures. That is the chief concern for the ecb. It is on standby to take some more easing measures in due course. What are the chances of them doing that . We suspect something will happen over the next few months. There is quite a large menu of policy measures that could take. The big talk for the past month has been qe. We suspect that it rapidly will not happen, it is usually complicated to get qe into action. It may well be that this is the sort of policy measure where you get an unveiling of a grand plan. It does not happen, but it works because it influences market expectations. What are the risks of out right deflation . There are always risks. We are quite sanguine that the shortterm prospects for the economy the energy price that we have seen puts more money into consumers pockets. If anything, the shortterm effect is to boost domestic demand. Theou are looking beyond sixmonth horizon, the danger is you begin to get employers producing pay increases or cutting pay. Consumers and firms begins to put off their purchases because theybelieve inflation put off their purchases and demand begins to fall. It is trying to ward off those expectations of falling prices that is key. What about the focus of the ecb on currency . A number of companies have been raising the flag and saying, somebody help us. ,he euro is a little bit strong that very phrase, how much of a near mario draghi are giving to those kinds of arguments . One analyst as saying the fact that he volunteered comments on the euro without having to be asked was quite significant and it meant he was focused on. If you look at what the euro has been doing, despite all of this talk about whether the ecb will take more action like quantitative easing. Oh it is dollar not helpful from an exporters point of view. Arguably, with that degree of overvaluation, what is important is the Global Economy is expanding. The other effect is the rising euro cuts down prices and makes the ecbs job that much more difficult. The euro has been surprisingly resilient. Minutes from the last bank of england meeting released today. It was a oneday meeting. Many officials headed to washington for the Imf World Bank meeting. Inflation in the u. K. Is coming down, it isnt it . Does that give mark carney and his colleagues more room to hold off raising Interest Rates . I suspect it does. If you are a policymaker, you will tell markets what is important is the policy outlook in the medium term. If you are starting at a stage where inflation is below target, it does reduce the pressure for you to begin to think about tightening policy and he gives her mediumterm forecast mark credibility. Mark credibility. More credibility. Youmain question is whether begin to start thinking about interestrate hikes towards the end of the year or at some point next year. Does one think about that eventuality or not . Yes, you begin to start thinking about it towards the end of the year. Our view is that you have a very subdued set of inflation pressures in the mediumterm. The economy is growing, but it is not out of control by any stretch of the imagination. Thank you very much. Many, the thought of designing your very own sports car is a dream come true. You may be able to design that cars sooner than you think. For the right price, that dream can be a reality. Most people buy supercars because they are designed by trusted names. Trulystomers who want a service, there are not many options available. The compromise is between upgrading or building a handcrafting handcrafted original. One British Company says that is no longer the case. A number of people have seen us that realize the company exists. You can take your dreams and do something with it. It can be a piece of furniture, for example. Envisage claims the ultimate dream can become a reality. If you are willing to spend a little bit more than usual. A buyer can work with the designer on live sketches. The first customer wants to build a classic car, the one you can rely on. That atave to accept some stage, it will break down. I wanted to create something that would not break it down. David brown is based on a jog were jaguar. Envisage confident in the market. If you wanted to design your own car, what would it look like . Manchester united seats . I just want a card that is reliable that i can put next to me a nice pretty girl and all of her lovely luggage. My wife. World it Takes Center Stage in mining country. That is up next. Some of the most compelling images of the day. Cherry trees were in full bloom at the brooklyn Botanical Garden in new york city as they are the cherry celebrate festival. The special flowers is symbolic for the japanese people to welcome the spring. There were performances by traditional japanese dancers and drummers. The world cup trophy return to brazil after traveling to 89 festival. The specialcountries. The countrywide visit will start the same way as the International Tour did in Rio De Janeiro. It will end in san paolo on the 29th of may. Coal carrying championship is taking place in yorkshires mining country. A 50 kilos sack of coal and they must run with it from the royal ub. P welcome back. Can your shoulders withstand 50 kilos . I doubt it. They make children carry the stuff . I thought that kind of practice was outlawed. Around a few of the macro themes that will be dominating the day. Backward a bit backward looking for a moment on china pmi. It is still contracting and if you look at what the chinese have done, it takes time to play. A little bit of stimulus in railways. Data it is contracting, a little bit better than the market was estimating, the china is still in a contraction situation. T they need to do we were listening to mark reading hotshots. Carry on. It is a currency story. Yuan. Inese looking at the is there enough in these numbers to push a big stimulus . The stimulant the stimulus seems to be no the consensus seems to be no. Different companies trying to chase theis there enough in thes to push a big stimulus . The stimulant the stimulus seems to be no the consensus seems to be no. Export. You have the ecb trying to talk. It is stormy ahead. This will be a massive issue for the sheer. This year. We have limited demand globally and what you make it is Central Banks engaging in feudal export. You have the ecb trying to competition. Ot everybody can devalue you cannot get the ecb pushing down the euro. It seems to work on the yen. It is more likely the euro will fall and then rise above one dollar 45. Maybe i am being ungracious. Fantastic. 90 it has a billion users. It is an awful lot. An awful lot you can do. A few other ipos that came out apart from facebook. Gentlemen, thank you very much. Lets look at todays other news. Caroline, you have been we had the chief executive on. One of their crucial areas of money gathering, royalties. That is flowing. Percent, about four but they are signing more licenses. It means more royalties in the future. Many of the Stock Traders say it sounds upbeat. Look for arm holdings to rise about one or two percent. A beef foods, we know it a foods, we haveb been talking about it expanding in the United States. Are continuing to go down. S becoming a problem, sugar becoming a thorn in its side. Expansion in europe and they will have stores in the northeast of america. Thank you. Storyl have more on that and on stocks to watch we come back. Welcome back. Minutes until the start of European Equity trade. Thank you for coming in. Caroline was running after the headlines on the Details Behind the primark story. Interesting move now that primark is going into the north of america. Excitement or trepidation . We had to greet it with excitement. We are walking into europe and the u. S. Story is a bit of a surprise. You would not really guess that based on the opening levels. Investors are not quite as excited as they should the. Total revenue was in line with estimates. Royalty sales up three percent, which is a slow down from last year, 32 increase. People do not seem to be blown away with this at all. Theyre expected to open half a percentage point higher. Whereone of these stories people are focused on projections. People clearly are not blown away by the fact that arm is consistent. Anything to look for in the bank of england minutes . Monetarysee some policy committee dissenting against the governor. No evidence of that yet . It is all about keeping things calm in the moment. The bank of england wants to hold steady at the moment and i think today will be a nonevent. Maybe we will hear something about the unemployment rate. Maybe we will go out and enjoy the sunshine. Guess what . On the move is next. They will be watching the opening share prices for some of the companies we have been mentioning. We have the pmi data later on this morning. Welcome to on the move. We are moments away from the start of european trading and our markets team is covering currency to companies. Lets kick off things in terms of china. Signaling a little bit of weakness. Futures are brushing it off. Steps as theytake have done and it is still contracting. The currency, the currency is that a 16 month long. Low. The currency can do for you what you cannot do for the economy. Sometimes. Do not burst my bubble. We will also have pmi figures out from france. 50 indicatese expansion, but it is a lot below what analysts were estimating. Later on in the hour, we will have german pmi. We will bring you those breaking numbers. We are watching china data, futures, pmi in europe, and a little bit of tech. Arm holdings, it