Standing by to deliver the stories that will drive your day. Could be weeks away from a deal with u. S. Authorities. Hans nichols is in berlin covering and is deflation a thing of the past for japan . And later on in the show, the worlds first smart racket. It is changing tennis for pros and amateurs alike. What it says about my swing. I tested out next hour. Is weeks awaynk from a deal with u. S. Authorities over lenders dealings with sanctioned countries. The u. S. May seek more than 10 billion from the bank. That would be the biggest ever sanctions violation penalty. Manus cranny is here with the story. 10 million . We were talking 5 billion a week ago. The mood is shifting. The mood is changing. Of the pond in terms of retribution. This would be the first french bank that the Obama Administration has gone after since he came to power. The severity of the penalty last week, i was saying 5 billion. It is almost like a ticker. Why . His conduct more egregious. The bank did not fully cooperate. This is what irks regulators. If you have done something wrong and you have been found out, admit and help and assist put the case together. It is what the american regulators want. This would be a significant departure. We are not just talking about a 10 billion fine. We are talking about a criminal commission. A guilty plea. That would be a huge departure. Other banks got away with a slap on the wrist, metaphorically speaking. Barkley, 290 million. Just when you thought, wow, 1. 9 billion. 10 billion dollars is in another category. It wasnt long ago that they put aside a 10th of that amount . 1. 1 billion. This is the biggest overriding concern. When you look at what it earns. It is a minnow compared to the fine. You you saw with what saw with Credit Suisse i think what you will see today is a stream of notes coming from the analysts. They will say, this is probably going to impact if it is 10 billion on their earnings and their ability to earn. If they are blocked from the payment system, that is something that has not been confirmed. It could have its own it is only a week pursue week or two cents credit swiss was given a fine and it did to a guilty plea. Uppingse that they are their game . A considered way too presented. I might have chosen different words. But youre holding me back like a racehorse on the bridle. I have one name for you. Fact anda mission with finds. The man, benjamin, who went flew the kite that they might ban the license for standard charge. This all pertains to breaches or sanctions for band countries and the u. S. Iran. I leave you with this thought. He is going after him. It reminds me of the movie jaws. Suddenly the regulator has got its teeth. By gosh, it is going to make the world realize, you break the laws and the u. S. You break the section loss the tax laws . , we will come after you ad find you to such an extent you wont want to do it again. They were not criticized for being too soft. Thanks a lot. They are streamlining. The biggest indie nearing company in europe is eliminating more than 11,000 jobs. Our International Correspondent hans nichols is in berlin with the details. 11,600 is the total number. This is on the highend. Had been hand of what speculated in the local press, 10,000 this is on top of the job cuts already announced back in september. 1 billion is a potential savings on this. Its quite remarkable. This company shrinks its global workforce. In september, it was around 370,000 workers. Trunk that by four percent. Theyre coming down a little more. They had to say. A certain number of people do things for coordinating and analyzing. About 20 of those, we believe, can be put to work elsewhere. They can be taken out of the system. The work was away. Jobs simply will not be coming back. It is remarkable the way he was so frank in saying that. There has been speculation about what they will do with the health care business. Willie selloff will they sell it off . He said they did not intend to, but they are flexible. It means, it is not for sale but if theres a good bid, it could be up for sale. All part of the Restructuring Plan they have gone from four sectors to nine units. It is supposed to be more streamlined. It means job cuts right now. And how does it tie into siemens bid . They are apparently still going after it. Here is what he said. Base in gassolid and steam turbines. They are looking for deals like this with alstom. They are still pretending or going through the motions of being interested. They have not submitted a formal bid. If and when that happens, it will be up to alstoms board. Think slot. Hans nichols, our International Correspondent in berlin. The japanese government is hoping deflation is a thing of the past. Prices rose at the fastest rate in two decades. David iglesias is in hong kong with more. You mentioned, that is the key thing here. Have numbers for april. That is when the sales tax was increased. The fastest pace of inflation since 1999 1991. It is important to strip out the effect of the sales tax. Everybody expected that to happen. What you got more or less was an inflationary move. Costs also exclude energy that is partially why prices are where they are. But you and to see whether there is a continued pickup because of demand. To some extent, we have seen inflation in japan. Japan imports fuel with a weaker currency. Back to the headline number, 3. 2 . One of the guests points out suggests data suggests companies passed on that sales tax to consumers and that is where the problem comes in. He yes, perhaps margins are protected. But margins volumes are questionable. Suggestsa survey which only plananese firms on raising wages by less than one percent. Wages, wage increases still sticky right now. Pursue mark critz good to talk to you. David and grace in hong kong. Ingles in hong kong. We will talk to someone with 30 years experience, next. Time for todays company news. Google is moving to comply with ruling which backs the rights of citizens to be forgotten online. They have created a committee of experts to advise it on the decision. Which said people may ask Search Engines to remove personal information. Microsoft and salesforce unveiled a Cloud Computing partnership. Salesforce programs will become available for Microsoft Windows and phone operating software. It signals a thought between the rivals. And Steve Ballmer won the bidding war for the Los Angeles Clippers basketball team. The people for money with the process says ballmer will pay 2 billion to buy the team. Owner Donald Sterling was banned for the nbi for life after making racist comments that were released to the public. Welcome back to countdown. Best six ndon is 614 14. Japanese inflation surged to a 23 year high. Our discussion. Slightly dis misleading. It includes the sales tax hike. We are roughly at 1. 3 , which is where we have been for the year. The two going to hit Percent Inflation target at the end of the next fiscal year . I think it is still pretty tough. A lot depends on where the yen goes. Increasereally of the has been to sources. The weaker yen and effect that japan continues to import significant amounts of energy. As well Energy Prices and inflation has not moved up significantly higher. The key question from here you had a report that talks about this whether you can get some sort of genetically domestically generated inflation. That will be a trouble. Sales taxes come in. Rates were hit. We have seen in the inflation data that firms tend to, markets tend to pass taxes on 100 . It is not like in europe or other countries where some of that tax is absorbed. In japan, it goes straight through purity he massive hit to real wages as a consequence will get it will be tough to demand stronger. The bank will have to use policies. Ease policy again . Probably later this year. When you look at government politicians, what they are trying to do it is understandable to maintain confidence. A lot of this is a confidence game. Trying to convince the public nomics is ae revolution. The evidence is that is pretty hard. Real wage growth is going to be hit quite hard by this inflation increase. The third aero, as it were. Our we have seen politicians trying to be upbeat and suggest a sales tax will not derail the economy. And then the bank will not have to easy again. But as we get more data showing the impacts of that tax hike, the fact that inflation will not hit the target over the twoyear time frame, that will make the bank of japan ease policy. Perhaps in some senses, there is the issue that if they continue in this vein and suggest that they wont use policy, that does risk a decline in dollaryen. I can upset the whole process. Your forecast for the end . Just above 101 . We will see it here for a little while. 105. Longterm, we are going to 120. That is not just monetary easing but other factors that are going on. The fact that investors like the Government Pension Fund will shift assets oversized. I am nervous about the chinese economic situation. The slowdown there. Which could weigh on asia and japan and the yen. As longerterm. Longer term, staying in the region, the indian rupee the bestperforming asian currency in may. Up two percent versus the dollar. Well it last . Ask for the moment to dwell. The emerging market currencies in general are in a good situation. Soldhave been aggressively, like the rupee. Stock markets flying. Very low volatility across all assets. What is there not to like about any emerging market currency . The indian rupee do you have a preferred emerging market currency . Those that have sold off in the past and offer good yield, pick up, in an era of low volatility to rebury our of low volatility. Coming back. Even the rand. We had disappointing gdp data, but that currency is proving immune to the bad news we have seen there. That will continue to strengthen it a bit more. Head of big ten research. A big week for the ecb. Lots to discuss. Stay with us. Welcome back, this is countdown. Stephen is with us from standard bank. The ecb meeting, i just wanted to happen. What is priced in . Rate cuts. Clearly, i suspect at this stage, the market would like to see 15 basis points off. If the bank just stops at rate cuts, that would be taken as disappointing given some of the other aspects that have been talked up by the ecb. Beyond of rate cuts, what is most likely question like most likely and less likely . I would like them to have a funding for lending scheme, taking a leaf out of what the bank of england has done. Although a lot of people do write these keen, a lot of people deride the scheme, it has fostered confidence in the u. K. Of not lending growth. Dont be distracted no. A decline in lending. A lot of companies do not necessarily need to borrow but they need to know they can if they need to. That is the level of confidence the u. K. Economy has come bounding back significantly for different reasons. This is one of the reasons. Im not saying the eurozone economy will come bounding back if there is a funding for lending scheme, but its not enough to just throw money at banks. They have to throw money at banks and say, do something with it. Any period. Over 2012 inme started at the u. K. And then was extended. The ecb could have a short timescale but could extend it if it leaves the scheme is working. Towill nonsterilization that have an impact or not . I think maybe if the bank cannot get a funding for lending scheme together. This is more difficult for the ecb than the bank of england. They may look at other measures. Maybe sterilization of the Security Market purchases. That adds 20 billion euros plus two liquidity. At the end of the day, will that make a great deal difference . I dont think so. Today need to set the ground for outright qe do they need to set the ground for outright qe . We will go big . I think mario draghi has already done that. I think that is in the pricing. The ecb has seemingly promised quite a bit. When will it deliver . I think probably later on this your or into next year. I thought for a long time that was coming to read as with that was coming. As with negative deposit rates. I thought they would have to go the whole hog on this easing. It is plain out that way at the moment. What does it mean for the euro . Coming down from highs of 142 1. 36 . 1. 40 to not very much, is it. They are aiming for a lower euro, but they have their work cut out. The market has died. Volatility is scraping the floor. I think it will stay down. I think it will be difficult. More him what might happen next thursday, if they deliver something of significance, we might see the euro come down quickly. Then i see a stabilizing again. Seen with the ecb meeting, the euro came down very quickly and then it has petered out a bit and drifted lower. Lower out of its trading range what could break it towards 130 . If the ecb were to deliver qe2 straightaway . The key issue is the volatility which is low. It is likely to stay low. In some respects, that is good for a lot of currencies or markets. In emerging markets, and helps to carry trade. These currencies could strengthen. It does not help countries where they are looking for currency movement. In the case of the ecb, with the weaker euro. Good to chat with you. Have a good weekend. The head of research at standard bank. For payingeadline asked debts to russia will expire on monday. Wealthy countries which are deal before russia turns off the gas . Welcome back, i am mark barton here in london. As is what is happening to the currency market. The one you want to watch today is dollar against the yen. Inflation surging to a 23 year high. That is on a tax rise that is pinching consumers who have seen limited wage gains. Does the increase in inflation mean we will get less holocene doj boj. Industrial production, Household Spending data out of japan today also falling more than forecast. The dollar is falling against the end today after that surprise inflation. For the three year high in consumer prices. These are the Bloomberg Top headlines as i just mentioned. Japans inflation accelerating to a two decade high. Industrial output, household after that sales tax increase. The chief executive of luna purchase most of the will be purchased bonds. I think rates may help on the euro dollar side. Not for us, i think, but for all economies in europe. They will lead to a slightly weaker euro. Capital and liquidity. Separatists are getting outside assistance in the form of advanced weapons. Prorussian rebels used shoulder launched missiles. Theres been a and upside an uptick in fighting along the russian border. The battle over gas. International correspondent hans nichols is in berlin with more. It is all happening in berlin today, isnt it hans . Where european officials are trying to mediate this dispute. It is pretty clear there is no deal. Energy minister of ukraine referred to russia as an enemy. Heres what we have going on here. 50 of the gas goes to the European Union from russia is piped through the ukraine. The supply of natural gas for europe at large. The deal that is on the table , thishe European Union hasnt been consummated. Heres what they say. Ukraine will pay 2 billion of its gas by may 30. That is today. By june500 million more 7. Om gets a first maintainthey will delivery. Yesterday,e was passed without an agreement. We will see what well go back to. Ukraine has refused to cover any russia raisedince its price is about 81 in april withdrawing two separate discounts. These are discounts from two separate years. Heres what the Prime Minister saying about it. We are ready to pay the market but never the. Itical one to i have no idea what that means in terms of how expensive it is for consumers, but there is a market price for gas, and they need to figure out what it is an come to an agreement. If not, once the winter comes, it could be more interesting. One interesting point, ukraine in april ase times they were preparing for this. Theyre bringing in a lot of gas right now and putting it underground and storing it. Me and isa man with exactly what 268 per thousand cubic meters means. He is trevor sikorsky. We will come to the question imminently. Trevor, thanks for joining us. The deal that is on the table at eu slapped on the the table. Is it feasibly palatable to both sides . They meet in berlin today. Are we possibly closing in on a deal are not . I think we should be. There are a number of reasons for why a deal would be good for both sides, particularly for gazprom. It looks bad in europe even if we dont need the gas at the moment. Think it would be interpreted in the west as an act of aggression on the new ukrainian government. Be seenhas to at least to be open to a settlement. The terms of the numbers, 2 billion is an agreed settlement. Everything above that is disputed. It is saying, we understand this level of payment, we will get out of the way. And we will talk about the rest afterwards. So if ukraine pays a 2 billion, the gas continues flowing. There is no disruption and they can talk about a price for the longerterm. That is the big thing. So essentially, russia has raised prices by 81 in april. They withdrew the two discounts to put in place in 2010 in 2013. Russiaf ukraine once 250300. What is achievable here do you think for both sides . The ukraine were paying around 268 and then it went up to 450. That is a big increase. That is way out of the market in some ways. Ukraine is looking at what they pay in western europe. That is downstream. After transport the gas there. The 268. Paying around theyre saying our gas prices should be around that. Theres no way we should be paying such a high premium for russian gas. That is what they really dislike. That is quite a punitive level of payment. To pay says you have this because you havent been paying your bills. You are a bad customer, and that customers pay a premium. This is going to be a very long dispute between the two. Gazprom is in arbitration often with its customers. Recently, the success has been that gazprom has to discount its gas. It has been in arbitration with rwe. Gas. Got discounted they havent had a good time in arbitration, and certainly, if you look at those gas prices you will say this is punitive, they would need to come down to be more in line with every with what everyone in europe is already paying. , if the taps were turned off they have been stockpiling, how bad would it be for the ukraine and for the rest of europe . It would be fairly bad for ukraine because you put gas in storage anyway in the summer. You have to do that because during the winter you have massive demands because everyone switches are heating on. They could then see a position w