Welcome to countdown. A warm welcome to the second hour of the program. Paribas isbank bnp said to be planning a guilty plea today to end the criminal probe into u. S. Sanctions violations. Caroline, what do we expect . Good morning. As you were saying, we expect frances largest bank, bnp paribas, to plead guilty today to u. S. Criminal charges. The board of bnp paribas, according to the Financial Times, met over the weekend and approved the deal with u. S. Us with u. S. Authorities. The department of justice should announce it in washington later today. According to the the french news channel, the ceo of bnp paribas also sent a letter to employees of bnp paribas warning them that mistakes were made and that we will be sanctioned heavily. The final price tag of the up to 9ill be billion. That will be the biggest line ever issued by u. S. Authorities on an overseas bank. Notthe u. S. Authorities are ruling out charging individuals in the future. Banks ability to transact in u. S. Dollars and operate in u. S. Dollars is also being called into question. Give us the latest on that. Of course, that is the main concern for the future of bnp paribas because that will probably mean that bnp paribas could lose some clients over these bans. But bnp paribas has a small victory this morning. Negotiate with u. S. Authorities to get a sixmonth clearingthe ban on transactions in dollars, meaning they will have time to prepare for the ban. Of course, that also means reputational damage for the bank because that means that they will have to go to other partners in order to clear transactions in dollars. What are the other consequences for bnp paribas from this ongoing saga . Of course, the shareholders of the bank will probably end up bearing much of the cost and much of the cost. It will probably wipe out this years earnings at bnp paribas. According to the latest bloomberg estimates, the secondquarter net adjusted income will be about 1. 6 billion euros. So that would be wiped out. It can also Impact Capital ratios of bnp paribas. We will have to see how much when the bank reports the next earnings at the end of july. And we will have to check capital remained Strong Enough to pass the next round of ecb stress tests. It could keep weighing on the share price. As you can see, the share price has been impacted, especially since february, when the bank announced that they had provisioned more than 1 billion for the case. At the time, they told me that the provisions could be much higher. Since mid february, the shares of bnp paribas have already lost more than 16 . Finally, investors could also have bad news on dividends, according to the wall street journal on friday. The dividend of bnp paribas could be cut or even suspended for up to two years. Share. Id 1. 5 euros per obviously, that would be a big hit for investors. Thank you very much. A warning for the world Central Banks read the bank of International Settlements as they should not delay exiting from emergency policy measures. In its annual report, emergingmarket debt and Forward Guidance come up for dissection here. Strong warnings here. When you read through a variety of takes on the bank of International Settlements,it is the central bankers banker. On, get on with it, and get things back to normal. Yes, the Global Economy is recovering. It is showing signs of recovery. There has been a greater search for yield. Everyone is looking for a return. And getend, get on towards normalization. It is going to be complex and bumpy. It is personified best in the periphery of europe. Greece, portugal, and spain, the returns, 30 percent on grease, 60 on portugal. These are so far this year. These are the actual yields. Record lows in borrowing costs. The longest stretch of games in 16 years. There is a false sense of security. Traders, brokers, dealers, have a false sense of security. Cheap money is something we are becoming dependent on. And the cheap money is beginning to lose its impact. There is a fantastic line. Euphoric Financial Markets are detached from reality. I sit behind them. I know. Markets are detached from reality. Len,risk is this for yel accuse you cannot carney of this, actually, being behind the curve to get back to normalcy. I think that is the great story. There is no widespread possibility of deflation. I think i read that somewhere before. Around the time i began my career, something to do with japan. A lot of concern about what developed markets, Central Banks are doing. There is also concern about the emerging markets. The emerging markets saw their opportunity. Low Interest Rates. Lets just show that debt out the door. They are taking on this automatic currency risk. 2 trillion worth of debt risk t risk. At of deb the real issue is the pricing. To. 5 olly good compared in the united kingdom. Rise. Lity, they will are we miss pricing are we miss pricing mispricing emerging markets . There is one market have a look at this. This is the worlds longest equity rally since 2008. This is a different stat. But i can see the flag and the title. Did you know that . That. Id not know right that down, everybody. Something mark barton did not know. Equity is the longest rally in the emerging markets and it is the worst performance so far this year. The point is, he had the bernanke taper tantrum last year. A warning about china today. They reaffirmed concern about china and the ramifications of the elephant in the room. Developed market money in emerging markets. They are also warning on banks. Saying that these artificially low Interest Rates are not cleaning up the Balance Sheet weekly enough. One other entry that is not cleaning up their Balance Sheets is called japan. Of course, we are nowhere near japans situation, according to the head of the European Central bank. The s p 500 is one trading day away from the longest stretch of games in 16 years. That is a good one. That speaks to the low volatility. Thank you very much. A Standalone Company combining its automotive and lighting businesses. Caroline hyde is here. The company is luring investors. You have got to remember, it is the second most important area for phillips, lighting. They are separating the technology bit, the bit that makes components, the amount that they have to invest in. Separating that unit from the general lighting area, where they are developing lighting features and things that you and i can buy for it for our house. Headquartered in california. This unit is being spun off. We howegic point of view can i accelerate growth in this unit without me having to funnel that much money towards it anymore . You separate it and get third parties involved. He is looking to spin this all. Off. They are thinking about the future of the business. Indeed sell it entirely. We do not exactly know. What we do know is that phillips lighting will remain a customer to this particular company. Automotive lighting businesses, basically, the bits that develop the best l. E. D. Out there. They produce the first ever tv and the firstever camera phone. It is all about new developments with l. E. D. Ands in Traffic Signals cars. To keep this area growing, they need money from outside the business. A want to separate it. I suppose so that investors will treat it differently in terms of valuation. The more background part of the lighting business. Which is selling to consumers and businesses. It is quite a large bit of their overall money. 1. 4 billion euros is how much will be separated off. About 17 of the overall lighting unit. So this is only 1 5 that they are getting rid of in lighting. They are keeping the rest of it. As i say, phillips lighting will remain a customer. But this is the ceo once again restructuring and trying to focus on efficiency. Seeing an area that needs growth and also needs money, separating it off, getting other investors involved. The other areas that he think will be growing will be phillips lighting and philips medical unit in general. Later, we will be the first treesk to the tui travel chief executive. The worlds biggest tourism business. That interview to be done by our very own anna edwards. Stay with us for that. He for that, before the break, how to become an ace investor. Higgins. Alk to alan time for todays company news. Saab has agreed to buy thiessen hyssenkrupps jet unit. This expands its business to making submarines. The First City Center store in hamburg today. It became the biggest home versioning retailer by getting shoppers to drive to its large, outoftown stores. This city center store is an experiment for ikea. Private Equity Company that has a majority in addison lee, has agreed to a sale. Book him back to countdown. Time in london is 16 minutes past 7 00. Now we are joined by alan higgins. Great to see you this monday. Thank you very much for coming in. Lets start with one of my nicest stats, world equities heading for their fifth straight monthly advance, the longest three since 2007. The s p 500 is one day away from the largest wretch of gains in 14 years. How worried should we be or excited should we be about the returns that some have made . There have been returns in equities, but i think in many markets, fixed income has out performed. That has been the real surprise. This thing to you earlier, i think it is right that the b. I. S. Indicates that low volatility is not a bullish factor, it is a bearish factor. Itit persists for some time, is different from periods of high volatility. In the last cycle, we had low volatility for four or five years before trouble hit in 2008 and 2009. Could you compare the two periods . Territory . 20009 thing, bankr one lending. Why is there no inflation . There is negative bank lending in the u. K. And euro land, which is incredibly unusual. I want to show you this chart. It is just incredible to see. Had negative bank lending and we do right now. So it is very unusual times. I think you are right. You cannot strictly compare and that is why we are in this low inflation regime. Changing a bit in the states, maybe, but on equities, we have stayed with it broadly. We think fixedincome yields can and we have had some longduration assets in our portfolios. I told you about the 100year mexican bond. On the subject of banks you havemortgage data, the u. K. Data and we are still some 25 below. What about looking more broadly at deflation in the eurozone . A topic of conversation once again today. The threat of italy. We are expecting to get another look at euro zone Inflation Numbers. How low do you think inflation goes for the eurozone . To be honest, i do not know. In my role, i listen to economist and try to interpret. When i look at negative bank lending, which does not need to be turning the eurozone, the way we look at it is interested to have buyers in streams of income. So fixed income in the eurozone. We can getow whether any closer to that zero level, but it is very hard to have inflation when you have not. The credit creation. Has done so far, do you think it will be enough to turn around the negativity that we have been seeing . I am not sure. Perversely, the more confident in the eurozone, the more equity flows you get. Equity flows typically unhedged. When we invest, we by equity fund. When they put money into european equities, nearly always unhedged, you have this dilemma. As the euro edges higher, it puts downward pressure on inflation. It is very hard with so many different bond markets. It is monday morning so we like to give people a little surprised. Alan is a tennis coach. You are a qualified tennis coach. Enough to get me by. Alans tennis coaching manner differ from his Asset Allocation manner . Both play. Ou i will give you three kids. One was used when john mcenroe was playing davis cup in the states. It is so simple and mcenroe was having a tough day and the coach said, john, i can tell you are not looking at the ball. Forou watch federer, example, he is looking at the ball right onto the strings. So keep looking at the ball. Ace has been spotted giving locker room advice to andy murray. Second one, get on your toes. A tall guy like you, i do not want to see you flatfooted. And the final one which a lot of people do not do come a they do not get their racket back early enough. In get that racket back. Who is going to win wimbledon, the mens . Djokovic. Is going tourray win. Coming up, bulgaria faces its worst run of banks in nearly two years. How are they turning it around . That is next. Welcome back to countdown. London. 7 24 here in the eu has approved free billion dollars worth of liquidity support for bulgarian banks as the countrys president says the Eastern European nation has resorted to violent attempts to destabilize its Financial System and he worst run on its banks in 17 years. Joining us now is elizabeth, live from the bulgaria capital. Remind us what caused these runs on the banks . Basically, it is the result of a political struggle between the socialists, who are under pressure to resign for their poor performance at the european , andament elections another party. The result is a political struggle between the two. Combined with a ring of people who have disseminated emails and messages on facebook, announcements that the banks are bankrupt and that bulgaria has no finances to support the banks. Basically, this is what has disseminated. As well as statements by the opposition politicians seeking reelection. What are the prospects of containing this racist this the prospectat is for contamination into other Banking Sectors . At this point, we do not see any danger of contagion. The European Commission has also. 3 billion theve quiddity support for the billionn banks 3. 3 support for the bulgarian banks. It is not a systemic problem of the banking system. There is no danger of contagion at this point, according to the government. Thank you very much for joining us. Slim isonaire carlos buying out at ts stake in his own company, america movil. Billion. Tag is 5. 6 more on the reasons behind the deal. Also coming up, maserati is on track to grow fivefold. Details when we return. Welcome back to countdown. Lets head out to manus cranny for your asset check. We are going to check it out kick it off with the south korean won. Strengthening. N this currency has gained almost 5 in the past quarter. We are just off a sixyear high for this currency. What we are hearing from a variety of sources, socgen is one of them, you are seeing intervention in the market by the south koreans. Dollar down, south korean won up. Intervention by the south koreans. Provides outlook on the currency. They say the economics of south korea are beginning to soften a little bit. They are saying you might just get a rate cut coming through. Incremental risk of that is rising. 1,070 in 12 months. So that is the south korean won. Moving into the emerging market debate, that fits in. The dollar just coming off its highs of the day. You have iraq uncertainty in terms of what is being declared as a new district. Ukraine closing above its 200day moving average. Theirs have increased long positions. They are the longest since october of last year. Back to you. These are the top headlines today. The central bank chief of the bank of International Settlements says they should not delay exiting even if the path is rough. They say ultralow rates have long governments and markets into a false sense of security. An Iraqi Government forces saysnue, William Hague britain is not planning to intervene militarily. The quickest country in the world to get humanitarian aid to the people displaced by. He activities of isis so we can help in many ways, but we are not planning on a British Military intervention. And german chancellor Angela Merkel and french president have puthollande pressure on russia and ukraine to resolve the territorial dispute. They spoke to russian president Vladimir Putin as ukrainian president Petro Poroshenko in a call yesterday that lasted more than two hours. The call came just two days after the eu pressed for further sanctions. Refuses to rein in separatist rebels. Billionaire carlos slim will buy out at ts stake in america mobile or 5. 6 billion. 5. 6 billion. Carlost is in it for slim and why is he doing this deal . For more, we are joined by matt. What is in it for him . Pieceeady has a sizable and he is going to own more of it. It is more control over a company he started and essentially a monopoly over the mexican and latin telecommunications industry. He is able to control more of this company. His net worth will certainly soar because at t is going to sell it at a premium. He will have to deal with a lot more headaches in terms of the monopoly and the discussion with the mexican government. They already do not like the amount of control he has. This gives him more. At t has got to get out because they have a conflict of interest with directv. Carlos slim will get closer to bill gates. The use to be the richest man in the world and now he is the second richest. Having a very difficult time. Half of him of his fortune comes from america movil. The other half comes from concrete, other plastics. Finance, a diversified portfolio of infrastructure stocks that allow him to basically control big parts of the mexican economy. At t have a relationship going back many years. That is right. Basically, able to get on the international stage. Carlos slim helu leverage that relationship into being able to not only control the Mexican Telecommunications industry, but all of latin america. Holdings in a number of european businesses. That is right. There has been a Netherlands Company that has been trying to he has been getting in business with them. It has been a tough year for carlos slim. A lot of the market has not like the disagreements with the mexican regulators. I have not love the fact that he has been going international, going into europe. He has been down several billion d