London. Stay with bloomberg. We will hear from the owner of home to alberto cant adore and one of the most innovative voices in professional cycling. And we will be talking to Novak Djokovic the day after he beat Roger Federer to reclaim the number one ranking. That is coming up later on in the program. Frances finance minister has occurred euro area governments to bolster the euro in International Transactions to counteract the dominance of the dollar. This comes after the bank was fined nearly 9 billion in sections violations. We spoke to him and an exclusive interview. We sell ourselves aircraft in dollars. Is that really necessary . I do not think so. Airbus can sell in euros. It would create stability for airbus and air france so that we can avoid this exchange rate. Can the euro be an alternative to the dollar considering that 60 of the Central Banks are in dollars . Can diminish financing costs in our economy by laboring by labeling more and other currencies. This is not a fight against dollar imperialism. ,he goal is to find stability to reflect the financial and economic reality of the world so that the world can be more stable. Do you think we are going to see more european banks get a f . Ne, just like bnp did yes, other european banks are concerned i the same western street but the past is the past. The u. S. Justice system is independent. But we are looking at a future. It is in the interest of everyone to create a better balance between our currencies. Is the french government going to take the lead in this battle . France is in europe, so it is up to europe and the eurozone, in particular, to lead this argument. Jonathan ferro joins us for more. Should we be surprised that the finance minister of a eurozone country is saying this . I am not surprised at all. This is just a hangover from the issue. Np paribas obviously, one of their babies took a big fine and they are not happy about it. Been fined foras conducting transactions in dollars with countries that have been sanctioned by the u. S. Clearly, they think that is a problem and causes concern. They are looking at ways to address that. To me, you have a bigger issue. You have a bank that committed a crime. It is a very serious allegation and there was a serious lack of oversight. For me, that is the big issue. What is interesting Going Forward is that i see an economy led by these officials that are beating a drum similar to the one the u. S. Beaded with china. How realistic is it that they could decrease the use of the dollar . Oil is traded in dollars. Planes are bought in dollars. We heard from the ceo of total thingsthat we can quote in dollars, but by them in euros. Market, 90 percent of that has the dollar on the side of it. The dollar is absolutely massive. Yes, you can extend the use of the euro. French officials are, on one side, talking up the use of the euro while talking down the value of their own currency. The other issue for me is that french politicians are at a french economic conference and the Biggest Issue for the finance minister of france is the use of the euro and not the French Economy . They are calling for the French Economy and the guys who oversee it to do something about it. When the french finance minister shows up and his big agenda is the use of the euro, that is a problem. Socgen was with us earlier. He said it would add to their abilities to make the euro a day player in global trade if the french were to go out and buy more stuff. He was talking about the eurozone generally. And be a bigger player, you have got to consume more, import more if you want to have that. One of the things we have seen over the last few years is the current account surplus where you see europe and the ledpean union, particularly by germany, exporting way more than they import. I am not sure how much they can argue this. What i find most interesting is that the french sound like the russians. Yes, they do. A lot of people are talking about the exact same thing. The u. S. Has been so hostile towards the russians, they are encouraging russia and china to look for an alternative to the dollar anyway. It is Angela Merkel seventh trip to china while in office. Earlier today, she met premier li. Top of the agenda is to boost trade ties. For more, stephen engle, a man who knows more than almost anyone on china, joins us. Some big deals signed between the chinese and German Companies today, yes . Say about what jonathan was saying is that the chinese have been saying this about the dollar for a long time as well. Andyes, chancellor merkel premier li talking about a whole host of issues today. She was in switzerland yesterday. The talks included Cyber Security and merkel committed about the latest u. S. Spying allegations saying that if the reports are correct, it would be a serious case. But you are right. Trade is the real focus of her seventh trip to china since 2005. Merkel was given a full military welcome in beijing this morning and will meet later tonight with president jean tang xi jin peng. Premier li said he will head to germany in october. Chinagerman ties were described as being an Important Strategic Partnership that has developed on a very broad sound a very broad foundation. A lot of deals being signed. Are many is chinas largest trading partner in europe and china is a key market for goods like audi, siemens. She brought leaders from many companies, including deutsche bank, lufthansa, airbus, vookswagen. Vw today announcing a big expansion of production. Euros worth of vehicle plant. Signed a deal with fellow star lines member, air china. No details, but i am sure it has to do with more cochairing. And airbus will sell helicopters to china. No specifics, but we are hearing that the deal is possibly for as many as 100 helicopters being told being sold to china from airbus. Premier has also been talking about the economy. What has he been saying . He is a knowledge and dging the downward pressure that we are feeling in china and saying that they will keep their composure and not adopt strong stimulus. Has been the fear, that they would go back to what they did in 2008 and pump the economy. , they will increase the strength of targeted measures and open up. That is something that chancellor merkel was pushing for, including reform of the government approval process and lower Market Access thresholds. Thank you very much. Obviously, Angela Merkel in china, as he was saying. She would be looking for anything that can boost the industrial output for germany, disappointing compared to forecasts just in the last few minutes. Month infor a third may. Another sign that europes largest economy is perhaps taking a little bit of a breather. Fromction fell by 1. 8 april. The Economy Ministry in berlin and out these tickets this morning. Economists forecast output that was unchanged. This certainly coming of a negative surprise. As stephen just mentioned, while Angela Merkel was traveling in onea, they learned that agent might have been a double agent working for the United States. Hans nichols brings us up to speed with this story. How did they catch this man who has been allegedly on both sides of the line . Ring us the latest. They caught him because he allegedly offered the same spying services to the russians and that prompted an internal investigation. Then they find out that he works for a German Spy Agency and he was double dipping and doing work as a double agent for the u. S. Realutrage here has been and palpable. Merkel learned about it in china, talked about it with business leaders. Yes, there is a salacious aspect to this story, but there is also a policy impact and that is what does this do to trade talks . It will be increasingly difficult for Angela Merkel to bring germans along with the idea of a freetrade agreement if there are allegations of spying. Here is what the interior minister had to say about this. Remember, we spoke with him a couple of weeks ago on the same issue. The is what he told newspaper. I expect everyone to cooperate promptly to clear up these allegations with quick and clear comments from the United States as well. The u. S. Ambassador was summoned on friday. Here is what did here is how the alleged blatant transfer material. He had an app on his computer that was a dummy application and allowed him to transmit data. A dummy weather app. This is spying for the 21st century. It is a great touring. We cannot get enough of it, but it does have serious implications. Thank you very much. Iraq, Army Generals have destroyed vehicles used by militants in the north of the country. That news comes from the iraqi military. The consulate has yet to cash the conflict has yet to Impact Oil Prices. Marjorie spoke exclusively to us at the economic form. Forum. It moved a little bit from after what4 happened. But it is back to 110. For everything in the market, there is a risk ring him. What the market is wellbalanced. We will take a short break on the program. Of strength sign for britains economy. How will Governor Carney sustain it . We have that story and the macro theme driving European Markets right now. Stay tuned. Time for todays company news. I is said to be planning an ipo for its telecom business. The sale may value the company at one billion euros. The company has 8500 employees. Bmw has halted production at South African plants because of a strike leading to violence. The strike by more than 2000 200,000 workers began on july 1 and threatened south africas any festering entering output. Wage talks broke down after the Union Rejected an improved offer. Leisure will buy Video Gaming Technology for about 1. 3 billion. Makescrat leisure gambling machines and is looking for an increased presence in the u. S. Market. Welcome to countdown. 7 16. Time in london is the pound reached a 21month high against the dollar. Here to discuss that and more stories driving markets for the global 2014 is barclays head of Asset Allocation. Lets start with the pound. I showed up in this country and it was 2. 10 to the dollar. Every time we went back to the states, we got an extra suitcase. It went down to the 1. 30s. Where do you see the pound going from here . I think it will do generally well against most things ecothe bank of england will be the first Major Central Bank to be raising rates. Against the dollar, i would imagine we are probably about as far as we are going to go because the risk is that the fed is going to start needing to move rates as well. What could trick the uks economy up heading out to the rest of this year and into next . Is it going to be something around the eurozone and the fight over deflation . Is it the Housing Market in the you quake a in the u. K. . Risk . Political there are still a lot of questions about exactly what happened in the u. K. , fundamentally, does this economy has a lot have a lot of momentum behind it . Is the need to recognize that the u. K. Is a very interestratesensitive economy. If the rates go up, the impact could be quite significant. Talk to us a little bit about the u. S. And where you see the market, in general, going be we , topast 17,000 on the dow be exact. Do you see that continuing . Do you think that can be sustained . I think the u. S. Equity market is the market that we probably worry about most. There are two reasons for it. One is the valuations are beginning to get stretched. I would not say it is exceptionally stretched, but we are getting there. Our biggest concern for the second half of the year is that u. S. Inflation is starting to go up. U. S. Rates probably need to go up and the market is not paying any attention. Could we still have a positive return in the u. S. Equity market the second half of the year . Maybe, sure, but it is not going to be a particularly big one. Do you think that the fed is behind the data, behind the reality of what is going on in the u. S. Economy . Should we be hearing some more hawkish thoughts from the fed . It is a tricky word the truth is, inflation in the u. S. Is picking up. It seems to be a trend that will be sustained. The fed is telling us we should not worry about it. I think the worry is that the market seems to be of a view that the fed has already decided. Hat is even though they say it is dependent on the data. They could easily Say Something more hawkish anytime in the next few months. Suddenly, the entire sentiment started starts to change. You mentioned that the market is punchy right now. Im i noticed that forward forecasts for earnings and p e ratios go down a bit. The valuations are only getting more i expected the valuations to only get more expensive. That is not necessarily the case. Does that mean we could have further to run . I always worry about forward p e because part of that is forecasts where earnings are going to be. You look at adjusted p e, 10 years of earnings that we already know, we are sitting at the highest level we have been at quite some time. P e is a tricky thing. Notainly, forward p e is that bad, but that requires the forecast to be correct. So a correction in the last 12 months in the next 12 months . What if we are going to get a correction, we think it will most likely happen in u. S. Equities. We think equities are ok, but the u. S. Is where we see those risks. Jim mccormick stays with us. We will get more from him on emerging markets when we come back. Welcome back to countdown. Time in london is 7 23. We are back with jim mccormick, discussing macro stories for the second half of the year. Lets pick up on the emerging markets theme. You mentioned that the fed could turn course at any moment. What would that would that do to emerging markets what he did when they first talked about tapering . The method we have on emerging markets is that they are in a much better position than they were 12 months ago. One is that the macro picture has improved. From an investor point of view, the more important point to make is that risk premiums are much higher than they were a year ago. Better places than they were the last time we had a pick up in rates. Which emerging markets do you like . I have got to ask you about russia because i talk about russia all the time and we were discussing pricetoearnings ratios, which are very expensive in the United States. They are very cheap in russia right now. Where does that fit in with the emerging markets that you like . Firstly, the asset class that we prefer is equity. It looks like a good asset class when growth is improving and rates are going up. We like japan, mexico, poland, india. I think there are a lot of different places in the emerging Market Equities that look attractive. You like india. They have a budget later on this week. Indonesian elections coming up. Are you looking for this week to deliver anything in particular on your emerging markets agenda . I think the india budget is going to be very important. This is a story that is a very structural story that people need to be part of. In thepositive on acrosstheboard. Indonesia, we need to see what happens with the election. It might be too early. And russia, it is super cheap as a longterm investment. You know what the risks are. They seem to have gone down a little bit in recent months. And the sox are very cheap. Russia,u are talking you need to talk oil and commodity prices. What is your expectation . We have been increasingly bullish on commodities this year. We have been bullish on base metals. We are now bullish on oil as well. Oil has all of the stars aligned. You have supply going down, overcapacity, Spare Capacity is going down, geopolitical risks are picking up. You could have said that last week or the week before last week and you would have sounded very smart. 114il kind of went up to and now it has come off to 110. Looks like it is headed towards being range bound again, no . You had the geopolitical spike around iraq. If you look at the bottoms up on oil, it has been pointing to upside for a very long time. Curve is not pricing that in. Do you buy around the m a . Do you target companies you think are going to be bought up . We do not, but as a trend, we are definitely in the part of the Business Cycle where m a should be a driver and we are seeing that. Thank you for joining us today. Jim mccormick, global head of Asset Allocation at barclays. Coming up, egypt faces an uphill battle with their budget. Higheriving fuel prices salt or exacerbate the crisis . We will discuss that next. Welcome him. I am anna edwards. Check. O now to our fx ds. Thank you, anna edwar a lot of potential for the euro to weaken. One dollar 30 cents, a slight drop from where we are, and the ecb is starting to do their bit gradually, and the Federal Reserve, led by janet yellen, are they going to do anything . Will they go the other way . Just noise. Minutes out from the federal last meeting. You add in a stellar jobs report, and that maybe one of the triggers to send the dollar higher. Thank you very much. Lets get you some details on the top headlines this hour. Theykraine government says have taken two cities from prorussian rebels one day after Government Forces regained and thein one area, contract in iraq has yet to Impact Oil Prices according to the ceo of a large oil company who spoke exclusively to Bloomberg Television at the aixenprovence economic forum. After what happened, one hundred 14, but it is back to and as for any market, but thea risk premium market is well balanced. And know that djokovic defeated Roger Federer for the wimbledon title, eating the grand slam recordholder in