Looking and the largest Engineering Company and its business thats breaking out now. Hello. Welcome to countdown. I am mark barton joined by Caroline Hyde and ryan chilcote. Breaking earnings from bnp paribasrans largest bank, the biggest loss in its 14year history after the record fine for doing business with iran. Loss approaching 4. 3 2 billion euro, the second quarterly loss since the bank was formed in a merger in 2000, slightly more than analyst estimate of 4. 27 billion euro. Almost 9s was fined billion after pleading guilty to criminal charges in the u. S. On june 30. That was a record sum for a bank accused of violating u. S. Sanctions. Interestingly, leaving aside onetime items, they earned 9. 2 billion euros in the corridor. Bank was that, the profitable but at bloomberg, we include one off items, the largest loss in its history. Thats go to paris. Caroline is standing by. You spoke to them before the results were released . Thats right, mark. Obviously, bnp paribas had to take massive charge for this corridor. The 75 million charge to pay for that. That impacted the caroline the currency ratio. As you know from january, they also have to face the oneyear dollar clearing ban on some transactions. The biggest damage of all, mark, is reputation. Bnp paribas had to plead guilty. How could the bank resist such a big blow . There are Quarterly Results including 6 billion in a oneoff charge relating to the settlement we reached at the end of june. Nevertheless, if we look, the underlying result is up 23 versus last year. The capital ratio will now be below. Do you plan to issue convertible bonds . We always said 10 for diversified banks kujlike bnp paribas is the yardstick we put forward in our plan. There is no need for any further capital raising. How can bnp paribas win back confidence . We have reached out to the clients if there is further information required. We thank them for their trust. That bodes well going forward. This is damaging the reputation of bnp paribas, isnt it . It should not have happened. The bank has regretted it. There has been action taken for it to never happen again. How much will you invest and how many people will you hire for better compliance . Remediation is what we agreed with the u. S. Authorities and we will review the current control framework. Beyond that, there will be a Group Supervisory and control committee presided over by the ceo. There will also be a conduct committee to make sure that for all general actions, all of the policies will ensure that going forward. Are you going to reroute payments electronically or tell your clients to go to another bank to do it . This is something that we will have to look at it. We have negotiated a time for that. We have an agreement following 90 days and we will have to go back to the authorities, french and u. S. , to get a state of the union on where we stand on these. For the oil and gas commodity kind of clients, during 2015, the transactions will be the final part. Tolitigation risks continue build up in the world. The bank isa risk facing that is of the nature that it would require provisions. Paribas does not see any relatives at the moment. They could still post a profit for the full year, but how can the bank really comply with sanctions given the current russian situation . Veryaribas does not have a big exposure to russia. They do not have retail presence there. Theres a new risk function, new compliance measures, and a whole new team in new york to make sure they abide by all u. S. Sanctions. In paris,e connan thank you. More breaking news. A really interesting part of siemens is whether it will be affected by russia going forward. There is no mention of russia within the statement. Hiredave numerous people thereby siemens, more than 3000. It could be directly affected by the sanctions. Looking at the numbers, it is strong looking at the thirdquarter income. In continuing operations, up 36 . Officer, first year at the helm and it is stunning to see this bear fruit with an increase of more than one third. Income is 1. 4 billion euros coming in beating analyst estimates. Sales did decline almost 4 hit by falling currency swings with the currency market. Up some 8 in emerging markets but thats have a look here. International correspondent from berlin, hans, joins us from berlin. What do you think of these siemens numbers . The big thing im looking at is the cost, when hundred 55 million euro 155 million euro. He wants this to be in electrification company. They already have 1. 1 billion in losses in that unit in they continue to have problems. That is what stands out to me here. There is a quick quote of the statement. While we made Good Progress in most areas, the Energy Sector poses a continued challenge in the quarter to come. Hes been at the helm for one year and in that time, the stock is up 20 and the dax is up 15 . We will be looking in the Conference Call for something on russia. Obviously, they have a lot of someure to russia with 3000 employees, almost 3 billion in sales including gazprom and other Russian Companies. Bad word in it, but here is one quote in a bloomberg Editorial Board meeting reminding everyone what he said he told Vladimir Putin. Here is the quote. That thenont start we will be the first ones to obey the sanctions and put them in place. The focus will be siemens exposure to russia, what they plan to do, how much they will have to turn back. Caroline. Delicately done, hans. Thank you very much indeed. The fomc met last night and released their latest statement. It seems change is afoot at the central bank. Manus cranny has been pouring over the statement. Whats new . Good morning. A little bit of a nuanced change. Originally the fed wholly focused on unemployment but we know the world is changing on how youre supposed to set Unemployment Rates. That sort of goes down to scale, too, if you want to think of it in those terms. There are a range of indicators to suggest there is underutilization and labor resources. The unemployment number is such a big policy part of the decision and that is what they are saying. When it comes to the economy, they are looking at a range of issues not just the Unemployment Rate and then on inflation, theyve actually upgraded. Ahead for the hawks hawks upgrading the risk of price increases running consistently below 2 . The hawks are happy. The risk of inflation below 2 will not just be there in perpetuity and the Unemployment Rate still picking up slack. No statement, no press conference, no new guide. I get kind of excited about the smallest of things. Dissenters . The Philadelphia Federal Reserve governor dissented. The reason why thats important is one voice of dissent for janet yellen and its the first voice of dissent under her tenure. Whats more important is the whole blooming world thought it was going to be richard fisher. He spoke recently. He said in the wall street , i believe that with mr. Fisher we are at risk of. Oing what the fed once overstaying your welcome staying too loose for to long. Manus. [laughter] at the end of the night, you have just an far too frivolous and it really is time to go. That was fishers mantra trying to make centralbank policy exciting. Where as Charles Closser klosseur will exit. They want to raise the point. The fed is saying even when we finish qe, for a considerable time it will remain very low. Objecting to that. Do new you want do you know what . I have three images and i want to see if we can see it. Is alan greenspan, ben bernanke, and janet yellen. Easy street iof have decided to label this. Greenspan did not suit the bubble until it came. The fed began raising rates under his tenure and a little bit too late, treated the bubble. Ben bernanke save the world, didnt he . And janet yellen, the perpetuate for safety. E contact me on twitter. I decided to show you a twoday chart because thats very exciting. By the time you get to friday, you wont know what hit you. Thee fair, mark barton made point this morning. The reason im showing you the twoday is that this move happened higher in government , notyields on the gdp data on the Federal Reserve minutes. At 4 , wayng in above estimates in the market. Shes going to cry. I better stop. The move on treasury based on the gdp data, not i repeat not on the fomc statements. This year or next year . Find out when Christian Scholz thinks the fed will raise rates. Stay with us. Welcome back. This is countdown. I am mark barton. 6 17 a. M. The fed is turning bond buying for another 10 million or months but the Committee Says they are still wary of a rate hike. For more, berenbergs Christian Schulz joins us now. Whats your assessment on when the fed is going to start raising Interest Rates . The eyecatching change at the very end, we had one dissenter. Plosser dissented on the guidance but i think that is very important. Rate hike in a april of next year but that is still plenty of time for the committee to discuss and make up their minds. The numbers published during the impact havent had much on the vote yet but its a surprise we already have somebody dissenting and that is a hawkish message. Plosser couldnk move. R encourage them to we may have seen more positive labor data and could extension with the discussion. Who knows . Was not the one people expected to dissent first. Maybe more people will join him next time. Tojanet yellen is trying stop us getting overzealous about the improving data and saying at the moment, there is far too much black. Too much flak. Will she suddenly have to shift gears . The increasing inflation rate will start to change sentiment. We have growth that 4 and unemployment near 6 . Too far away from target and we have emergency policy rate bond buying. That of course raises pressure to justify why you are doing this. She has many good points and shes right not to move too quickly. Seen commutation over quick tightening can do to american and global markets, the taper tantrum last year. Move slowly and communicate that to markets. Shes right. Until nextt her way year. I think shes doing well. Wheres the wage growth, christian . Why is a not responding to this economy . Conundrum. The i was going to say even more in the u. K. Were jobs growth is so much more stronger than it is in the u. S. It is probably something to do with productivity both in the u. S. But especially here in the u. K. Where we have strong jobs growth that is actually stronger than output growth which means productivity is so disappointing. If workers are not productive, you cannot really pay them more. I think productivity will pick up because it just has to at some point. How will it pick up . Is it because they have been delayed in investing and so they have not been as gainfully employed and is not making it more efficient . We have seen hiring but generally in the lower skills segment. The investment story, this legacy of financial crises is playing a role where missy a big increase in investment that should translate into higher productivity as well. Difficultty is a concept to measure because you can measure the number of hours, the number of people, maybe the hours people work over productivity with other measures and thus pay would go up. Its tricky. Eventually, productivity will go up as it always does. We are not in a world where suddenly productivity stops. Christian, stick around. We are going to talk about euro zone cpi data as well. Berenberg senior economist Christian Schulz stays with us and make sure you do, too. Welcome back. I am mark barton. Christian schulz is still with us, berenberg senior economist. It may come in unchanged from the previous month. Will that push the ecb and to further action or not . Obviously not now but sooner rather than later . 0 to be honest, it if it is. 5 after we saw german and spanish cpi, that would be a surprise at this stage because german cpi went down and spanish inflation went down. Todayld even disappoint and that would be an Even Stronger message to the ecb to consider what next. I think the ecb well, after the decision that they have taken in cut in the main rate and the negative deposit rate. After that, i dont think they will move that quickly but they will clearly discuss what else , ofd be there to do in case course, the economy disappoints but also the geopolitical risks we are seeing heard the european far. My more than it has so they need some emergency toolkit, which im sure they will continue building and communicating. You think the measures they have already taken will cycle through and push inflation eventually . The negative deposit rate also. The timing was quite elegant. If you look at the growth data, september things were gradually improving. We still had the asset quality review creating uncertainty bringing back some of the supply and growth as well. Teltroslped rose kick in. It could be a catalyst but it could also disappoint so they need to look at this about once a year. Christian schulz senior economist from berenberg. Argentina declared in default by standard poors. Welcome back. I am mark barton. Lets go to manus cranny with an fx check. Lets start with the surest bet in the world, the eurodollar. It is changing direction. What do we mean by that . They are pulling money from europe. Exchange traded funds in america polling over 1 billion, the first outflow since april 2013. Everything supported the euro, the buying of peripheral bonds, european equity, is it changing direction . 1. 24 at the end of 2014. Rate doesoyment matter. I love that phrase the surest trade in the world. The dollar index, strengthen the dollar index if you look at it over the twoday time but this is what i showed you earlier where the move in the dollar is being driven mostly and fundamentally at this moment in time when you have gdp of 4 . That is what moved the dollar into a new shift. Sinceggest monthly gain may 2013 up 1. 7 and traders are raising about on a hike by the ottoman next year. By the autumn of next year, 87 probability. Dollar on the move. I need to learn to write better. These are the Bloomberg Cap headlines today. The Federal Reserve policy Committee Says they are still concerned about the underutilization of the u. S. Labor market and signaled it is still wary about any Interest Rate rises. The fed will trend bond buying but another 10 billion per month. The gaza main market hit by an airstrike after the United Nation condemned a previous attack on a Refugee Center where 16 people died. The United Nations is demanding accountability citing that nothing is more shameful than attacking sleeping children. Army troops are responding to the fire launched on them. Oligarchs assets are now being frozen by the European Union, the latest attempt to pressure president putin the stop supporting rebels in ukraine. Eight people were added to the blacklist of individuals and organizations being sanctioned. The eu has unveiled its socalled crony list of Vladimir Putins business and political allies to be blacklisted. Ryan chilcote has been taking a closer look at who is being sanctioned and why. Tell us about the main figures. He is worth 3 billion by our ofnt, owner of s p bank, one the first to get sanctioned. You may remember mastercard and visa declined to service their credit cards for some time causing some who blog. A former judo partner of putin and boyhood friend on the sanctions list. He was one of the first people to be added to the u. S. Sanctions list. Interesting to see basically what europe is doing is copying the u. S. List and starting at the beginning. The other notable figure on the shareholder inst the bank that the white house says is effectively the cashier of the kremlin cronies. Is aussians say it perfectly legitimate bank that does corporate lending. It was also sanctioned early on so he is now persona non grata in both the United States, europe, and should he have any asset still here, they will be frozen according to the blacklist. Interest interesting thing about him, he owns a very large Media Organization so russian channels, it internet sites. In the European Union menu sanction an individual, you have to say why and it has to be legally watertight. They said his channels are effectively a Propaganda Machine allowing the destabilization of ukraine. Interesting, quickly. He has a Company Called cctv media, an Entertainment Channel that has nothing to do with news or propaganda, but the ceo was saying they were finding that russians are becoming more patriotic so some of the western sitcoms they will move away from. That is apropos of nothing. Today, yett later another company with exposure to russia. We have already had bp. What do you think we will get from shell . They are not as dependent on russia as, say, ep. Its exposure to russia is important enough that it cannot ignore it not as dependent as bp. They are working with a neft inry of gazprom siberia. They also have their hands in t out in the projec islands and they have wanted to increase and we will listen to what shell says today. Even if they dont make a statement, they have wanted to increase capacity. The danger to them going s, if youlng cargoe remember yesterday we have the former owners saying they are going to move against them both potentially. The way they do that, if the russians do not fork over the cash as they tried to seize assets if they can overseas. One question i would have is what it means for the lng cargo going forward. The other issue is working together with gas from gazpr om neft. That is dependent on the technology that europe says they are now going to ban. Funding for all Russian Companies is tight. The oil and gas industry is always capitalintense project. That