Transcripts For BLOOMBERG Countdown 20140731

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 would presumably also affect them. We will watch the numbers. Analysts expect to actually see a rise in profit. Russia is just a small part of the big picture. Ryan, thank you. Lets talk latin america and argentina. They have defaulted. The country could not come to an agreement with a group of holdout hedge funds that wanted the 2013d in full on dead. Our International Correspondent hans nichols has been following the story and joins us. They wanted to be paid out in full on the 2013 debt. Theyre negotiating again in new york today i understand. There will be more recrimination and namecalling. The big thing we are going to be looking at is whether this whether theefault, association that governs whether it is a technical default from the International Swaps and derivatives association, if they rule this is a credit event then the cds, credit default swaps, close to one billion of them will have to be paid out. We do g will come and its one key thing to look for. Is there going to be a side deal between the holdout creditors led by paul singer and a group of argentine banks, the group that would buy that that and then figure out a way to unwind it . No deal there and talks are continuing. The other question is if the remaining holders of the foreign debt, some 30 billion in foreign debt, will they look at this credit event, this technical default and say we want to be paid in full right now . The argument from argentina 80 centurylink we have the argument from argentina is essentially, we have paid. Here is a quote from the economy minister last night when this all went down. People have created all kinds of euphemisms. It cant be default if weve deposited the funds. We continue to pay our debt. Thats the argument from argentina and we will see whether or not this group that determines whether or not the cds will be paid out buys the argument. Think you very much indeed, hands. Thank you, hans. Hotel thata redefines luxury and is indulging the richest of visitors from around the world. Bloomberg got a look inside one of the most Luxurious Hotels in the world. So the story goes there was hotel,et to build the just an edict from the king to take as much time and money as necessary. These are not Standard Hotel rooms. A onebedroom suite costs 1300 per night, three bedrooms, 50,000. This is one of the most Expensive Hotels in the world. Money goes a lot further than it would in europe. You can get fivestar service for a lot less money. Intourism has bounced back morocco. There were more than 6. 5 million overnights days in marrakesh over the year before. Most visitors are still european but according to royal mansour, big spenders are coming from further afield. Surprisingly enough, we have discovered our clientele is not necessarily the classic clientele that used to come tomorrow cash. The american markets, russian, asian, thend now the japanese and chinese market, theyre becoming one of our leading clientele providers. Im not convinced by the prices. 50,000 for a threebedroom suite . Is that number right . That is quite a large number for a suite. Why would you want to have three bedrooms to keep the kids out . [laughter] if you can afford to stay there, you can afford to ship them off somewhere. Maybe even to another hotel. I love my children. The children are weeping. They have been shipped out. Its party time in west london. Still to come, and lost at the lufthansa. A look at the results from europes secondlargest carrier. Time for todays company news. A Top Party Official is forecasting a drop in sales in russia between 10 and 12 as european sanctions take hold. The chief executive of audi russia says the premium market has remained strong but now, sales are expected to suffer. Despite sanctions, russians are still drawn to the audi brand. Russians love german cars. Not only audi but all german cars. It is a sign of quality, a sign of success. Our customers will not stop buying them because of political issues. Posting aon secondquarter profit missing analyst estimates. The biggest mark phone maker is having difficulty retaining market share in china amid competition from cheaper phone makers. Shares fell after profit dropped 18 . Lloyds Banking Group is said to have suspended at least he didnt traders after the settlement with the bank of england over libel allegations. To have suspended at least two traders. They manipulated the sterling rate between 2008 and 2009. We wouldve the latest earnings from lloyd at the top of the next hour. We will get the latest earnings. Welcome back. I am mark barton. The concept reported a net loss earlier this morning and joining us to discuss this from the airline industry, consulting director john strickland. Lufthansa says theyre predicting travel markets will remain weak in the second half as overcapacity remains. It seems as if it is not, to use a simplistic term, not doing as well as air france, klm . Lufthansa is doing a whole host of things to improve performance but if this was a School Report i would say they could do better. They can rightly point to market issues. But Capacity Growth where they have excess capacity that was the wrong choice to put their capacity in. And have lowcost carriers they are trying to set up german wings to tackle it. Now theyre looking at a second lowcost carrier. Now even a second longhaul lowcost carrier. Easyjet hamaand keep it simple. Easyjet, keep it simple. I question how well that will work. Legacy airlines dont have an easy time of making the cost work. Separately norwegian is testing out the low airfare principle that has not really worked out elsewhere. Theindustrial relations, pilot strike and they have in some ways toughed it out but there is nothing like the grim determination, you can see iag is giving and its previous figures. The report from lufthansa that they are seeing forward bookings remaining week. We know the capacity story, but how much are the current recent events affecting sentiment out there for people wanting to fly out a moment . There are the terrible news from 17. H 17 mh how much will this really feed into that . At the moment, that is very intangible. Malaysia was losing money even before the first incident with mh 370. They lost a lot of business with the chinese public and airlines ,ight now, after mh 17 theyre looking to improve the way that information is collated and shared. Industry leader a well respected Industry Leader has said that they have to do better. The whole process here it is intangible. You have to communicate. You have to say you are on top of things. Safety always comes first. Whether you reroute flights, cancel, you have to make sure the public understand you are treating it seriously. Getting back to an earlier point you made that big airlines are not good at setting up Budget Airlines sort of in their umbrella. Like you said, they just set up a sort of budget airline. Are they competing with one another . British airways set up an , theyre competing with their own business not looking at the bigger market but taking business that would go to somewhere else. And i can go to a different airport later than other than lufthansa. Klm,ubsidiary of ironically selling to ryanair, they could not understand what they were doing and their methods, this is getting back to a lufthansa problem. Legacy airlines have all got systems, the structure and the companies. They really dont quite get this. Markets are down since mh 17. One of the debate is these shoulder missiles, different than the advanced military type pads, theyre called man they are cheaper, more portable, potentially devastating to lowflying aircraft. Is there anything the industry can do to safeguard itself against this type of weaponry . 750,000 there are stockpiled around the world. From my understanding of this sort of thing is next to zero but many of these missiles cannot really be used very effectively in terms of aircraft targets. Is nothing to compare with the missile that shot down the one in ukraine. The industry is navigating risks of all kind every day whether they are manmade, natural, intended, airport closures. This is just irrelevant. Terrorists and security has been top of mind for a long time now. Wass ago, i remember there an ira missile attack near heathrow. These things have happened. We are not to dismiss them, but the industry has to work as hard as they can to run a Seamless Service but managing security. Director johning strickland. Out with the old me. Move over selfies. Time for usies to take center stage. Next up in the newspaper segment next. Welcome back. Im ryan chilcote. Its time for the newspaper segment. Less than one hour away from european trading. Were going to do the newspapers quickly here first. Do you want to kick it off . You kick it off. My story comes from buzz feed. I went to illustrate it. Selfies. Ut usies, not hashtag. Worde incorporation of the into the english language. It is a group selfie. Were going to take one, arent we . You have to read the buzz feed story. We have decided we are going to do an usie for us. My wife says i should never take it from below me. [laughter] thats going to go on instagram. Usie. Heard thet already newest and most exciting word in social media, now you have. This is of a similar ilk, taking photos of yourself but women taking photos of themselves laughing. Photosardian has these of women laughing defying the turkish all addition who came out in his statement during eid saying women should refrain laughing in public. It should not be celebrating during this time. He felt that it was moral corruption to a certain degree. Now women are fighting back taking to facebook, instagram taking pictures of themselves laughing. Jokes these women telling as well. I love this bit of reaction. You sane bolt, Gold Medalist and fastest man on earth, allegedly called the glasgow Commonwealth Games a bit [blee]. Foot in mouth. Argentina is declared in default in the government misses the payment deadline. Selecting the labor market persists in the economy is picking up. The record fines for doing business with iran. Into something that should not happen and the bank as regretted it. It is a busy morning for earnings. Welcome to countdown. It is a busy morning. Have asked regina cut astrazeneca coming up. Thate interesting thing is it is another company that has exposure to russia. Company that is pushing into emerging markets and exposure in india. And theght a big stake consumption of whiskey. Whiskey is phenomenal. Have a. 5 stake and the overall volumes are falling. Clearly, not doing that well and they have concerns. They have to do with thailand and the political instability. And usntinues to unravel is what they say about russia. And items ands inventories got numbers. 6. 1 billion. It is a huge increase on last year. That it did 4. 46 and that is good news. We have not seen a performance at other oil companies. Yeah. Very solid numbers. We will see if we can find it. Is not to the extent, is it. And they are into areas one is is in alle issue things in russia. Is the difficulty of raising capital right now. The other issue is drilling for oil. Not allowen the eu some technology to russia that would help with unconventional drilling. That is a thing they like to do. The right to go after oil and that could be an issue going forward. There is nothing about russia. Has been say that that a theme when it comes to companies. Call and theil the answer the questions that people have, as opposed to getting out there and saying things. Lets talk about the Banking Group. It is still owned by the u. K. Government. The profits Beat Estimates and the estimates were an increase of 32 . The impairment charge and it was reduced. Ands good news for the bank that is a story we are getting, as well. Legacy. Interesting manus knows all about the legacy. He talks about the banks across the continent this week and this, of course, was a week when they were find 200 footie 6 Million Pounds for manipulating benchmark Interest Rates and that is the fifth largest out of the firms that have had to settle with regulators. Mark carney called the behavior reprehensible and the bank had the compensation claims. Amazing. The biggest of all of the banks here. These are the legacies and bloomberg did a beautiful argue article. A summary. As it is, the underlying business is doing well and profits are rising. Whats lets have a look at another company. There are strong numbers and it is a company that is promising the world that they will andease sales by 70 75 many felt that to get there, we would see a slow burn and sales decrease. They say that it will be a match and that is raising the forecast for sales. It is expected to decrease into the low double digits when they continue to invest. They beat analyst estimates in excess and they just made a purchase of respiratory drugs. Showare really trying to that they are valuable as a Standalone Company and that was the big argument. Own andetter off on our we have a pipeline. This is where they are truly trying to get patents against the bestsellers. And they have been running out. The have competition on their heels and they say they are going to increase sales. It is once again taking a rosy picture. Monthy can come back next if invited to. If not, back in november. It is cooling off. Lets talk about the Statement Last night and it seems that change is in and they have been pouring over the statement. It is more exciting than you had hoped. Conferences no press and there were no new estimates with growth and outlook. Ande were nuances of change i watched the program last night with Mark Crumpton and the. Akeaway was a shift one is on the view of unemployment and the labor market. It seems to have moved down in the core focus. What is the Unemployment Rate and should we raise rates or not. A range of labor market indicators suggest that it is significantly underused. There is plenty of slack in the economy. Do not worry. The second most important issue is where are we with inflation and the debate. The metrics some of that the Federal Reserve used persistent 2 f inflation have diminished somewhat. Ok . Something for the hawks. Something for the doves. Both sides of the policy divide have something. We got guidance. We did. Was the only dissenting voice so far and i think that the consensus seems , who that Christian Scholz you had an interview with and a debate about what to do about rates. The reason he dissented was because he disagrees with the interview about tapering ending and it continuing for a considerable frame of time. There is an issue of time versus the data. The minutes were like a raging bull. The increase in gdp. , storming ahead on growth this is the rub and it is interesting that the market is surprised. Dissented and who not the president of the dallas Federal Reserve, who was quoted as saying that he believes that we are at risk of doing what the fed has done too often. Overstaying a welcome and staying to loose for too long. It is a historical retrospective. Alan greenspan, we spoke to him. He was worried. He should have been more worried when he was in charge of the fed. He said that he save the world from melting down. Was he over the biggest equity market bubble in history . Janet yellen is self invested in unemployment and is a great scholar of the field. Many people have great empathy and the dissension and discussion will increase. I leave you with this thought and reflection. Think about i sometimes. I think about markets. Getting more excited with the treasury market. You have the bonds declining for the second straight month and they have declined. I want to reflect back yesterday theye growth data and sparked a rise in Interest Rates. It had nothing to do with the fmoc. I was thinking, do you know what . He is on the money and on the curve. They are sitting behind the curve in the data and they are not responding. It is a front running kind of manner. That is my view. There you go. A reported loss earlier has narrowed. This is the French Telecommunications equipment maker. Stay with us. Welcome back to countdown. The French Telecommunications giant this morning. Ing us is thank you for joining us and i want to look at the initial share sale that you are planning for the unit. Old and the years first undersea telegraph line. Why were you looking at a potential share sales. We have announced that we will be looking at the capital of the summary networks and it is a longstanding is this. If they were a leader in cable would beenance, it tremendous Growth Potential and opportunities in that sector. Thatme to the conclusion it is a means to diversify itself and accelerate the government. As well as, up in my eyes and give identity that will be positive for customers and employees. Futurepefully, for coshareholders. Crisis is far the plan to turn her on the company and part of the plan it is mark barton here. Good morning, by the way. Good morning. To raise sales by 2015 and. Educe six ansys expenses can you tell us about the metrics . Indeed. Thank you for the question. Successher measures of are the savings programs and we generation of 94 Million Euros. It brings the total under the shift plan to 570 Million Euros we continue to see progress in that respect. Program,set disposal it is a program to reach one billion euros. To pursue it because we needed and we want to do it. It is good capital location. Andhink about the listing it is an industrial project. It will be a race to the company and a dissident meaningful listing. And it shares of our own will count towards the target. Question you give us a sense of how much it will raise . Comment andant to it is subject to market conditions. The firsteted for arester of 2015 and we launching the works. We are going to study and analyze it. And iuires preparation prefer not to comment on it the actual scope of the proceeds that we may raise. You have commented that it will help diversification. How worried are you about the fact that the sanctions are avoiding the gas industry and starting to impact oil technologies. Is this a worry . We look at our business in a longterm manner and the offshore oil and gas sector is global in scope and there are opportunities for us around the world. Frankly, as far as we are concerned, there are plenty of market opportunities. Give us a sense of what demand is like right now. The demand for Network Equipment 1824ick up in the next months from european carriers and u. S. Demand in china remain strong. Give us the flavor of demand right now. First and foremost, you can see that our revenue increases on a comparable basis year on year. The business is curtailing. That reflects an explosion in data traffic that comes and operators need to cope with. It is an explosion in consumer demand and we think it is a positive and secular trend that we will in a fit from over the next several months and several years. And thehe trend consumer is Going Digital around the world. Is any, there acceleration of the transition of the consumer to the digital lifestyle. I was going around the world with clients and they are surprised by the speed at which the consumer of all is in dealing with the explosion of opportunity. Servicesations and around the world. We will see you soon. That came from goldman sachs. He has been at alcatel for almost a year now. Quite a change from goldman sachs. Argentina is declared in default. What is next for the country . The details are next. Welcome back. It is 720 7 23. The country could not come to an whole. Hedgea funds that want to be paid in full on the dead. Been followings the story and joins us now. What is next . More recriminations and namecalling. The voter funds from economy minister in new york. It is important to note that all of the talk from the government may give space to cut a deal with the holdout hedge funds. 2001 is leftover debt from and here is where we are at. Everyone is waiting for the technical default and the question is if the international swap and derivative association declare this a credit event and our credit default swaps triggered . Bad will getuts a a payout and there is a lot of outstanding credit default swaps out there. That is the coming days and the focus is on what happens next with the ability to raise money on the open market. They have not been able to do that since the default in 2001 and now, the question is what it would do to the economy. That it couldort shave off 1 for growth and make it harder to buy money. The company is in recession. After theat they said negotiations failed. People of created all kinds of euphemisms to describe this and it cannot be a default. Andontinue to pay our debt it is likely that it is like bet. Did you welch on your bet . Jim demint miami time. You do not need my money. Once i will hold onto it. Padding. Ment with tougher sanctions imposed against russia and we have the details. Welcome back. Lets get over to manis for the fx check. I will show you the market and it is the euro dropping in july. And theters are at Work Exchange rate and funds are pulling out over a billion in the past month. Stanley is going to hit pulled over 400 billion from equities in the past months and we wait for the number. And the unemployment a little bit later. And your eye on the dollar it has a better story. It was back earlier and at this time that the data came out. That is what moved it higher. It is the a just monthly gain. Yields. Eye on u. S. They are the widest in 15 years. Back to you. Ease of the top headlines today. There is concerned about underutilization and they are worried. Another 10 billion a month, as expected. The main Public Market was hit by airstrikes after the United Nations condemned israel about the Refugee Center. The United Nations is demand being accountability. The Army Officials say that troops were responding. Being pressured to stop supporting me rebels in the ukraine. To individualsed and organizations being sanctioned. Russian stock phone and the mobile operators. This Beat Estimates and it is up. It will be interesting to see what happens there. Increasingusers are the use of data and that is really good for them. The interesting thing is the working capital being moved to hong kong because of sanctions risk and the united kingdom. That is right. It is interesting to see how Russian Companies are responding. Worrying about liquidity and having money frozen. Company isdent oil saying that they are going to so ukrainian assets. It is about companies trying to avoid risk and they are the assets not being safe. They were sold to a company. Individualsus the that have been blacklisted. Do we care about these . It was yesterday and they expanded the sanctions list to follow the u. S. Lead. He owns a bank that was u. S. And aby the longtime friend. Is in theareholder first bank to get sanctioned. The other interesting thing about him is that the media holdings. It isve to say why and the destabilization of the ukraine. And hea Company Listed is going to report later today. That will be an interesting one to watch. Global joins us, the research director. Of the you make sanctions and the blacklist that we got from European Union yesterday. There was a little bit of thought that they may just stop and avoid the billionaires. Bithey are doing a little of both and covering individuals who are close to Vladimir Putin while turning up the heat on sectors. People anticipate sanctions and they are blanket sanctions the cover the entire economic sector. The European Union appears to be focusing on parts of defense and oil where the government is. Ocused the sanctions are targeted and this is a step up. It will have a few things. For russianult companies and banks to refinance and that is coming up. Debts andave these they are not going to be able to do that in the United States and the eu. Do they look to Central Banks or, do they turn to asia for support. That is an interesting facet to that anhis and there is capability to cover this in the asian markets. Town for sanctions and you have to wonder if banks are willing to go against the taliban and trend of sanctioning Russian Companies. You said that assets and cash. Ere being sent do you think that is a trend we will see more of . Yes. That is a possible outlet for the closing of western capital. There could be a financial pivot towards asia and we will see if they have the depth and the political will to go against the trends. It is a control risk and you give advice to companies. The companies calling you regularly . What is going to impact the business . The demand for information about what to do and how to remain safe as investor in russia is at an alltime high. You have problems. You have companies and individuals and an opaque Business Environment in russia. Whereng out who has what and how to make sure they are sidestepping the sanctions is difficult in the Business Environment. People ask us for assistance to figure out if they are liable for the action of sanctions. There andly signs are one of the things that happens is trade sanctions. You see russia turning off the taps and making a move against fruit and vegetables. You have agricultural embargoes and you start to see that response. You see the Big Oil Company and 7 billion of assets in russia. Project and they are looking for oil. Is there a danger that these Big Companies and banning coal respectable imports is not trivial or petty. Could you see the confiscation of this . We do not see any indication seizure of western energy assets. That is the deathblow. That would have to be more extreme for us to see the response from the government. It,hatever you want to call you want to push to the broad sanctions. Releasedre meant to be gradually and part of it is threatening to impose the sanctions. If you go all the way at the beginning, you have nothing left is ahat we are looking for military invasion of the ukraine. Russianian border troops spill over the border, there is little alternative but to take the heat up further. Do you think they will be affected . It will be cumulative and we will see it. Do you think it would change the policy . It is an important distinction. Are meant to inflict pain. The change of behavior, we do not see much. Where does it leave us . Markyear from now question i am putting a timeout there. Asia coming to the rescue. We could see the central bank stepping in. And we willve cash probably see a possible outcome here to put the economy in recession. They do not have a problem and they can finance themselves. The reserve. So many reserves. Intou can push the banks financing the debt. Talkbig picture and people to you about another cold war. Careful about using the analogy. Saw the triumph of communism over capitalism. Careful about those labels and there is a chilling in the ad. Towards investments in russia and the sanctions are having a ripple effect. Was that just a one or two day thing . I think you are seeing huge swings in the stock market and, what happened yesterday was not surprising. Many people worried about russia and china being cozy enough. Clientsseeing asian wanting to know more . Of a block is not that interesting because they are seen as opposing forces and could make a potent combination. These countries and interests were aligned. Thank you for joining us this morning. Up, earnings within the last hour and we are going to recap the biggest stories of the day next. Time for the company news. Secondquarter revenue exceeded estimates and the sales climbed on a comparable basis. Surging demand help compensate for sales and the company agreed to by a swiss lawmaker. A firsthalf net loss. As thirdbiggest bank created provisions for exposure. Shares have fallen this month. Secondquarter profit that missed estimates and the Biggest Smartphone maker is having difficulty maintaining market share in china amid competition. Fell to 6 billion. Welcome back to countdown. Lets do a earnings because it is a busy day for earnings. There are things to consider. Areprofit is up and they down. The outlook is positive and they expect profits for the full year to be ahead. The charges for legacy were issued. Swaps and the libor settlement caused mark carney to call lloyds reprehensible and the underlying picture is strong and it is a similar story to what they told us a few days ago. There you go. It backs up everything i just said. The secondquarter sales Beat Estimates and they are raising the forecast. Previously, the company said they are not going to get back until 2017. At some of the key products and sellers. Patent hadterol drug been running out. They had become so positive rosy, they said, andre better off alone leave us be. Moment, it seems to be beating analyst estimates. They beat expectations and the expectation was closer to . 47 a share. That is up from last year. A secondary point was that they are reporting the u. S. Gas assets that are unprofitable. They say that is offset by the australian defenseman. It is some trouble. Watching. Re stay with us. Thatll look at the data drives the last trading day of the month. Stay with us. Welcome back. Breaking news. They warned that they are going to not make as much money. That was the forecast and the forecast was revised back. The problem is in the gulf and they say theyre going to cut the opening plans for this year and next. And the to the ceo Consumer Confidence is a huge problem there. That is what we are perhaps seeing. The depreciation of the ruble has been going on. Tailormade. Unit thatilormade had to be doing restructuring and clearly affects it. The ruble is down. It is a pretty big drop. Another trading day is almost upon us. Tell us what is driving the markets. The fed. It is there. It could be a lot worse. It is new wants change in the language and the inflation is below 2 . At the same time, they say there is plenty of slack and that leaves the Unemployment Rate. Thee is an obsession with Unemployment Rate in the United States. 5. 2 is the full employment rate, according to consensus. What it takes to run a , it is hundreds of people running a gm factory. Through the to go data pieces and look at the raft of results. Trumpsults are going to that. The charges were sufficient. It is doing white nicely. Money is flowing out of europe and it does not need to get more embellished about it. Money going into bonds is less. The americans are not piling as much into assets. It is the run on european assets. 0. 5 out of europe. The debt is quite clear and the yields are lower. There were record lows and we have been talking about a big deal. Dissented over the language of inflation and he got what he wanted. That,ease him and remove it is a big deal. They hadon is if started the verbal pivot too late. You have not got many meetings to do it. Says he thinks that people andk the u. S. Fed will move the bank of england, not yet. We may get it in august. Is talking about. On this and there is no rate rise. It did note and happen. Is this another false. We will talk about that. Does he listen to alan greenspan, do you think. Yes. Goes back to the big proposition that the biggest there is more, there is seven seconds left. We will see you tomorrow. Xem202. Modeltay®sierrap. Delta901. 5. J. L. 20. 3. 1. 092echoncaret15. Point2asteriskntango. 26. 9mlima india. At. Point2mikesmikean pointta . Secho . Udab,9rlimasierran. 4caps. {4caps. Rromeocechossbuniformt papa. I. Onlyhe moment, there is one man who will bring you that. That is manus cranny. The equities will open higher. More ons has to do earnings than sentiment. You can see it opening. It is alcatel. They are going up and we will talk about that more