Welcome to countdown. Prime minister erdogan won turkeys first direct president ial election with nearly 52 of the vote. He will extend his leadership through 2019 as he treat seeks to transform turkey. Hans nichols is live in istanbul. Good morning. What happens next . Good morning. Later this morning, the justice and peace party will have a meeting and determine who is going to be there next Prime Minister. That is the position that erdogan is coming from. As he seeks to transform a ceremonial role, the office of the president , into one that has real authority. He has been very clear about his intentions. He wants the power to call cabinet meetings. These are the moves he is making to consolidate power. Turnout was only 75 . It was 90 in local elections. He did win 52 . He avoided a runoff but it is not a rousing mandate. One thing voters arent happy with, the economy. Average 5 growth over the last 10 years. 4 growth is expected for this year. Maybe 2 . There is concern about inflation. It is at 9 . Coupled with that concern, will erdogan keep the central Bank Independent . He wants to put turkey on a faster economic path. Right now it is 17 and the world. It is never in the g20. One final note on all this, the lira is appreciating ever so slightly overnight. Investors arent concerned. Who might he appoint as Prime Minister . Is, will theon current president , will he make a move and try to become Prime Minister . If he is Prime Minister, he may have the authority within the party to challenge erdogan. That could mean a check on erdogans party. There have to be a couple technical moves. He would have to find a parliamentary seat and become Prime Minister. That seems to be what some in the investor class are hoping for. You would have a check on erdogan as president from the current president who would then become Prime Minister. Thanks a lot. Hans nichols in istanbul. Breaking news. We were talking about it earlier. Said, no thanks. The news that we were running overnight, according to people familiar, carillion approached. Thisdeal fell apart over new yorkbased engineering consultant. Potential he, bell for bt was in the process of selling that unit. Ion wanted them to keep that union. They had reapproached about four. Balfour. They are coming out with numbers again today. Look, competitive sales are well advanced, subject to satisfying the interest of key stakeholders. The group will return up to 200 Million Pounds to shareholders. Clearly, hopes of that shale might disappoint shareholders. Balfour doesnt have a chief executive at the moment. Has not been benefiting from the sudden boom in construction that we have seen in the u. K. It has had cancellations to projects as well. A profit warning. Over onrman has taken an interim basis. Carillion has got this Services Division which is booming. It was thes if perfect fit. They say at the moment that confirmation with carillion that they were supportive, and in the evidence of a joint leak, announcements would be released. Overall, they are saying carillions request was predicated on Balfour Beattys retaining the proceeds from the sale of parsons. Clearly, they havent been able to agree on the back of this. What the equity split was going to be, 56. 5 of the company would go to Balfour Beatty shareholders. 43. 5 would go to carillion shareholders. Be ion does seem to there were a number of risks. They were mindful of the synergy that could be achieved. They lost confidence in the likely delivery of a successful pact. This isnt the only deal. Yeard lafarge earlier this in a 40 billion merger. A couple years ago, we had the spanish builder. Happening because of a decline in construction work. This was the rationale behind this construction merger which would have been the biggest Construction Company in the u. K. They have to go it alone and show their shareholders it is wise to do so. Balfour beatty says they are implementing cost efficiencies. They have had operational issues. Whenlfour beatty shares the deal was called off in july are down by 6 . Carillion down by 9 . Investors were unhappy that the deal was called off. Which is why we said carillion came back to the table. Shares are down. Investors want this deal. It seems that Balfour Beatty isnt quite agreeing. Meanwhile, lets take a look at china. We did get the latest inflation data. Zeb eckert is in hong kong with the details. Inflation once again subdued. Indeed. 2. 3 , itued inflation, is leading to a rally today. China investors are optimistic. We are seeing the shanghai composite extending gains right here in hong kong. Beautiful day indeed. We are seeing financials rallying. The outlook is that the central bank in china as well as the government will extend fiscal and monetary stimulus. They may extend their existing stimulus programs. That, lifting the markets today. Inflation, well within the governments range. The cpi estimates that the government hopes to keep Consumer Prices within 3. 5 in a bid to meet that 7. 5 fullyear gdp target. We got the latest numbers on producer prices. That is the cost of goods at the factory gate. Those prices fell 0. 9 . The longest the klein since 1999. We are watching this closely. Chinas economic strength, a key focus among investors in hong kong and shanghai. Many wondering, will chinas Property Market run into difficulties and will policymakers be able to maintain the appropriate level of stimulus to keep the economy going strong . At least today, that optimism in china continues. Thank you very much. Analysts thinking that new loans are going to keep on coming. A record high for july is predicted. Coming up, why putins European Food ban is bad for russia but good for prisoner. Politics and policy next. Welcome back. This is countdown. Despite geopolitical turmoil, the dollar has been enjoying a strong summer. What are the ripple effects on emerging markets . Thanks for joining us today. Lets start with turkey. You are negative on turkey. Wonably before mr. Erdogan the first outright president ial election. Why are you negative on turkey . We think there is a host of issues. One is this issue of checks and balances being undermined. The politicization of Monetary Policy. The central bank has been in a big hurry to cut rates. We think that is premature. The markets have been rewarding turkey for politics having been better than they could have been. There could have been an ineffective opposition coming in. What we are concerned about is that the checks and balances are being undermined. Shortterm, maybe it is ok, but longerterm we have concerns that the economy is being run in a reckless fashion. How quickly should investors be exiting the doors of turkey . Do we wait until we see who takes up the political post with in turkey . There are a few candidates to take over managing the economy. I think that is indeed going to be one of the triggers. Fed tightens and the dollars rally strongly, that will be an issue. When it comes to turkey itself, as your earlier reports were raising the question, are there some internal checks and balances at this stage . We would guess not. How big and i kerleys hell would you say he is to the current account . Sayilles heel would you he is to the current account . How big a worry is the current account . Is the country doing enough to reduce the longterm risks . Our sense is no. As you say, it is good news that turkey has had an important adjustment in the external deficit. But it is still quite large. It sticks out like a sore thumb in a world that is uncertain. Many other countries have done much more. The direction of travel in Monetary Policy and hopes for that in other countries are quite a lot that her. Better. In india, there is a move towards installation. In brazil, it has gone the other way. That there will be a more orthodox economic shock in brazil. That will be good for brazil. At that point, turkey will need to do more. Indonesia seems to be moving in the right direction. When you compare it to brazil and india, how vulnerable is it to the fed . In january, all the emerging markets were affected. Where does turkey stand on the list of most at risk to flight of capital . Our sense is that the fed is going to go relatively slowly. Where there is a strong surge in the dollar, all of them stick out like sore thumbs but turkey more than the others to rig it the others. The current account deficit is still 6 . They are in a rush to cut Interest Rates. The others are being much more circumspect. Where there is a sticky inflation problem, there is much more so if you are and emergingmarket investor, are you bracing . Many feel that the dollar strengthening is coming whether you like it or not. Whether we see a sudden spike or we assumeore gradual, it will be in terms of how they start to increase Interest Rates. Do you get out of the emerging markets . Our sense is that there is room to discriminate. If there is a sharp turn, the initial kneejerk reaction is going to be a sharp selloff in many places. We think there has been a lot of that already. I think right now, it is hard to disaggregate whether the fed or putin. The situation in russia seems to be calming down right now. That will probably help in the short term. Our sense is that the u. S. Economy, although it is recovering, it is not the recovery we generally have. It is not clear to me that we can have a strong u. S. Recovery without a strong dollar. I suppose if we get a really strong dollar, which is not a risk aversion scenario, that is a signal that the u. S. Really is pulling ahead. We are not so convinced it is ahead. Relative to the eurozone, relative to japan. Relative to its own history, it is not doing that well. What if the dollar does spike and we see the u. S. Economy slightly dented by this concern . Is there some way to manage this affect . Is this the only course . I think we have to distinguish between a strong dollar scenario that is risk off because of geopolitics that is one in which people will head for the exits in risky Asset Classes including emerging markets. Again, but other benefits. The haven currencies all benefit and the dollar is clearly still going to be one. What ise other hand, driving this is a stronger than expected turn in Monetary Policy, i think that it is a little bit more complicated. The fed will probably try to slow that down. If you have a sharp surge in the dollar, you get a hit in that trade, there is this concern that Monetary Policy between the u. S. And the eurozone is diverging significantly. That will cause other kinds of dislocations in asset markets inside the u. S. As well. If it is really about Monetary Policy, it is going to be comforting rather than concerning. At what point do russian assets begin to look enticing . As europe ratchets up the sanctions and russia retaliates, at what point do russian assets begin to look attractive . Our sense is that one has to see a significant turn in the attraction between russia and ukraine, and russia and western europe and even the United States on the other hand. There has to be a serious, credible, sustained signal that russia is ready to come to the table. That is still not clear. The facts until friday have been about more escalation. Right now, there is probably a little bit of calling going on. Arebaijan and armenia distracting the focus right now. Our take is, they really have to come to the table and put the process back on track. Will they . Relationshipole have fundamentally changed . That is certainly the risk. We dont think it is beyond the point of no return but it is heading in that direction. We treat any relief rally with some skepticism. We will leave it there. Thanks for joining us today. Up, how does an escalated byce war against a publisher publishing the chief executives email . Authors and ebooks next. Welcome back to countdown. I am caroline hyde. Lets talk ebook economics. In a strongly worded letter, amazon argued ebooks should be cheaper. Hatchet on the other hand is holding out for higher prices. What is the right price . It is a fascinating battle that is going on. It is not just books. It is also films. Disney now getting embroiled. 900are looking at natories who basically had they are taking to not just the airwaves, but to media. They have signed a letter to the New York Times yesterday saying, look, they are concerned about amazons tactics of delaying getting your hands on certain bestsellers. If you want to preorder certain books, you have to wait five to six weeks rather than two to three days. If you are under the Publishing House of hatchet. We know that jk rolling has been owling is having her new work affected. Amazon, says, let us cut and you will sell more books as a result. 74 more books, it says. They say, we dont mind taking a 30 cut. Amazon takes a 30 cut under contract. The rest goes to the Publishing House. The Publishing House wants to be able to keep the prices higher. There is a war of words going on in the press. You have amazon itself leaking the chief executives own emails. If you have a view, you should email him. Meanwhile, they are saying, tell amazon chief executives what you think about the price of digital books. Meanwhile, disney getting broiled in. Want themerica, if you dvd, you cant preorder it. But you can stream it. They did this earlier this year with warner bros. And various of their films. It has happened before. These films, they really need dvd success. Often, films arent profitable from their theater runs. Captain america, the number one grossing film of 2014. That top spot has to be hard in terms of revenue. When you are trying to get your money back, you need to be able amazon once again making things a little bit difficult. In fact, a lot more Book Publishers are about to start renegotiating with amazon. But amazon needs the money. Israel and gaza. They are abiding by another truce. Will it give the negotiators time to craft a lasting accord . We will have more from tel aviv next. Lets have a look at the yen against the dollar today. The yen is following against major currencies. We did have reports that russias warplanes ended trails and the nation is seeking to mediate between kiev and prorussian forces. On humanitarian grounds ukraines military dismissed as lacking in substance. They pushed ahead with the campaign to put down the uprising in the east, but the yen is falling. Its down against the dollar. The dollar is holding onto its gains. Bullish betsg to on the dollar. Retail sales lifting the dollar. Against theising yen today. These are the top headlines. Turkeys Prime Minister has won his countrys first direct president ial election. He will extend his leadership. It from aansform ceremonial role. Israel and gaza militants have begun a new truce. They accepted egypts proposal as negotiators worked out a more permanent accord. Renewed rocket fire. The Ukrainian Government is rejecting a ceasefire from prorussian rebels. The government will vote on a bill that would block oil and gas shipments traveling through ukraine to europe. Militants have agreed to a new truce. Aviv following the story. Happen following these talks so violence does not restart . The good news is that both sides have agreed to end the violence for another three days. Is there is no clear end to this. There is no clear way to get a longer, more enduring stop to the violence right now. Israel and hamas remain set on what they want to get this to be over. Each side wants something that completely conflict with what the other side is asking for. Hamas wants a blockade to be ended and for there to be movement of goods through israel. Israel wants the war to end in a way where hamas cannot claim major achievements, because if they were, that would encourage another round of fighting in the future. Now they are very far apart. The main compromise that could come out of this would be for the more moderate Palestinian Authority in the west bank to come into gaza and oversee the movement of goods and the easing of the blockades. That would allow israel to say hamas did not come out the victor. Even before the ceasefire fighting hashe changed in intensity after israel pulled out troops. How come . Even before the truce was announced and went into effect at midnight, the fighting has eased up. It is no longer the kind of the kind of fighting we saw before israel pulled out its Ground Troops. That is because israel has pulled out troops and said, we are done with the tunnels. Hamas essentially is saying, we are going to keep firing rockets until we get something out of this. Hamas is pledging to continue fighting, but it doesnt want to fight at the same intensity because it doesnt want to see the kind of destruction that may eventually turn gazans against thomas. Against hamas. Thanks for joining us. The iraqi Prime Minister deployed troops on the streets of baghdad yesterday. He resists president Barack Obamas post for more inclusive iraqi government. To malikilekeok up to . He surprised everyone by saying that the iraqi president is out of line, acting unconstitutional, and basically needs to allow maliki to remain Prime Minister. There is a bit of a power struggle with the Prime Minister insisting on remaining. He is in a caretaker capacity. Sunnis, the kurds, according to the constitution, thats the way it has to be. Even many she is said that is the way it is supposed to go many shia say that is the way it is supposed to go. A lot of all editions would like out. E melekeok maliki that is one reason most analysts inc. There is an increased presence of troops in baghdad itself. Yet oil is little changed. Fraction. Own a with oil it is pretty straightforward. Market thinks these airstrikes are going to protect