I am mark barton joined by manus cranny. Lets turn to all addicts. 200 lets turn to geopolitics. 280 russian trucks said to be filled with food and water are turned back from entering ukraine. The convoy left from moscow yesterday. It is getting closer to the border. The ukrainian say it is not carrying humanitarian aid. They believe it has military supplies inside. We do not know because we cannot verify it. It seems like an outlandish claim, but how do we know . ForInternational Committee the red cross seems to be getting cold feet on this socalled International Aid effort. At a listen. Have a listen. What we need to have is clarification regarding modalities, practical steps that need to be instituted before we launch and operation. There is a of concern about this convoy. I dont think i have heard so many World Leaders as gus one convoy. I heard the white house discuss how the ukrainians have a structure, a process in place so they can check the convoy. We have heard ukrainian say they will not allow the convoy in. The British Foreign minister said whatevers inside of those tocks should be transferred the International Committee for the red cross. It is something we will have to watch and see how it develops. Talk us through the market developments. There are various stories that nato is suggesting it is a trojan horse. It was quite a shockup Market Reaction. Horse,xplain the trojan the idea is that it would carry evans. Terry weapons. It would turn into a literal military invasion into Eastern Ukraine or it could serve as an example. If it comes under fire, russia could bring in troops. The investor reaction has been straightforward. The closer investors are too Eastern Ukraine, the more concerned. We saw investors dump yesterday. The National Currency of ukraine is down 6. 5 as of yesterday. Parliament said there is no reason for the National Currency to be this low. Three times out of the last seven, the central bank has intervened to try to prop it up. They are running out of money. They have 16 billion worth of foreign currency. That is not far off there and nineyear low of 14 billion. Ukraine is propped up by what . The imf. Where does this leave putin . The russian president is expected today in crime area crimea. As far as the russians are concerned, that is their newest region. He will convene the parliament and his cabinet there, and the security council. Reason, no proof to think the russians are up to something nefarious here, that they have no intentions. If they dont, that they have ill intentions. Russia dont, imagine cooperating with ukraine, the european union. Maybe not as the partners might want russia to. This could be huge for the russians and a way to deescalate. They are showing their support for ethnic russians, russian speakers in Eastern Ukraine. The domestic audience, he has an 87 Approval Rating inside russia. He shows not only are we going to be concerned about this , we are going to be the first to show up with a. Where is the eus eight . Aid . These people have been without water, electricity, and food for 11 days and the west will continue to talk about what to do because they are concerned we have weapons in the structs . In these trucks. If there is something nefarious here, you might be well devel oped to go further. Nouri almaliki has lost eight major a Major International supporter. Hass been the last been the latest country to back alabadi. Meanwhile, in the north of the country, the u. S. Has continued to attack militant positions and the u. K. s Royal Air Force has airdropped humanitarian aid to thousands of civilians displaced by militant advances in the north of the country. Japans gdp contracted the most since the earthquake of three years ago. We are in hong kong. Good morning. Talk us through it. These are concerning numbers indeed. Let me get you the numbers. Basis of thezed economy, the gdp contracting to 6. 8 . It comes after the april sales tax increase. To keepe not rising pace with the Rising Consumer prices. That is having an impact on consumers and an impact on the economy. Investment plunging as well as the sales tax increases. The government weighing whether to increase the sales tax again in october of next year. It highlights the difficulty for the shinzo abe government is facing staying on track with the third arrow ofabenomics. They have yet to deliver on fiscal and Economic Reforms and changes to the corporate scratcher corporate structure. We are seeing a modest Market Reaction in tokyo. The market is focused on what is happening in china. Numbersnomic num there. Of Prime Minister is traveling in japan. He made comments domestically save the government is analyzing the numbers. The economy minister said the government is ready to take flexible action if things get worse. On that matter of chinese data, we had news of a plunge in credit pot credit gauge plunge in the nations credit gauge. This is concerning for the chinese property market. We have seen the government taking steps to rein in excessive credit growth. It reveals it unexpectedly plunged last month. We have aggregate financing coming in at 44. 3 billion in july, well below estimates. Yuanbelow estimates, new loans and the end to money supply came in well below expectations. Reports on Industrial Production so it is an important date for the chinese economy. Stocks are falling on the news. We saw the shanghai composite falling the most in the week. Shares in hong kong are declining as well. Thank you. London, today here in bank of England Governor Mark carney will present his quarterly Inflation Report. The words he uses will be closely listened to. Any hint of dramatic changes in language. People are paid big salaries to listen. The nuance of all nuances with the Mansion House speech in june. It has all changed since then. It has. That is a fair point. The analysts are pulling for ir view on when the market the market has decided to rally after Mansion House. Give it all back. Have a look at dollarsterling. The pound is now where it was on june 12. Was 1. 6788 at the day of the speech. They really cant there is a lack of consensus in the amount of slack. They are going for the hike in the fourth quarter. Labor markets carney highlights a divergence of views on policy committee. That may give us a hint that one or two good people have dissented for a rate hike earlier than we think. Wages are the other big issue. Wages excluding bonuses in the last quarter had the slowest increase ever. It is the fact of the day. We are going to get the jobless claims. We will get the average weekly earnings. They are expected to drop. This combines the issue. Steady group would say the bank of england Inflation Report likely to support the case for an early increase. Why . Wage activity data has disappointed rate expectations only to a degree. The growth figures we expected to be nudged up today. Who knows what they will say about slack . 1 one. 5 . 4 maybe they will narrow it slightly. Another thing that caught my eye is u. K. Stealth employment, up 28 . 8 percent. Up more people working for themselves. Is that good for the labor market or does that reflect a somerset . My gosh, the labor market is not that strong. People are thrown in the towel for a historical employer they would have worked for and they are going in a long. We know the Technology Economy is the new economy. That is what i saw yesterday that come my eye. You wonder if the economy is showing signs of leveling out. We had manufacturing growth pace slow in july. That was according to manufacturing data. Industrial production rose less than estimates. Weekrong pound, by eurozone, it seems as if we are leveling out. We will know later. We get the forecast for growth and inflation and stock. Stay with bloomberg because we will be discussing this throughout our programming in terms of carneys quarterly Inflation Report. He starts speaking at 10 30 london time and we will bring you that purport live. Tipping point trains. Tensions in Eastern Europe showing no signs of abating. Willl geopolitics how geopolitics play out on the market . Todays company news. Alibaba is selling a Small Business, a company that already controls alipay. The moves show the company separating itself from its last financial units ahead of an ipo. That is expected next month. King digital lunch as much as trading afterours posting secondquarter sales that trailed estimates. The company cut its 2014 now 2014 outlook. Sonys global sales of playstation for game consoles have hit the 10 waystation four game consoles waystation at the 10 million mark. Microsoft xbox one sales. Phyllis, good morning. If we saw a russian incursion into ukraine, which currency should we be invested in . I dont think it is so straightforward. It is not a black and white situation. Been very much driven by the macro economics of what has been going on in the g 10. Geopolitics will be an important factor. Has largely been driven by the performance of the u. S. Economy. We think that the u. S. Will rd momentum gua against the euro. Against emerging market currencies . In the last month, the dollar is up against 21 out of 24 main emergent market currencies. Does that trend continue . I think so. We will see emerging markets outperformed but in a selective fashion. I think that will continue when it comes to the dollar. We will see it becoming increasingly broadbased as we head into autumn and certainly against against volatile emerging market currencies. We saw yesterday some. Went reaction some virulent reaction. Volatility in terms of the ruble. The you any perspective on currencies . Russia is under pressure. Have you look at those currencies . To related currencies as some of the flow. The Global Economy is picking up. Look at geopolitical risk in a broader fashion. We had geopolitical risk emerging in the middle east area we have it in ukraine. We happened in other parts of the world as well. In that context, the ruble does not look like it is going to fare particularly well. It is the currencies in emerging markets that are showing strong fundamentals, that have strong external positions that will outperform. It is not clear that the ruble meets those criteria. Probably not at the moment. We have had news from turkey. Ergo one. Ard where are you in terms of fundamentals . People say it has the marks of a currency that could come under pressure again because there has not been enough structural reform in turkey. , i think ittions was in line with what we were expecting. With elections, always the onus is on the incoming policymakers, if you like, to engage in those difficult reforms, structural reforms. Story withsame indonesia. It was the new leadership going to engage in difficult reforms which will support the currency . It remains to be seen with turkey. The leadership has just been reelected. It is a new opportunity. It is very important, especially with the Global Economy picking up, to see those difficult reforms be engaged. It is something europe is struggling with. It is not something that is just relevant for the emerging markets. We will talk about europe in the next session. We will talk about the quarterly Inflation Report. Back with us is phyllis papadavid. A big, big day for sterling. The quarterly Inflation Report released today. 4 against the big ten currencies. What can mark carney say to boost sterling today . A lot. Has beenmic data positive. For upside surprises in the data. I think what we have seen will give the mpc cause for comfort. One element of the data which has been weaker across the g 10 as in wages. Average wages have been week in the u. K. They could be concerned about. U. K. Continues to outperform. Fallbackeen sterling but that is because it was so hot. Was so high. Where is your position on sterling . It is not in their interest to have a highvalue sterling . Some people are saying you may well here carney talk about the division in terms of slack. Is that the key issue that drives sterling . I think the state of the economy is the key issue for them. Different mpc members will be focused on Different Things. Slack is certainly an important factor. The Unemployment Rate has come down. Concerned,terling is putting things in context, it is not overvalued. Cable has been trading well. Terms,eweighted sterling is not overvalued. The imf said that it was. If you look at a broader raft of models, it is still trading close to fair value but not overvalued. The most profitable short trade has been eurosterling. We continue to follow that . It was taking product on our short eurosterling trait but we are looking to reenter at opportune levels. The trade has worked well. It is an important macrostory in the g 10. Is the u. K. Outperforming the euro zone economy . It has done well but we are looking to reenter. Lets talk about japan. We had the biggest gdp contraction in three years. Since 1994. Decline what happens next . Does the bank of japan will they be forced to do more or do they look through the state at and say the Third Quarter will rally through . Posthike will be important. That will be important to look out for, not just the gdp numbers. What is going on in the Consumer Sector in japan. Sticking out, but with wages we, we need to see the earnings power, the wages kick higher to boost the economy. Until then, we will see the yen trade on the back foot. We will leave it there. Thank you very much. 6 26. E in london is market been bad for germanys biggest Utility Company . Welcome back. I am manus cranny. Lets have a Foreign Exchange check. We were talking about the yen before the break. It is going to be a tough call. The gdp contracts the most in three years. The and holds its losses. Dollar rising. Virtually flat. Somethingp has been the market has flirted with. A breakup that would reassert an open move for the market up towards the 103 level. Moving along with it are the euro. Number fourmagical 2014. Tomorrow you will get consumer prices. This market is so short, it will turn bullish. 21 billion worth of bets against this currency. We saw this twice before in the near past. In 2000 20, in 2012 when mary o drawdy said he would save the draghi said he would save the euro. Was it coincidence oh that it bounced in 2012 when mario said he would save it . 133. 33. In a rare agreement with the United States, iran has become the latest country to back alab new prime the minister of iraq. Almalikis refusal to leave office is problematic in part of the country. The reds it needs cross says it needs better understanding of what is in the russian a truck before it signs off on the mission. Ukraine says the boy could beast the convoy could be carrying weapons. Russia says it is a medicine, food, and water. Charges may be filed against former executives of deutsche bank. The charges are related to how executives defended the bank in an investigation over the collapse of germanys kirsch media group. The coceo was charged with attempted fraud. Another former ceo was indicted. They all denied wrongdoing. Breaking news coming from china. This is on the retail sales number. Foril sales rise by 12. 2 july. That is below the market estimates for 12. 5 . Where are the fixedasset investments . That rises. When you take out the rural area, it rises by some 17 . Over ¥5 investment just trillion. It is a miss on the retail sales mark and that come binds with the other views from china is that new credit plunged that combines with the other views from china that new credit plunged. That is the weakest annual new credit in almost 24 years. The property slump and you have a question of whether the target of 7. 5 this year is actually achievable. Maybe the government will have to change policy. Beckoning onready china to hold back from continuing to look at that 7. 5 . Retail sales is a miss and credit plunges the most in 24 years. Lets talk about e. On, germanys largest utility. The underlying net income for the first half of the year, 1. 5 3 billion euros. Estimated 1. 4 6 billion. We have a beat on the underlying net income figure. It is confirmed in its forecast for the year. That is for underlying net 1. 51. 9 billion. This is a Company Seeking relief from the energy of people by investing in emergent markets. Angela merkel has been shifting towards for knowable, await towards renewable, away from nuclear. That is cutting power prices in an already weakened economy within the eurozone. Is pushing, e. On into emerging markets, like brazil, turkey, and russia where it is facing headwind. On an underlined net income basis, earnings have beaten estimates. Lets go over to berlin. Hans nichols is joining us. Your early takeaway on those numbers . We are still looking at it. The beat is important but for context and perspective, last year, the first half was 1. 9 one billion euros for underlying net income. For the number we got this morning, that is what the company will use to calculate dividends. You may see a of in the stock. E. On has pushed outside of germany and to in into markets that are shaky russia, brazil, and turkey. They expect their noneu income to be down by almost 24 . Analysts expected to be down 24 . The top line number looks good. One thing we will be looking at is the what is the noneu income . Will it be around 100 million . That is the expectation. That is half of what it was before. First take looks better than expected. Forow wellprepared is e. On the winter given the situation in ukraine . You can run a variety of analyses of progression and you look at what they have on stock right now,