We will talk to the head of companies that reported earnings. Hello, welcome to countdown. The ecb gets ready to dig over banking remission in europe. Tucker, p with all paul tucker one of the keynote speakers. He warned there is no quick fix to shore up europe lenders. It will take some good framework. Legislation is needed, but the , and theyestructure need to issue bonds. Bondholders need to take losses without depositors taking law is. Losses. Not all banks are structured that way. Fighting continues in Eastern Ukraine. Russia is calling for a sees higher while ukraine continues to accuse russia that ceasefire while ukraine continues to accuse russia of stoking the fire. Where are we, hans . Any progress . It will magically the latest ischancellor Angela Merkel considering a visit to tm. Kiev. Yesterday we had a day of diplomacy. They are accused of attacking a civilian convoy, saying there are dozens of death. Foreigny in early in minister lavrov called for a ceasefire. Foreignhat call to the minister of ukraine. Here is what he had to say. Bilateralut ceasefire it is about bilateral ceasefire. It is about the real process but russian commitment to stop shelling and stop terrorism on the ground. Until certain preconditions are met. One of those is rush. Is thatnd applying russia stop arming and applying. Office is only saying she has spoken with poroshenko and is can do during it, but nothing firm has considering it did nothing firm has an set. Ask where are we for another round of talks . The Foreign Ministers are going back and reporting to their president. That is mr. Putin and mr. Poroshenko. They have to decide what the next steps are. To have be fruitful another round of talks . The foreign minister of germany said they make some progress. Its very difficult to see where that progress was. The ukrainian minister called it moderate progress. As you mentioned that aid convoy from insideis still not ukraine proper. Thanks for the latest. The shipping and industrial giant transports around 15 of the worlds containers. Betweennting tension russia and ukraine the company could be heavily impacted. Carolinas here to tell us the details. Its all about the shipping containers we care about. It makes about 40 of sales for the Parent Company. Other areas are in. El ofan get a real fe what it is like out there. They have an very nervous about the Russia Ukraine incident. No one is interested. International trade has global advantage. Clearly it is something that could impact their overall business. So far too early to comment on what the possible effect could be. The sanctions against russia might not be that terrible. They could go to latin america. They could go to asia. It doesnt matter where youre getting it wrong as long as it somewhere. Red we want to see how geopolitics is affected. We have stability in thailand, nigeria, the middle east. This is not that shocking. This is something these companies, against on quite a regular , against come against on a regular basis. Where are we on that story . Overall improving the rates and taking capacity out of the system. What is the view . A main issue has been overcapacity. A massively invested in these huge vessels. Vessel, one particular the biggest in the world. You have theime financial crisis. Not great timing. At the same time you have this overcapacity. Freight rises begin to tumble. Get they want to do is key players to decide to share. Essels from asia to europe, transatlantic and transpacific route. Thinksaid, what do you you are doing . You have got far too much control of the overall market. Three is the french player. He team them together. China said, you have almost half of the overall market from the far east to europe. Were worried about that. They are trying to push ahead with just the number two player. Off want to get it passed by 2013. They still have to get regulatory approval. They still have a massive market share on the far east route. I think it is 30 . The regulators might still say, sorry, this is an going through. Then what do they do . But you have to tackle overcapacity in a way they have already been doing. In the First Quarter they were quite a standout. They managed to reduce cost. They have higher volume of freight. They did actually see a bit of a blow. The United States is doing better. We had china increasing exports. Help the amount of trade we were seeing. Maybe they could survive without this kind of deal. They do want to tackle this overcapacity. Freight volumes went up, but freight rate dropped five percent. Theyre having to cut costs. If you want a gauge of isight rates, the baltic that gauge. It is a real bellwether. Aspeaked in 2008. It fell in 2012. 0 value lost 90 of it since the heart of the financial crisis. That shows you what has happened to trade. I wouldnt be alive without bloomberg intelligence. They say this drop in overall freight is perhaps going to be valid out by liquefied natural gas production. The consumption in china which might actually begin to balance things out. You might see more scrappage. Rather than reducing natural capacity you have scrappage growth on the industry. Do you remember the graphic of the day in the old days . Asked mark is trying to terrible memories. We many times focused. Graphic of the day. Join me on twitter. Dont encourage him. With thesee back numbers. We are going to bring you an neilview with the ceo anderson. That is just after 8 00. We will get the health check on the construction industry. Reports biggest builder at 7 a. M. We will bring you the figures. Then we will speak to the ceo afterwards. We will delve into the results with Albert Manifold. Still ahead negotiations between russia and ukraine seemingly going nowhere. Could mom albion line for more be inons could moscow line for more sanctions . Its time for company news. Guiltymer trader pleaded of conspiring in a new york court. And pleading guilty to us will conspiracy count. A single conspiracy count. Largest firmsorld are considering bids for the Service Operator according to people familiar with the matter. A microsoft Cloud Computing a majorsperry and outage that lasted for five Services Part of a plan to remake the company. Sight to the fighting in ukraine. What is with the acts of the overall rossbach for the struggling economy. About what Little Common ground there is between ukraine and russia. You see the Common Ground . Do you see a resolution in the near future or not . I dont be a Common Ground that the moment. We had these talks in berlin. For want on they went on five hours. I think the real problem is for putin to extricate himself from the situation. He needs to get a facesaving measure. Some measure might give a bit more cost additional reform in ukraine, a bit more devolved power to the russians in Eastern Ukraine. How is that to the government and ukraine . They are talking to try to end the violence, but the moment i cant see this domain in broken. Were in a deescalation. Is it her to say we are in a deescalation mode but there is a possibility of more sanctions if we cant in this convoy over the border . Where are we with the aid convoy . They are trying to decide what happens to the aid convoy. What they really want to focus on is to try to get a solution to the overall problem. The aid convoy is one element. There were talks they had come to some sort of agreement that hasnt read published. That may well get into the country. Sanctions, are they really beginning to have an influence. Influence. We see the engineering areaterals in that deal excluded from sanctions. How tough are the sanctions at the moment . When will we see the real impact . I think we take a step active we go back to the original sanctions. Those see some impact of sanctions. They were mainly mr. Putins friends. We collect some m a indicators. We do some surveys. What they show was a big hit to Business Confidence right after the sanctions were imposed and to consumers as well. Oft we have seen is a bit ounce back and confident for business is. In our july survey we saw Business Confidence bounced back. The initial impact appears to have faded. Have they covered the time since the downing of inmates 17 . Mh17 . Were releasing the data. I would ask you to see a bit of a hit. That would include the sanctions that have been imposed. They are a lot stronger than previous nation. Talk to us about the economy Second Quarter. Will it fall into recession, the russian economy, and the second half of the year or not . I think secondquarter gdp is a bit stronger than we expect it. Deeply. Ook i think we will see sentiment fall over the next couple months given the renewed sanctions and the downing of a Malaysian Airlines plane. We are still seeing capital outflow flowing very quickly. I imagine by the end of the year we would be lucky to see positive growth. Havest that backdrop we strong inflationary pressures in russia as well which probably arent going to be helped by food sanctions russia has imposed. In terms of the central bank, they may need to raise Interest Rates again. Hold that thought. We are going to talk about the central bank, about inflation. The chief economist joins us after the break. Stay with us. Welcome back. Still with us is the chief economist. Before we went to the break we were about to touch on the currency, and the Russian Central Bank widen the trading dan. Ban. Were you surprised . It does emote little bizarre. Seem a little bizarre. He have some confidence the ruble will remain relatively stable. Band is to widen the part of a longterm view. What a want to do is move towards an inflation targeting regime. In order that to be affect those two ed the current the currency to refloat. As you say, it is potentially a slightly risky move. They cand the caveat still intervene. Indicates 79 chance they will lose more. Do you think the central bank will be worried about another depressurization in the currency . That is quite a scary number to be honest. Is going ont what in terms of the potential food sanctions, in terms of the impact on inflation in the second half of the year, i think that is another indication. Its quite possible we will see a lot more downturn. Percenttion was seven through july. The ambition is to have inflation at four percent next year. Achievable or not . It is not achievable. Are think the central bank white committed to bearing down on inflation. I do think we will see more rate hikes in the second half of the year. When the russian economy is flattened, it is back in terms of growth. Not a pretty picture. Lets look at the flip side. How does europe become affect it by the ban on imports . Countries are very reluctant. What is going to be the impact on their economies . It is not insignificant, but as a whole probably wont put in on the macro level. There are other countries that poorlyng to fare more because of their geographical closeness to russia. Germany exports an anonymous amount of pork products as well. There will be a hit there. A great deal of a rowley has been had with some of the a ralley has been had with the food reducers. It is not enough to wrap up food reduction. Is that a Fair Assessment . Inre is too much overdone up. S of being able to ramp they think they can do everything themselves, but these will take time. I would be buying shares in brazilian food producers. Termsis a lot of talk in of meat exports. That is where i would put my money. There you go. At least you have something to wake up to. Break, tips for better banking. We are going to bring you our interview with the former Deputy Governor. Welcome back to countdown. I meant is cranny. Time for your 6 30 fx check. We start off with dollar sterling because it is cpi today, Consumer Price index in the u. K. Expecting it to dip to 1. 8 . Retiredy for sterling to to retest for a sixyear high. This currency is oversold. It is down nearly 3 from its of 1. 7192. 7192 1. 71 by the end of next month. Cpi data could be friendly to the market. We expect the bit of a dip their. Give mark carney the grace and favor he needs to keep rates lower for longer. Lets have a look at the ozzie dollar. The aussie dollar. It is trading higher by about an at 0. 9338. 8 growth will likely have slowed. Could it be that you get another cut . We will wait and see. These other Bloomberg Top headlines. Gentle german chancellor Angela Merkel will visit ukraine with for talks with the key of government. The Chancellors Office declined to comment on a date after an earlier report that it would happen this weekend. She also ruled out nato combat troops in eastern europe. Obama says thek u. S. Will continue limited airstrikes in iraq to support Kurdish Forces who are battling militants for control of a key dam. He says the u. S. Is also working to pull together an International Coalition to support humanitarian relief in northern iraq. Obama is also sending his attorney general eric holder to a misery suburb to help calm a weeks worth of unrest. Protesters in ferguson have clashed with police and thrown molotov cocktails after a white Police Officer shot and killed an unarmed black teenager. Yesterday, the governor called in federal troops to help enforce calm. Now is a time for healing and peace and calm on the streets of ferguson. Now is the time for an open and transparent process to see that justice is done. We will be reporting the latest results. Of 30 point 6 billion. What else can we expect from the mining giants . David inglis is standing by for us in hong kong with a look further ahead. Good morning, david. He mentioned some of the numbers we are expecting. What is in store for this Huge Mining Company ahead . They flagged to this quite well. We are probably looking at divesting. This could be the biggest structural change. Years of asset sales have reaped more than 5 billion or even that was below estimates. Php will be focusing on what it calls its fourth pillar, iron , even a fifth which ash. The major talking point will really be about divesting of these noncore assets into what you call it emerged unit. 12 billion. Were talking about everything from aluminum to nickel. Assets, we know that bhp is the worlds biggest producer of coke and coal. You have lower prices and more competition and you have a dwindling contribution at the bottom line. In 2013, cole contributed only 746 million. Showshe Bank Forecast only 525 million in 2014. At as alooked nonethical investment. That is a line were looking forward to. Hisorts its latest latest results. We are expecting on what analysts have told us. It 3 billion Share Buyback and as you mentioned a 27 improvement in profit. Theres also talk that perhaps we can see the u. K. And australia a dual listing may come to an end. A lot to watch for. It could be one of the bigger stories of the day. Back to you. Bhp billiton releases numbers in just about an hour. It comes as the ecb gets set to take over industry supervision in europe this november. One of the keynote speakers is the former deputy of the bank of england. He started by asking him how long it would take to reform lenders and ensure they dont meet the same fate as Banco Spirito santo. It will take some years to put a good resolution in place. Legislation is needed. That is been done by the european direct of. Also, the banks need to restructure and they need to issue bonds so that the bondholders can take losses. The bondholders need to take losses without the depositors taking losses. This requires banks to be structured in the appropriate way. Not all banks are structured in the appropriate way now. I think what we can take from banker spirit to santo is two things. First of all, subordinated bondholders did take losses. That is good, they should. Other bondholders, senior bondholders didnt. There was an in dash there was an injection of resources from the portuguese government. That may have been the right thing to do in the particular circumstances, but it should not set a precedent for the future. The steadystate regime has to be one in which bondholders take losses and not this date. Im not criticizing the portuguese, they may have done exactly the right thing, but complete, then is should not set a precedent. Losses have to go to bondholders. Including the senior bondholders. As you say, it will take time until other regulations are in. Other other regulations in the European Union sufficient to have this coming in over the coming years . There are two parts to this. First, do the authorities have the right set up hours . I think they do. It follows a global standard. The second thing is requiring systemic banks, big banks, to have a certain mass value of bonds in issue. Global policy on that is going to be decided at the summit in orsbane in september october. That is the next step, not only for europe, but in fact for the world. We will have to see what they can offer. I hope it is ambitious. What should they come up with . I think they should require have an amounto of bonds in issue that is at least as to the amount of equity that they are required to have very it the biggest global banks are required to have equity of about roughly 10 of their socalled risk weighted accident assets. I think they should be required to have bond issue of 10 . That order of magnitude. At the market for this particular type of security, you think theres enough clarity for investors to actually buy like this . Are the certain enough that those rules are being kept . And are theybuying priced appropriately . I dont think this is overwhelmingly hard. After all, throughout the world, investors by regular Corporate Bonds and regular Corporate Bonds get restructured and converted into equity. The chapter 11 and the United St