But chinese manufacturing numbers, price contraction more than expected. It is not going to actually help sentiment this morning. When it is good, no one believes. When it is bad, people really believe. We will have to see whether there is a read across into commodities. We also have gdp from spain pretty much as expected. Gaining 0. 3 in the fourth quarter. Staying on corporate news, hans, youre talking tech. A big deal for to lenovo and google. Normally when we talk about cool, we talk acquisitions. Today we are talking sales. They have sold or plan to sell their motorola handset unit to lenovo. We will look at both sides of the deal, who got what and what it means for both Companies Moving forward. Thank you so much. We will have plenty more throughout the program. Caroline, we have figures from shell and ericsson, roche and h m. Keep an eye on h m. This is a company that has been hit by foreign currency weakness in emerging markets. Profit missed analyst estimates. They did rise slightly but the measure of profitability, the margin was deteriorating. There is worry about exposure to emerging markets. They are sounding pretty optimistic. They are off to a good start, opening more stores. Theyre opening in the philippines and australia. There has to be a worry about exposure in emerging markets. H m down some 3 . We also have figures from diageo who is suffering because of emerging markets. This is what i am watching, the worlds biggest distiller reported profits that missed estimates. Down 3. 5 . The other one we are watching for, ericsson expected to start to move after the Worlds Largest maker of Wireless Networks reported quarterly revenues that missed estimates. Ericsson though gaining 1. 2 . We have the fed, the emerging markets, bit of mna. It gives us a nice impetus for the day. A feast. Marja his approvals mortgage approvals. I will lead you thing about this. The last time your big u. K. Mortgage approvals were this high, lehmans was in business. Mind, that is the backdrop to the u. K. Housing data that will come out later on. Spoilers health, got a low rate mortgage. Equity markets are just dipping as we go into the openings. Some emerging markets raising rates by 4. 5 , 5 , does it really work . South africans raised their right and it was a two minute wonder in terms of reaction. Lets see if the miners are down. No, it is diageo that really takes the hit their. The chinese story doesnt seem to come through on the mining companies. There are a couple of companies you mentioned shell. Lets see how they are trading now. That probably needs to update. H m down 3. 2 . Roche, they missed on numbers. This is a big drugs company. The big debate is, do you need to do more acquisitions . Bloomberg industries ran the numbers. Roche has missed on their earnings per share. It is the biggest myth in four years. Iss in four years. Royal dutch shell up one percent. Story, at the currency where this next shoe will drop is anybodys guess. This is basically dollar yen it is virtually unchanged. Have a look at those emergingmarket currencies. We will keep an eye on those through the rest of the trading session. Back to you. Thank you so much. Joining us for his views on the fed and china and to discuss his latest monthly is Alex Friedman from ubs Wealth Management with nearly 2 trillion of assets under management. Always such a pleasure to have you on the show. Talk to me about the main themes. , we are on fed watch, emerging markets watch. Is there some overarching theme that makes you worry for the next month . For the year i would start with a seemingly counterintuitive statement, the world is Getting Better and investment returns are going to come down. Becauseunterintuitive we have had these artificial returns for four to five years. That is because of Monetary Policy that is being withdrawn. We are handing off the growth. Growth is stabilizing and improving but it is not ideal. What are you looking at . Do you stock picks . Do you look at industries which have been in 2013 . Star with equities. They return about 15 annually since 2008 which is not because the economies have been doing so well. It is because of all this Monetary Policy. We are looking more like six percent to eight percent equity returns this year, next year, probably over the next three years. We like equities because there is not much yield in fixed income but you need to be diversified. Into cyclicals, midmarket companies in the u. S. And europe. Europe is improving a little bit. Are you looking for cheap value . Stocks that have greatly ratio pe ratios . T o the story the story on risk assets is acceleration. We are basically depending on earnings to grow somewhere between seven percent and nine percent for the story to work. Stocks are fully valued. There are not an bubble territory but if you want to see growth it is going to be because of earnings. We have seen about nine percent Earnings Growth so far. Thank you so much for now. I am going to get more on this next. Here is a look at what else is coming up on on the move. A united front of the fed. Policymakers backed Ben Bernankes plan to wind down stimulus. The lenovo spending spree continues. The pc maker drops nearly 3 billion for googles motorola handset business. The emerging markets slowdown hits diageo. The chief executive joins us this hour. Stay with us. We are on the move. Welcome back. I am Francine Lacqua here in london. This is on the move on bloomberg television. This is a stock that is on the move. Interview with the ceo of diageo coming up. Down some 4 , this is the worlds biggest distiller. It reported profits that missed expectations. That ties into the emerging markets story. They are seeing still a very big slowdown in emerging markets. We will try to quiz the ceo on costcutting. Fed policymakers have their first meeting of 2014 this week and manus cranny has been pouring through the statement. What stays put . It is the first meeting where there has been no dissension since 2011. What we have is a very united fomc in transition mode going under yellens tenure. That says we are united, we are in taper mode. The hurdle to stepping back, the hurdle to the fomc stepping back from the mode of tapering at 10 billion per month looks pretty darn high. In terms of what they are considering, we found out more in the minutes. That will make for interesting reading. If you look at citigroup, i love what he says. S is the fed saying a very and a bank statement. I think when we look at the other no one says in terms of language, dont forget the fed has two objectives. One is about employment and one is about growth. The labor market is concerned, it is mixed. That is the new word. As far as growth is concerned, we have moved from expansion mode to picked up. That is the view. Growth has picked up. That is the point. I will probably come through in all the conversations. Can profitability return as growth comes . Radar going to stay lower for longer. That is the case. Theyre going to focus on inflation. Those of the nuances but a united front as janet takes over at the alkyl and c. The market reactions are more driven by emerging markets. Yes, look at these three markets. The msci, the sp and u. S. Treasury. U. S. Treasury being driven more by the desire to be protected rather than anything to do with what is going on with the fed. There is the s p and the msci, this movement in the markets is fairly protracted. Treasury yields are at a twomonth low. Are you going to get many buyers . I will leave you with this thought from bill gross. Turkey and south africa flunked the currency test. Dont wait to see who is next to drop. Moved to treasuries. I suppose that sums it up. It certainly does. Thank you so much. Still with us, his investment how do you view all of this . The fed is definitely starting to tighten or taper. Tapering is not tightening yet. At the same time, they are going counter emerging markets . The fed works for the United States. Yes, the biggest economy in the world but at the end of the day it has to drive a supertanker touches the u. S. Economy. It makes decisions about turning and sees waves. Make changesy to on a technical basis so quickly. The u. S. Economy is recovering. The fed has succeeded in shifting communication to lose her for longer. That hasnt changed. What were seeing in emerging markets is a different story. It is also Central Banks all fending for themselves. It is three dynamics at play. Starting is the u. S. To normalize and the effect on emerging markets. The second is china and the effect on exporters to china as demand slows. The third is the idiosyncratic headlines we see out of argentina, thailand, turkey, places where there are double deficits. Is it possible that now we have to differentiate emerging markets . I have guests coming on here saying emerging markets were all in one bag. 2014 is the year where we have to make a difference between india, turkey and brazil. This is one of the great inefficiency is of the investing world. Isen the 50 of demand generated by emerging markets, about 15 of the mci m msci, flows have an impact on this. Exporters should do fine because the u. S. And europe are buying more stuff. If you take a more domestic demand driven emerging markets, theyre going to suffer. Argentina is a story of lots of policy errors. Korea is doing great. Mexico is doing fine. Is are different stories. How do you play emerging markets . Inyou buy consumer stocks specific emerging markets that will outperform . Emergingmarket countries that are more exposed to stories that i understand like United States and europe. Demand is picking up, people are buying more stuff. They are buying more stuff from countries that sell a lot. Exporterd be the nations. I think china is a different story. China has been exporting deflation for a long time. Its Manufacturing Base is getting more expensive. It is shifting towards exporting inflation at the same time as it is trying to shift its domestic demand. There will me that be better growth in 2014 but investment returns will be lower. This has a lot to do with Central Banks. Are we going to see a correction . I think the markets will end 2014 higher but it will be bumpy along the way. My overall view is that we will see some returns in the equity markets but it will be volatile getting there. We see earnings acceleration for corporate and capex being put to work. 10 of u. S. Gdp is sitting on the Balance Sheets of companies. They have to start investing again. That should kickstart the circle the fed is looking for. We need to see it showing up in this earnings season. Thank u so much for now, Alex Friedman of ubs. Still to come, investors give facebook a thumbsup. The stock surges after hours. It hits a key milestone on mobile. Details, next. Welcome back to on the move. I am Francine Lacqua in london. The Worlds Largest pc maker continues its buying spree. Lenovo is acquiring googles motorola phone unit for more than 2. 9 billion. I spoke to lenovos president in talkedast week and he about expanding brand awareness. We are number one in commercial. Everyone knows thinkpad. Our customers ask us, expand your enterprise in server portfolio more. The gives the customers opportunity for a bigger portfolio. He could have given the breaking news but he didnt give it to us. Hans nichols joins us with the latest. Google is cutting their losses vo seizing opportunity. You could say google is cutting their losses. On paper, it doesnt look like this was a great acquisition. About 22 months ago, google bought a motorola handset unit for around 12 billion. They are planning to sell it for 3 billion. That is not entirely fair. It came with a fair amount of cash, 3 billion there. They also sold with the tv business so they have about 5. 5 billion there. The question is, how much are the 15,000 patents that google will retain, they are not selling those patents, how much are those worth . If you make the argument that main play wass protecting their operating system from patent wars and keeping that central, it may not have been that bad of an acquisition. They have been running a loss on motorola. It is way down in the rankings in terms of where they are in their handset business. If you actually flip it around, for lenovo it is a bit of a shopping spree. You kind of wonder what they are seeing in what they are buying. Also, what lenovo will become in 12 months. Have a pcis going to spot. They bought ibms pc business in 2005. Last week they wanted to buy ibms server business. That was announced last week. These are all intentions. It is all subject to u. S. And chinese regulatory authorities. If the motorola deal go through, lenovo will be third in the handset market behind samsung and apple. This deal happened pretty quickly because lenovo was interested in blackberry. Blackberry takes itself off the market and lenovo ends up with motorola. They are a hardware company, they want to be in the hardware business. Google is in the search business but they retain the patents and they have decided those patents are still worth a lot of money. Thank you so much, hans nichols with the wrapup of lenovo. Still with us is Alex Friedman. He oversees nearly 2 trillion of assets. We talked a little bit about the world economy, returns in general. Talk to me about tech. Are we going to see more c apex spending . I dont know anyone who doesnt have a smartphone. You know the old westerns where people walk into the bar and put down there gun, now they put down their smartphone. I think the story on tech is basically, as companies spend more, as we move into a bit of a , buyingecovery story new computers for their workers, individuals buying new technology, the benefit from this cyclical turn. Generally, tech just like financials should do well. Broadly, from a mobile phone, Something Like 2 billion people now are participating in the Global Economy because of access to technology which is a fantastic equalizer. Doesnt override your Investment Decisions if you are looking at retailers, industrials . We just pay a lot more online. Does that come into your thinking . I guess there are two bank dimensions to it. X is picking up everywhere. Technology is one of the real beneficiaries. Where do you want to position yourself . Technology, do you feel that some of them are frothy . Do you want to find smaller players that no one has ever heard of . Guess it relates a little bit to this valuation question. That stocks are fully valued and technology there are a lot of different ways to approach valuation. The main headline is i dont think we are in a bubble but i do think we need earnings acceleration. If i am wrong on this story are we see Consumer Confidence change significantly to the downside, then theyre probably wont be a better story on equities and Technology Wont do as well. We have an overarching view of how you invest your money. What is your favorite place in the next couple of months . Is going to sound simple and boring but i still like the u. S. Market. I think the u. S. Is furthest along in the deleveraging cycle. I think the fiscal drag is much better than it has been in years. I like the u. S. I think europe is not as good as it seems. Too complacent . We still have to get through the bank test. Testnk, you dont give a where everybody passes. There will be banks that fail this test. Was the process by which they are real capitalized, i dont know yet. Scary but theks longterm trends are still attractive. Anything in currencies . Like the british pound we sit here in london. The u. K. Is doing well. Can are intuitively, i think that is a drag on earnings so u. K. Equities arent attractive. Currencies, i think the dollar will strengthen. The economy is doing better and if we do all get scared by emerging markets, it tends to be a safe haven. Thank you so much for all of that. Great to have you on the program. Alex friedman there, global chief Investment Officer at ubs. After the break, diageos chief executive joins us on the program. I will ask about the companys latest earnings, the impact of emerging markets and costcutting. Give it right here. We are on the move. Welcome back to on the move. I am Francine Lacqua at bloombergs European Headquarters in london. These are the Bloomberg Top headlines. The Federal Reserve policymakers cut the peso bond buying by 10 billion for a second straight meeting. The fomc maintained its strategy of gradually withdrawing the Stimulus Program as janet yellen prepares to succeed ben bernanke. It was the first meaning without a dissenting vote since june of 2011. China manufacturing contracted for the first time in six months in january. A purchasing Managers Index fell to 49. 5 from 50 point five in december adding to concerns about the worlds secondbiggest economy. The rating just missed the estimate of economists surveyed by bloomberg. Bank of England Governor Mark carney says scotland will probably have to give up some of its sovereignty and mirror integration plans if it votes to leave the u. K. And keep the pound. Speaking today or yesterday, he said policymakers need to carefully consider the stability risks associated with monetary union. Scotland referendum is set for september 18. The worlds biggest distillery, first quarterd Profit Growth that missed expectations due to a slowdown in emerging markets. Joining us now, Bloomberg Consumer reporter clemente and. I do so much for joining us. It is all about emerging markets. In americamuch it delivered really good sales growth. People are buying more expensive things. Western europe was improving. Andlook at emerging markets it is just harder out there for consumer goods companies. It isthat they are offcenter in a costcutting program. No surprise at all. This is something a lot of people are doing. It is a mess