Globally investors have withdrawn nearly 200 million from the bond and equity markets in russia. In 9 30. Es will come carney speaks. And a voice from the european aboutl bank will talk lithuania. You have got a slight drop in markets. You have alcatel down. Vivendi on the upside. Three companies very much on our radar this morning. We have a little bit of mining, a little bit of autos. When it comes to bhp billiton bucking the trend they are actually up a half a percent. Booming away in terms of production, up nearly 20 . 57 million tons. Thats more or less what a produced. The estimate was just under 49. Copper also rising. Bhp billiton looking to sell assets. Look, we aresaying selling every ton we take out of the ground. The wall street journal also carrying an article on the yogurt maker. Thats what they are most famously known for. A straight a Strategic Review the ceo asked, how do you expand the business . And a big Strategic Review to come through. A takeover target seems to be the view. Dollar, they want to trump the vw brand. Daimler doing quite nicely. When it comes to currency inflation. Have had just under three percent in australia. The highest in almost four years. Pare back their bets and perspective in terms of rate cuts by the aussies when youre faced with inflation like that. Otherare uncle countries that get a taste of inflation. Could that be enough to drive the hawks into dissent . Could it be the wages . Our wages are rising, but inflation is not. Could that be it holds anonymity for another day . Inflation, what a novelty. Begins yesterday. Lets get some perspective from the man himself. He is head of equity trading strategy. I want to gauge what on earth is happening. Not the market today but the market yesterday. For me it is one of two things. Hopefully you can get an answer. Either we dont care about Political Risk are we due care and we dont think politicians will do much about it with regard to sanctions. Can i go for a third one . We do care about geoPolitical Risk. Most likely we will stay localized. It is bad news for russia. Its bad news for ukraine. They most likely will need more sanctions. As long as it does not deteriorate it will not globalize itself. As you look at equity markets on a global basis you have got to go back to earnings. Earnings are doing well. 73 , and thebout european one is 63 , which compares very well to previous was moreere europe 5050. Its a bit of push and pull. As long as it doesnt get worse fast micro can expect itself rather than macro. When we look at the u. S. For since europe there has been an underperformance in european equities nurses u. S. Equities. Are we starting to see that come through . We think it is going to close. We expect more in europe than we do in the u. S. The performance was driven by two factors primarily. Europe to thee of u. S. Is highly correlated to relative pmis. The Ukraine Russian situation is not helping as well. The dax has been the head of choice for ukraine and russia. Given the close links on the energy side between germany and this point ofm view, ukraine has reduced some of the risk appetite. We expect the spread to close. It will be easier to close faster if europeans show the recent low does not last too long. Your best case is the spread narrows. What is your biggest risk that doesnt play out . The earnings. As you look at equity, global basis and you look at china, which is chief cheap, the rest are not cheap anymore. We are still relatively cheap, but to be able to continue to justify and grow further we need leadership. Thats why we take a lot of confidence. We are going to need to see that pursue itself. We normally need news to be able to contemplate higher. It think you have painted a bullish picture on the european equities side. Is there a risk we are being complacent . Is there a risk sanctions escalate, russia retaliates, and it becomes a european wide story and not a localized phenomenon . Iti guess the good news is is still pretty low. The price of protection, which means for it to be unhedged does make a lot of sense. We are not discarding or ignoring what is happening. We are saying be long and be hedge. That is his message. Here is a look at what else is coming up. Apple tells investors just hang in there. The long wait may soon be over. A regulatory review makes waves at Deutsche Bank. Shares fall. The scottish minister fights for the pound. He says sterling does not belong to george osborne. We will bring you that later this hour. Follow me on twitter. We will be back on the move in twominute time. Welcome back. I am Jonathan Ferro. We are streaming live on your , apple tv, absolutely everything. Deutsche bank is down. Just off the lows of today. Inaccurate, unreliable. Those are the words being used by overseers in new york. The man watching closely is hans nichols. He has got the details from berlin. Abouts the bank saying this . What is their response to these allegations . When the story leaked the banks response was essentially, we are following through with our practice. We are working diligently. We are trying to fix these problems. The problem is at the time the they had numerous irregularities. They knew about them, and they failed to fix them. Its a failure to fix. Then the letter is released in july. We dont know what side the letter comes from. A can assume it comes from new york regulator. Here is what it says. The size and breadth of error strongly suggest when the regulator says you need to take remedial action, the general thinking is you should switch into high gear and take care of that. The concern is nothing has happened in the last six or seven months. We are seeing the stock way down. It was down 2. 6 at the open. I believe it was 1. 9 now. The question is how does Deutsche Bank fix this. Lets talk about the timing more. Coming to light six or seven months later how does the bank react, and how does this play out . Do they know they have to fix these problems . Do the issues still remain, or is this just an old story . When the regulator wants to issue a letter like this they can do it private. They canceled the bank publicly or issue a letter privately and later make it public. If that is what happened it may be an indication they dont think the problems have been fixed. The next step they can do is ask which bank to restate some of their earnings. The asked Deutsche Bank next step they can do is ask Deutsche Bank to restate some of these earnings. Maybe these changes in january werent enough for the regulators at the Federal Reserve bank in new york. Fascinating story. We are going to get more from the global head of equity trading strategy at citigroup. I want to talk about the sector. Regulators versus banks. It has got to be the biggest headwind. If you are trading banks, how do you play this . We are bullish on banks in general. We see qe will be possible and will provide a push to asset prices. In the short term a few worries. We mentioned pmi in europe a little earlier. Pmi correlates to value. There are a bit of headwinds valuationm pmis on a point of view. As we look at 2014 what was step one. Was just step two is more purchases. We expect by the end of the year we will get a lot more asset purchases. Goodis going to have to be for the bank as well. Are you bullish banks because fundamentally they are in europe or because the ecb is going to do something and we know what happens next time . To bring you back on Regulatory RiskRegulatory Risk is something we have to learn to live with as an industry. As much as downside reaction on day one, it tends to be seen as more of a oneoff which is repeatable. The positioning of the banks has a lot to do with the price action we are seeing. A bit ofs year excitement when pmi started in january. A huge amount going into the banks. Of it was neutralization of positioning. We found them safe and sound. The earnings stories should be there. Qe should help. It will remain volatile and would likely see a pickup on the economy to be more bullish on the banks just yet. We will get more later. We are going to talk about tech. Apple posted growth and sales for the iphone the jewel in its crown. Up for investors seem optimistic about microsoft, hopeful the new ceo is making some necessary cost cuts and reorienting this business. Here is our European Business correspondence. Growth continuing to be the story. It was pretty phenomenal. We saw profit up and sales up. Their sales are in excess of 37 billion. That is more than the whole country of jordan in the country bahrain will annually. Iphone is up 30 in sales. Also max are up. Well in india,ry selling very well in china. China up 28 in terms of sales. Even tim cook said, i am surprised. Baked in . Sm already 18 growth year to date. This is a company that is the most valuable in the world. Many have expected this sort of growth. That is the geography story. I want to talk about the product. If the iphone the only thing i can get excited about for apple this year . It seems everybody is ready for this iphone. Said we areelf going to be really busy. Are we going to see more smart . Atches, smart jewelry we want more hardware. That is currently being hinted at. That is where the next numbers are going to come from. Next quarter, which is their fourth quarter, might not be that good. We are going to see a little uptick in sales. Everyone is going to hold on until after september when the flurry of new products is going to come to the market. I am be sensitized. I am over it. Lets talk about microsoft. Profit down. This is a longterm story. Is a bet on Cloud Computing. Its a bet on the man who used to helm the Cloud Computing area for microsoft, and the way to the business. We have heard how he is doing that i cutting jobs. 18,000 slashed last week. It seems investors are optimistic about the direction he is taking. Profit fell seven percent. It missed estimates. Shares rose in the afterhours. What he is promising is more cost cuts. Areas. Izing the core it is Cloud Computing for businesses making them able to access work technology. We dont need to be glued to our desk anymore using old windows run out. We could be out and about getting it from the cloud. That makes us more flexible. That is the way the companies are investing. They did do well in pcs. Windows xp came off the market. Many businesses are updating with the new microsoft product. From pc. Bit of whimsy it generally is about focusing on cloud. Optimism abounds in investments. Inks very much. Lets talk about tech. We know the numbers are always amazing for apple. You have a Federal Reserve that has put out of monetary report and said certain sectors of valuations are looking stretched. A lot of people are talking about that. What is your view on valuations . We cut in three sectors. Hypergrowth, some of the internet names, the names which got huge pressure in march because the price momentum had been so strong. There is the bottom bucket with a which is all about the microsoft of this world. Good cash flow. Here the story is about capital returns, dividends, and maybe trying to refocus. The bit we are most excited about is in the middle. The thing is the bricks and , toar in the industry continue growing they need some of the pieces that come in this middle. The valuation is clearly not a stretch. Outperformingen last year. That is where we would tend to focus. Even in hypergrowth it was two things. Positioning was too extreme. As growth picked up in the u. S. You dont need to pay as much premium of valuation for growth if growth becomes plenty. Part of what we saw in march was probably driven by the fact the economy is doing better. Positive on tech. You heard the man. The head of equities strategy at citigroup. We will be back in two minutes time. Coming up later. Welcome back. Earnings out this morning. Glaxosmithkline reports later. Joining us is sam. Welcome back. You and i have been talking about this. This is about guidance. Thats going to be the big one. I think everyone is going to be looking at the events of the last few months in terms of the strength of the sterling. The issues with regards to the launch of their new products and how quickly they have been able to bring back consumer products, how that might push them in terms of providing their guidance. On consolidation side we had a lot of consolidation. Premium formassive the company. Are we to see more consolidation in the sector . Doesnt mean they are going to have to pay bigger prices to do it . Excellent question. At the end of the day this seems to be the time a lot of companies are getting involved. A lot of them are driven by tax issues. We have even had a little deal that involved a swissbased company. The reality is companies are continuing to look at assets that can plug into their pipelines. There was one specifically for that reason. That seems to have been driven can really that they do this at the time. There are few of those cases. I think we will continue to see this. Hot thedepend on how asset is. Very quickly, the issue with china and the company, does it continue to be something they can leave behind . What is your take . Its difficult to tell. We are looking at a case that will undoubtedly involve the company. What they have to do is play the best they can to clear their prove to thefully world it wasnt driven by the top management and then we can move on. A fantastic summary of what is going on. Here is the European Research direct your. Thanks for joining us. I will be back in about two minutes time. Welcome back to on the move , i am Jonathan Ferro. Trading,s into equity we are off session lows and pushing higher here in europe. The big focus in the u. K. Is bank of england minutes. The big one, governor mark carney will speak. Look out for that. Now, manus cranny is that the touchscreen. Of a focus onore results rather than geopolitics. We are getting back to facts and figures. Er, when it comes to the mercedesbenz brands, driving the profitability higher. 13 new models coming on board. None, all about the strategy for yogurt. Said to be asking senior managers to put together plans create what should we do to expand the company . How do you not become the next takeover target . A lot of speculation that pepsi and nestle might be interested. Abb, when it comes to matters of grave importance like power are reallye guys trying to turn around that industrial beast. Abb has missed their earnings per share for the third consecutive quarter. Not my research, bloomberg industries. The order book is turning around. It is up by some 13 . But they miss on their topline profits. At the end of the day, when you beat, the market typically rewards you. Abb is underperforming this morning. Manus cranny gets excited about power grids. There you go. The bank of england releases minutes am its july meeting in one hours time. Investors looking for any signs the central bank is ready to raise Interest Rates. The u. S. And the u. K. Has seen accelerated growth. Would that mean higher rates by 2015 . Governor mark carney speaks today in class cap in glasgow. The eu threatening to restrict Capital Access to eu markets and defense technologies, deciding to blacklist russian businesspeople and companies for the first time. The widest sanctions list potentially do tomorrow. Russias ambassador to the eu is warning leaders against damaging their own economies. The impact on european ,usiness, the Banking Community will not be less than that on the russian business. Regulators ordered Domestic Airlines to suspend flights to israel as palestinian rockets fired from militants in the area around tel avivs main airport. European carriers also canceled services. Israels transport minister says the airport is safe and that a a prize fors terror. Elliott gotkine joins us from the phone in tel aviv. Ring us up to speed. Is it escalating, is is stabilizing . What is the picture . I can see the gaza strip from where i am right now and i can hear it israeli artillery being fired. I have not heard any sirens in the particular area where i have been all morning, but the fighting is continuing. The casualty count, unfortunately, is continuing to rise as well. Is beginningrael to feel a pinch following the cancellations from those airlines. This is clearly feeding into Airline Companies stock prices as well. What is the outlook . Do we have any gauge for the time horizon here . For now, this is kind of an automatic, 24hour ban on flights after a rocket hit a place about one mile, 1. 5 kilometers north of the airport. This is far and away the most important airport. All the main u. S. Airlines are not flying right now. Shares up sharply today, their biggest rise since april. They must take the view that they will plug the gap left by some airlines who are not flying here right now. Thank you so much. Great perspective from the ground from israel. The eu is stepping up sanctions against russia. It is not sure of economic and trade sanctions as they met in brussels this week. Walk us through what these expanded sanctions entail. It was supposed to be this big moment of truth, a test of european power. In fact, they met for about seven hours and what happened . Well, the Dutch Foreign minister do we have the Dutch Foreign minister . We have the Dutch Foreign minister. He is going to lay it out for us. We have decided today that the list of persons on the sanctions will be announced and a list will be submitted by thursday. We have also decided that the commission will be tasked to look at a number of potential measures in a number of fields, hightechefense goods, including in the energy sector, and financial services. So he says financial services. What they are talking about is restricting Russian Companies access to European Capital markets. We saw the exact same thing in the united states. The u. S. With some sanctions last week said that it would restrict four companies, to be exact, their access to u. S. Capital markets. What does that do . Effectively, that shuts them out of the market and makes it more difficult for them to raise money. That raises the cost of raising money. Effectively, that makes thos