Caroline has the story of the day. Blackrock. And they are working. Assetbacked securities are different. That may come as a shock. The bond buyers that we see. The european valuation is below the counterpart in United States of america. We are looking at confidence data a little later to drop and we are looking for unemployment in germany. I will join you for those numbers. We are looking at unemployment to fall and were going to look at the data. Lets look at vivendi. No real reaction from vivendi so far and the market. Lets turn to the companys on the move this morning. You have telefonica and telecom witha doing a batter oil gdp. Royal with gdp. The assets are lower and Telecom Italia is lower. It is a 20 stake. Caroline will take you to the numbers. Telefonica is up a third of 1 and they have trumped the gross levels. I leave the honor of taking you through the details of the deal. This is one of the bigger companies. Their fees are up 11 . They are a Global Player in the sector. More than 10 . Hayes is doing nicely. They are looking at the telecom story. Telefonica is up and Telecom Italia is bucking the equity market trend. I know that you are waiting for something and tell you that the have bought some bonds. I know it will happen and will be from a german player. There you go. It is in negative territory. Do not worry. It is still there. Have a look. That is one of the most interesting currencies at the moment. The have the strongest element. Have had enough to provoke a response . The cap is 120 and the swiss do not like anyone messing with the timing. Keep an eye on that. Waiting to see someone who has bought german bonds. The chief Investment Officer and nearly 1 trillion in assets. I will not ask you if you have been buying german debt. I will bring you spanish data and gdp coming in as expected. The cpi is less than expected and deflation is still a big concern. Lets look at the equity market. It feels like last year. Two big weeks for european equities. Im not expecting a correction. What are we looking for with minimal returns over the next five years . It is correct. Minimal and the relative scheme of things. You can achieve the front end and the cash, as well. There has been a risk towards portfolios and that demonstrates a cap that we have seen with the increase in equity markets. The floor has underpinned market moves. You see the selloffs that you ave mentioned and they are repositioning of risk, versus a positioning of a selloff. Talk to me about the macroeconomic environment that underpins the forecast. We are looking at a Global Market perspective and a lower gross scenario. It is longer to get back to normal. There could be confidence with shortterm blips in a growth perspective. We expect it to take a long time to normalize and that will wherede with bank policy, they expect it to be lower for longer. The global growth. In europe seems to be running to stand still. Growth right now. It is a game and we see spain some have recovered from a low level and they have recovered. You can see them working through some of the pain. There is a significant rebalancing and government spending. Labor costsucing and try to bring Foreign Investments in spurring domestic consumptions. You can see that in the peripheral then what you can in france. From a germany perspective, the game is different and with growth fromave seen a german perspective and you can see that from the numbers in germany. There is a dent or a pause on growth from the german perspective and we would align that with the worry around how the sanctions are taking effect in russia and from russia. Do you pull back . We like a diversified portfolio approach and the european markets are differentiating companies versus country. You look at the companies and multinationals. Some of the manufacturers and wear have global reach and it is a worry for us. It is the Company Activity that is important. Diversifying is the message. Were talking about the markets on the top and where we are extended after the break. Stay with us. Here is a look at what is coming up. The war heats up. Euros offered and the biggest French Business names head to versailles. Stay with us. We will be back. Welcome back. We stream everything on bloomberg. Lets get some stocks that are on the move this morning. Telecom italia and telefonica are both out with offers. That is what the stocks are doing at the moment. Telefonica is pretty flat. There is a bidding war. I am not going to try to explain. In a word, it is complex. We are joined from the newsroom. Bring me the latest on the story. It is tricky to follow and i will get my teeth into it because we have the cards on the table from telefonica and Telecom Italia. Hey have upped their bids one is slightly more than the other. If you want more cash or stock options. Italias from Telecom Offering 7 billion euros. You are getting 1. 7 billion euros in cash and 16 from a Share Capital basis in Telecom Italia. Tasty for is pretty the owner because they want to access the content and they want a steak. You get 15 in the combined unit. That is the asset that they currently hold. On the other side, you have the spanish rival that is a bit they own a stake in Telecom Italia. They offer more info you. You get more cash. Holding in the combined unit. But, should they wish it, they can swap some of the brazilian holdings into Telecom Italia shares. The Share Capital and Voting Rights are the whole of the amount that they currently own that the brazilian regulators do not really like. The offer is on the table. What is next . We have a Board Meeting happening and the foot the french conglomerate. The have been spinning off telecoms giant and they have the numbers later today. The board meets later today and they are going to be tried to get to grips with the deal. What is more appetizing . Do they want more access to content . Do they want a bigger chunk of cash coming . It is all of for debate and we will see what is more appetizing. It is all up. The reason they are so desperate is because of the fastgrowing broadband operation in the new emerging markets with younger generations. They want to access the internet and it looks like it is the prize asset to have. Whoever is the loser may collapse the market altogether. Thank you very much. The french politicians and ceos are gathered today for a conference. This follows a week of political turmoil. The resignation of the president s government. We are on site with the latest on how they are responding to the political change. Is it a surprise for the business lobby in france . That the Business Executives are very happy about the Cabinet Reshuffle and it was well received here with the people i have been talking to since yesterday. They say the economic ministers signal the Prime Minister to continue their probusiness policy. The president introduced a responsibility pact with tax cuts for companies. Those are exclusively to the deal and one of the biggest utilities in europe. They specialize in waste and water management. About theat he said Cabinet Reshuffle. Toi think it is important work as a team. I think the situation is clarified and is good for the confidence. Factionod for the rapid that is necessary. Of course, we have to see what happens when the Prime Minister explains to the parliament. Telling us the three shuffle brings more clarity to the economic qualities of france and that he does not expect any more political turmoil during the next few months. We have the outcome from yesterday afternoon. Was it received well by these guys . Do they like him . Yesterdayan ovation and the Business Executives really like his piece. It is about bringing confidence back to businesses that encourage businesses to invest in france and we have 3. 3 million jobless people. Rising taxt a anymore. It was interesting. Talked to a ceo and here is what he said. It is the first time that we see a Prime Minister from the left party and the socialist party coming to meet the business guys and saying, i love you and i love corporations and the private sector. The supporting you and is related tonce the success of firms and corporations. This took place with tony blair. Old labor and new labour. Tony blair says that we are going to succeed and support corporations in the u. K. Between thee affair Prime Minister and the Business Executives in france. They are comparing the Prime Minister to tony blair. Back to you. Thank you very much. Stay with us for a little bit more perspective. We have wayne. Listen to those comments about the french politics. You are interested in european debt market. Who cares . The one i keep going on about is the german debt. 1, 2, 3 year bonds. Who is buying this . Question of a Banking System is a riskfree Government Bonds. Germany and you requirement to make sure they own a certain amount of assets and liabilities. You look it safe haven and the risk of principle. Germany is on the top end at the risk spectrum and you have a bias with that. The other thing that is interesting is around the negativity of the reserve rates. That has to be passed on and if you are a current account holder, it may be the chance that you have a bank risk. Owning a Government Bond may seem appropriate. You get a negative yield before you adjusted for inflation. Where to you go . Conundrum around the valuation of the equity market and there is a barbell of risk. Safety assets and Government Bonds. Diversification is global diversified risk and it is developed market equities. You would argue why you are seeing a run from equity. We have been banging on about this for two years. Loadield are low and the the rotation is there are going to happen. Is that something we need to think about . It is. There is a yield differential between markets and europe continues to surprise from that perspective. Yields willal bond be through and they have continued to grind lower. Is helping with issuing debt and attractives to be with certain points in the curve. It is worth keeping an ion the rotation and the extents of the market. Aboutant to talk to you what you sent to me. You said that the subpar growth increases the risk of asset bubbles. I look at spain and the yields have come down to 2. 1 on the tenure this year right now. T is a surprise are things getting overextended question mark deflation is around and i would suggest that there is more. Have an expectation and they need to hold government securities country by country. Andneed Government Debt french Government Debt. You have domestic owners and buyers. We mentioned that they have to. Of do have these elements significant price rises and drops in yields. Will we get a normalization, dust . I dont think we will we get a normalization . I dont think that we will. Floor they keeps the under the bond price market and has a cap on yields. , if they stay where they are where is the frothy mess . You look at the equity markets and valuations. You can pull out and this is the safe haven. Everyone is towards developed markets and people are looking for safety and security. It makes perfect sense. You can see and argue there is some attractiveness from the valuation perspective. So, there is an ability to reposition from a geographical perspective. Different. I will give you that. Thank you very much for joining us this morning. Thead to the break and third biggest loser on the stoxx 600. It is down and we will to you why next. You up toime to bring speed with companies on the move. Expensiveis on less liquors. They get about a third of the revenue from asia. Transaction Security Company says that sales missed f missed estimates and reiterated their forecast for double digit expansion. We will get more perspective. Right now, they stock is getting crushed. Well talk about qantas and the shares taking off. They beat trouble and theres a light at the tunnel. Will bring you news of the turnaround next. Welcome back. A lower open stays lower. A big week for european equities. German inflation is getting a regional breakdown and it does not look pretty. It moves higher and it is about to disappoint you all. You are going to talk the ceo shortly. It is all about identity and software identity. They say they will accelerate in the fact of the day is that it is the most shorted stock on the stoxx 600. Down because of iron or. It is at a twoyear low. Morgan stanley says no. Down and when it comes to telecoms and they are slashing. They are cutting. A much better word. They are cutting the revenue forecast by 1 or 2 and say that construction will have a robust performance. Rare and a country where your revenue comes from france, with the growth problem. Back to you. Here are the headlines for you. They are seeking to borrow as much as 27 billion euros in the auction of cheap cash. That is according to people familiar with the matter. Unicredit is asking for euros. The u. S. Is russia may be directing a counter offensive with the eastern ukraine. A spokesman for Vladimir Putin denied the claim. He says the information does not correspond with reality. Crime has spread to peaceful areas. Investigating a hack attack on jpmorgan. That is according to people familiar. Coordinate the attack that resulted in a loss of Customer Data that could be used to drain accounts. Lets go to the big corporate story and the showdown in the telecom sector. They has started a bidding war over a unit. They raised the bid after Telecom Italia put forward a offer. Stake,e on what is at lets go to the show. Good morning. It is confusing. Why brazil. Brazil . Invite ane wants to brazilian for a dance. Especially a company. Due to theffected consolidation of the sector. We can compare value and industrial background of the proposals. Not be more different from one another. Andfonica is an exit ticket telecom is on the table. Theres an issue of personality and it is an important element to be taken. Long has been a relationship. Ande is an Industrial Financial issue. Like there is an issue on whether the unit is for sale or not. Is inl, you know, that context. The counterproposal of telefonica expires tomorrow and it is a tactical attempt to buy some time and negotiate further. Longerering has a Expiration Date and they want to put pressure to come to a quick decision. Vivendi will take the necessary time for negotiating. It is not just maximization of value. In case they go for telecom for italian, it will be a defining operation for the next year of the new industrial environment. That is why i do not think the story will be over tomorrow. Do noter say that they get the wedding ring on the finger. Where do they go next . Brazil is a Strategic Asset for Telecom Italia and there are other options on the table. Italia cannot afford to lose a growth option available in its portfolio. Brazil will stay on the screen for the next month, for sure and definitely for the next year. They cannot lose important opportunities. There was an issue. The brazilian regulators have inn picky and careful granting a competitive environment. Sameeals do not have the regulatory impact. Is another that it person invite it to the wedding and we have to see whether their reaction will be in favor of one option versus the other. We will talk again. Thank you for joining us this morning. Thank you very much. Lets turn to corporate earnings a recordantas posted 2. 7 billion annual loss. They forecast a return to profit and we spoke to the ceo. Report andes that we the underlying losses were 636 million. That was a consequence of a record fuel price. It was over the supply of capacity. Andt of carriers operate lose money. Domestic airlines are profitable. Were in thee losses fleet that was purchased. Was . 57. Ge rate it is a change to the fleet and restructuring as a consequent best consequence of the business. On theot having impact economics or the cash position of the business. It is the appropriate change. Ok. You do not answer the question in the slightest when i asked about how close you have come to resigning. You have a target. Do you still have the target . We have given an outlook statement that says we expect the business to be profitable. Committed to turning the business around and delivering on the factors that we can control. The business is delivering on a Transformation Program and the worst is behind us. We are delivering Customer Satisfaction and there is no better time to travel then today. They are fully committed behind that and everybody is thinking of delivering what we need to deliver for shareholders in the future. Ok. You have looked at qantas domestic. The International Holding company. That it could be spun off and put into a company withture that is open emirates or another carrier . We have created a Holding Company and a Corporate Structure that allows us to have a vestment in Qantas International and Foreign Airlines and Foreign InvestorsGoing Forward as a consequence of the qantas sales act and has been si