Transcripts For BLOOMBERG The Pulse 20140314

Thank you so much. We will get back to hans in a short while. Bp, good news for bob dudley. Deal where they will be allowed to bid for government contracts in the gulf and in the gulf of mexico. They were banned from doing business. That has been overturned. Litigation continues in terms of the clean water act. News, because it allows bob dudley, this is one hubss four key geographic where he wants to produce oil. For theirry important reputation and business. Very lucrative contracts coming. Lets get to ryan. He is at downing street. He is meeting u. S. Secretary of state john kerry is in london and meeting with his russian counterpart today. Plenty of 11th hour conversations as western leaders tried to convince Vladimir Putin to stand down ahead of the vote on sunday. It kicks off at the british Prime Ministers office. He will be receiving the u. S. Secretary of state any moment now, all of that as violence breaks out in the east of ukraine and Russian Forces amassed just over the border. We will cross over to ryan shortly. Lot on this Market Correction taking further momentum. We are keeping an eye on china. Data andome u. K. Trade the russian Monetary Policy at 9 30. We may see a ratification of that. You merging markets have had their biggest drop this week since june of last year. The u. K. Ista in going to be of importance. Money going into the yen and protection in terms of volatility. Rising by only 9 by over nine percent. People using these stocks to protect themselves against potential moves. We are waiting for that to get underway, john kerry and his russian counterpart, their meeting. Lets have a look at some companies we are keeping an eye on. I mentioned bp at the start of the show. Good news for them. 63 Million Barrels is what they produced from the golf of mexico last year. Bob dudley wants to grow that. About rebuilding their reputation and being allowed to bid for government contracts. Nokia, the news is that they may point do not forget, all equity markets are lower this morning. Monte paschi, the italian news journal saying that jc flowers may be interested in investing in a 20 stake. That is bucking the overall trend. Dominating the agenda. Lets look back at the map. All of these equity markets definitely trending lower. Emerging markets under pressure. Russian markets under pressure. Money going into the yen. Draghi, even the french farm minister the french Prime Minister talking about the euro being too high. The dollar is slightly lower and the yen is slightly higher. Aussie dollar, biggest coal of the morning so far for me. Goldman sachs say that when you have bad news under the hood, it is locked in. . 85. Ack to you manus cranny with the latest on the markets. Joining us for her Investment Strategy is lucy mcdonald, chief Investment Officer at alianza allianzinvestors global investors. Talk to me about some stocks that are in the news today. Bp now being allowed to win some lucrative contracts in the gulf of mexico. Does that mean that you are a little bit more enticed by the stock . Clearly, it is good news. I remember sitting in this very studio in 2010 and talking about the prospects of the company and where they were going to become involved in that at that stage. At that stage, we did not want to become involved because of the potential liability. That andwe can now see value it. It means that they become more investable still. It is clearly good news for them and as investors, it makes it investable. Want tothat mean you own it . If you look at the oil industry group, is that something that you would favor . Are you still cautious on the sector as a whole . We have been relatively cautious. Valuations have become more attractive. In the overall market, when you stand back and you have valuation in favor. Earnings, oil prices have stayed resilient and now you have the situation in ukraine. We do not know what the outcome is going to be. I think you have valuation on one side, earnings and momentum a little bit better. It is more interesting. That, inng back from the longterm, it is not that interesting for investors. There is not much growth and it is more of a capital efficiency story. It is more about income. We have to take a break. Are you looking at the sanctions or analyzing sanctions that we can impose on russia or the asymmetrical sanctions that they ideation ton rich the eu . Indirecte some exposure, but we do not have any direct exposure. We are waiting to see what happens on sunday. Thank you so much for now. Lucy mcdonald stays with us with us and we will talk about china and her other top picks next. Coming up, taking aim at the euro. I am Francine Lacqua in london. This is on the move on bloomberg television, radio, and streaming on your phone, your tablet, and bloomberg. Com. Mario draghi said his Forward Guidance may help weaken the euro. His comments echoed those from last week, when he said a strengthening euro had subdued Consumer Price. Lets bring in our international correspondent, hans nichols. To spoke to Jens Weidmann put what mario draghi said into context. We always need a translator with central bankers on the euro. A week ago, mario draghi and did at this. And did hinted at this. The market did not really get it. Last night, he was more explicit and the market clearly got it read the euro dropped quickly last night. It has not much moved today. The concern is that the euro gets stronger and that puts downward pressure on inflation, meaning the bank may have to act. Here is what he actually said. It will be countered with additional monetary measures. It had a. 4 impact on inflation. Rightnflation is that now, if the euro had to strengthen, it would be at 1. 2 . That is a congregated way of saying that is a complicated way of saying they are concerned about the strength of the euro and what effect it may have on the recovery. It may suggest that they will act on the back of it. Yesterday, you spoke to Jens Weidmann. What did he have to say . His take was more marginal. He says that as the euro continues to increase in strength, it is clear that there is no hard target. As it continues to increase in strength, it is a factor that continues to influence their expectations on inflation. Policy target for us as Monetary Policy makers, but like other variables, our assessment of the economy. In that sense, it affects our projections for inflation and greater growth. This is how we take it into consideration. That is basically Jens Weidmann trying to say yes, we will act if it gets too high. Abouting very careful what the threshold would be. They do not want to get boxed into anything. It is euro is at 1. 45, not necessarily a trigger, but it is influencing their decisions on what they do moving forward. We will have to monitor them very closely. Sometimes the first time central bankers speak, the markets do not always pick up on it. You are absolutely right. Thank you very much. Hans nichols interviewed Jens Weidmann. Great interview. Check it out online. Still with us is lucy macdonald. Thank you for sticking around. We spoke before the break about some of your top picks. Talk to me overall about the european market. Valuations are cheap, and yet we still risk inflation with a high euro. The markets have been doing very well this year on till the next couple that the last couple of weeks. Particularly the dax has been affected by what has been happening in ukraine. Probably what is happening in asia too. The earnings in the region have been affected by a stronger euro. , they were doing good until recently. I think there is still a good potential mediumterm investment andrtunity in europe potentially more so after these setbacks recently. The euro, it is helpful to have that rule of thumb, what the impact of the high euro is on inflation. We should be able to work out at what level they will get concerned, which is not that far away from here, i think. They are watching it carefully. It is not going unobserved. It will be dealt with. In the meantime, it is affecting the earnings in the region. Where do you see the most value . George serous george soros was saying a lot of the banking stocks in europe, it seems like a gamble without asset quality reviews. As it goes through, we will get more insight into those Balance Sheets. Now it is finally happening. That is helpful and that is an area where there is value. They will be revalued upwards as we get more clarity. And we get those Balance Sheets restrengthen. Restrengthened. The area where there has not been value is consumer, exporter areas. I was thinking more of exporters of consumer goods. There was not much value, but you are beginning to see it come in again. That is interesting. Retail everywhere is being affected by structural issues of going online. Unless the retailer has a good online offer, they are not going to get anywhere. There is value, i think, within europe. We are seeing more of it after the last couple of weeks. Many areas of the u. S. And china. You mentioned they are online. It brings us to check to tech and one of the stocks you are picking up is microsoft. A lot of tech is quite hot at the moment. Is prettyobile excessive. Techme of the larger companies, there is still value. Quite a few are similar. Microsoft is one of those. They are very depressed with 12 times earnings. They have a yield of around 3 . It now has a ceo as well who is from inside and knows the company extreme the well. Quite a lot of restructuring has been going on. Within their business, they have a Cloud Business that is growing and have recently won some business on a lot higher multiples. Been understood and reflected in the market valuation yet. That is more interesting than many other areas of the market. Thank you so much for now. Also released its first Earnings Report since going public. The french mobile and Cable Company is also in a bidding battle. Caroline hyde has been digging through the release. What did we learn from their report . Is stillks like it doing what it does best, restructuring assets and making them more profitable. Only sold shares in january. It is founded by the french billionaire. Largely a Cable Company, a few in mobile. It is across france, belgium, portugal, israel, luxembourg. Update aboutt any what new acquisitions they could be making. This is a company largely focused on cable, but looking to expand in mobile. Particularly getting its hands on sfr. It does hint, potentially, in its earnings statement, saying they have all the flexibility they need in terms of capital and balance sheet. Trying to tell investors that they have bearings, but they still have cash to play with. We learned yesterday that the bid was upped for sfr. It now has a value of 15. 5 billion euros. Theproblem for altice is french government seems to prefer their rival to become the owner. Andou combine the second third biggest players, you get far more synergy. Maybe they would be better at supporting the jobs than the wanth leaders, who do not to see any more job losses in france because unemployment is very high. Goutgues 10 maybe buoygues can promise that a little bit more. Movement in french telecoms. Anything you want to pick out . Telecomverall in europe industry looks like it might be ,oming out of the dark ages which has been the last few years because of regulation and the inability to consolidate. There are too many players across europe. It does appear now that the regulators have understood that what they have been doing as far as pushing returns down has actually stopped investment and it has been made clear, when you look at comparisons to the u. S. , that is changing now. That is encouraging her consumers and shareholders because shareholders will benefit as consolidation come through and you get higher returns. You will see exhilarated investment into 4g, in particular. It is all good news and there is going to be a lot of m a. One should really have an involvement. When you look at europe and value, there is still some value in telecoms. Thank you so much for spending time with us today. Lucy macdonald, chief Investment Officer at allianz. For u. S. Mpete contracts again. What this means for one of europes biggest oil companies, coming up next. Welcome back to on the move. I am Francine Lacqua in london. Bp can once again compete for lucrative contracts in the u. S. Regulators have lifted a suspension put in place after the Massive Oil Spill in the gulf of mexico. For more, lets bring in marcus cannon. Marcus cranny. Manus cranny. Now they can understand the potential they can make in terms of money and winning contracts. A manager from one of the biggest funds in the world, the United States, the future. 4 big job areas is the u. S. And the gulf of mexico. They want 300,000 barrels of oil per day. They are at 200,000 right now. They say if they can have a helps. Ike that, then it it is about reputational rebuild. It is about business. They have some chunky contracts with u. S. Departments. They were earning nearly 2. 7 billion. They dropped. They considerably dropped. To be back in the game, they are not a pariah anymore in terms of bidding for contracts. You are back in the game. It is all fairly good news for bob dudley. I have got to keep their house in order. They have an independent monitor. They have got to get it right and deliver in terms health and safety would be the word we use here. Ofterms of rigorous testing what you are doing and how you are doing it. Does that mean all of the legal wrangling is passed . Ier,e still have carl barb the district judge, trying to decide how much oil they are responsible for spilling under the clean water act. Limitations could still be up to 17 million. That spill could be the difference between bp, halli burton, and transocean. There is a considerable financial risk at play. A dollar in charge of or two, if she is saying this is constructive, then that carries across the across. There is still financial viability that is the understatement of 2014. There is still litigation risk here. Thank you so much. Manus cranny on bp. We will cross back to him throughout the day. The world watches as crimea recessionr sundays vote. We will break down the implications. Stay with on the move. We are just getting started. Book him back to on the move. Markets are the doing 30 minutes into the trading day. It is an important market day because of this friday. We have a big correction over the last five days. Here is how they are shaping up today. There is quite a lot of volatility. Seems to be fluctuating. Ibex is down. Chinese estimates yesterday. This is overshadowing the improvements that we have seen in the u. S. Economy. As with the currencies are doing. The eurohe lookout for dollar. Itsend is looking for biggest fiveday game against the dollar. These are the Bloomberg Top headlines. A gauge of Chinese Companies december the 20 of its december hide. Duee are growing concerns to corporate defaults. Most after russias. Indias navy set up a search zone for the missing malaysia airline. Hundreds of miles off the course. This comes as evidence is mounting that the plane may have flown the longer after lost contact. The search area and covers 000 where kalama theres kilometers. In his struggles were just on the currency, he said the Exchange Rates are increasingly relevant in the ecbs assessment of rice stability. He also said that his Forward Guidance may help weaken the euro. He made those comments in a speech in vienna yesterday. We are getting some breaking news in the last couple of minutes. This is in terms of we are the hong kong, authority. This is the regulatory authority, the Monetary Authority. They are finding evidence of ubs exchange. The the Exchange Rate london and then you have them around the world. As is possible market manipulation. We will be following this story very closely. We will also be following the Foreign Exchange probes for hkma. They are finding evidence of misconduct. We will keep track of this breaking news story. In other news, the secretary of state meets his russian counterpart in london today. The west is putting pressure on russia. With thealso meeting u. K. Prime minister. The meeting is taking place at number 10 downing street. Kerry will arrive at any moment. That is right. There are plenty of 11th hour talks planned for today. Western leaders make a lastditch attempt for prudent to stand down in ukraine. This is ahead of the referendum in crimea scheduled for sunday. The first of those talks will take place at 10 downing between the rich Prime Minister and the u. S. Secretary of state. He is scheduled to arrive here any time. The main act is when john kerry meets with his russian counterpart, the foreign minister. Thisll be in london later this morning. This is really interesting. They are meeting in london and not washington or moscow. It is neutral ground up. John kerry refused an invitation from the russian president to meet in moscow. Was not said it convinced the russians were taking the diplomatic solution seriously and did not want to hold talks in that context. The talks will go forward now. We expect the secretary of state to arrive here any time now. What can he accomplish,s . I dont think the referendum will be called off. We can expect him to convince the russians into not annexing crimea immediately afterwards. They can vote to join russia, russia still has to accept them into the russian federation. That is for the things john kerry will be trying to accomplish here today. Tensions continue in the meantime to summer in the ukraine. That is right. Lots of violence last night in the eastern city. This a Big Industrial city. We saw thousands of prorussian and proukrainian protesters clashing. Riot police were called in. One person was killed. That in and of itself is tragic. It is also important to keep in ms is to russias attacked russian speaking people. Of russianhousands troops just over the border on the eastern side of the ukrainian border, just miles away. There are concerns in the west and in ukraine itself that those ukraineould move into causing even more escalation in this problem. Thank you so much. We will cross live when secretary kerry arrives. Western leaders have warned that russia will face sanctions if the crisis intensifies. We will look at the Business Impact of sanctions. Is still very speculative as to whats sanctions will take. These may be asset freezes. Trade sanctions are very much a threat. Neither party would actually want to follow through on them given the significant exposure to the Russian Energy supply and economy. They are taking a beating again. ,hey are down 10 for the week that is the most since 2011. That we hurting a lot of people for many individuals in that country. That is the ultimate sanction. How is the set to play out for European Business . Let us start with what we know. This is one of the biggest consumer markets in the world. Have a central bank that is put up interest rates. The question you have to ask yourself is what does that mean for growth . Cosmetic swedish , weany, a danish brewer been talking about this the last couple of weeks. There are Key Companies that are relying on revenue out of russia. How much will it hold up . What happens if the ruble keeps on falling . It is at record lows against many currencies. Marketsves in emerging have shaved profit from the ruble. Last year, the danish currency was up. It is done that under three months this year. Many of these companies will get that money when they convert their revenue into rubles. That could hurt them. Thank you so much. Is aus for her Thoughts Research fellowship. She is cofounder of the open ukraine. Thanks much for joining us on the program. And all ofnvestors us dont really know what is going to happen on sunday. And in the following monday. The worstcase scenario and a best case scenario. How do you see it panning out . It will be a very volatile weekend. A lot will depend on the stance russia will take on the results of the referendum. Crimea and make it part of the russian federation, this will lead to sanctions. Action on dramatic the side of both the you United States and the european union. They can be quite united in this way. If russia decides to stand back, understanding that crimea wants to be independent but will leave it in limbo in a way and leave some negotiating in the mainland, perhaps coming back for a new deal or postponing president ial elections. It is so very difficult to understand the plan that putin wants to put in place. It is too soon yet . Is there real pressure that western leaders can do because the rhetoric has been so strong . I think there still a chance. I think russian now is looking at proposals to the crisis. It is positive compared to just moving your troops into crimea. There is room for negotiation. Russia refuses to negotiate with ukrainian government. They want to recraft the borders onlyhe Security Order western powers and the nine states in europe. Are sotes in europe united. It weakens russias position and puts more pressure on ukraine. It may stabilize the situation overall. Bookend of sanctions are we looking at . Russia was talking tough. They were talking about not honoring some of their loans and bring in london to a standstill. We understand that there may be some asymmetrical repercussions. Who has the most to lose . Depending on the take of russia, though we different layers of sanctions. Both the u. S. And europe will try to target political leadership, those who are in charge of annexation and military operations. This will be visas and asset freezes. This will not immediately impact the moneys. If russia moves forward and troops, this can lead to stopping military contracts. This could lead to looking into gas and oil trade that is taking place. Germany has said they are ready to pay the price. We understand that what is happening in europe is a stress to european security. Pricee willing to pay the and it could hit the economy of the european union. Predictions and the russian economy needs investment. They need the opposite of what the kremlin is doing right now to their economy. Thank you so much for coming in. Up, Mark Zuckerberg called the president. This is on the move. We are streaming on bloomberg. Com and any windows phone. The formula one team, the hardest race is in the factory to get a car to be competitive and stay competitive. We take a look at how they do it. My name is john. Im the performance director. Im going to show you how we build our 2014 car. The first thing we start with is the design. Change, we have to interpret the regulations the best we can. We have concepts and layouts and ideas about how we can get the most performance out of the 2014 rules. The new move into the research and Development Area. The designs will get tested. Areant to see if they performing as we expect. From there, we go to manufacturing with our chosen solution. We have to craft crash tests and moveations and that would back into the research and Development Area again. 80 of the car is made from carbon fiber. It has a great strength to weight ratio. That enables the whole car to be made in this facility for the first time. The pulse is coming up at the top of the hour. Well have plenty more on that. Teddyl be talking to fernandez about his eclectic businesses. He owns the car company and air asia. It is based out of asia. It is pushing strongly into india at the moment. Hes got a company in london. We will talk about that with tony in the pulse. We have the cofounder of wikipedia joining us. We will talk Tech Companies and tech security. We will talk bitcoin. Onhas an interesting take bitcoin. Well also talk about what is happening in the ukraine it up to the referendum this weekend. We will talk about russias relationship with the west. Everyone should check around for the show. Pulse inn with the about 10 minutes. This is as the government is tightening restrictions. The worlds most profitable banks of never been so unloved by investors. Chinas four biggest lenders have the lowest evaluations on record in hong kong trading yesterday. Banksraight controlled known as chinas big four are being squeezed by bad debt. Jennifer lopez is said to make a competing offer for the squeeze cable channel. Sweethearts want to buy views fuse. Mark zuckerberg is frustrated with the obama administration. He let the president know the oldfashioned way. He called him. Nsa has beenthe disguising itself as facebook to gain access to computers. It was bring in our international correspondent. You have covered the white house for one or two decades. Do you have the president s phone number . That is just the white house switchboard. You only call that when no one in the press office will call you back. In my case, that was frequently. And we have a conversation the president , you go to the oval office and you dumb down whatever criticism you meant to say. Under zuckerberg that changed. He only did he criticize, posted those criticisms publicly on a facebook. It is a remarkable escalation. It is a change in roles over who is in charge in this dynamic. Here is what he said in his post. I have called the president to express my frustration over the damage the government is doing. It will take a very long time for true full reform. That indicates the call did not go very well. In some ways his comments are similar to those from Edward Snowden when he addressed sxsw remotely earlier in the week. His message was technically you isd to fix things because it going to take too long a legislatively to get a solution. Here is more of centerburg. It is up to us to build internet we want together. We can build a space that is a more important part of the world than anything we have today. It is also safe and secure. The president has been flirting with Silicon Valley for a long time erie it. He has them at the white house. This criticism is public and it was a zuckerberg who released it. The white house confirmed it. He said that he called the president and complained and he did not answer my concerns and we will have to do this on our own. It will have clinical implications between democrats and Silicon Valley. Had thosember obama executives from Tech Companies to try and get some them closer to the white house. We dont know how president obama responded. Today issue anything . Ali have the white house is a confirmation that the call took place. Callshe white house has from a foreign leader, you get a readout from the white house. It is written in diplomatic speak. Hadyou know is that they the phone call. The details are almost always read out by the person on the other end of the line. To get more interesting things from the white house if obama and merkel have a conversation. That is not always true. For the most part, does confirm that the call took place. It does not sound like the call when all that well. Hans, thank you very much. I love the story. Stay with on the move. Welcome back. This is the recap on the big market movers. Overall, the markets are a little bit down. Trillion moved off. It is been quite a selloff this week. That is risk aversion gauge right now. Things of been sold off quite aggressively since we had that bad data out of china on the x port side of things. That copper trade , how much of that has to do with derivatives being closed. George soros have something to say about the copper. Desk is aat as a benchmark for china. I will check with them. You know who he is. Thank you so much. Stay with bloomberg tv. We are back with the pulse or. Well be back in a few. The crimean countdown. Secretary has just arrived to demonstrate ahead of the referendum in crimea. Money off the table. Global markets are weak after concerns mount for china. Game, for your after the big spill, if he the bid for u. S. Deals in the gulf of mexico. Good morning. Good evening to you in asia. Happy high. I am guy johnson. This is the pulse. We have to tell people what that is. We will. Stay tuned for that. Our final installment of the behind the wheel series, we talk about staying on top and form the one. We begin with meetings in the ukraine. U. S. Secretary of state john kerry is meeting with Prime Minister David Cameron at and the foreign minister. We are on site with the latest. John kerry is just arriving. That is right. 20 of 11th hour talks are going on here in london. Western leaders make a lastditch effort to convince putin to stand down in crimea ahead of the referendum scheduled to take place on sunday in crimea. As you said, secretary kerry is just arriving. Because he is entourage still parking their cars outside of 10 downing street. He is going to be meeting with the british Prime Minister. He will be meeting with his russian counterpart, the foreign minister for what will be the most important and difficult talks since this crisis began. The meeting is in london instead of washington or moscow. Secretary kerry declined meeting in moscow. They were concerned that russia was not interested seriously and finding a double medic solution. Both sides have found appropriate to meet just two days ahead of that referendum taking place. What does the United States hope to accomplish . What is the eu want to see out of todays talks . People are certainly referendum will go forward. Crimean voters were going to decide if they want to remain in ukraine or join russia. Will russia except crimea into its own territory . Kerry will be very keen to try to convince the foreign minister that, to notnot do annexed crimea immediately. That is perhaps the most that could be accomplished out of these talks. , very manye said this. Istic views of there are talks scheduled for next week after the referendum takes place. The goal is to punish russia for letter that what for letting that referendum go forward. Tensions are still high in Eastern Ukraine what is the latest . These were not easy talks, violence flared up yesterday in the east of ukraine in the industrial cities. We saw thousands of protesters clash, proukrainian and prorussian. At least one protester was killed. Those events are significant and tragic. They are attempts to move forward after the revolution there a couple of weeks ago. Let us not forget the broader context. The whole idea of russias intervention was to support russian speaking ukrainians there. It could be that russia uses the violence in the east of the country to do that. To move troops in. As the concern in the west. That is the concern in crimea and ukraine. There are thousands of Russian Troops conducting military drills just over the border on the east side of the ukrainian order in russia as we speak. President putin is ratcheting up the pressure on the west. Thank you so much. Kerryw that secretary just one in. That is why you saw all the press leaving number 10. Well have more on that from downing street. Lets look at Business Impacts of possible sanctions against russia. Jonathan ferro joins us. Are citing a very key i ally of food and. We ran a story yesterday talking about officials up repairing for the worst. Let us be clear. Weve been talking about this for two weeks. It is no ones interest to really push to trade sanctions and get triggerhappy. It is going to hurt both parties. It is still very speculative right now. Russian equities are getting hammered. Theyre down as much as five percent this morning and 10 in total. That is going to hurt people. That is going to set them about food and to some extent. Europe, how this plays out in each economy for each company is a specific case by case basis. This depends on how much business they do in russia. These are also sanctions that the russians could impose on copies for retaliations. We have an economy that is in decline. That hasa central bank had to lower rates aggressively. What is that mean to the economy . We havent talked about a couple of companies. The one everyone is talking largely from russia. It is not just carlsberg. Im talking about that translation affect. When you translate the ruble back into these currencies like the euro. This year, the move of the danish currency was about 12 higher against the ruble. We have seen that this year in under three months. This will filter back into these companies are needs earnings. The company does not hedge this position. They balance out over a. Of time. If the ruble is record low, will it bounce back next year . We have not talked about the exposure of the banks. That is something that london is concerned about. The countdown starts. We are on it. We have another company that is going to be impacted. Bp has lost hundreds of millions since the crisis began. Yesterday, the u. S. Lifted a ban on the oil giant that kept it from government supply contracts stateside. These are balancing each other out. Manus cranny joins us. Let us talk about both of these sides. Clearly this is a big win in the u. S. , russia is a problem. Story. Now the russia that is going to be a painful issue. About the good news that has come out. Bp has been supported by the u. S. Chamber of commerce and the British Government to be allowed to bid for government contracts for business and 40 million the gulf of mexico. This is a significant step forward. This is be the bp being allowed to bid. Just because they let you back in does not mean they let you do business. Some of the u. S. Departments that bp used to do business with had nearly two and a half billion dollars worth of contracts. That drop the way. That dropped away when they were banned. When you hear what bob dudley has to say about the gulf of mexico, they have tenant rigs down there. He went to produce 300 million of oil for day. It is a important strategic position. It is about reputation. Think where bp was four years ago. It is a reputation nightmare. This is a progressive step on the Business Front and the reputation front. Does this put an end to their fines and legal problems . No. On the criminal side we know that money has been leveled against bp. U. S. Districtthe judge. He is trying to decide and make a final decision under what is the clean water act. He is determining how much oil must be attributed to bp. That lawsuit is still expanding. That does not have a cap on it even though the conversation that you had this morning was that this is a progressive step. Beltre of valuing the company better. That is one piece of legation. Thank you so much. Malaysianrch for the air flight has moved to the west. Indias navy is searching for the airliner in the sea. Plane may have flown four hours after losing contact. We have the details. Increasingly, the evidence points that this aircraft did fear of course. Anywhere of course, hundreds of miles off course is what the evidence is now showing. I would know this . Satellite transmitter, nothing a and point of contact, but another satellite transmitter was active for five hours after the main transponder turned off. Five hours. This boeing 777 can move 500 miles per hour. 500ould have flown in on a what he 500 miles more after contact was lost. That is why we are seeing the indian navy in the sea trying to search. This is why confusion is building a. The evidence isnt that there was a mechanical failure. That is why the u. S. Is considering this ape jairus he investigation. Piracyus he investigation. They went in completely the wrong direction. It was bound for beijing. Some the countries are involved. You have india and south korea involved. They are starting to help with the search. There are dozens of countries. Couring the sea and land we have to keep up front and forer that this is a debate us back at home. It is agonizing for the families of those 239 on board the flight. It is unthinkable. Thank you for the latest on this still missing flight. Mark zuckerberg the president obama to express frustration over the government spying. The nsa has been disguising itself as facebook to get access to computers. That is information leaked by Edward Snowden. The nsa says the reports are inaccurate. The world has the second richest person. That is warren buffett. 63shire hathaway is worth billion. That is up 4. 3 since the beginning of the year. Bp president is taking aim at the euro. In his strongest words, he said the Exchange Rate is increasingly relevant in the ecbs assessment of price stability. He said Forward Guidance may weaken the euro and lower real interest rates, at least that is what he is hoping. Up next, russian stocks sink. We are talking about the emerging markets impact on the threat of sanctions next. Good morning. Welcome back. Youre watching the pulse. Russian stocks have fallen to the lowest since 2010. For more, lets bring in the head of emerging markets. Good morning to you. We face an interesting weekend, clear lead. The politics is having a clear impact on the markets. You are seeing what is happening to the stock market in moscow. Impacting thinking in the kremlin . Question is how to react to the sanctions. Well see what sanctions will. Ome probably not in mealy this afternoon but next week. We already saw a few shots with the u. S. Releasing some of the oil reserves to bring demi oil price a little bit. See thebe key to severity of the sanctions that are upcoming against russia. This what markets are focused on. His nativek would in his mind about how he is going to react on monday . Will he change his thinking or what he is going to do at this moment . There are people in the market who think that russia at the last moment will call for a compromise in terms of accepting the results of the referendum and whether to accept or not accept the application to become part of russia. The idea is to lead crimea to become independent. That is why we are seeing the independent referendum. This is something that we will certainly see as a way out for russia in a way to avoid tougher sanctions. We will see the rhetoric after the next week. The is the distribution of outcomes favoring russia or is it favoring the fact that they should be running for the hills . If youre talking about markets or russia . Ukrainian situation. This is an excellent opportunity to buy. There is a strong moral obligation to help ukraine in this situation. Child of thester poor soviet economy. Ukraine has a chance to be a Free Democratic and strong economy. We talk about russia, people are trying to assess how far the severe the sanctions would be. From that perspective, the market favors the sanctions to not be as severe. It would be mutually distractive between europe and russia. Europe is so dependent on russia from energy. Why would you want to hold anything in russia at all . The economy is barely growing. Putin is seen by investors in a much different light. It is not perceived to be friendly to investors. Russia has been trading with a putin discount. Russia still has a strong position when you look at the reserves and the strength of the economy. It is not growing as fast but stable. Thanks to oil. Thanks to oil and commodities. That is true. This is the problem for the longterm growth. For the time being, i think russia can sustain for the next five years of we are talking like harsh sanctions iranian style sanctions. We will probably see a very Good Opportunity in russia for an evaluation perspective. Thank you for all of that. He is head of the emerging markets. Break,e head into the the pulse summer is 3. 14. Isp pi day. Next year, it gets even more exciting. Greaterll take a significance when you count one extra year. Pieill be eating a slice of pis honor. On this day, youll have the first 10 digits of pi at that particular moment. That is what i am focusing on. Day. Ppy pi well be right back. Welcome back to the pulse. Manus cranny is a touchscreen. Were looking at stocks in europe having taken a hit. They are down three percent. They have the ukraine to deal with and the annexation of crimea. N effect. Get a but it is down two percent. Youre seeing the biggest risk in terms of the downside. X down over four percent and paris down over three percent. We look at u. S. Futures, you see the risk elements coming into play. They are virtually flat. 1842 is where we are out of the s p 500. Anniversaryg on the of a major bull run a stock. At levels ofk 2008. That is really that. Back to you. In the next hour, we are talking about tech with the cofounder of wikipedia. That is coming up in a few minutes time. Pulse. Is later in the it can follow us on twitter. There are some great ratings on twitter. Drovele of days ago he with a formula one driver. Bottleneck to the pulse. Were live from bloombergs European Headquarters in london. These are the top headlines. Indias navy has set up a search zone for the missing malaysian airliner. This is hundreds of miles off the course of the flight. Evidence mounts that the plane may have flown longer after it lost contact. The search area covers the 5000 square kilometers. Hong kongs Monetary Authority says trade has. The Central Bank Says the findings are the result of an investigation that lasted more than a year. Internal chat 100 messages containing change requests by several ubs traders. John kerry is in london today. He is meeting with the Russian Foreign minister in a lastditch attempt over the crimean vote on sunday. Theyre voting to join russia. This violates ukraines constitution and international law. We are getting the latest out of russia. What do we know . Benchmark rate in russia. It is on hold at seven percent. We had a surprise hike last month. Are 150 basis points, the highest since 1998. That was to prevent inflation. The ruble is still at a record is. Only one analyst forecasting another cut to 6. 5 . You can see the ruble pushing just a touch higher. Thank you so much for that. Jon ferro is with the latest on this russian central bank. Billionaires in russia and the ukraine are bracing for further losses. Helping to quantify the losses is robert lafranco. Who is being affected . How is this impacting it rushes richest . Youf youre in russia and have money, you are being affected. We are talking about the richest of them all in russia. Indexre 19 guys on our and they control about 200 billion worldwide. They are getting crushed right now. They are stressed out. Word is theyre trying to get putins inner on this. Is that appear to be listening. He is staying steady, which is causing havoc for the wealthy in russia right now. What is a likelihood of them swaying food and put in on this . Putin on this. Most dont think he will be listening. Their attitude is that he does not back down. He does what he does and he never gets negative impact at home from what he is doing. He has a store go reasons why this is happening. , he wants to him bring money back into russia. He founded an unfair practice the way these guys built their fortunes. He is going up against them. Some are very close to them and he does not appear to listing right now. The duo to get his ear because the sanctions will be bad for these guys. A socialportrayed as contract between putin and the oligarchs. They mutually back each other. What are they doing it . If you look at the capital flight numbers and russia money is leaving russia aggressively. Money has left russia for many years. That is part of the problem. Loser in biggest russia so far. He is down about 5 billion since the beginning of the year. Much of that is since the start of the crisis. He owns a major Steel Company and he is big into shipping. He owns an estate in scotland and has accounts around the world. That is a big problem. He read refinance has to refinance at a very high rate. These are the guys who are in the business that are already struggling with the china slowdown. Could interfere with their ability to get international financing. It is a nuclear bomb for them. Lafranco, thank you. Outside 10 downing street where john kerry is meeting David Cameron and the foreign minister william hague. How theyany sense of are briefing right now . We just saw the foreign secretary leaving in the last 30 seconds. You are right, secretary kerry is with the british Prime Minister right now. That is the first part of the talks. There are a lot of talks taking place in london that. The goal is to convince putin to conduct stand down. Scheduled tom is take place on sunday in crimea. No one thinks the referendum is going to be decided this point. The diplomats are hoping that perhaps russia will not annex immediately and bring into the territory of the russian federation. In that referendum, they will decide if they want to remain in europe ukraine to join russia. Russia does not have to accept their request. That is at the diplomats are working at. They are trying to find some way of workable situation to this crisis. Meeting without a doubt will be between secretary kerry and the Russian Foreign secretary. Theyre going to meet here in london as well on neutral ground. Secretary kerry was invited by putin to moscow earlier in the week. They were not convinced russia diplomaticted in a solution. He did not go to moscow. Instead they will meet in london. That is the most critical meeting that we will have in this crisis in the lead up to it. It will be the most difficult of the conversations we will witness. I thought it was fascinated that london is perceived as neutral ground. That many goes to rich russians have embraced london as their own. Could say that. Russians definitely revere london. There is a lot of russian money here. It is a place for diplomacy how obviously the relationship between russia and britain is stronger than the relationship between russia and the United States at the moment. I dont know what the criteria were for choosing this location. In the cold war days, it was often ice land and reykjavik. All sides seem to be pretty skeptical that these will deliver any concrete results. Thank you so much. Getting a press briefing from malaysia. We have pictures coming from malaysia. This is the interim transport minister. Howas gone through exactly money people and countries are involved in the search. 13. Number is there are 57 ships and a 48 aircraft are taking part in the search. Talk publicly. Ot it may have flown after it was offering our. Let us listen in. When we received new information and it has been verified, he will act on it. We will investigate it. From the beginning of the crisis, we have worked hand in hand with everyone including International Agencies and experts. Technical assistance from all of the key players. Theave been in contact with leading countries and we have welcomed all assistance. Finding thetted to plane. All right, we will start with questions. [inaudible] that was the acting transport minister. A big briefing yesterday. They were disputing things were being reported in the press. They are keeping very short. Comment. Fficials would they may be saying to disregard pressure ports. There are leaks in terms of the search. They said that 13 countries and 57 ships are taking part in the search area. All kinds of angles are being pursued. We look at the formula one company and its attempt to stay competitive. That is coming up after the break. Let us talk tech. Facebook ceo Mark Zuckerberg called president obama to express his frustration over government spying. The nsa is reported to have been disguising itself as facebook to ask at access users computers. Hence the goals joins us from berlin. Hans nichols joins us from berlin. The question i have is whether zuckerberg knew going in that he would leak it afterwards. Leak it, he did. It was a clear rebuke to the president from Mark Zuckerberg. They had a conversation and here is what he posted a berkeley on facebook after the conversation. Called president obama to express my frustration over the damage that is being done. It will take a very long time for true reform. That is an indication that the call did not go well. Saidme ways, zuckerberg something that echoed snowdens comments at south but sxsw. Engineers have to fix this. Legislating will take too long. Anytime you leak a conversation you had with the president of the United States, it may impede your ability to get your phone call returned next time. But for a deterioration between the relationship between obama and the tech community. What does this mean . He invited tech executives to the white house in december. The phone call to not go so well. It did not go well. They did confirm that the phone call happened. Obama went out for a private dinner at john doerrs house in Silicon Valley. He sat next to zuckerberg. Steve jobs was still alive the time. Theres been a courtship between obama and the tech community, partly for fundraising. There is it is remarkable in some he invited to a state dinner and was close with obama had a conversation with him and then publicizes it in a negative manner. It is quite remarkable. I suspect this relationship is on ice. Seems. Zuckerberg with the latest between facebook and the president. Unfriending is what we should be talking about. We continue with our final installment of a weeklong series inside a formula one. The hottest races not only track. It is back in the factory and getting the car competitive and get it to stay competitive is a never ending battle. This is how his team does it. Directorhe performance. Im going to show you how we build our 2014 car. The first thing we start with is designed. There are rules changes, so we have different regulations. We come up with concepts and layouts and ideas about how we can get the most performance out of the 2014 rules. Destiny move into the r d area. The designs get tested. We will come up with a better solution. From there we go into our manufacturing. Pass a series of crash tests. If valuations and so on, then a move back into the r d area again. 80 of the car is made from carbon fiber. Safety to weight ratio. That enables the hole cards be made at this facility for the first time. A challenging business to say the least. Likes anandez challenge. His business portfolio includes an airline in the form of air asia. It is an eclectic mix. What you have in common . Whereook at businesses theyre not so well run. No one in their right mind wouldve gone into the Airline Business three days after 9 11. Many famous people said had he become a millionaire, start with the billion and in an airline. There are opportunities. Weve taken airlines with two planes and we now have 150 people planes. It is a very profitable business. It is what people want. People like it. We are in a part of the world where the middle class is growing every day. The middleclass go into higher middleclass, there will be a huge amount of people want to buy it. People talk about cars and planes people. Football is a fantastic branding tool. Streetsalk around the of london, theyre asking me about the airline. Theyre asking me about the rangers. They are all linked around thatesses or opportunities have a lot of attention. This gives you the ability to build scale and drive more product through the ecosystem. I like to sell. I can create. I like to do things differently. Notnt necessarily i am richard who wants to go up to the moon. He keeps asking me what i want to join him on the moon. I keep saying yes and then i pull out. There are a ton of things to do on earth. Ive taken businesses that are high profile not because it profiles me come a gives us an ability to build business much quicker. We are from malaysia. In london you have the center of the worlds media. It is much easier to promote things. For a Little Country in malaysia, we have built a global brand. Hopefully, we can do those things with our other businesses. Tony fernandez talking to me a few days ago about his eclectic group of businesses. Justcretary kerry has wrapped up talks it down a street. We have our man on the ground. He spoke to secretary kerry a couple of minutes ago. Will come back to the poles. This illegal be watching for the rest of the day. Caroline hyde is on set. Lets start with ryan. Secretary kerry is in town. Completed his meeting with the Prime Minister. I just spoke with them and he said he wants to defuse the britain and United States are united in their approach. He is on his way to the most important meeting of the day. He will meet the russian counterpart. This will hope to deescalate the crisis in the ukraine. The referendum is on sunday. Watching the ukraine story. Bp is now allowed to try to win some contracts in the gulf of mexico. Theyre lead to get back into the fray. There are 40 million acres that are up for auction. It is fairly significant. As one fund manager did say to me, just because you are allowed back into the party does not mean much. Holding. A 20 it is still 30 of bps production. It is only because i was trying significant it has impact. We are continuing to look at this missing airline. We dont have much news. The press conference and not many headlines are coming up. They are expanding the search. If it is going west to the indian ocean and east of southeast china. There is more evidence backing up that the flight veered west. It perhaps hundreds of miles off course. Five hours there was a satellite transmitter. That turned off. You are still getting transmissions from the satellite. It could be point 500 miles further off than we had anticipated. Any are categorizing it as of a missing airline. They are looking at the possibility that the pilot and crew were potentially involved. Well have more on that. For those listening on surveillance is up next. About wikipedia and the ukraine and this airplane. And will be talking about pi. Francine is celebrating with a pie. You can follow us on twitter. We will see you back in a couple of minutes. This is bloomberg surveillance. The mystery of Malaysia Airlines flight 370 deepens. The search widens west across the indian ocean. Europe and nato scramble as we go into the weekend. Russia hunkers down on ukraines border. It is friday. It is time for our cookie shot. This is bloomberg surveillance. We are live from World Headquarters in new york ear to, march 14. Im tom keene. Joining me, scarlet fu and adam johnson. We have important breaking news from Malaysia Airlines. Malaysia looking at the possibility of pilot and crew involvement. The defense minister in the News Conference also said he cant affirm that there is no hijacking as well involved as well. We will come back to this in a moment. Lets look at the morning brief. Overnight, indian wholesale to a inflation eased ninemonth low in january. In the u. S. We are adding Consumer Price index