Well show you some of the most expensive watches in the world and pickpockets in paris. Find out how petty crime is causing major problems for the citys tourism industry. Before all that, lets get back to our european g. D. P. Focus and lets take a moment to look at whats happening in the east of the European Union because poland has reported its g. D. P. Numbers. Quarteronquarter was estimated to o come in at. 5 . It is come in at 0. 6 . A little disappointment. A bit more than analysts had been expecting. Because of the geography and history and link between this part of europe and russia and the Political Climate that we find ourselves in at the moment, that is why we are focused on this little bit this morning. Well get some insight to what this number means and what the polish economic story looks like right now. There you can see the impact on zloty. It has been under a little bit of pressure. From poland lets broaden the picture around g. D. P. We had it from germany and france today. Germanys growth more than forecast. Hans nichols is live from germany and mark is in paris covering the french economy. Hans, lets start with you. The german g. D. P. Numbers, contraction more than had been expected. What happened then during the Second Quarter . Well, exports were down. Ip ports were up but exports were down. That is what is driving it. Some of this is seasonal. We had a warm First Quarter in germany and a lot of Construction Movement where Construction Activity was moved forward in the year. Were starting to see the effects of russian sanctions and what it has done to the business psychology here. Tch just speaking with the c. E. O. They have some 3 million container units they load up a year and ship them all over the world and their view here is that things are going to be worse later on in the year and potentially more depressing when get into 2015. The caveat to all of that is that germany will still have basically small amounts of growth. This is not going to be a horrible outlook Going Forward but it gives you a sense for an economy based on exports 5, 2 of the german economic output is based on exports. There is concern about russia and elsewhere in the globe and if the Global Economy slows and if the european economy slows, ports like this may be gaining market share but eventually they are going to rouvent room for growth and that is bad news for the German Economy. Anna . Hans, lets talk a little bit about the russian sanctions. You talk about business psychology. The data we got earlier on this week, that came in weaker than had been expect. That is a survey of investment professionals and people that are following this on a daytoday basis. It is fascinating to see where you are, how this is infiltrating to the perspective, the everyday Business Community there in germany . Yeah, it is not just one company, anna. There are some 300 companies that export through this port. It gives you a great indication of the business psychology across the country. The first six months, exports to russia down. Russia is not their biggest trading partner but if you toss that out over the year and say there is going to be 20 to 25 less exports to russia, youll see another quarter shaved off g. D. P. When there is not enough growth, those are not encouraging number. Anna . Thank you. Lets go to france now where the economy unexpectedly failed to grow for a Second Straight Quarter. Mark, run us through the numbers then. Well, basically you know, france has the problem of growth. France has barely grown, well, it will be almost three years now if you include 0. 5 as barely grown. The finance industry came out after the Second Quarter numbers today and cut its annual growth forecast to 0. 5 from 1 previously. That means that france wont meet its deficit target this year either, the deficit target being 4 of g. D. P. In 2014 and essentially implying that these sort of holy grail, the 3 European Union deficit target scheduled for france in 2015 wont be reached either. It is a problem of competitiveness and lack of confidence among business leaders. Cutting growth forecasts, cutting the deficit or saying it wont meet the deficit target, none of that sounds promising politically for president hollande. No, i think there is a big problem here for hollande in terms of the economy. He is having trouble keeping his own socialist lawmakers and union onboard. You hear politicians in france regularly calling on the European Central bank to do more, to support the european economy. You hear them calling on germany do more to boost domestic demand. From the other side of the rine they are saying get your house in order. We want to see them boost growth. The problem with france is it has a long record of failing to meet deficit targets. Since the european sovereign debt crisis they have already been granted two delays in reducing its deficit to 3 of g. D. P. It asked for it again in april. It was rejected. With the numbers out today, it means essentially that france wont be able to meet that target again next year and, you know, it is a very difficult position for it puts policy makers in berlin and bruss unless a very difficult position brussels in a very difficult position because these are fiscal rules that france helped write and it needs to show that it can comply from time to time. Thanks. Mark deen, Bloomberg News. Reporter there in poirs. A convoy of almost 300 ssian trucks caring carrying humanitarian aid. Good morning, ryan. Give us the details on the convoy. It is headed for you cranian border. It should be there in a few hours. As we have seen, there are surprises along the bay. The russians took a tactical pit stop last night. No one anticipated that. The ukrainians are now saying they will accept this aid under two conditions. One that they be allowed to nspect the trucks and that the red cross distribute the aid opposed to the russians in those trucks with the aid. In any case, we have yet to hear from the russians. This is a bit of an improvement. Just yesterday, the ukrainians were saying they could take their 30 tons of salt and shove it. And we herd the Prime Minister say they had better send those trucks empty and pack their fighters into them and take them home. President putin is in crimea. He is set to speak there today. What do we expect . He is going to address the russian parliament, talk about sanctions and send a message to the west, one of defiance. Think about it. He is going to talk about aid for crimea. Lets just imagine he said i wouldnt be surprise standard he is there inalitya, the place where stalin yalta, this is the place where stalin and roosevelt met. They are sending the convoy to the east. Separatists want to be part of russia. He is helping those people in the Eastern Ukraine who are suffering as a result of the ukrainian armys block aid. He is helping crimea after having annexed the territory. This is mainly about the message that he is sending out. All at the time when the u. S. Is focused on sanctions giving us revisions to the sanctions they previously put in place. Are things going to get a bit tougher . Yeah. This most recent change comes to the socalled 50 rule. The rule was if an individual or entity is sanctioned, if they own more than 50 in something it too is sanctioned. There is an insurance exeand at one point last year, three months ago we thought they might be sanctioned because its majority stake holder appeared be a bank whose biggest shareholder is a guy named yuri. One of the shareholders close to the russian president. They took it to just beneath 50 just before the sanctions were introduced. It looks like the treasure i have trying to close treasury is trying to close those loopholes. They said if any own more than a 50 stake in the company that entity is sanctioned. It looks like they are back in doghouse. There might be other sort of examples. It is just a little example of how the u. S. Is broad tng sanctions by tightening the screws. And how the devil is in the details with this. Thank you very much. Ryan chilcote with the latest on ukraine. We have breaking news. Germanys 10year bond yield has dropped. Well get more details on what is going on here. Perhaps surprising for some to see this on a day when we got the german g. D. P. Number coming in below estimates. A contraction of. 2 . Well ask whether he thinks investors are receiving something more dove niche stance from the e. C. B. We will leave that one there. And tell you what else is on our radar this morning. A surge in Clean Energy Power generation. R. W. E. Is germanys biggest producer of electricity. Well be live with the c. F. O. Later on the pulse. According to people familiar with the matter, the companies arest are in talks to buy the centuryryold unit that g. E. Recently decided to sell. They could make an estimated 2 billion in the sale. Well have more on this. And a top president ial kd in brazil has been killed in brazil. He died when the plane went down in bad weather. Investors are trying to assess what his death means for octobers president ial elections. Coming up on the program, recovery halts in the euro area. Well continue our conversation on the vulnerability of the region to the crisis in ukraine. Stay with the pulse. 13 minutes past 9 00 here in london. Welcome back to the pulse. It is g. D. P. Day in europe. Germanys economy contracted more than expected while france flatline and we have learned that the polish economy slowed from its fastest growth pace in two years in its Second Quarter. Joining us now to paint the picture of whats happening in the eastern part of the e. U. , the director of emerging markets at roubini global economics. We spelled out the details around poland. 0. 6 . A little bit better than the estimate but still a decline from the First Quarter. Paint a picture of what is going on in Eastern Europe. We got news from the czech rub and hungary also. Growth is slowing down but we see a resilience. Hahn gary showed a strong growth performance hungary showed a strong growth performance. I think the real question mark is as this region emergingstout ecession and Slower Growth and deleveraging, what will the growth look like . We would expect some deceleration in the region. Germany is the largest trading partner in all of the countries in the region. As their exports slow down, that will dampen growth. Some of those Eastern European countries export into that german manufacturing engine or empire, dont they . What happens in germany is important for what happens in these Eastern European countries and also on top of that, the sanctions story and what is going on in russia. Which is it is dictating where these countries are going at the moment . These countries are caught between the e. C. B. That is providing liquidity and the dynamics from russia and a eurozone that is struggling to grow, including germany. Poland is an interesting example. They export into the Manufacturing Sector and feed german domestic demand. Where po slant concerned one of the questions poland is concerned, one of the questions Going Forward, where they stand in deflation. Our view is that it is going to be shortlived in poland and that prices will return to positive growth later in the year, but this is still an environment like all of europe where there are really not price pressures wand the e. C. B. Likely to do more policy support this will provide some cushion for local Central Banks and to for local assets. Of course policy makers will be mindful of fighting deflation and they might have to be support with their currency and the threat for any cap tool flight that could be capital flight. The place i would watch for that is hungary in particular. They exposed their financial channels to russia in particular but also it still has a high level of foreign currency debt. We have seen it come under pressure. We expect it to be stronger Going Forward. Actually the polish central bank is getting weaker over the last few weeks which perhaps does a bit of easing work for it. I think there is also a broader picture outside of europe and russia. Which is about the chinese growth story. China is an important trading partner of germany in particular. Our view is were seeing china add more content domesticically and import less. We see chinese growth slowing down over the next year. So this all adds up to a somewhat more challenging growth environment. The good thing is in Eastern Europe, we have seen Balance Sheet repair. We have seen deleveraging and they look less vubble vulnerable. What do we watch for on sanctions and Eastern Europe for the rest of the year then . The russians have taken action on food and talked about the possibility of taking action on the Automotive Industry and shipping industry. Automoat i sounds like something automotive sounds like something that could hurt the eastern part of europe. They would hurt not only germany but also Eastern Europe. The Czech Republic and hungary are tied into the German Automobile export chain and as i mentioned, hungary is in large part about new production added in the automotive sector. That is where to watch. We could also see luxury good being targeted. Why luxury good . That would fit a russian government goal to reduce reliance on luxury good imports. We dont think automotives will probably be the first step but we would imagine the deeper sanction could come in coming months particularly given the news were seeing on the ground from russian ukraine. Still to come on program, a restroomp rollsroyce. Revave to rollsroyce. Youll hear from the car makers c. E. O. Later on the pulse. Welcome back to the pulse live on Bloomberg Television and radio and streaming on your tablets, phone and bloomberg. Com. Lets check on the markets. Manus cranny has more. German 10year yields dropping below 1 . We have it in splendid tech any color. What does that actually mean . What does a buned yield below 1 mean . Bund yield mean . Does it mean that q. E. Is on the way . Does it mean that we should be more concerned about risk in the markets perhaps than we already are. I know were flirting with 1 at the moment. Certainly it is quite a dramatic statement. Stagnation in france, contraction in germany. Triple dip recession in italy. They say dont worry. A couple of Little Things helping us along the bay. More sanction also come along the the near term. The domestic demand is holding up in germany and that is something to be grateful for in terms of through those g. D. P. Numbers. The rest of the equity market, london is looking to eke out gain, a big dividend gain. Of course it is loflation. The new phrase i picked up if the i. M. F. That is what the i. M. F. Are worried about. Thats actually what is going to drive the next big move. Underwhelming. If you take over 1,000 watts of production out of the way, it is already knocking into your numbers. Think what more that can do. Rolux, will they go after g. E. s assets . Essentially london, a popping of the boyle as it were in terms of the momentum of prices of property here in london. Is knocking it off. They dont want to go any lower. It is the low of the market. U. B. S. Said the hedge funds are 20 short into this market. Ill leave through it. Thank you very much. Still to come, pickpockets in paris. We look at how petty crime is causing problems for the countrys tourism industry. Stay with the pulse. Welcome back to the pulse live from bloombergs European Headquarters in london. Im anna edwards. R. W. E. Has turned to a loss in the Second Quarter. R. W. Sembings cutting Capital Spending and selling assets to reduce costs. They are germanys biggest producer of little bit. Well be speaking live to the c. F. O. Later on during the pulse. Ukraine has opened the door to compromise over humanitarian aid east of the country. They said they are ready to accept a russian shipment of aid. Ukraine said it will inspect the aid first and that it will be delivered by the International Red cross. The u. S. And e. U. Are warning russia not to use the aid as a pretext for an invasion. Germany missed g. D. P. Forecasts for the Second Quarter. They abandoned their 2014 deficit target. It contracted more than expected. The aggregate reading for the eurozone is out at 10 00 london ime. As if by magic, just to add to the picture of what is going on in european g. D. P. Now, what is going on in the European Growth story. Just getting numbers out from portugal. 0. 6 preponderate. That is just a little bit above 0. 6 . Just a little bit above the estimate. At least against estimates, a slightly more positive picture being painted by that part of the european periphery. That could be very relevant to our conversation next with Bloomberg Economist david powell. He has been pouring over the details of this at the moment. Go through with us. What is the drive what is driving the weak thans we have seen in the big economies. We have the same forces out playing behind weaknesses in both countries meaning it was a contraction in germany due to subtraction from net exports and also a slowness from housing construction. Essentially the same factors behind the number in france although france is a bit deeper problem or a structural problem with that weakness being more spread than just the housing. Actually the german number q 1 g. D. P. Possibly overstated sligh