Good morning, everybody. You are watching the pulse. We are here in london. I am guy johnson. Lets go to wales, newport. World leaders are gathering in south wales for the nato summit. The meet just a day after russian and ukrainian president s. Ryan chilcote is at the summit. Ryan, walk us through the agenda. Walk us through what we can and cannot expect from this event. Good morning, guy. It is a very busy agenda. They are going to talk about the situation in ukraine. That is going to get a lot of attention. President poroshenko will be here. They will be keen to hear what he has to say. He will be addressing them later. They are also talking about what they can do to assist that nonnato country. I think we should watch for some conversations on the sidelines about what some of the countries in nato can do in a socalled coalition of the willing to provide military assistance to ukraine. A lot of countries have been discussing the idea of arms shipments to ukraine. That is something we could hear two or three countries agreed to at this meeting. One thing we know that there is a great of a great deal of unanimity on is the idea of helping the baltic countries. That was well telegraphed by the secretarygeneral when he had his press conference before the summit. That is all about that Rapid Deployment force that would be able to get there quickly, should there be any russian aggression into the baltics. Attention ont of the Islamic State and what nato can do to counter it. They make decisions like the eu, consensus. There will be discussion about what they can do in terms of reconnaissance. We know that britain plans to float the idea of actually sending troops back to iraq for a Training Mission. That would be a nato Training Mission. Just to get a sense of what the other nato members think about the idea. A very busy agenda. It now looks like france is not going to sell to the russians. Any talk about that . Any sense about what those carriers could be used for . It is too early to tell at this stage. Any traction on that story . Yeah. Not all whole lot of traction. What we have got so far is president hollande getting pats on the back from countries for bowing to the pressure and agreeing not to sell those warships or putting those sales on hold. The foreign minister of ukraine was tweeting earlier in the day, thanking the french president for putting that sale on hold, saying that was the right move. Your question is one that i am sure will be discussed if france isnt going to sell those warships to russia. What is it going to do with them . It is a 1. 2 billion deal. France cant let the deals of that size go without anything happening to them. It means a lot of french jobs. There has been talk that perhaps this European Union could make use of it or nato could. There hasnt been anything concrete. I am certain that is something they will be discussing as well today. Tendto military exercises to be substantial operations. What are nato summits like in terms of their scale . Give us some sense of what is going on down there. Summits only happen once every two years. The last one was in chicago. There are 28 members in nato itself but there are 60 World Leaders here. Not just nato countries but people that are associated with nato, want to be in nato like the ukrainian president who is coming as a guest speaker today. We have some 60 World Leaders coming, six battleships parked off the coast of south wales as meals of force, 15,000 expected to be served over the next couple of days. And even though the french dont get to sell their weapons to the russians, there is an arms display of sorts. Right behind me at the celtic manor resort on the 18th hole. Hat is an f35 that is a Lockheed Martin aircraft. There is a couple more down here on the right. They are sprinkled throughout this complex. There was a rumor going around that if they wanted, maybe they would invite president putin for a round of golf and if he made it to the 18hole, they could unleash the f35 on him. It is on the fairway here. Quite unusual to see a fighter jet. It is a big bonanza. Just like it is a big affair in the field. This is an organization that has to validate itself. It had a clear purpose during the cold war. Perhaps it is getting that purpose back. Anetheless, they try and make big show of it every time they get together. I wonder how the members feel about having tanks and reconnaissance vehicles, and as you say, fighters parked on their golf course. Probably not happy about it. I think they would classify that as a hazard if you are playing a round of golf. Ryan, thank you very much indeed. Yeah. Talking a little bit later. We will get back to ryan and talk about the hazards. Some news coming out from the u. K. At the moment. This beleaguered institution is coming out with some announcements this morning. It has named richard penny cook as its new chief executive. That is effective immediately. Farreaching reforms have been. Greed for the institution it is going to be smaller and have a more effective board. The board will stand at 11 people. A significant change of structure and leadership down at the coop. Lets move on. Central banking, one of the key themes of the day. Mario draghis speech in jackson hole a few weeks back, shocked the markets. He said, we will use all available instruments needed to ensure price stability in the nearterm. Pretty broad list of things that could be used. Will the ecb take any action today . What can we expect . The man that has been figuring all this out for us, manus cranny. Guy, it would be folly if they dont deliver something. Some form of action, some form of roadmap, some form of movement. Very few analysts think they will move. The conversations that i am , he hasith bnp paribas got to really grasp the moment, to not do something would perhaps be folly. Jpmorgan were in here this morning. John norman saying the markets are expecting so much. I think that is demonstrated through the move in euro. Down to 1. 25, down to parody by 2017. The government bonds now below 1 . By gosh did his words yet again move markets. Today is the day, the potential beginning of the ecb with their hand in their pocket. Everybody else has to pay for the movement of european sovereign debt bond yields. Everybody else has had to pay for the movement in the euro lower. It is the dollar story that is moving higher, not the euro. German government bonds hit just under. 80. The positioning of markets, the positioning of rhetoric coming from draghi today. Action, rhetoric and forecasts. I am getting the impression that we are going to get action today. That is what people are saying to me. Finetuning lending, to make it even cheaper. Small and Medium Enterprises saying there is such a need. The ceo over at Deutsche Bank captured things perfectly for me. Have a look at this. What he is saying is, 70 of credit creation is happening via bank loans. Simply lowering the cost of sovereign debt. You cannot get growth to move beyond that point. It is about structural change complemented by the policy moves. Think today is the day. Yes. Andibly a roadmap on abs targeted ltros. There seems to be a growing sense that we will get fullblown qe. You wont get that today. That is maybe what the market is beginning to position for. You may be right. Sovereign bond yields are a little bit ahead of themselves. Markets are presuming fullblown qe. Did you read the comments . Is cicely, this is the point precisely, this is the point. I dont think you are going to get qe. I think you will get some movement on the target, a roadmap. Action over words. That is what markets want to see. Whether it is a small amount of action, it opens up the roadmap to considerable movement. That is what the consensus seems to be from sources i have spoken to. I am just curious. The market is clearly anticipating at some point that we will need fullblown qe. There is an awful lot of politicking and things that need to happen. I will take you forward in a personal view. This is not a bloomberg view, this is my own particular view. In 2015, the germans do not want qe so far. Begins to set up a much bigger debate about the unity of the euro. Going to be an interesting year, thank you very much indeed. Stay tuned. We will break the bank of englands release on its Rate Decision. Later, the ecb does the same. Then we get to the main event. Mario draghis News Conference live and in full. What will he say . It was his birthday yesterday. Maybe he will be in a giving mood. You never know. What else is on our radar . German factory orders surging the most in a year. This after a week demand in the Second Quarter contributed to economic contraction. Orders rose 4. 6 . A german builder has cut its profit goal for a third time. The company says is as been hurt by difficult markets for energy. We are going to take a break. Coming up, Vladimir Putin presents his own peace plan after agreeing with ukraines president on steps to be taken toward the truth. What is he up to . We are going to find out after the break. Welcome back. You are watching the pulse. We are live on bloomberg tv, the radio, streaming on bloomberg. Com. You are fully connected. I want to take you back to our top story. Nato leaders gather for their summit in wales. Vladimir putin is making his own power plays. The russian issued a peace plan after agreeing with his ukrainian counterpart on steps toward a ceasefire in Eastern Ukraine. How should we read this . Lets try and do a little bit of that. With theh fellow russia and Eurasia Program joins us this morning. We ended up in the situation where we are terribly confused about what putin is doing, what he wants, how close we are to a ceasefire. How should we analyze the evidence of the last 24 hours . We had a conversation. That is good news. How much was agreed and how much substance came out of that . It is important to keep the focus. What president putin is doing is pursuing a week neighbor policy. The play in ukraine means that putin wants to undermine ukrainian aspirations to become part of the integrated west. This means annexation of crimea, a legal territory occupied. It means also fermenting the protest in the east. The fact that putin proposed the plan is good because it brings us back to the negotiating table. Time,unately, at the same a military buildup of Russian Troops in the east is observed. This means that president putin said, i am not going to give up the separatist movement in the east so easily. What ukraine has to face is a Russian Regular army. To counter that, this is happening as we speak, nato is going to help ukraine develop its armed forces. Beginning to feel very cold warlike. We have basically got nato saying it is going to help ukraine and russia putting its forces on the ground. That seems very hard to resolve. It is indeed but it was not ukraine or nato who was pushing development in this direction. What nato and ukraine are doing is responding to a clear threat coming to a country that is based in the middle of europe. There is nothing wrong about providing defensive capacity for ukraine. The annexation of crimea means that russians may be seeking to seek a southern part of ukraine to connect crimea. There are threats coming from continued arms inflow from russia to Eastern Ukraine that may overflow the region that is controlled. Ukraine needs to have this capacity to protect the wellbeing of the nation. Russia seems very committed to this. Putin doesnt get something close to what he wants, either a very week neighbor, a , or a land neighbor bridge as you are talking about, if he doesnt get one of those three things or all of those three things, it is hard to see him stopping. Indeed it is very hard. You should not expect him stopping anytime soon. There will be confrontations. This is something we should prepare for. That what the west should do in the rest of ukraine where we have a democratically elected government, reforms should take place to reinforce ukraine to be able to defend itself era get for president putin, there has to be continued pressure to limit his resources for the policy he is pursuing. We should recall 2008. How do we stop this . This is a very serious wakeup call. Nato,bring this back to article five up lies now to the baltic states, part of the former warsaw pact. There is no way that putin challenges article five, is there . I dont see it in the immediate future. Obviously these countries are fullfledged members of nato. There will be a rapid reaction. These countries will be protected. I think it is the question of the countries in between. Nato, if are not in you are not covered by article five, how worried should you be . Exactly. You can see what it brings to ukrainian soil. That is why Ukrainian Government ukraine never treated russia as a threat. Now putin is pushing ukraine to accept that he is a threat. If you were to extrapolate this further on, we dont get a resolution anytime soon, does the military adventurism when does the next one happen . Overhould we view this and what timescale should we view what is going to happen . If putin wants to achieve his , how however we call it big is that . How big empire does he want to construct here . Without ukraine being part of this, it is hard for president putin to reconstruct the eurasian union. I dont think it is going to happen. You cannot turn the clock back. Ukraine did sign an Association Agreement with the European Union. He has to make deals and cooperation between the european then, associated states of former soviet union and eurasian union. As long as the price will go high for putin to pursue this policy and as long as the pressure inside russia will be mounting, we do see information and news about russian soldiers dying on ukrainian soil and their families demanding information. This will be all over the news. This could be the next afghanistan. He was denying casualties in the soviet times of afghanistan. Now in the days of information, you cannot hide it. Build internal pressure from the economic sanctions, from russians dying on ukrainian soil and from russian insulation. Russia cannot fight against europe. Thank you very much indeed, orysia lutsevych. We are going to take a break. Welcome back to the pulse lets check on the markets for you. Sensitive, cautious ahead of all the bankRate Decisions. We already had sweden, no change there. We are not expecting any change from the ecb on the bank of england. Where thecision is potential for fireworks exists. Theo draghi whetted appetite of the market in terms of quantitative easing. Will we be seeing bond buying . Will he hint at further stimulus to combat low inflation . 600 tradinge stoxx just over 0. 1 . We are seeing a little bit of caution in the stock market. Reallyd markets, interesting stuff coming out of bank of America Merrill lynch. Bonds are moment of trading below 1 in terms of the yields. None other than german bonds trading at 0. 9 . Clearly there is caution. Numbers. Me i will be back with more just after this break. Welcome back. You are watching the pulse. We are live on bloomberg television, on the radio, streaming on your tablet, on your phone, bloomberg. Com, everywhere. Lets talk about what is happening in terms of the details of the day ahead. We are watching what is happening with the ecb. The Rate Decision comes out at 12 45. You could get a deposit rate cut. The corridor may stay the same. Different rates that the ecb applies could all be cut. Then we get on to the main event. What does mario draghi say in the News Conference . Do we get hints about qe . All these things need to be discussed. Inflation is a little weak in the eurozone and draghi said in jackson hole that he has all the instruments on the table ready to fight that story. Lets bring manus cranny back. Talk about what he is hearing about what this meeting could deliver and what the press conference may signal. There seems to be a range of options on the table. Maria talk about those at jackson hole. Jackson hole seems to have changed peoples thinking. Where on the spectrum is he going to decide that he will take action . Where he would like to take action and where he can galvanize his board on the European Central bank to take action, my perception is that there is a big difference between the two. He lay down a marker for the market and markets love a marker. So his mother and his wife started to trade started to become more encouraged by trading. And nowll dip below 2 reassert itself above that. This comes down to a couple conversations i have had. One with bnp paribas, one with jpmorgan. And ubs. Three big names. Greater thinkers then i. Paribas would say, do not miss the moment. If you miss this opportunity to deliver some kind of action that action could be a roadmap for ideas. That could be a change in the interest rate. Gathering momentum for quantitative easing. So long as the market gets something sewing that there is owing that there is progress, markets will be sated. To do nothing would be folly. To do nothing would be reminiscent of bank of japan. At the end of your show, they said property prices will drop by 75 . I said, that is not happening. Thanks go into zombie mode. Ok, you have a point. We do have asset quality review coming up. People are raising capital. The banks are going through a bit of a healing process. Bank of japan did not do enough. That is the accusation. Bank of japan did not do enough to counteract deflationary spirals. Once you get into that vortex, it is hard to get out of it. That is the risk, that they dont deliver small moments of opportunity here. We will talk to you a little bit later. Manus cranny, thank you very much indeed. As you can see, the nato secretarygeneral is now speaking in south wales. Lets listen to what he has to say. Security, stability and prosperity. Here at the summit, we will strengthen our transatlantic bonds as the bedrock of security in europe and north america. With that, i am ready to take your questions. Good morning, secretarygeneral. Ukrainian news agency. Do you really think that it can help a ceasefire . Do you really think this too . Poroshenko and putin can never find a solution . Can they expect that during this summit nato nations will go further with assistance for ukraine . Thank you. First, on the socalled pea