And investors braced for todays investment report and another low payroll numbers. U. S. Stocks hit record highs as investors celebrate five years since the bottom of the market after the financial crisis. Welcome to the show. The s p is up another three points. Here we are an hour into trade, weighted to the down side. The ftse by the close last night was up some 13 points. Its down 27 at the moment. 0. 4 lower. Xetra dax down 0. 8 . Cac 40 down 0. 3 and the ftse mib off 0. 5 . The nikkei was up when we closed up for trade in the week in gentlemanen pa. The hang seng down marginally, the asx 200 up about 0. 3 . The focus is very much on the u. S. Employment report. Looking for an increase in 152,000. The Unemployment Rate may tick down 6. 5 depending on which forecast you look at. Here is treasury yields. 2. 712 . We were at the close wednesday with a close. It looks like military action is less likely in ukraine, so yields are just perked up, 2. 72 . But ahead of them, the bond report more cautious. Bond yield steady 1. 63 . Gilt yield still at the 2. 762 mark. The yield curve is at the highest point this year. Currently at 11. 3868. Still targeting that 1. 3894 level. Traders have that in their sights. The dollar has just come back from a fiveweek high against the yen. Currently 102. 84. And sterling just above 1. 6753. The aussie dollar continues to pull away from its lows that we saw at the beginning of the year. So u. S. President barack obama has urged president putin to seek a diplomatic solution in the ukraine. The two health a lengthy telephone call last night after which the kremlin said russia doesnt want ties between the kremlin and u. S. To be damaged. This is both the eu and the u. S. Announced sanctions on those responsibility for moscows military intervention including bans on travel to america and freezing of assets. Steve, after the diplomatic moves we saw yesterday, where are we now, today . Lets just recap a little bit more of that conversation between putin and obama. Putin doesnt want relation toes be sacrificed over albeit extremist nationalist parties. Obama is saufrg a dramp, a threepart solution. One that the ukraine and moscow Start Talking to each directly and number two, international monitorers are allowed into the crimea and three, Russian Forces return to bare acracks. The kremlin is still saying this is pro russian selfdefense troops. The president itself, alexander basically saying article 73 of the ukraine constitution says a referendum has to go through the whole of ukraine, not just crimea. But on the other hand, the only force in crimea is Russian Armed forces. The kremlin isnt recognizing the forces in kiev. The government in kiev isnt recognizing the regional authority. After two days of talks between mr. Lavrov and secretary of state kerrly, weve seen no progress over the paris or madrid talks. In the meantime, the parliament in crimea has voted to become part of the russian federation. Lets update the macro situation. Because of the financial situation, it is equally dire. They came on the 4th of march. Theyre working out of the offices of the National Bank of ukraine. Now, we had access to those offices yesterday and we had an exclusive sit down with the governor of the nbu, stephane kubiv. We spoke to him about a whole host of issues, including an update on the current financial situation and conditionality the imf may be asking for and where we are on the form. Lets listen in. Translator we have already explained the first steps in terms of monetary policy. In terms of exchange rate, we start to move in the direction of a flexible rate and we understand we have to a a responsible approach. So we have to keep our word and do what we agreed upon in the imf. Our last actions include the only thing would be the market and the relations between the markets of ukraine and the bank regulators. We didnt take a dollar to influence the Flexible Exchange rate that we had in these difficult days in ukraine. We set three priorities that commercial banks and nbu have to focus on in this situation. We have to support liquidity of the banks and stabilize the market. So we have to work on these priorities. How confident are you in the Liquidity Position of the ukrainian banks . There have been b concerns about corruption in the Financial System. Are you confident that regulation is Strong Enough across the Banking Sector as it stands . When ukraine was in a state of default and political default, there were a lot of forecasts saying we were going to experience economic default. Default is a very strong word and i think the crisis is more of a cross roads. We have to decide which way to take it, the way to high quality of life, to reforms, otherwise we will stay the way weve been for these past 20 years. So when we choose a market economy, freedom of speech, it will require a lot of reforms. Some of them are going to be unpopular. But we have to keep telling them the truth and be open and transparent and take the necessary steps. Given what weve seen from the European Commission, which is going to be called the heads of state of the eu today and the loan guarantees that have been offered by the United States, how much funding in crude terms does ukraine need from the imf . Ill talk about the amount we already know of. Thats 1 billion that has been confirmed. 1. 6 billion from the eu. As to what we are going to get from the imf, it will depend on how it all comes together, what the quality of the documents will be, what the program will be, and it will also depend on whether its going to be a longterm or a shortterm solution. In addition to the public funds, we are hoping to attract credit funds. We are planning an absolutely new investment environment to become a new investment point and accumulate money to become a stronger economy to quickly develop and can increase the quality of life of the ukrainians. Thats stephane kubiv talking exclusively to the National Governor of ukraine. He was adamant that they would be letting the currency free flow which will be part of the imf conditionality, as well. Were seeing an economic crisis. What we havent seen is and i think thats probably interesting in terms of the currency elise having a run on it. Yes, weve gone up from those peg levels trading around 8 versus the dollar in 2013. It goes down to its as well. Solo theyre letting it free flow and hes been talking to me about not trying to intervene in the current ski and use reserves for that they have that 15 billion of reserves interesting we havent seen that pressure. Since 2008, ive been traveling to these areas, lisbon, ma did, etcetera, its been very difficult for the well meaning Central Bank Governors to deal with. They havent started with the conditionality attached to troy ka packages, as well. It seems such an enormous challenge. And i think if this is going to turn its around economically, theyre going to need absolutely enormous support from the west. Its intrinsically leaked, the economy, to russia still. It certainly is. Thats the latest from the ground in ukraine. What about businesses who are active in the region . Joining us right now is martina besojova. Good to see you this morning. Strategists are not pulling out of ukraine. Its very large. It has a big population. Theres a lot of potential for growth, especially in areas like consumer products, agriculture, health care. Targets have had to be revised multiple times this year and thats obviously not very good for investor confidence. No. What about russia . That is obviously a bigger market and theres a lot of companies that dont like wouldnt want to do business in russia, anyway, because of corruption. Are people now rethinking that investment or the level of investment that they may put in . Yes. A lot of our plans, a lot of multi nationals have been very concerned about the impact that this has had on ukraine and on russia, as well. Not everybody is in ukraine, but everybody wants to be in russia. But at the same time, youre absolutely right, there has been a negative impact on investor confidence. Russia is already seen as a market which is difficult to do business in and is unpredictable. If i was a new executive right now, i would be getting some very difficult calls from headquarters. Youll also got the ruble depreciation, a soft. Ing demand picture, anyway. Thats exactly right. Demand is going to stop in both of those markets. The demand in russia is much more detrimental to performance than in ukraine. And. There is a lot of uncomfortable in russia that is going to be exacerbated by these events. Are we going to see other emerging markets benefit or not . Yeah, definitely. What weve seen is because of the slowdown in turkey, in Central Europe and russia, companies are looking for faster growth in other places and those will be places like kazakhstan, even uzbekistan. Thanks for that. In the middle of this, president putin is set to open the paralympic olympics in sochi today. Official from ukraine will determine whether they would participate or not. Still to come, the countrys first ever bond default. Well cross over to beijing to assess the implications right after this. Save you fifteen percent or more on car insurance. Ould yep, Everybody Knows that. Well, did you know the ancient pyramids were actually a mistake . Uhoh. Geico. Fifteen minutes could save you fifteen percent or more on car insurance. What is this place . Where are we . This is where we bring together the Fastest Internet and the best in entertainment. We call it the x1 entertainment operating system. It looks like the future we must have encountered a temporal vortex. Further analytics are necessary. Beam us up. Thats my phone. Hey. [ female announcer ] the x1 entertainment operating system, only from xfinity. Tv and internet together like never before. Police have arrested two people in south korea for allegedly swiping the personal data of 12 million individuals. They allegedly suspects hacked into korea telecoms website, stealing customers names, addresses, phones and bank account numbers. That information, police say, was sold to telemarketers for nearly 11 million. Regulators warn of drastic action if it happens yet again. Workers at a plant run by ibm in Southern China have gone on strike to test their move to lenovo. The wall street journal reports the workers have until march 12th to decide whether to become lenovo employees or resign. They want higher severance packages if they heave. Chaori solar regards has become chinas first ever Corporate Bond default. Now three chinese firms say theyre halting or delaying plans to issue new debt. Eunice yoon is with us in beijing and joins us for more. This first domestic bond default comes at a time when record levels of corporate debt, eunice. Just how big might the implications be, do you think . Well, a lot of people are talking about how this small default could portend big change in china. Its a small player in the sole onner industry, borrowed a lot of money, but wasnt able to make its interest payments. Now, in the past, what the government authorities would do in this type of situation is coming in and trying to help out the company in order to try to prevent any economic fallout or fallout in terms of job losses. But this time, nothing happened. There was no white knight. A lot of people are seeing that as a signal from the leadership that it is comfortable with the idea that companies could be in trouble, that some companies could fail, and that we would see more defaults. Now, the optimists are saying that this is a very positive development. Because up until now, the way the Financial System in china has worked in terms of borrowing mope, you basically were able to get better rates if you had a buddy in the government. But now, it looks as though the government is more willing to make some changes and shake things up so that companies could get the credit that they need. Now, the concern that a lot of people out here have is that as the market starts to deprice some of that risk, which were already seeing happening, there could potentially be some sort of trigger or tipoff of unintended consequences, which could lead to a financial crisis. And that is what people are worried about here. So far, though, from the regulators, they have said that they are very closely monitoring any possible Systemic Risk to the system as they make these changes. Ross. Eunice, thanks for now. Ill catch you a little bit later. Joining us with his thoughts are mark matthews, head of he research for asia. Jewela a julius baer. I suppose this is a market that needs to mature and grow up a little bit. But as we go to a market that is much more riskbased, how big are the ricks . Well, ross, youre right. Nobody really knows. But thats the thing about china that borrows us. We dont trust the debt, the air quality numbers, the food, the products that they make any more. So china itself is cognizant that it has this huge credibility issue. This is, i believe, the first small step to rectifying that situation. It will take many years. And allowing companies to default is only one aspect of it. But i am an optimist. I view this in a very positive light. On the basis that were going to have much better credit analysis, the introduction of government, better governance, all those things. Yeah, thats right. Positive on the basis that this shadow Banking Sector and this trust was part of that has really crowded out a lot of lending that should have been done to the private sector and, instead, money was siphoned off into these double digit return products which, you know, just shouldnt be the case. Its very inefficient Financial Market in china. Theres been a tremendous overhang on the banking shares. We dont know the level of the stat. And im sure a lot of it might default and wont be allowed to. But, you know, i would also just say if the americans could rewind the clock back to 2008, im sure they wouldnt have let things transexpire the way they did there, either. So there will be selective defaults as a message to not to basically put an end to the shadow Banking System and thats a good thing. And you talk about selective defaults. I imagine what investors will now do is price differently those companies that are seen as strategic and have Good Government support and those which the government may see as not that important and may just let it go. This is what they want to achieve is more of a marketbased economy. By the way, its not just in these kind of defaults, but in making the Stateowned Enterprises more responsibility to the market. They just started privatizing three Stateowned Enterprises. So i think as we continue to see this unfold, and as i said, its a multi year process. In fact, it will result in more efficient economy, more Efficient Companies and, therefore, eye chronically, even though the economy is going to be slowing down, profits are going to pick up. Yeah. Although in the shortterm, there might be more refinancing risk, as well, i guess, for some companies. Mark, good to see you. Thanks for joining us, mark matthews. Now, back here in europe, greek bank perez is set to return to Capital Markets after a fiveyear drought. The companys biggest lender will issue 5 million worth of debt. Greek banks have been shut out of the Capital Market since the debt crisis hit in late 2009. Parting shots have rung out between bill gross and Mohamed Elerian. Go counseleder gross has accused the departing executive of trying to undermine him about talking to media about deepening tensions between the two. Gross has been monitoring he has been monitoring elerians calls and has evidence that elerian wrote a detailed letter to the media. And in some other corporate news, europes telecom giantses have called on the European Commission digital chief to ease industry regulations. In the joint letter, they outline how restrictions and mergers have put them on the back foot compared to their counterparts. Shares in Telecom Italian are lower today. Theyll not be taking the 2013 dividend on ordinary shares. And Air France Klm is near the top of the stoxx 600 after the company says passenger traffic rose 279 in february. The airline carried 5. 34 million passengers last month and reported growth in capacity. Cargo traffic, which was up 3. 5 , helped to improve the companys load factor figures. For more news on the aviation sector, according to the states well be speaking to the iag Ceo Willie Walsh later today. Aig own both iberia and British Airways and that will be at 8 00 p. M. Cet. Meanwhile, lets get more with whats going on with Telecom Italia. Claudia has the details for us. Whats behind these figures . Yes, good morning, ross. We are seeing figures that are boosting the stock this morning. Its trading higher by one percentage point. This is after it started in negative territory. It was the worst performer, probably because they didnt pay out a dividend for this year, which is a first for Telecom Italia. But that was already in the works. So it was probably in the price and shortly after the stock went into positive territory. They did ultimately beat expectations even though telecom did post a loss of 674 million euros. In terms of bottom line, they did reduce that loss. The loss was down lets say in terms of revenues, down by 7. 7 for the quarter while for the third quarter, they were down by 10 and even more so in the first part of the year. So theres a slight improvement fundamentally in the domestic market, as well. They expect the domestic market to give Telecom Italian better margins last year. In terms of