Youre watching Worldwide Exchange, bringing you Business News from around the globe. Warm welcome to todays edition of Worldwide Exchange. Plenty to get through. We start off with perhaps europes most important economic indicator. Its come in 10. 4 in may, below the consensus number which was 110. 9. Current conditions index, 114. 8. The Consensus Forecast was 114. 5. The german expectations index, 106. 2 in may. The Consensus Forecast, 106. 6. The april number was 111. 2. We have dipped down from that. A lull theyre talking about seeing in the German Economy in may, no revisions to the april indices. Euros been weaker ahead of this number and indeed it is ticking down again. Down to 136. 36 is where we stand at the moment. We are at fresh 2 1 2month lows on euro dollar on this lull. Joining us is christian schultz, senior economist at beringburg bank. Your reaction to this . The pmis yesterday paint maybe a slightly different picture. Both indices show the German Economy is growing at a fairly rapid pace but its not accelerating further. I think thats what the ifo reflects as well. There are plenty of risks, usually quite fickle german investors and businesses tend to reflect quite strongly. Ukraine being the biggest one and also the disappointment of the q1 gdp figures. Theres plenty to worry about. Bottom line is, germany is growing fast, based mainly on domestic demand, expeorts not the pmi was stronger than we might have thought. If you look at it from a world rebalancing review, wed like domestic demand to pick up for everybody. This is the new German Growth trend, driven by domestic command, consumption, business investment, construction investment. Thats good news for the rebalancing within the eurozone. They will buy more spanish, italian, even frank goods if these companies are competitive. Thats good news. Where is germany going to stand on the ecb actions on june . Is the fact that we dont have major inflation in germany, are they thinking we could do with extra stimulus even though their economy is relatively okay compared to the rest of the zone . There will always be public opposition to central bank easing in germany because Interest Rates are low, germans are sabers and they dont like the low Interest Rates. There will be opposition. The very low inflation rates, the weak growth figures for the First Quarter, that disappointment has come together to even ease the opposition of the bundesbank, even their our position is crumbling towards more action. Weve heard him talk about additional action. What they are doing is damage limitation, trying to avoid qe but give in maybe on negative deposit rates and another rate cut. Christian, stay there. A lot to get through. Well get your views, of course, on what the impact of ukraine and Eastern Europe has been as well as in the european economy. Before we get out to st. Petersburg and kiev, barclays has been fined 26 Million Pounds for failing surrounding the london gold fixing. A former barclays trader has been banned and fined for inappropriate conduct. Daniel James Plunkett exploited weaknesses in barclays systems and controls to seek influence at that days 3 00 p. M. Gold fixing, thereby, profited at a customers expense. The fca fined plunkett 95,600 pounds and banned him from forming any function related to any regulated activity. This is concerning by the way. This affected figures from 2014 to 2030. Ukraines Prime Minister claimed theres evidence that moscow is involved in violence in the eastern part of the country. Prorussian forces and Ukrainian Government soldiers violently clashed on thursday. Mortar fire and explosions were heard in an eastern city. This comes ahead of president ial election where poroshenko is expected to win. Were 200 kilometers south of kiev at one of the final rallies, billionaire petro poroshenko. Hes selling the message of a united ukraine, underlying the need for further european integration. He says thats the only way forward for this country. At the same time, he says he can reignite the relationship with russia in just three months time. The clock is tick. The question is can he sell this message to those in the east and south of ukraine . Even if he can, will they be able and allowed to vote . Those votes could be crucial in determining whether or not he can win this election outright on sunday. I asked him will he get enough votes to do that . Most probably 55 of ukrainian people think i can win the election. This is much more important. Weve seen further violence, intim dag in the eastern regions in the last 24 hours. Theres a real risk that people will be too afraid to vote. Whats that going to mean for the legitimacy of the Election Results even if you win . This is just two regions among 25 left after aggression in crimea. We are, as a state, undertook enormous efforts. Many people are risking their lives. You can imagine one of my member of the Election Commission, local Election Commission was taken as a hostage. One of them would attempt to kill him. People are risking their own lives to deliver the rights for the people to vote for the next president. This is extremely important because now less than onethird of the total polling station can have a risk to be closed. 69 still working. We do our best to defend the working rights of the people. Im not sure what will be the result. Im absolutely sure the level of the responsibility of the people are so high that we can have the medium level. I doubt it would be below 60 . For sure it would be about 50 . So we dont have any in russias eyes, too, will it be legitimate . Okay. Unfortunately, russia is absolutely unpredictable. Nobody can predict that russia can make aggression in crimea. Even at such a high price by sanctions, by the depression in the economy, by devaluation of currency, by real strong problem in the future. Even in that situation, russia can go and make an aggression in crimea. We tried to do our best to stop russia to make destabilization of socalled special type of war using this terrorist russian group, soldiers of fortune who have only one purpose, destabilize the situation on the east of ukraine. Julia joins us now in kiev after that interview. Julia, mr. Poroshenko expected as far as the polls are concerned to get into the second rounded with a lead if indeed there is a runoff. Who would be with him . Are we going to get a man even without crimea who represents the eastern part of the country, tipco . Well, its interesting, ross. Theres a lot of talk about who hell bring into his government if indeed he takes over. One of the crucial questions, all these candidates are selling the message of unity right now. Im not sure how selling a closer tie with europe for this country actually brings those in the east together. Im not just talking about the prorussian separatists right now. The message i have from being here, theres people in the east quite frankly who are terrified about the prospect of closer ties in the eu and what it means. They only understand the soviet way of living. Im not sure how the two ideas, the idea of unity and a move towards closer ties with europe actually sits. Right now, the message seems to be getting across. They believe hes a guy that can carry them forward. He said that hes proeuropean. He wrote compromise also on crimea. What we do know about his history, hes a selfmade billionaire. Were still talking about an oligarch, this blend of high wealth and politics. That makes people cautious here. Hes also zigzagged across the political spectrum. He was part of the Ruling Coalition that was kremlin backed that was then thrown out. You have to be careful that you dont look like an opportunist here rather than a vote for change. He said he gets that. Hell continue to promote his message. He has one more day to continue to convince voters before the blackout begins. We head 48 hours before the election. Plenty more of that interview coming up. For you, ill hand back to you. Julia, thank you very much. More to come from kiev a little bit later. Now, events in ukraine very much dominating discussions at the st. Petersburg investors forum. Jeff has been speaking there and hes also been speaking to president of the committee on Eastern European economic affairs. Interesting comments coming out of there. Lord mantelson. Jeff will be hosting the keynote address with Vladimir Putin, from 12 30 cet, 12 30 cet. No one will want to miss that. I can absolutely assure you. Also the chairman of the China Investment corporation has outlined his views on the ecbs strategy. Well get more on that when we come back. And well have the latest from the st. Petersburg International Economic forum with jeffrey as well. See you in a few moments. What is this place . Where are we . This is where we bring together reliably fast 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. Lets get out to the st. Petersburg economic international forum. Jeffrey is there. Jeffrey, its interesting to see the comments from lord mandelson. As you know, ross, hes said an awful lot while hes been here. In fact, he had a piece in the Financial Times i believe where he made a number of points about the state of the economy. Of course there are some here who dont want to hear the message. I think it comes in good spirit. Hes been a longterm visitor to this part of the world. I think hes had long and extensive relations in russia with senior people. So i think people are listening, because when your enemies criticize you, obviously you disregard that. When your friends are critical of you, then i think you do take note of that. So the comments in some quarters are not well received. Broadly, i think people understand the message hes trying to put across. Id like to roll that conversation into the conversation with my next guest. Again, youre someone who has had extensive experience of operating in this part of the world. Your comments come from a position of understanding and, perhaps, emniti. Do you think we could see this crisis ratchet down. I have not seen a clear view of deescalation. A lot will depend on the election next sunday. Chancellor merkel has made a clear statement, whether or not well see economic sanctions is dependent on russias reaction to the president ial elections on sunday. This is socalled red line effectively that the chancellor has drawn here. But it would seem that given the moves from the kremlin, the apparent support from president putin for the electoral process and promises to pull troops back, that he is keen at this point to deescalate. If yes, but you know, it is obviously pretty much dependent that we prove that troops are being pulled back. I dont doubt that but it is very hard to assess it from the outside, being a businessman. I keep my fingers crossed. That we will see the deescalation process and at least looking at it from the german perspective, everybody, i dare say, everybody still hopes that we will not see economic sanctions. Not many germans here really. Not many germans who want to be publicly seen to be here nor americans at this stage. What happened to the socalled policy of engagement . The americans and many europeans have just pulled back, it seems, and are unwilling to continue dialogue. Well, i mean, what you have to bear in mind is this. The st. Petersburg International Economic forum so far has not been that popular in germany. So comparing 2014 to 2012 and it is necessary compare to 2012 because chancellor merkel was here last year, i guess if im not mistaken from the top of my head, in 201 we had two german i regret that a lot. Because this gets growing importance and hopefully well see more german top guys participating in the years to come. So as far as the committee on Eastern European economic relations is concerned, what damage do you think has been done already, not even talking about another round of sanctions but already to the interdependence of this economy with other parts of the cis and western europe and the world. Well, you see russian growth slowing down. Germany has a trade volume with russia or had a trade volume with russia of about 80 billion euros. Was already decreasing or has already started to decrease in 2013. And that development continues. So here you can see that these climate of uncertainty, which has emerged, bears negative impact on trade volumes and economic undertakings. Its been a pleasure speaking with you. Thanks so much for joining us. Thank you. Just to point out, i am hosting a panel with president Vladimir Putin. That coming up in just a few hours here in st. Petersburg. Ill send it back to you for now, though, ross. Id call that an unmissable event, jeff. Thanks for that. We are an hour and 20 minutes into the trading day here in europe. Were very much 50 50 between decliners and eded ed ed ed e. We are just down 14 points. We had an ipo this morning, one that suggests maybe weve peaked in demand for ipo saga. Listing this morning at 185, right at the bottom of the range. They had a range of 185 up to 215. It has ticked up slightly to 8 186. 88. We saw the ephone number. The hang sang fairly flat. Treasury yields, stronger housing data yesterday. Stronger home sales rebounding in april. Treasury yields take time. Currently at 2. 54 . We were 2. 55 with yield in the overnight session as well. The dollar helped buy higher u. S. Yields. Dollar yen up to 101. 73, away from the 3 1 2 month low we hit on wednesday of 180. Sterling is weaker, back down from the 169 level we hit yesterday. Euro dollar, fresh 2 1 2 month lows or threemonth lows for euro dollar, 1. 3633. The ecb would very much like to see the euro getting a little bit weaker and is expected to act at its june meeting as well to target deflation. Mario draghi has hinted that it could drop the deposit rate to zero. He also worries about the strength of the euro. Translator i can understand the ecbs position. Quantitative easing policies adopted by the Federal Reserve have resulted in some capital flowing back to the United States. This has an effect on europe, especially since economic recovery in the region is at an early stage. Outflow of capital from the european markets at this point will definitely work against its recovery. Under these circumstances, stimulus measures taken by the ecb will somehow moderate this phenomenon and growth and recovery of the eurozone economies will contribute to the wider growth and recovery of the global economy. I think the ecbs position is reasonable. We will take that into cross when we look at Market Opportunities in europe. On the whole it may be good news for us. Chris schultz is still with us from behrenburg bank. Do you think they will boost lending to the private sector . Thats the big question. The question is also, what shape would that take, that initiative . Would it be a targeted ltro. Would they buy abs and what is abs, is that just car loans . Theres lots of technical questions that the ecb will have to answer. If there is going to be something, it may be fairly small. I think this is evidence as well. I think there is evidence that funding has worked. We also get with the ecb, banks have repaid funds as well. Their Balance Sheet has contracted fairly sharply. The problem with europe is, surely, he talked about the break down of the transmissionmakers. It is finding ways to get banks to lend to smaller businesses. Draghi rightly says a lot is not Monetary Policy. Its the capitalization of banks is their confidence to lend to the real economy. If he could come out with an fls, there is a role for Monetary Policy to play, right . If it worked in the uk, it could work in the eurozone. The uk is one country with a certain set of financial markets. The eurozone has 18 countries with different setups. A lending scheme which works one for one may not work for the next one. Very briefly, have you seen the lows in spreads for peripheral countries . We hit them three weeks ago. Since then, theyve widened out again. I dont think we have. I think were watching the ratings agencies. In 201 their Interest Rates spiked. When they regained investment grade, a lot of investors or some at least might be tempted to go back and that could lower Interest Rates in the periphery still. Good to see you today. Still to come on the show, the thai army has frozen the border for politicians and activists. Well be in bangkok. Honestly, the offseason isnt really off for me. Ive got a lot to do. Thats why i got my surface. Its great for watching game film and drawing up plays. Its got onenote, so i can stay on top of my todo list, which has been absolutely absurd since the big game. With skype, its just really easy to stay in touch with the kids i work with. Alright, russell you are good to go alright, fellas. Alright, russ. Back to work youre watching Worldwide Exchange. Bringing you Business News from around the globe. Headlines from around the globe. The saber rattling over ukraine ramps up. Moscow will be forced to respond if nato steps up its presence nearby the border. Not diplomatic, not political. Ukraines leading president ial candidate tells cnbc exclusively that if elected, hell engage with russia but he wont compromise on the crimea or closer ties to europe. Britains financial regulator has fined barclays 26 Million Pounds over failings related to gold prices. A former employee at the bank