A warm welcome to the program. Lets talk about stress. The Federal Reserve rejected the capital plan for banks. Jonathan ferro has details for us. Jon . Youre not stressed. I am, quite often. The fed says no. I think that is big news overnight. For citigroup. Plans to buy back shares and boost dividends. They are going to have to readdress plans. Two rounds no those tests. Think of the first one as what if . What if unemployment peaked at 11 . House prices fell 25 . Can these banks withstand a recession . St week the big guns all passed. The result is about taking into account their capital plans. It is very subjective. It wasnt just citi that failed. Hsbc. Santander. It is really interesting. On the quantitative measures to peer one capital, they pass. They passed in that sense but they failed on the processes. R. B. F. . Does it mean for it is r. B. S. . It is planning to sell shares. Revenue and losses under economic stress. How many problems did this bank have . This is one of them. We were meant to get rid of this bank this year. I think you have two questions this morning. Does this raise the red flag for potential buyers and diminish value of any potential sale. Citigroup got hit hard. For the s matter european headquarters. It could dictate the amount of money they are allowed to pass back. This is what the fed said about santander. They rejected their u. S. Unit because of widespread inefficiencies in governance, internal controls, risk management. That is quite damming. Thanks, jon. See you later. With any stress test, the estion could be were the uestions too easy . Well have an interview with andall kroszner. Hans nichols is in brussels. Today would be the day. Remember, this is a long process. It started over a year ago when they were talking about a lot more money. It looks like the range is now 1015 billion dollars. What we have here is the negotiating we know what the points are. On top of that is lowering pension payments and then you this back and forth on what to do with the currency. Do you allow it to fluctuate and what do you do about the subsidized gas payments that elp heat homes in ukraine. In the last few weeks, six, seven, eight weeks, it has gone down so much it is almost not a Sticking Point anymore. One of the reasons why this is so important. Once this money from the i. M. F. And there is an agreement, if it gets approved by the i. M. F. Board in washington, then you can have this conditional money released, 1. 6 from the europeans. A billion from the americans and additional money from japan. That is how you plus up to get to that 20 billion range. Hans, i understand that crimea has been something of a Tourist Destination for russians and ukrainians. How is the economy of crimea going to be shaped by the russians . They have some interesting plans. So interesting plans would be one way to put it. A gambling economy would be another way to put it. Crimea has fiscal deficit as well. 1. 5 billion euros. Wouvent plans they are talking about in moscow is to make it a gambling zone. Take some of those revenues and shore up some of the budget shortfalls and crimea could end up looking like the mac caw of russia. Berkshire hathaway is said to be reing plans to sell 20 of their hong kong shares. Why is it revising these plans now . Well, the company is facing essentially a Balance Sheet crunch. This warren buffettbacked company is forecasting as much as a 96 drop in profit in the coming quarter and in fact, its debt levels are at records now. It is a challenging situation as its Core Products of gasolinefired engines, those cars are not selling necessarily that you will well. Shareses could raste raise as much as 1 billion. It would give them funds to bolster shares in electric cars. Profit forecast to drop about 96 this quarter. Shares are down today. And Warren Buffetts investment in b. Y. D. Is not looking as hot as it once did. Take a look at this. There is a Silver Lining in everything, i guess. It is not all bad news. B. Y. D. Was sold as the best performing stock of Chinese Companies listed here. It has done quite well for all of its misfortune. We will see what this share raising means for the shares. Well be watching b. Y. D. As it continues that decline. Now down 3 . Talking of shares 10, cent shares down the most since 2012. Whats going on . Ten this cent speculated to announce as much as 1 billion in acquisitions. One is the chinese internet site reported on yesterday saying they would take a 20 stake in yuko. It is the chinese version of youtube, essentially. And a games maker, a Company Called c. J. Games to resonate with mobile users. The market not liking this. The share down 5 . The big concern, evaluations. Trading at levels we havent seen in six years. Evaluations, im talking about. The real concerns here are what are the true evaluations. Tencent. Mpacting but tencent notable because it is asias largest listed Internet Company and it is leading declines among some of its peers. Well continue to track tencent as the stock falls in hong kong. Thanks. Caroline hyde is in basil for us today in switzerland. Your week of luxury continues. Caroline . It is. The biggest watch and jewelry fair in the world. It is about luxury. It is about champagne. That mag niff sent and about the most expensive watch on record. There is still concern. He challenges are clear to see. Chinese still weak in terms of demand. Sales have been eroded by foreign currency, weakness abroad, particularly in the emerging markets. After that, the smart watch and indeed the threat of the swiss very own making problem. That could hurt the talent that the swiss watch industry managed to bring in to make these lorious watches. Watches by rolex. Omega. Back to you. Yes, absolutely. Caroline will be bringing us the latest from basel. That will be later on during countdown. We await news of a potential i. M. F. Loan for you crane. Our next guest tells us why a bailout may not be enough to protect the countrys economy. Time for the days company news. Candy crush maker king was crushed in its debut. The biggest decline in a newly listed u. S. Company in over four months. The c. E. O. Said he is not worried about the price. My focus is not on the price. Our strategy is longterm. By focusing on the longterm, we create shareholder value. I think we are in an incredibly strong position. Ten this cent is leading declines in asia among internet companies. They agreed to pay about 500 million for a stake in south oreas c. J. Games. At 36 billion, a deal would be the biggest asset injection into a Hong Kong Listed company. They are planning to spend about a 4 billion share sale to the public. Welcome back to countdown. Im anna edwards. Im mark barton. It is 4 clothesline 15 in london. It is 4 15 in london. Frederick Ericsson Joins us from brussels. Good morning. Thank you for joining us today. Good morning. Frederick, were awaiting news on the bailout for you crane. It could arrive today. That is good news when it comes to bankruptcy. What about the bigger issue of reviving and restructuralizing this economy. What measures need to be announced. What measures will be politically feasible. Well, i mean, that is a very good question. That is also an issue which is much more in the hands of the current ukraine government and the government which is going to take office after the election. What you can do by the International Monetary fund and what other external lenders can do is provide the resources to plug the gaps that are there now. Both in terms of physical gaps and currency gaps and financing its external trade. But apart from that, they could have different conditions to the loans that they are going to give to the ukraine as well. It is very much in the hands of the government. It is they that need to different Economic Reforms that is going to revive the economy and take away the osified structure of many different commercial sectors in this country which has been constraining productivity for many, many years. Is reform of heavy industry, particularly in the eastern part of ukraine, is that going to be the focus . Opening that up to competition . Getting it ready in a fit state so it can compete more internationally . Well, i mean, that certainly needs to be a part over the Broader Program which is going to put ukraine back on some sort of a sustainable Economic Growth path. But it is going to be extremely challenging. I mean, apart from many other reasons that previous governments in ukraine have almost failed when they have ried this before, were seeing continued very Strong Political connections between different ukrainian businesses between different ukrainian investors and the Ukrainian Government to take this on and really get reform going through the economy. It is going to be extremely politically challenging and it is going to take determination and strength from a new Ukrainian Government to do so. On the subject of sanctions, you said that and you written that punitive sanctions are not a reliable instrument. So what is the appropriate course of action now for europe against russia . Ell, i mean, europe is has already chosen the path of economic sanctions as an instrument of trying to get russia to realize they are there are going to be economic and political costs associated not only with crimea but if it decides to go further into ukraine. There is no real alternative for europe now than to basically continue on the economic sanctions strength. What we need to understand is in the first place, economic sanctions, when we look at the sort of sanctions produced in the path, they are not instruments that are defined in order to get other governments to start and behave and start to do the things that in this case the International Community want russia to do. But there should be at least a chance to get improved behavior now in russia. Speed is part of the essence and that sanctions must come faster and must bite harder. If we just continue with the sort of sanctions we have seen in recent weeks, i dont think that is going to have any at all, neither on the sources of the kremlin, nor on europes capacity to actually affect and nsms in this region. Frederick, could one area for reform in europe and the way it deals with russia, its political relationship, Political Economic relationships with russia, would one area of reform be stipulating more criteria, being specific about the types of businesses that can list in europe . Is that one area we should see europe focus on . If we start to look at perhaps more of a mediumterm sort of policy for europe, what sort of response it should define now that it is faced yet it n with russia clearly is not prepared to live up to International Rules and law. One response going to be changes in europe itself and changes that europe needs to do for its own security and texture of its own economic integration with russia. There are lots of things that they need o do now. Try to make the sort of reforms in europe that are important to ensure that this sort of economic integration would have with russia will be based on market terms. That is not so heavily politicized as it has been in the past. If that is what were talking about, the Energy Sector of course comes first. The fact that europe has allowed a state trading gas monoply in russia to build up cartels and energy, political alliances in europe which has prevented europe from doing what it should do, which is promote competition and investments and interconnectors and show that we are going to reduce our dependency on one exporter of our energy. A lot of things that europe can do for its own sake. That is going to be in the medium term and it is not going to help ukraine. It is not going to effect a change on how the kremlin is going to decide whether it is going to just stay in crimea or go sbo into other parts of the ukraine as well. Frederick ericsson. Director and cofounder over the political economy in brussels. Just ahead, chinas exiexi ping visits pictures. Well see what else Frances Hollande is hoping will come out of the visit. Welcome back to countdown. Im mark barton. Im anna edwards. Chinese president xi jinping has only been in paris for a couple of days. The visit is an important visit for france whose trade with china lags behind germanys. Lets bring in david tweed with more. France really rolling out to red carpet then for their chinese vitor . It with a purpose. Something that the French Foreign office is calling economic diplomacy. It is really a story about going for growth. Youre not going to hear mr. Hollande talking too much about human rights or chinas transgression in the south china see. This is all about business. Let me just give you an example of how committed hollande is. The first 18 months when he was in office, 33 trips by Government Missions to asia. Not just china, but all over asia. That compares with only 13 trips in the two proceeding years, the last years of Nicolas Sarkozys regime. It is paying off in spades. 8. 5 billion euros worth of deals. They got the deal to recycle nuclear fuel. We have the peugeot deal which has been signed off on. So a lot of business has been taking place but there has been a lot of homework to get this business done. David, it is not all about china. France is looking to do business all over asia of course. You know, you could really call whats happening under Francois Hollande a pivot to asia. It is not just france. They are extremely aware there is a lot of other business to be done in asia. France has trade surpluses are singapore, asia, australia. With the deal Just Announced today with japan, a. N. Sambings going therewith split a 16. 6 billion order with boeing. This is the first time a. N. A. Actually bought airbus planes. That is very significant given the fact that Japan Airlines just last year also ordered airbus planes for the very first time. This is significant payoff when youre talking about frances economic diplomacy. A big success. Expect more to come. Up next, well take you to the swiss watch industry. Welcome back. Im anna edwards. Im mark barton. Lets get straight over to Jonathan Ferro for the fx check. The u see the kiwi dollar, new Zealand Dollar up. 5 . Despite the trade surplus, the finance minister in new zealand said this one is too strong for the nations exporters. They want it lower. Mark barton, this one is the best performing major currency this year. Thanks, jon. These are the Bloomberg Top headlines today. President obama says the u. S. And its european allies stand united against russian attempted o redraw ukraine boundaries. Wasia is challenging the ideals of democracy, free market and international laws. Stocks fell after his remarks. The bank of america has agreed to pay 9. 3 billion to resolve a dispute over mortgage securities. The federal Housing Finance agency sued 18 banks over their sales of mortgage products. They allege they falsely represented the loans behind the security. Singapore and switzerland, as the investigation into the alleged rigging of currency markets widens. U. B. S. Opened a review last year. This after Bloomberg News reported in june that traders in the industry had colluded to rig a global benchmark. Now graph is making its first appearance at basel world this year. The atch maker is debuting watch with 110 carrots of red diamonds. It is 55 million. Bloomberg had a sneak peek. We wanted to create as we always do, something extraordinary. We have been collecting the diamonds for about two years. Of e are about 110 carats colored diamonds in the piece. Stones between two and three carats. There are blues, pinks, greens. It is a collection of diamonds which happen to be put together in a watch. It is very, very possible someone will want to be able to buy the best of the best, which that is. The diamond market is very, very firm. I think today, more than ever, there is a lack of great places that very wealthy people can put their money. Diamonds are of course a great tangible asset that you can actually hold in your hand. We have seen tremendous appreciation in the value of diamonds and the value of other real assets that are tangible. Are you hallucinating . Absolutely. 2013 was a tough year for the swiss watch industry as exports stagnated. Many fear another slow year this year as chinese demand remains sluggish. Lets head to caroline hyde. Youre the at the worlds biggest watch event. What is the mood like there . Shrug , if youre trying off the concerns of 2013, this is where the elite come to show f their latest, most usually highly priced wares. The challenges still remain. Lets run through those challenges. Chinese exports, exports of swiss watches to china last year fell 13 . That is crucial when swatch, the biggest swiss watch maker gets 1 3 of its sales from china. So clearly, there is still concern about whether that will pick up for 2014. A crackdown on luxury gift giving. They want more understated luxury now. Add to that of course the sales these watch makers are making are eroded to a large extent because of the foreign currency weakness in emerging markets. Think of the ruble decline and the real decline. If youre selling to these merging markets youll get less bang for your buck. Many are worried about foreign currencies this year. Remember, the likes of swatch warning that it could hit them by some 500 million swiss francs. The immigration referendum that we just had last month passed by 9. 3 this switzerland. How concerned is the watch industry about the impact of swiss immigration limits . Yeah, it is an interesting one, isnt it . It is really of their own making. There has been concern voiced by the Industry Groups saying this is really going to make it harder for us to grow. It is going to be harder to bring in the sort of talent that we usually need. Get this statistic, mark 50 of all employees in the swiss watch industry are foreign. 1 3 of them travel across the border every day. They are socalled cross commuters. That is going to be hit by any immigration cap. Watch unit, mhs and he said switzerland is almost our own problem. The bigger threat of switzerland are the swiss ople, finally with their initiatives. With all the referendums. Im still very, very, very optimistic because the minimum wage for us, we have already minimum wage in our industry in every segment. That is not so much a threat, i think. The immigration is also not a hreat. He is shrugging off the problem of minimum wage but saying the biggest threat to our industry switzerland itself. Taxation is a problem as well for the swiss. Well be Digging Deeper on all of these trends. The chinese slowdown. And immigration with our next guest. Were speaking to the head of the company in just an hours time. Caroline will speak to the head of the company. Stephane linder. Well get earnings next hour from europes second biggest retailer, h m. Lets start with luxury. Would you spend 65 million on a watch . Well, i wouldnt but clearly there are people who would which is why they are making it. Are there people who would . There are not quite as many chinese in particular willing to spend lots of money on the luxury good that they were a couple of years ago. You had this corruption crack thedown and that flushed out a whole lot of gifting demand. What youre starting to see is a little bit of a in china. Getting down to the level that people for the most part buy levels for themselves. Russia is a big market for luxury as well. If things really take a decided turn for the worse, i would be watching that space as well. Generally i think im a little bit more optimistic than last year. Lets go down. To asia and europes second biggest clothes maker some say it is a little less higher fashion than zara. One analyst said it is not best at fashion and it is not best at price. Is that fair or not . Relative to zara, absolutely. It is much more basic offering. It is the more value price point. That is what is puzzling about h m. The business is very inconsistent. It wasnt doing particularly well. Some of that had to do with the fact that it sells to a much younger shopper. You know what youth unemployment has been like in europe. The unemployed shopper. Effectively. But it didnt have the magic of zara. The fashions were so because of the unemployment issue, the business wasnt doing so well. It is investing in new concepts and markets. Is that the way forward for h m . Relative to zara in the shortterm race, the awareness is still there in many of those markets. It is going at a point when many of those currencies are quite weak. Youre seeing a little bit of an improvement in terms of the European Market and consumer demand. It is on the verge of rolling out its online product. The u. S. Is only just happening. That should be a kicker. Other things are coming in place. Because the product wasnt necessarily on target and the euro was so strong, they kept selling largely in terms of europe, they were facing a consistent issue in terms of the input prices. That seeps to be going away now with the euro continuing to strengthen. Youre sealing it sell largely in europe. That gives them a little bit of a margin opportunity as well. That might be a boost for them. Talk about the two businesses alongside each other geographically. That particular combin of where they sell. Could move that currency moves are a plus for h m. In some ways zara was much earlier in terms of pushing for International Growth outside of europe. H michigan did it very late. I think there is huge potential in overseas markets. The brand can can sell at a premium to where it sells in europe. Markets like russia, h m is not even on the map. It is just about starting. In terms of giving them faster growth. The problem now is the currency going against them. You have a shortterm blip in the road. H m is now investing at a point where hopefully currencies havent hit rock bottom but late to emerging markets and online. Is this an issue for h m being late to these trends . I think it is. Which is why the business has underperformed consistently over the last few years. Youre seeing a little bit of an improvement but because these things are happening. They are now underpenetrated in these markets. That issue is understood. We talked about the squeeze in the u. K. Supermarket space. Low end, high end,ing those in the middle. The its coast and the saints briss. Sanes buries. Is it undercould you tell cutting the likes of h m . It is not just bad whats happening with the internet. If you dont have the right online offer, youre toast. Next is a good example. They are doing exceptionally well. It knows its consumer. But it also knows she would like to have under options in terms of how she shops, particularly online. They are one of the first to go there. They are still keeping that customer. On the other hand, the people that dont do that, frankly, i think h m because it didnt have this offer, has been struggling. Can m s learn from next . Were constantly talking about this turnaround at m s or the hope for turnaround. Is it achievable or not . M s is k the issue at the contrast with next. The beauty of next is knowing the shopper. Next have had them for a very long time. They know the shopper wants to dress younger. She shops in a younger way. She likes the convenience of being able to go over the internet. M s has never been able to do it. It is ther shopper. They dont cater to any of her needs. He says her. Mark, of this is about you. Thank you for joining us. Coming up right here, can ryanair convince the high flying Business Traveler to fly low cost . Well have more on ryanairs revamp. Thats next. Time for todays company news. Italys Securities Regulator and the companys finance police are investigating trading in monte paschi over the last month. They are cooperating fully with the authorities. Fish network chairman directly contacted directvs c. E. O. To discuss a merger. It was in response to the comcast acquisition by time warner in february. And samsung failed to keep its knew galaxy s smart phone from going on sale early in south korea today. This as other carriers try to work around penalties imposed by the national regulators. Welcome back to countdown. Im anna edwards. Im mark barton. Europes Biggest Discount airliner, ryanair is revamping its no frill business model. Michael oleary was in town to talk about it, something of a sport. What is the big message from mr. Oleary . Hug me. Love me. He started the press conference in london with a puppy and him cuddling a puppy. That is the imagery he preferred. Here is a c. E. O. That Still Believes in piling it high, selling it cheap. He wants to make the customer relax. The wait and measure brigade, the police have seemed to have departed from the front desk. It is about getting ready for change. He also talked about the numbers. 81. 5 million for ryanair. Were talking over half a billion euros of pretax profit. The takeaway is this. Realizing the need for a change. I think it is a bit complacent. Were carrying more passengers than anybody else. It is working. People would crawl across broken glass to get these low fares but there is another 10 or 20 Million People out there who say no, im not going to put up with a third rate website and policies that dont allow me to bring a second bag onboard. Were changing all of those policies. I wonder if he had lunch with the c. E. O. Of easyjet. Going into the next 10 years, that is the critical issue. How do you stay at at the front of the market and stop this needless irritation of customers. Many years ago, easyjet realized there was opportunity for low cost opportunities in Business Traveler market. They are talking about carrying 80. 5 million to over 100 Million People. With that in mind, their target is to double the business traffic over the next two years. So clearly the business passengers are in their sights. I think the in the past, we didnt care whether you wering on business or leisure. We treated everybody the same. Were now going recognize that you have different needs. You may want to backtrack through security. We will have a policy to allow you to do that. The reality will be the experience they receive at the front end of the ryanair journey. They are going to spend money on advertising and allow travel agents to join in. It is very much the little scenario of business which is what ryanair was doing. Snapping at the heels of big brands. I find it surreal. People he has openly admitted would crawl over broken glass. To get that flight. They are changing. Michael oleer ji changing. The customer has changed. You have to hand it to michael oleary. He has run one of the best airlines. One of the best accessible. For decades. He is changing. The reason why he is an adept c. E. O. And still in his job is because he is absolutely prepared to admit maybe i need to change the way im selling product to you. Coming up, a new musical has starteded in london. It is about not being able to sing. It is a parody, a satire of the x factor. Well have that on countdown, coming up next. Welcome back. Im anna edwards. Im mark barton. It is newspaper time. Can you sing . That is the question posed by this new musical that just started in london. The title is i cant sing. It gets three stars out of five. Not great in the guardians review. X factor. T ire of the it doesnt know if it is a satire of the x factor or trying to boost they spent 6 Million Pounds telling us that tv talent shows are dominate bid van philadelphia perhaps they didnt need to spend all of that money to tell us that. Simon cowell is one of the coproducers. Maybe that is one of the issues. Are you going to see it . I thought you said are you going to sing . I might. Three stars, know. David, what have you got over there in berlin . I have got two little car stories here. I couldnt decide between them. It is the 40th anniversary of the v. W. Gulf. You can recognize it from the original car. And the other is the front page of europes biggest newspaper. I hope you can see what were looking at here. That is a 93,000 euro range rover being driven out of an underground car park by one woman and three passengers. Here is how four women park, says the build. Apparently they lost control of the car and went side ways into this sort of area here. This is what and it was in london. This is what is making front page news in germany. Women and parking stories. Really . So very 1980s. Youre not going to see me for 11 days. Im going to finish with the love of my life. Manchester united. Players revolt threatening the future. Im finishing with you for 11 days. According to this article, the players are rising and revolting this morning. Second hour of countdown continues after the break. And ukraine are poised to announce a bailout deal. We will break down the winners and losers in the Federal Reserves annual stress test and what it means for those eggs that failed to we are live at the worlds biggest watchsho show. The rise of wearable tech. Hour. Earnings out this welcome to countdown. A warm welcome to the second hour of countdown. We are getting earnings from h m based in sweden. We are. Net income has missed estimates. The first quarter, 2. 65 bil lion kroner. Pretax profit has come under analyst estimates as well. Sales up 12 in local currencies in the period two. Its gross margin is below estimates, too. Profits, gross margin below estimates. This is a company which is competing with other chains. Its investing in new concepts, new markets, and its introducing an accessories focus chain. It is adding a third store in the Southern Hemisphere and it started a u. S. Web shop as well. It has fewer brands than the likes of into tax indotech. Encourage investors with accelerated Revenue Growth in the first six weeks of the fiscal year. A couple of interesting bits of information from h m. It is to sell online in italy, spain in early autumn. Andits to open in peru south africa this year as well. And it will sell online in china by the end of the year. Its online horizons. And terms of breaking, i should tell you that waited theawaited report by regulator of Energy Markets in the u. K. Has come through. The Energy Market competition assessment is through and they are going to be proposing that they Competition Authority investigates the Energy Market. Price rises have intensified public distrust within the sector. They believe, they referred to os competition regulator timel as timely. To break up the utility company. International Monetary Fund and ukraine could announce bailout agreement as early as today. Hans nichols is in brussels with the story. Today could be the day, hans. Wetoday is the day that expect this to be announced. They have been working on it for some time. We are talking about in the range of 15 billion. Initially, ukraine wanted 15 billion to 20 billion. They may get some of that from other contributions but we have a traditional imf program. It is going to be like the program for greece, according to the German Foreign minister. Here are a couple aspects. They want to see lower pension costs. This is the imf. They want to see lower payments, less payments for gas subsidies. They want the currency to float on the open exchange market. This would cause it to weaken. It would help ukrainian exports. On that last point, currency is trading openly. On the year, it is down 26 . It has already weakened enough which potentially could help the currency. They are looking at potential of three percent contraction. The economy facing many struggle. This is one of the challenges. Package, youget an imf get 1 billion from the u. S. And 1. 6 billion euros from the european union. You get close to that 20 billion number. Guys . Hans, another side of the fiscal story russians want to promote a different kind of business in crimea to try to turn around the fortunes of that region. Crime hada has a budget shortfall. Russias potential answer for this go ahead and legalize gambling. Could potentially close that gap. No say on whether or not what the crimean people think about this, but this is what is being talked about in moscow. Hans, thank you very much. Hans nichols reporting on the latest on ukraine and the imf. 2013 was a tough year for the swiss watch industry. Many fear another slow year for demand remains sluggish. Lets go over to our European Business correspondent. Caroline, you are at the worlds biggest watch event. Basel world. What is the mood like there . Me, allu can see behind the biggest brands are here. We have rolex, omega. This is the biggest watch event of the entire world. Its very blitz and glamour on the surface. Diamond encrusted this, champagne that. All of the great english showing off their latest wares. Ratch the surface and the concern is still there. A stagnant in 2013. We only saw exports up less than two percent. Compare that to the average last few years. 17 growth. We are seeing a real falloff in chinese demand. That clampdown in gift giving. We saw chinese demand vomit 13 last year. Many warned that this could remain the same this year. Chinese tastes are changing. We are expecting 7 million smart watches to be unveiled this year. That could lead to more classic watch pieces losing. A and a cap on immigration could hit talent coming to switzerland. How concerned is the industry about the impact of swiss immigration limits . Swiss immigration limits, they are concerned about. The swiss industry has been saying that look, on the back of this referendum, if we do see that hit ourd see employees. 50 of swiss watch employees are foreign. 1 3 are crossborder commuters. Interesting, though, on the smart watch issue. They feel that is a big concern to them, because we could see eventually the Younger Generation buy more smart watches. 7 million meant to be this year. But will that really stop the higher, more traditional classic watch . Many say no. Ofwont stop the sale 15,000 watches that you would expect on the higher and. We spoke to the chairman of a patek philippe. Threetwo or generations, it will be much more interesting. What i am sure about is a value will not be kept. That means that if i lose it, if i lose my iphone for example, i just replaced it. This is the difference between those types of objects and a mechanical watch with a lot of knowledge inside. So as hes saying, knowledge inside it. The difference between a mechanical watch and of course the more hightech smart watch. Those being unveiled by the likes of sony, samsung. Back to thend 1970s. That is when the courts qu artz was introduced. It nearly killed the swiss industry. A smart watch, new technology choke it off once again . Are they being too short of shoulder about the whole situation . For the time being, most of the highend luxury watchmaker say, no, there is room for both. You cheaper smart watch and youre very much more luxurious mechanical watch. Thanks. Later caroline will speak with the head of tach hoy. The guest from patek ph ilippe, if you lose your smart phone, you buy another. So many people would lose your life. Might start crying. You could buy a house for a patek philippe. Lets get to jon. Its an and all stress tests. Jonathan ferro is here with details. That was the big news overnight. Citigroup. Their plans to give a 6 billion Share Buyback. A plan to boost dividends. The fed says no. That was the big result of the stress test. There were two parts. The first one was on what if. All of the big guns pass this. 11. 3 f unemployment hit and stocks plunge 50 , 10 those banks withstand a deep recession . The answer was yes. The next stage was about implementing what would happen with their capital plans. Subjected to things like judgments about management, the quality of the processes. It was not just citigroup the failed. It was rbs, hsbc, and santander. The fed is but a question mark internal processes. Talk about rbs. It matters. There is a light flashing because it wants to sell its u. S. Unit. Does that damage the possibilities . Two questions will be asked. Does it raise the red flag to buyers . This is the unit they want to sell, a unit they were hoping to sell this year, whether it is an ipo or an outright takeover. The fed objected to the capital plan because theyve concerned about its practices for estimating revenue and losses under economic stress. It is another long list to add to this massive list of issues. Thank you. That means some of these european banks are not going to be as able as they wanted to be to return money to their Parent Companies in europe. They could have implications for european banks. For more on the stress test, lets bring in our next guest. He is the professor of economics at the university of chicago and a former Federal Reserve governor. Thank you very much for coming in to talk to us. Give us your initial reaction to the stress test. This is not the first time the fed has raised the flag, expressed concerns at the qualitative processes that we see at the banks both on wall street and in europe. First, i think the important thing to realize is that everyone past the capital requirements. That is an enormous progress or where we were a few years ago. There is asaid, second stage were you look at the more subjective factors. Even citigroup passed on the quantitative tier one ratio. 2030 banks passed. We have made a lot of progress on the basic cushion against losses. But now there are more subjective, qualitative factors of exactly how good are the processes. Relyed does not want to just on simple modeling. It wants to rely broadly what are some scenario and analyses and one of the approaches that people are taking they can make banks hold her hair out because it is hard to see exactly how to pass that . It is also something that is valuable for the fed to be doing, to get a broader field for risk management, not in terms of the simple models but in terms of the big picture. I want to talk about janet yellen. She caused quite a stir last week i nher first meeting following the fomc, in the comments that caused the stir we will startly to raise rates six months after we start tapering. Did she mean to say that . If we look at the market year, mosthe u. S. 10 of the reaction was when the statement came out. All those dots had moved up. Up eight ormoved nine basis points when the statement came out. When she gave more clarity, there was only maybe three basis points move. By the end of press conference, it was over. I think the focus should be more on the substance of the statement. Are you in line with the thinking of the dots . Are you rate projections in line with the fed for the next couple years . The median forecast . Yeah. One has to think my forecast is just about what the fed is going to do. I think that is a reasonable representation. The fed feels like the economy has gotten stronger. So they can start to take the punch bowl away a little bit faster. This is not dramatically faster. It is 25 aces points, maybe a couple of meetings earlier. That led to this move initially. How about the fed president s . Have they been actively trying to guide the markets to a later date or not . Does that overthink those comments . I think there is too strong of a reaction to the words that chair yellen said. I think the market was not that far from what janet had said anyway. The market expectation was for some sort of tightening probably in the third quarter. Now the moved up to the second quarter. Estimate nowd to what is going to happen a year or a year and a half from now. Thank you very much. Economics atfter the university of Chicago School of business. Ok, coming up, we will have more with randall. Do stay with us. We will talk about the u. S. And other matters, other central bank matters around the globe. Welcome back. This is countdown. We are backward former Federal Reserve governor randall ku ruznor. You are there for three years, 2006 to 2009. The easy years. The most memorable years and the feds history for good or bad reasons. Now that you have had time to ponder over those years, what were the good and bad parts . Well, i think the good parts for the amazing work by the whole of the fomc, and particularly the Federal Reserve staff. When we were dealing with failing institutions, we would try to keep them alive until friday. Then try to deal with them before the open up markets in asia, because we did not want aims to get out of control and have to wake up monday morning and have to do something about it. Incredibly intense period. The staff would work 24 hours on that. We would be having board meetings at 10 00 on saturday night. These kinds of things. It was an amazingly inetense experience. Central banking has changed a lot since the days of greens bang and now into janet the days of greenspan. Do you think it is for the better . Theres more communication and documentation. There are many more words spoken by the fomc. Is that all to the good . Broadly it is. There will be stumbles along the way, when you are using something news. It is very hard to figure out whether you have turned the dial right or not. People have to get used to new ways of talking. New ways of presenting information. But i think are ugly, by the fed and other Central Banks, giving more insight into how they are thinking about the economy. What are the key factors they are looking at is helpful for orrket presence of the f market participants. Can it be deemed a success when you look at the u. K. Example, Forward Guidance . Many people focus on a particular words. Wemy last fed meeting brought Interest Rates to zero and introduce the extended period language. That became particular date and the 6. 5 unemployment threshold. It grew organically. The u. K. , though, it has been a far shorter time frame. Is it too early to judge . Part of it is that circumstances change. You want to give the thinking behind the decisionmaking circumstancesf are changing, let the Unemployment Rate coming down more rapidly in the u. S. And the u. K. , you might want to change how you talk about it in order to convey the same kind of information about how you are thinking. Shouylld other Central Banks . Ay doing more the ecb, should they be doing more to stimulate the economy . I am very concerned about the rates. Ome deflation is one of the scariest thing for a central banker. Thatugh i do not see immediately on the horizon, i think it is very important for the ecb to focus on that. I was heartened that the bundesbank had actually acknowledge that we may have to be a little bit concerned about this downside and they typically have had a more conservative more concerned about the other side. I think they understand also that not all the chances of deflation. Great to chat to you. Thank you very much for joining us in london. Of economics at the university of Chicago School of business and a former Federal Reserve governor. Past 7 00 in london. A new cruise blast off into space. That is next on countdown. Welcome back. It is time for a look at some of the most compelling images of the day. Hot shots. Pu if you ever wanted to nch a shark, now you can. A new Virtual Reality game allows you to fend off sharks with your bare knuckles. Once a player makes contact, an explosion occurs. Was launched this week. He carried a special package into orbit. Headed to the International Space station. The group left from kazakhstan iand docked in the vening. Pandzs are usually the stars of the show. That is until the first lady showed up. Michelle obama the latest in a long line of visitors to be wooed by chinas cuddly panda. Diplomacyu up next, we will take you to the live watch show. You will hear from the head of taj heuer. Welcome back to countdown. London. In lets get to Jonathan Ferro for the fx check. Focus on the new Zealand Dollar, up i ate 10 of one percent this morning against the u. S. Dollar. 1 against thef u. S. Dollar. New zealands finance minister suggests this one is too strong for the nations exports. Investors are winding their bets that this one could go higher. Would be another rate hike of the new zealand central bank. That is pushing this one higher. It is the bestperforming major currency for the year. Thanks. These are Bloomberg Top headlines. President Barack Obama Says the u. S. And its european allies and united against russia and its ukraines redraw boundaries. Obama also said that russia is challenging the ideals of democracy, free markets, and international law. Stocks fell after his remarks. Bank of america has agreed to pay 9. 3 billion dollars to resolve a dispute over mortgage securities. The federal Housing Finance agency has sued 18 banks over the sale of mortgage products. It alleges they falsely represented themselves. Traderssuspended fx in the united states, singapore, and switzerland. And its investigation widened. Ubs opened a review of its currency operation last year after Bloomberg News reported that traders and industry had colluded to rig a global benchmark. 2013 was a tough year for the swiss watch industry. Exports stagnated and many fear another slow year for 2014. As chinese demand remains sluggish. For more, lets get across to our European Business correspondent who is at the world you just watch event baselworld. You are with the gas. A guest. I am, indeed. I am joined by the president and ceo of tag heuer. Stefan linder. Lets get a sense of the anticipation for this year. Stefan, what is the mood like at the moment at this years baselworld, more optimistic or less so . I would say more because we are seeing the trend going a little bit up. We have seen little improvement for us. Months we are seeing the proof of more product getting more and more out. Ing that are you seeein demand improving . The best one is japan. Japan started to have high consumption. Its booming. It is difficult to follow the demand. Russia was doing very well so far. Now we have to be more careful. Indonesia was doing well. Uk is starting to pick up as well. Its very sporadic. Some places are booming, and some places are single digit growth. You mentioned russian and japan. Both countries that have seen weakening and their currency. If that something you have to offset by increasing their prices for your watch is in those countries, or will you remain the same and have to take a strong currency hit . We will have to be cautious not to go too far. In russia we did not increase our prices yet here it and i think we wait for the competition and take a look what is around. In japan, we increased slowly because we cannot about 20 in one shot. It is a question of being very cautious. In japan, its increasing. This is something the japanese have to digest. So we increased that very softly. How worried are you about the political instability in russia and the ukraine . How much does that stop the wealthy buying luxury watches . So far we have not seen any difference. But what we see is that people start to be a little bit cautious. Investors are taking the money out of russia. It is not a good sign. Maybe they will buy the watches out of russia. So far, we did not see such a move. Some warnings and signals that could be ahead. You mentioned indonesia. What about china . Many people talk about the worry of china. Do you think it will start to pick up . As obvious int china as some of your competitors. Are you looking to push further into china . Yeah. There is still a lot of potential. They are just beginning to have luxury content. Take a look of the politics made by china. They try to push the middle class. High end classes to internal consumption. They could be a huge market. Yes, we will further push because it is a long term credit you. Do you have an idea of what marketshare you would like . 10 of market share. Wow. Tell me about your own industry in terms of employees and workforce. There has been much worry and concern about the referendum we had its with someone about trying talent in the future as immigration caps. Will that affect your industry, will it affect tag heuer . It goes back 10 years ago. For every time you meet somebody which is qualified, because for us we need qualified people, engineers, what we have to do is apply for work permits. It is very administrative and very long. Of course, it will be less reactive. But this is not yet designed because they spoke about quotas, but we do not know anything about it yet. Only 3 of unemployment which is unexceptional here. We should take a look at qualified people. Oying, but wen know that the swiss government is very pragmatic. We know we can always apply. It will be just longer and more painful, but i am considering that our government is very pragmatic. You will not think about moving your production abroad . Not so much. We produce swiss made watches. There is regulation you have to respect. You cannot move so much production out of switzerland. What about concerns about the smart watch, the development of technology . Many people say, you can have both. You can have a very high end watch and a smart watch as well. Do you think a good head a certain . Price range . Of pricen chunk range . The smart watches there are two brands that do that. You need the iphone and the watch. The mobile phone is more interactive. Why bother with the watch when you have everything in your pocket . This is the first reason you do not bring technology. This is one side of it. But it could change because technology moves so fast. The second thing is emotional. It is about what to buy when you buy luxury watches . Youevery watch over 1000, buy a dream, prestige, the sense of a longing to an exquisite club. It is like when you buy expensive shoes. It is a driving factor to buy a luxury watch. And it is not the same as an enterprise watch. Buy auld you 5,000 watch . This is more luxury. Actually, you buy a piece of a dream. A wonderful thought. The president and ceo of tag heuer. Its all about buying that dream. Still looking for that dream, i am. Which is it . I am still hallucinating watch. Lion of i would not ever leave the house. This season. In have you not read that . I have not. I differ to you in fashion. Turkey hasin overturned the governments ban on twitter and ordered the Telecommunications Authority to restore access. Elliott gotkine has more. A bit of a blow to the ruling party. Just days before local elections. Talk us through it. It is and is not. It willne hand, yes, add further ammunition to those who said from the start that said the turkish government was misguided. On the other, practically speaking, nothing actually changes. The government is saying it has got 30 days to implement this court order. So accessing twitter by conventional means, and we talked about the ways around the still not ban, is longer possible. There are going to be more lawsuits coming. Post came outlog and said that today we filed petitions for lawsuits. We have been working on together with our independent turkish attorney over the last few days in various turkish courts to challenge the access ban. Expect the we government to restore access to twitter immediately so its citizens can continue an open dialogue ahead of the elections to be held at the end of this week. But it may take a little bit longer than that for twitter to have open access once more in turkey. Howust remind us, significant are these elections that are coming . The Prime Minister is not literally on the ballot, but he is certainly very visible. He has been campaigning alongside the ruling partys candidate for the mayor of istanbul. Many people see this as a plebiscite on erdogans rule. If he does well, it will be used for the residential elections held in august. If he does not, it could torpedo those very same ambitions. Certainly opinion polls seem to suggest his party will do reasonably well. We will have to wait and see. I will be there myself on sunday keeping and i on the selections for your. Thank you very much. Now, engineers in this building worked aroundtheclock the clock to help find the missing malaysia airplane. After the break, guy johnson takes us inside it to explain how they did it. Welcome back. Michael oleary, the ryanair chief executive has spoken. Who better to decipher his comments than manus cranny . We did send guy johnson along. This was a News Conference in london. He apparently started off with an image a puppy odog. And michael oleary. Love me, stop writing bad things on google about ryanair. There is no doubt about it. Over 81. 5 million book with ryanair. It is a volume play. I liked it with the telegraph said yesterday, we will stay in volume but it is about making you the customer last stressed less stressed. He did. He gave us some numbers. We will make the train 500 and 525 million. When it comes to the situation and you think about the customer, ryanair realizes it needs to change. I think that is was a bit complacent because we are carrying more passengers. People would crawl across broken glass to get these low fares. 81. 5 Million People still do. But there are another 21 people out there who say, i will not put up with a third rate website and policies that do not allow me to get a seat or bring a second bag on board. We are changing all that. This is about the fit for generation. The next i have it on Good Authority from olearynson that mr. Went into almost shocked because they said lunch and rinm,drink. Free. Sea bass. Things have changed because they are trying to court the business customer. Sea bass. Can you imagine on a Ryanair Flight . Good gosh. Yes, they are. They are taking delivery of 175 new plane. Market outwhole there. I wonder if you did go to lunch with Carolyn Mccall from easy jet. He has taken on a new chief marketing officer, but he is serious about it. The business passengers in the sight s of ryanair. The message was in the past we did not care if you are best traveling on business or pleasure. We are treated everyone the same. Now we will recognize that you are business person and you have different needs. Your meetings might change. You may want to fast track to security. And we will have a policy that will allow you to do that. Business travelers have needs. Thats an interest in take. They will take you to prime airports. They will use marketing. They will spend money in advertising. They are going to engage with travel agents. This is structural change, making ryanair fit for purpose for the next burst of growth which is about selling higherpriced seats to Business Travelers. That is my take. I wonder if johnson had sea bass. He gets all of the good gigs. Carolyn mccall was not there. Mannus, thank you very much. Lets turn our attention to the still missing aircraft, the malaysian aircraft that went missing a number of, a couple of weeks ago. Guy johnson went to meet the team behind a fairly low profile, some say secretive satellite operating company that has been right at the heart of this developing story. A missingrch malaysian flight mh370 is the biggest in aviation history. Thousands of men and women scouring millions of square miles, looking for a needle in a haystack. Some of the most sophisticated search and rescue equipment available, finding the missing plane has been tough. For the biggest breakthroughs did not happen in the southern indian ocean. It happened here on the old roundabout and the hustle and bustle of the east end of london. In an unremarkable building filled with people doing remarkable things. Thersat has been in satellite business since 1979 and went public in 2005. It has 10 Operational Communications satellites that are used by everything from ships to planes to broadcasters. What they do here really is rocket science. Figuring out what happened to mh370 required a week of hard work, radical thinking, and lots of pizza. The way they did that was with this car, but theracing doppler effect which describes how single frequency changes over distance. Thate racing cars case, is sound, but in this case it was pings between the satellite in the aircraft. What it allowed the engineers to do with not only figure out the core doors in which the aircraft could of been operating, but were critically the direction of travel down here into the southern indian ocean. Tangiblenow is that evidence will be found that will actually explain what really happened. But whatever that is, narrowing the search area will have proved pivotal. Whether or not this breakthrough has any meaningful impact on remainss bottom line, to be seen. This area of london has once again secured his reputation a trulyb for the innovative company. Guys here to give us a halfhour chat on the doppler effect. [laughter] i brought my charts. I have a few little slides. Going past. Ng car yeah. How was it. It is an amazing company. It is below the writer. But this is a company that has been around since 1979. Below the radar. There are two other Companies Operating out of the states that do similar things. There are smart people in there doing very smart things. But has been on this street forever. But allstreet roundabout is silica and roundabout. So it could be called satellite roundabout. They operate across the range of industries. Ships have to report the position every six hours. They do that. If you are i gottesman, you have one of their pieces of if you yachtsman, you have one of their pieces bolted there. What do they think of their newfound fame . Theyll let us in. You can fill. Im sure theyve had up teen news crews there. They will not talk to you. They are not sort of shouting from the rooftops about the amazing mets medical breakthroughs they have done. It is amazing the math they did. That is never happened before. Plane hasd say the not yet been found. Thisis based on intelligent. It is a mathematical exercise. Quite impressive. They are rocket scientist. One would expect it. They are not putting people of or interview. It will not talk to you. So you will be here for a few more months. We will send you to camp outside until they do. Shares are up 88 in two years. It was initially set up as an intergovernmental operation and then they listed it a few years down the road. Thank you very much. Stay with us. 8 minutes away from the start of the European Equity session. Futures indicating stocks will open lower. Welcome back. This is countdown. Five minutes to go until European Equity markets open up for thursdays trading session. Little are looking at bit weaker as we head towards the start of day. Keep an eye and h m, one of the stocks we have seen there. It will be weaker. Retail sales and the u. K. Could rise. That is including fuel for the month of february. Keep an eye on banking stocks. In the energy session. On the move up next. Big watch show. We are there. I will see you tomorrow. Bye. Welcome to on the move. Im Francine Lacqua in london. We are moments away from the start of european trading. Our markets team has everything covered from companies to currency. Here with me now is manus cranny and Jonathan Ferro. Hans nichols is in brussels. Markets are looking a little bit bearish now. The rhetoric coming from obama and merkel is a shift in gear. We are waiting to hear she will talk to hans about this, the imf potential for ukraine. Obamas words saying you need to deescalate. Merkel talking about tough responses. Stocks this month are on track for their worst monthly performance since june of last year. So i think there are layers to this story. And it is whether ukraine has come off the boil for now. And whether we focus again on data. And a little bit of pressure on banks in asia. If you look at the stress tests, we talk about the nuances. The big news overnight citigroups plan to do a Share Buyback on hold. The fed says no. The news for europe is the fed has questioned the management unit. Ses at rbss u. S. Stock was called lower by 2