Transcripts For BLOOMBERG Countdown 20140605

It is 6 00 a. M. Here in london. Bloomberg reporter standing by ready to deliver the stories that will drive your day. Are live in frankfurt awaiting Mario Draghis decision. Hans is in brussels. We have more on the tmobile u. S. Tie out. What Mel Mario Draghi deliver what will draghi deliver . The ecb president last month hinted that today a cut may be in the cards. Before we act, we want to see the tough projections that came out in early june. Guy johnson is in frankfurt where draghi will be delivering the Central Banks latest decision. Good morning. Whats he going to do today then . Thats the big question. To my mind, there are three options now on the table for mario draghi. A sliding scale of what he can deliver here in frankfurt along with the rest of the governing council. We just heard what he said this time last month when he opened the door to todays possible rate cut. It is the deposit rate that everyone will focus on and this is the first time a Major Central Bank, as you say, have gone into negative territory. Them experimenting with this but this is the first time a Major Central Bank may deliver a negative deposit rate. These are uncharted waters. What we may see is testing of the waters. He may just go a little lower, maybe just one point lower, see what happens, just experiment and make sure the focus is there. We will see the rate cut as well that is the deposit rate that everyone will focus on. Thats the first option and that is almost completely 100 priced in by the markets. Then may get into more interesting water. Lets talk about credit easing. But we could see here is a very longterm lp ro washing the market with liquidity. Could see a something the bank of england did last time, funding for lending scheme. It encourages banks by offering better terms to lend to small and Mediumsize Enterprises which create 80 of jobs here in europe and that staggered scale means the more you land, the better the terms, the better the rate. They may also do with the bank of england do as well which will change the rate. That may make it better. Theres a problem they have right now and this is by no means fixed but they are looking to preserve capital. They have lots of liquidity. Onto the third option. This is where life gets very interesting. Some kind of asset purchase qe for sme. 4 sme effectively, buying bundles of small and mediumsized enterprise loans meaning they can put the money back into the economy. We do not have the system in place allowing them to do then. Securitization programs are not in place for them to do that but governing bodies around the world are very concerned about securitization. We know the reason why. It was that the heart of the last financial crisis. The sliding scale of what could be a series of options for mario draghi today. We have had a month to digest, to plan, to even predict what the ecb would do today. Comesoes it mean when it to market position . How are they position . Like they think the market is going into this short bureau with a view that the euro will go down as a result. We have seen a significant drop in the euro since mario draghi made that announcement. If he disappoints today, you could see a Short Covering rally. That could take us back up to the one 40s. A difficult allen sing act but the suggestion is the market is going in short. I look forward to chatting to you later, a big day today for druggie. Stay tuned. Bloomberg is there for all of the Big Decisions from the central bank today kicking off with the bank of england. The boe does meet today at midday followed by the all important meeting at the ecb. We will bring you the News Conference live and in full at 1 30 p. M. London time. On, bige get moving news coming out of the netherlands. Ing has confirmed they plan to proceed with the sale of the Insurance Unit. Thats the european insurance operations. The plan is to sell more than 50 of its stake of its insurance arm before the start of 2016. It will sell the remaining shares before the end of 2016. Also, they plan to pay a dividend in the second half of this year. Iny plan to pay a dividend the second half of this year. Big news from ing, the Dutch Financial Services firm that is its europeans in Insurance Unit. They have to sell shares as a condition for receiving a government they allowed in 2008. It was not just the european Insurance Unit but the u. S. , malaysia as well. Big news from ing. Further share sales have been a ipoant i peel market market. The amount of announced share sales across the globe this year is an 83 increase on the year ago level. Ing to sell shares in its european insurance arm. G7 leaders warning russia that they could face another round of sanctions. Hans nichols is in brussels. Good morning. Buthese are yellow lights no firm red lights, warnings from the g7. There was a dinner meeting here in brussels and there was a fair amount of disagreement on what the triggers would be for a third round of sanctions, whether they continue on individuals or you do sec boreal sanctions. At the same time, mr. Putin is heading to paris later tomorrow for conversations with several leaders and he accused the u. S. Of being the aggressive one. Country with the most Aggressive International policy to protect its interest are the United States. Russia has almost no military but there ared american bases everywhere. Wherever they go, they decide the fate of other people far from their borders. Fascinating interview that he gave with a french station. At times he was quite conciliatory. Forppears to be looking ways to leverage the temperature on this. He will have that opportunity in paris on friday. He has meetings planned with Francois Hollande, angela merkel, and david cameron. The white house wanted to isolate mr. Putin yet he has these series of meetings and he can have his case on what he plans to do in ukraine. Will obama and putin have their own separate meeting or not . The official line from the white house is that no meeting has been planned. Numerousl be opportunities for asides. Do they have a brief conversation that turns into something substantiative . They will be in normandy on friday. Plenty of opportunity. Is how long the conversation will be. Doesnt qualify as a meeting . President obama will find the opportunity to pull Vladimir Putin aside and potentially warn him. The interesting thing here, mark, the status quo of Russian Troops and crimea seems to be accepted. There will be no additional action to push them out of crimea. All the talk of triggers are what russia does in the future in Eastern Ukraine. Hans nichols, International Correspondent in brussels today. More consolidation in the u. S. Telecom space. Sprint is closing in on a deal for tmobile. Here with more is European Business correspondent caroline hyde. If it goes ahead, it will be a win for the owner of tmobile, Deutsche Telekom. 31 billion for the fourth biggest mobile player in the u. S. , the third and fourth biggest players joining. This is already one of the most active areas for m a already. Consolidation has been rife. We understand the deal could be done by next month. The offer is 40 per share. Deutsche telekom is the major owner of tmobile u. S. They would get 16 of the combined company. Big,will also get a nice hefty chunk of cash and sprint stock. E still have bits to finetune we have management and termination fees. They want 3 billion whereas the sprint owner, softbank in japan, they only want to pay out about 1 billion. The is all about convincing u. S. Regulators that by combining number three and number four, you are not reducing competition but you are elevating it because you would give far more of a yeast to come up against the likes of at t and verizon, two key players in the u. S. Japaneseonaire behind softbank, the owner of sprint in the u. S. , has really been trying to regulate on this. We need to be a bigger player in so far investors seem to agree. The share prices in sprint went up. Riseven saw tmobile u. S. After hours as well. Investors think you need to scale to compete. The only asset that Deutsche Telekom could be cashing in on. You were just talking about ing having a share sale. A joint venture with the u. K. Business could be looking to share sales again a. The french have said when they come back from vacation theyll disappear in august. They will be reanalyzing more to do with this. To him numerous times. He has been given instructions. Prepare. Give us a business case. We either want to be selling a stake or selling shares in its entirety. Give us a way to go because they need to compete particularly if companiesher u. K. Such as vodafone offering mobile, cable all rolled into one. How will he be able to compete . Could begin ai new area today by taking the deposit rate a low zero for the first time. Our next guest says some form of new cut and nonconventional measures at the minimum to avoid inequity selloff. Time for todays company news. One of the biggest medical device makers, medtronic, evaluating the takeover of a londonbased company according to feed people familiar with the matter. They could be moving their tax domicile overseas. They have a market value of about 9. 5 billion pounds. Medtronics preparations for a bit are at an early stage and no offer is imminent. To introduce a smart son later this week according to a person with knowledge of the matter. Amazon is holding an event june 18 for the product unveiling. Appleartphone will rival and plunge the Largest Online retailer deeper into the competitive mobile device network. The chief executive says there is no oversupply in the asian hotel market. He spoke exclusively to bloomberg. We have been growing in the pacific opening one hotel every five days for the last five years. We will continue doing it that way. Welcome back to countdown. Barton. Our next guest says if mario draghi does not take action today they could be in for a bit of a direction. What is the minimum to avoid this equity correction from draghi today . The minimum is a cut to the refi rate. If things were to deteriorate again, i dont see that happening for quite a long time. If it deteriorates, that is still an option on the table. That will be key today as much as the announcement itself about rate cuts. The need to loosen the credit channels, measures as you say might he announced to do that. Will that work . Dotheyre going to have to something because clearly lending is not working in parts of the eurozone. Places like spain and italy, the cost of borrowing is still very high. Money is not getting through the channel. I think what we have to get through first is the asset quality review going on in the ecb. Banks are not lending as much as they potentially could do because they quite dont know what the outcome of that will be yet. I thought they were raising money ahead of it. Doingnks are probably what is necessary ahead of that but until they get the final out, they would be relocked then. Regardless of the uncertainty the review of banks, you still like the european Banking Sector . I do. Is the sector most geared towards the economic recovery. These are companies that do well in gdp starts to rise because they are linked in with all parts of the economy. We are anticipating european gdp to continue rising. A slow growth environment. In some areas of europe, they are stumbling and other parts are doing quite well. Its rising quite nicely. It would have been a year ago. Things are improving a bit. How do you differentiate between the banks . I have investments in some of the peripheral markets and playing on the domestic recovery there. I have some of the investment banks because those evaluations are pricing in an awful lot of bad news. Companies like Credit Suisse are in the portfolio. But i dont have are some of the Northern European and particularly scandinavian banks. Theyve done really well in the past. Theyve done all the right wings. They have very Strong Capital ratios. It does not impede its ability to do business. I sell the position about two or three weeks ago when it was clear this was coming. It was 1. 1 billion and then the talk was a 4 billion its gone through the roof. Other sanctions have put on the company as well. Will they be precluded from doing business in the u. S. Dollar trades . Etc. Until we get clarity with the level of the fine is and the measures being taken against bnp, kevin, stay there. Kevin lily, head of european equities at old mutual global investors. Welcome back. Im mark barton. Ig news crossing the terminal ing, Dutch Financial Services, selling shares of its european insurance operation. This is almost as interesting as the fact that they will stop paying a dividend in the second. Alf of this year opening up they cannot buy companies unless they pay dividends. It is lowly valued. It is attractive in my portfolio for instance. There are another group that will be able to invest once they start hanging dividend. What is your assessment of the ipo market when they came a week or so ago and they said it was the peak of the london market . Is that being a little too melodramatic or not . Theres an awful lot of ipo business and i have a pile of ipo research at my desk at the moment. Like how do you choose and all of these . Participate in ipos. I tend to find them too expensive. They are all being priced off as the most expensive stocks in the marketplace. Of companiesoup with high multiples in a similar industry and you price it off of those which is what i would do. I never find them attract is. M a. Os, can we take advantage of that as investors or is it too difficult to try and play the m a market . If you are playing the market just for that, you are buying particularly expensive companies. Theres a bit of a premium built in already because it is anticipated. Thats a difficult one. Its interesting whats going on with the ipo market. And more of them coming and did they have been priced high. But thanks for joining us. Us, thanks for joining kevin. Welcome back. I am mark barton. This is the latest fx check. We have a look at the euro against the dollar. In may, the euro has fallen about 2. 3 against the dollar on expectations the ecb will cut rates today. We will announce various measures from them. Goldman sachs still sees todays meeting of the catalyst for a drop in the euro. Theyre looking at a cut of about 20 basis points would cause, to use their words, a tumble into his press conference. A surprise in the briefing made, and more rate tight ends larger than expected credit easing like a fouryear lending program. Therwise known as the ltr oh a downward revision towards 2016. It says Goldman Sachs says all or some of those measures if announced after the rate announcement it could push the euro down by at least another two big figures. Against the dollar today. As i said, the ecb is expected to deliver rate cuts today. The benchmark refi rate and the deposit rate. According to two european , keepingank officials borrowing costs low. So hear from the bank of england today. Divided between governor mark carneys view that the rates are still needed and those leaning towards higher borrowing costs. We kick off with the boe at midday followed by the ecb. We will bring you these live and 130 p. M. London time. French president Francois Hollande says the potential fine against bnp could hit European Bank stability. 10 billion to settle there is a that violation of trade sanctions. He wants to raise the issue when he meets with u. S. President barack obama tonight in paris. Getting some breaking earnings intreau. I contr that is a big brand suffering from a slowdown in the demand for cognac in china. Nothing is crossing the bloomberg terminal as of yet, but the Company Already announced a warning on its profits in april. They said they expected a profit on its core basis to plunge between 35 40 this year after reporting sales fell more than analysts had estimated. Still nothing crossing the bloomberg terminal from remy. Its all about china. As i said, spending on existing dropping causing inres to fall to about 24 recent times. Just crossing the bloomberg terminal. Remy says they can return to profitable, steady growth in the future. Full year operating profit down by 28. 8 , bang in line with estimates. 38. 8 . The bloomberg estimate was for 140. The environment remains uncertain. This is the fiscal year 2014 and 25th team. Confident and targeting organic growth in the sales and current operating profit in 2014 and 25th in as well. Organic growth they say will happen within sales and operating profit this year. We have seen a big drop in operating profit, 38. 8 . Because of the government cracked down on extravagant is one of the spirits largest markets. Intreau just passing over the bloomberg terminal. Lets take a look at what my next guest calls Mario Draghis die mama. Weakening the currency on which it is sold. Europe,me now from founder and chief executive officer at merk investments. Axl, good morning. Thank you for joining us today. You say draghi is incapable of weakening the euro. Why . For 20 or 40. He has been able to do it for months. Structurally it is very difficult. They may counter that with another today. TheBanking System is mechanism and banks are not lending. The bank still need to repair the balance sheets. Its actually doing just fine. Does willout what he change that. These negative rates i dont think will do much either because there are no deposits left that will be affected. Nothing will budge and you say the euro could possibly rise. What could draghi do to persuade the markets about something bigger could be in the offering Inflation Expectations deteriorate . He has been trying that but i do not think they are ready for the prime time. Program, that is something for them to cook up. That will take a while especially with the way the bank system is struck during here. He can raise his finger and threaten the market with more action, but you talk about the surprises earlier. How much more should we be surprised . Theyone expect him to be straw. We will focus on new programs and forget to talk down the euro to aggressively. Eurou have been buying the and recommending. How high do you think the euro could go . I think it can even reach 150. I think by the end of the year it might be there. This is why last month he spent a great deal of time talking down the euro. He will have to change his tune talking more about the other opportunities. Once he strike same tad more of an optimistic tone, the market will call his bluff. Outside of the euro, currencies are your specialty. What are you buying right now . What do you favor right now . We have been getting increasingly optimistic about the Australian Dollar. It has been beaten up quite a bit relative to the new zealand dollar. We are far more up a mystic on china. Starting with the glass halfempty with positive news, theres a lot of correction that needs to be done on the upside. The Australian Dollar is really the strongest position. We do play the euro as well because we think a lot of people dont dare to buy the euro and conversely, weakening the euro in the path of least resistance should be up in any term. How does the pound fit into your thinking . Its being overshadowed i probably what will happen at the ecb. Many are projecting that the boe could raise rates in 2014. What do you think about the trade weighted basis trading near a fiveyear high . People were caught offguard that carney was less dovish and a lot of that was driven by the tailwinds the british economy is following. Now in the short term with pricedative sentiment in, we think the euro is the better bed. If youre looking for a volatility play, this is the path that is going to have fewer surprises. In the medium term, yes, the sterling will do well. We are much less optimistic down other people are. In the low volatility environment, it is not just. Urrencies but stocks and bonds our emergingmarket currencies . Till the place to invest the rupee is up this year by 4 . Or coulden its gain there be more to come from the likes of india and indonesia which have seen the strongest emergingmarket currency this year against the dollar . All emerging markets are created equal. We are very optimistic on india. Will reflect positively on the rupee. On the advanced asian economies, we are optimistic. We do not think there is low volatility and the week emerging countries will suffer the most with the exception of india where true reform is going to happen. You think the low volatility will persist . Likes it will not. It will end very ugly, i think. What happens in any volatility environment, they are attracting investors that have no business being there. They will be out in a heartbeat. We are very pessimistic on the stock market. Even a crash is quite likely as they realize its not as safe as people think it is. If you do not use leverage, currencies are not that volatile. Thats a big called. 10 , 20 . Thats quite easily possible. There is so much complacency. Everything will be built perfectly and we think there are a lot of challenges out there. If we could get good Economic Data through the globe, they will not have the smooth ride anymore. Come back and talk to us. Thanks for joining us today. Founder and chief Investment Officer at merk investments. Coming up, is china heading for a hard landing . Highlighting the challenges for policymakers. Time for todays company news. Ing has confirmed an ip as selling more than 50 of its stake in the insurance stock before the start of 2016. It will then sell the remainder before 2017. We will speak to the vice chairman on and countdown. Sprint nearing an agreement on the price and structure of an acquisition is tmobile u. S. According to people familiar with the matter. It could value tmobile at 31 Million Dollars leaving its parent company, Deutsche Telekom, with a 16 stake in the company. Pay 105hkline will million to settle claims by over 40 american states it illegally thma and asked mum as antidepressant drugs. It encourages use of the drug is not indicated on their label. Welcome back. This is countdown. 646 a. M. In london. Theres been lots of talk about a potential hard landing. Now we are getting some data that suggests it may already be happening in harder hit areas of the mainland. David inglis joins us now with the details from hong kong. What did you find them . Is one city in the northern part of china, 4. 3 Million People in the province, the second largest coal mining region in china. If you look at what happened here, this is not just a hard landing but a clash crash landing. Near zero. M 12 to a lot of investment went in. Now you have a lot of these assets sitting idle. Down nine percent end up the same time, fixed Asset Investments up 25 which suggests you have the local government in this area trying to spend and invest their way out of it. Collecting back on easter looting industries. Whats more important here is what the city actually represents. When you look at china, its important to consider these governments. If these same local governments swallowed up a lot of debt, when you have growth rates crash like to zero, you can expect some of the debt will go unpaid. Just this area having these problems. Certainly not. If you want to generalize these things. These provinces, for example, in the northern part our home to these giants hell mills. We all know that we have a slowdown. Keep in mind that aging is trying to scale back on a lot of these industries that i just mentioned. Too much assets doing too little things. These are basically all in that part. 2. 9 growth First Quarter and one of the poorest provinces, it basically encircles beijing like a doughnut. And then the one we talked about, 5. 5 . It is part of the pain of slowing down. Some areas are getting hit harder than others. Inglis, good chat. Coming up, andy murray dug deep to pull out a win in his quarterfinal match in the french open. An easy game to come in the semi final. Hes only playing the eighttime winner. Welcome back. I mark barton. On any given day, between 300 and 700 devices and applications and services not monitoring just his body than his surroundings as well. He works as an ambassador to the future and hes dedicated the last several years of his life to tracking and analyzing is data. Ive been called the worlds most connected human. Collecting information about my life, my body, and my environment for about five years so i can review and access. If you take application sensors, 700 are between 300 and monitoring me between any given moment. Drasticallyhange over the last five years. Ive lost 120 pounds and i can more is really focus on tasks. Thate a recipe to make happen. Every morning and night i capture my Blood Pressure and my blood oxygen. Im doing really good. I met 9810. Im at 98 . This allows me to keep track of my posture. The thing i really like about the house is most of the technology is not visible. I have my nest thermostat over here. Durings track of motion the day. I have very small little cameras. This is an outdoor weather station. I have a sensor in your that monitors the air quality, ambient, how bright, sound. This is my office. I started when i was 14 collecting clippings or anything i could find that represented my life. This is where my data exoskeleton recharges. Like any good i. T. Department, i have an infrastructure cause a, probably about 60 terabytes of data back up in here. The most interesting thing is most humans are attached to at least 100 the systems and they dont think about it when they swipe their credit card or they walk in some place. Im not that different and most people. I just talk about my relationship. I see the world differently, just like the kid from the sixth sense that saw dead people. I now see information everywhere. It is by a miracle but someone just turned out. Im very much alive. A technology exoskeleton. Thats quite frightening. You where all of them all day and you recharge them in a special booth overnight. Caroline is here. Lets take it away. In the guardian, a new range of legos. Lego idea is the website where if you are an enthusiast you can vote for new collections. There are too many male legos and too much of a stereotype. Wearing pink. We will have an astronomer, a paleontologist with a dinosaur skeleton, and a chemist. Im scared of the ones that work in a Nuclear Power station. World cup referees struggling to keep cool had in brazil according to a sports scientist. And humiditys 30 is 72 and it could badly affect vision, judgment, as well as the players. 30 degrees and they have not seen anything yet. I can never concentrate in the studios. Andy murray in the french open semi final. Who is he playing . Champion, rafe nadal. Ll r if he wins this one, it will be nine. No one has ever won nine grand slams in one tournament. Few splitight be a allegiances. I think hes going to win. We need more monitoring of view. Countdown continues in the next hour. Lots more on the ecb meeting. Draghis time to deliver. The e. C. B. May be the first Major Central Bank to take rates negative. Were live in frankfurt. A warning for russia. G7 leaders are prepared to impose further sanctions over the ukraine. The Wireless Company set to be near a takeover of t mobile in the u. S. Plans to sell shares. Well speak to the groups vice chairman first here on countdown. Welcome to countdown. Im mark barton. Im anna edwards. I. N. G. Has confirmed an i. P. O. It will sell more than a 50 stake for its insurance arm n. N. Joining us is the n. N. Vice chairman. Thank you very much for coming to talk to us. I know there is some European Commission involvement in the decision to sell and the time of the sale. Remind us why this part of your business is being sold. This is part of good morning to you. This is part of a commission that the management arm for more than 50 by the end of 2015. Obviously then there is some lack of flexibility on the timing. Is this a good time to be doing i. P. O. Given that some companies have face a difficult trading environment immediately after the i. P. O. In recent weeks. The markets have done quite well. We are ready. It is important we announce our intention. Wear group which combines insurance and Asset Management activities in 18 markets. Cashgeneral right businesses. We are ready. Our strategy is focused on increasing cash and capital regeneration. We want to deliver excellent products and services to our commerce. What are you going to do with the proceeds . It is going to be invested by i. N. G. Group. What is the earliest that shares could be lifted . You said half will be lifted by before the start of 2016. You said possibly it could kick off this year. When is the earliest time for a listing . We have this morning issued our intention to float in this process, one can expect in a couple months that the company will be float. Obviously this is all dependent on Market Conditions at the point and time. Extent us an idea at the of your international intentions. Tell us about how global your business can be . Our Company Currently has operations in europe and japan. We are present in 18 markets with insurance in Asset Management businesses. We have these businesses. We have built them by ourselves. With our own hands over the decades. So we think we are well positioned to focus our strategy on general right cash and to have nice pockets of growth in areas like europe and japan live where you can see the First Quarter that our growth progress was pretty good. Not toould be rude of me ask you about your expectations at the meeting. Many are expecting rate cuts. Nonconventional measures. Youre a big executive in what will soon be lists as a big insurance fund. What do you want from the e. C. B. Today . Lets wait like the rest of the Financial Community on the deliberation later today. Thanks for joining us. Ard friese on the phone from amsterdam. Speaking of the e. C. B. , our top story of course, what will mario draghi deliver . The e. C. B. May be the First Central Bank to take rates negative today. Last week they hinted today a cut may be on the cards. Comfortable with acting next time. But before we want to see the staff projections that will come out in the early june. Bloombergs guy johnson in frankfurt where draghi will be delivering the Central Banks latest decision. Guy, what is he expected to decide . Well, it is expected to do something. We just heard from that mario draghi. The question is what . It is kind of a sliding scale for you. Most people are anticipating they will get a rate cut or rate cuts. This could be the first Major Central Bank that will cut the deposit rate into negative territory. This is the first Major Central Bank to do it. An experiment to be brutally honest. They are likely to cutette fractionally. It could upset the money market. The next step could be they announce some longterm lpro. This is to ltro. Banks are short of liquidity. The e. C. B. Has already fixed that. Alfunding for lending scheme out of the bank of england will target s. M. E. s. They are impaired. Capital impaired now. Funding for lending schemes could be on the cards here. They could lower the risk weight for the banks. That would help. Certainly did in the united kingdom. Then get on the the big one. Could we see some kind of q. E. Here today . Les of loans from the banks to s. M. E. s so they can reuse that noun do more loans. That is something that is controversial. Global regulators are down on securitization. They have been launching a campaign of late to get the rules change to allow the securitization of s. M. E. Loans. The infrastructure is not ready. He may talk about that today. Are we going to get all of that . The market is short euros expecting we will get an overdeliver from the e. C. B. As a result of what were going to hear today. If they dont deliver, do we get towards 140 . Back to you . Thank you very much. It is not just the bank of eng listened. Not just the e. C. B. We kick off with the bank of england midday. Well bring you the Conference Live at 1 30 london time. It could face another round of sanctions but they didnt agree on what that might trigger or what might trigger them. Hans nichols joins us from brussels. Hi, hans. Good morning. When we talk about the e. C. B. , we talk about the sliding scale. Sanctions are different. They are binary. There is a warning coming out of the meeting last night. Were in brussels, not sochi because it is the gmp7, not the g8. The continued presence of crimea should trigger a third round. What russia is knowing Eastern Ukraine now. That is meddling. There is no agreement whether or not that would trigger sanctions. If russia makes further incursions into Eastern Ukraine, that could trigger sanctions, but that is a big if. There appears to be Division Within the g7. Vladimir putin is expert at it. Listen to what he told a television station who he thought the real aggressor was. The country with the most Aggressive International policy to protect its interests is the United States. Russia has almost no military presence abroad, but there are american bases everywhere. Wherever they go, they decide the fate of other people, far from their borders. Mr. Putin has a full dance card when gets to paris tomorrow. Has meetings with hollande, angela merkel. Still unclear if he will have a sitdown with president obama. They have a chance to meet with each other m we just dont know how long and how formal a meeting would be. More consolidation in the u. S. Telecom space. Sprint is closing in on a deal with tmp mobile u. S. T mobile u. S. It could be quite a windfall if these two manage to pair up. Because it would be 31 billion. Thats how much we understand sprint would be willing to pay up for tmp mobile u. S. Third t mobile u. S. A key Company Nation re. Deutsche telekom owns most of t mobile u. S. Over 60 . The deal would look like 40 per share. Youd be getting half in cash. Deutsche ck and telekom, it would still have 15 of the combined company in total. Not just solely dependent on urope. They still have to work out what the termination fees would be. Sprint wants it to be relatively small. Tmobile wants it to be more on the 3 billion side of things. Really what they want to see is size here. This is where really bigger is better. You need money to throw all of us want more data on our smart phones. We have to have better wifi and internet services. Internet in particular. The billionaire behind softbank in japan, which owns the majority of sprint in the United States is trying to reregulate it. Saying this wont reduce competition. It will give us the scale we need to take on at t and verizon, the two biggest players. Deutsche could california cash in on e. E. Yeah. The mobile business, they own. They had planned to sell shares in january this year. They put them on ice. We could see them reinveigh rated or resuscitated. I love this orange saying. After we come back from holiday. They are examining their options. A chief executive has been told, look at the next six months, we have to get to us with our Business Plan of what our options are. It might be selling a stake or some of their shares. The head of oranges European Businesses. Thanks. Mario draghi is seen taking action later on today. What would it take to spur him to implement quantitative easing . That conversation is after the break. Welcome to countdown. Im mark barton. Im anna edwards. 7 15 this morning. Will draghi implement quantitative easing . Well discuss with bank of americas fixed income strategist. You dont think were going to see quantitative easing today . No. A number of other people suggested that is going to be the case. How close to quantitative easing will we get . Will he signal it is going to come in the future . I dont know if he is going to signal that it is going to come. What will he callette because he might not call it quantitative easing. If were listening to him speak, what watch words do we need to look out for . They are no longer going sterilize the do anything that they can to shore up the eurozone to try to get inflation to pick up a bit and get activity at more robust levels. Whatever they actually do today, they also need to show willingness to do more in the future if it is needed. We have seen the euro come from 140 to 136. If we dont see the rate cuts that were strongly hintsed at last time. We see priffrell spreads continuing to peripheral spreads continuing to tighten. If he does, spreads tighten further . Yeah. How low do we go . Because of conditions elsewhere as well, it is just a search for yield, the first returns on vems going on globally. Yields everywhere are still very low. Therefore, as long as people believe that the e. C. B. May well in due course engage in large scale purchases and if there are more problems ahead, they will step in as they said they have done and be a buyer of last resorts. Any yield pickup were sort of getting toward the pecressed vels where it makes more pecressed levels. It is becoming pretty thin. If they keep q. E. On the table, to go into ng reverse. It is inflation that is a target. They need to get it closer to 2 . They have projections at the moment that suggest that inflation is going to rise from 0. 5 from where we are at the moment. What do you think new numbers from the e. C. B. Will tell us about the thinking . It is always a bit of smoke and mirrors in this. They are bound to have forecasts showing inflation gradually picking up towards target, clearly if they did anything else they would spook investors in no uncertain fashion. They have to respect the confidence. It is going to have an impact. There has to be an acknowledgment that inflation is going to be lower. This years forecast is down a bit. They will still be heading back towards target for sure. Will they work this bringing down the euro and boosting credit . It is a difficult balance to strike. On one hand you are deliberately trying weaken the currency. It depends on the time scale. Exactly. If they are too successful on making people think this is going to have a strong impact, clearly the currency might strengthen on the confidence that it puts into the market. It is a difficult balance to strike. In the background of all of this in a way that is difference perhaps for the fed and the bank of england, for example, they are fighting against all of these structural falmts in the eurozone. Do you think the b. N. P. Allegations in the u. S. That could soon come the fore and b. N. P. Could be hit with. Hollande is going to bring this up with president obama. Something he feels that is a bit of a threat to the financial markets. We know the background of these Central Banks are working to shore up the underlying strength of the Banking System. When you look at borrowing rates, ultimately what the e. C. B. Is trying to address here, they are still much higher peripheral countries partly because lenders are in more strange circumstances but also because the Banking System is not fully prepared. A rate setting meeting does take place today. It is becoming interesting, isnt snippet it goes from strength to strength. We think rate hikes are coming at some point in the next year. Not here. John, thank you very much. Thank you for joining us from bank of america. Coming up, more takeover talk. Onsidering a takeover of a londonbased company. What taxes might have to do with it. Welcome back to countdown. Im anna edwards. I am mark barton. Lets talk more about the i. N. G. European insurance i. P. O. Hy, what, how, when . This is probably going over the summer. Maybe the end of june. Or the first week of july. If they raise what we reported they raise 2 billion euros and they are looking at as much as that, it could be a smaller deal, this would then be the largest i. P. O. This year. We see a lot of banks coming in and i. N. G. Listed their Insurance Unit and the shares are up around 18 . Away from i. P. O. News. M a news. I know you have been following medtronix story. Tell us why they might want to buy . Seeing medical Device Companies banding together to eal with the ram ram fick vings the u. S. Healthcare act. They dont want to bring it in for tax reasons. Maybe on a smaller skile well see another play out of astra. They are probably going to deal with the issue. An inversion deal. Great question. This is what we heard they might o. Push their structure into smith and enough you in the u. K. They will be paying the u. K. Rate of tax. It is a huge advantage for them. We saw, for instance, another healthcare deal last year, they did the same thing. They had an inversion deal. They went to ireland for the stack structure and now are paying less taxes. Thank you very much. Well hear more about that story as it develops. It is 7 26 here in london. Is business getting in the way of politics . Well talk more about barack obama and president hollande as they get ready to meet. Stay with countdown. Welcome back. Im mark barton. This is your latest fx check. It would be wrong of me not to look at the euro against the dollar today. There are expectations we will see concrete measures today to bring down euro and boost liquidity and try to get credit rumbling within the eurozone. Goldman sachs released an interesting note saying it sees todays meeting as a catalyst for a drop in the euro and a larger than expected rate and it would cause a tumble in the euro dollar rate and a dovish surprise could come in the form of more rate guidance, larger than expects longterm loans like a fouryear what is known as ltro and an assetbacked Securities Program and also a revision to their c. P. I. Consumer price forecast. That current forecast says that c. P. I. Will reach the 2 level at the end of that here. Those are Goldman Sachs thoughts. Today the euro is barely changed at 136 against the dollar. These are the Bloomberg Top headlines this hour. The e. C. B. Is expected to discuss rate cuts today. Plans for draghi to cut the benchmark refinancing rate and the deposit trirate. Depository rate. Well hear from the bank of england today. The Monetary Policy committee is divided. Low rates are still needed. Stay tuned bloomberg for latest decisions from the central bank. We kick off with the bank of england at midday followed by the e. C. B. And well bring you Mario Draghis News Conference live and in full at 1 30 london time. The potential u. S. Sign against b. N. P. Could hit bank stable. They want 10 billion for transfering funds in violation of trade sanctions. President hollande plans to raise the issue when he meets with president obama tonight in paris. Lets stick with that subject. Big businesses including b. N. P. Paribas, total, General Electric are in the heart of a chill between the relationship between the u. S. And france. They traveled to russia for the forum despite u. S. Pressure not to attend. Were joined by the professor at the American University of paris. Thank you very much for joining us. Give us your assessment then on how strained relationships are at the moment. We have given a number of examples from the Business World where those tensions have flared up. How bad are tensions between france and the u. S. . I would say the Biggest Issue between the two right now in the military standpoint is the sale warship to ious russia. This came a few years ago where e french selling an advanced amphibious warship that could have been used in the russiageorgia war, for example. Even though russians promised this will be deployed in the far east, chances are it could be redeployed in the black sea in the near future. The u. S. Has attempted to pressure the french not to go on with the sale and also even the u. S. Congress has asked nato to pay france for the warships in order to prevent them from being delivered to russia. Were we have seen tensions stained between the two countries in the past, professor, in particular, im thinking over the iraq war. Give us some Historical Context then on the level of tension that were seeing across the atlantic here . The iraq war was the biggest statement by france and germany too against u. S. Intervention in iraq, but even the russia georgia war where before that france and germany combined the opposed a membership action plan for georgia, i think that upset the americans, who wanted for the most part a membership action plan and that was another Franco German combination that combined against american interests in expanding nato. Another issue is the fact that europe in general was about 30 dependent on russian gas and oil and that makes the europeans less more reluctant to engage in sanctions against russia in the current crimean crisis. President obama of course as we said is going to be meeting with president hollande. He is also going to be attending the 70year commemoration events surrounding 70 years since the dday landings during the second world war. Of course president putin will be there as well. A lot of speculation and talk about whether there will be some informal conversation between the two. Are you expecting any progress in the relations between these two countries as a result of these meetings . Well, i would hope the irony is at least temporary suspended russia from the g7 but yet they all want to meet with putin anyway. They arate meetings could see what putin said to each one of them and then determine what kind of policy can be determined. Putin made positive steps that he wants to meet with president obama. Putin is going to be suffering from these sanctions. There is already 50 billion to 70 billion in capital flight. There are already moves to expand Energy Production in the u. S. So they can meet european demand. Europe can look to countries like qatar, libya, algeria for natural gas in order to get itself less dependent on russian gas. Putin has to come up with something in order to prevent his economy from further collapsing and further it is already going into a slight downfall and chances are that it will continue on if sanctions become stronger. Of course professor, the 70year commemorations around dday, they take us back to a time where russia and the u. S. Were on the same side. Do you think these events commemorating 70 years since dday will do anything to decrease or increase tensions around ukraine . Does that long lens of history help at all . It is quite ironic, because both sides on the ukraine, the ukraines are calling the russians fascists and the russians are calling the ukrainian fascists. If you go back to that time period, where the nazis entered the ukraine, they first welcomed them and then once the nazis took control, they said they wanted to nazis out and joined forces with the soviets. That narrative has to be looked at carefully. There are groups which have at least historic tice fascism or at least claim that. Now on the other hand, russia has been seen as an oppressor in the ukraine and therefore this is fueling ukrainian demands for independence and a greater independence for moscow. Now on the relationship between france and the United States, that was roosevelt never trusted de gaulle. He thoukt he could be a dictator and thought he could be a dictator and did not want to liberate paris as soon as de gaulle did. If you go back to history, you can bring up more dirt that will cause more frigs. Great to hear from you today. The professor at the American University of paris. Coming up, our next guest is questioning renzis growth outlook. Well discuss more after the break. In essence, i think there is a lack of recognition in how much the bank has already done on the way we pay people and reward people. More needs to be done. I would say that banks will be shy to the major progress they make. Ermonti s sergio speaking yesterday. Welcome back to countdown. Im anna edwards. Im mark barton. 7 42 in london. Our next guest questions the outlook for the Economic Growth platform. Joining us to discuss the Italian Economy and the e. C. B. Decision today, always good to talk to you. Thank you for joining us. Thank you, mark. If i transported you today into Mario Draghis body, what would you do if you had Carte Blanche to do whatever you wanted . What would you do as draghi . That is actually wow. Youre putting me on the spot here. Well, first of all, what he is going to do what happened the markets are going to expect are certainly going to be very, very different things. Draghi is a very experienced poker player and he is not going to show his hand literally until the last minute and he still may have some ace up his sleeve. I think he is going to bring Interest Rates down to 10 basis points and implement a. B. S. Purchases in the form of ltro. The important thing is he or is he not going to start charging banks negative Interest Rates because that is really going to be question that everybody is asking themselves because at the end of the day, do people want to pay for the privilege of having cash . That is the question that mario draghi is asking himself. I have had a guest on already today that said it doesnt matter anyway. It is only about 29 billion parts to the e. C. B. Anyway. On the big scale of things, if that is reinvested, lent to businesses. That is not a huge amount of money. Not as much as the 700 billion which was part of the e. C. B. At the height to have crisis. That is absolutely of the crisis. That is absolutely correct. You take 10 basis points of that, that still comes out to lots of nun the e. C. B. Could use and it sends a signal to the markets. Remember what happened in 2011 where draghi was saying he is going to defend up to a certain am and then one day all of a sudden, he announced whatever it takes. That whatever it takes smufe what really got the investors thinking. That is the reason why the spreads on i stallian government bonds went from 400 down to where they are now, well below 160 basis points. The problem really is deprothe. How do you growth. How do you stimulate growth . You can bring a horse to water but you cant force him to drink. There is very high unemployment. He is going to try to come up with new tricks. Unt snt new tricks ultimately new tricks mean ill do whatever it takes . Doesnt that lead to q. E. Ultimately . Isnt that what it is all about . The markets, the bond markets, especially peripheral bond markets, they seem to be pricing in something bigger . Well, i think history really should give us a lesson. Look at what happened in japan after the 1980s and 1990s after their spectacular growth, serious growth, they went through a long period of no growth and low, low Interest Rates. I think draghi is going to take a lot from that playbook and learn from the negative lessons that the japanese had of suffering tremendously. There are a lot of similarities. Both of these economies have aging populations. And very, very strong protection for labor. Things are going to have to change. Ive been saying this for a very long time. The best solution is not going to be an economical solution. It is going to be a political solution and it has to be dictated by the actual countries. Bear in mind one more thing. Mario draghi is chairman of the European Central bank based in germany and germany still has after 90 years, an aversion to inflation. It is in the d. N. A. Of germans, this fear of inflation and they are very, very scared that its ugly head could rear up again in any way, shape or form and they are going to doverpbing to prevents that from hang. To do everything to prevent that from happening. It ultimately has to be a political solution leads me to ask you my question on your Prime Minister there, mr. Renzi. I liked his quote after his success in the European Parliament elections. He said the demolition can now begin. What is your renzi scorecard looking like now . Well, i said this a few months ago and keep repeating it now. Im rooting for him 100 . I hope he buries those darn unions. They are really the most despicable corporative protectionist entities that have really that have stalled any progress in italy. If they simply took a step back and looked at themselves in the mirror and said wow, have we caused this much damage and if they were humble enough to do that and come to the negotiating table in good faith, im not going to go into detailsings but look whats going to happen tomorrow in italy, in rome. All of the big players are going to go on strike. For what . Because they dont want to take a pay cut . Everybody has to tighten their belts. Lead by example. The politicians are going to take a pay cut. Renzi is going a great job. I hope he keeps Going Forward and forward and forward. Demolition team. Lets go. Thank you, mark. Coming up on the program, quantro. E to the european trade. Welcome back. This is countdown. Im mark barton. Im anna edwards. 7 51. Lets get some stocks to watch with joe randall. Thanks for joining us. Remy cointreau reported numbers earlier on today. You said ahead of these numbers everything is about china really. They have been struggling against that crackdown by the Chinese Government on gift giving. What have we heard today that tells us anything new . It is all about china. Nothing to do with europe. All growth is driven by china. I think the problem they are having with this crackdown will iron itself out. It is fairly deep in china. I was in shanghai a couple of weeks ago. They are very highly placed in a lot of shops. I think it will ride out. As soon as they get that right, the stock will carry on and probably go down about 5 . Youre not giving up on tesco despite yesterdays slight aten it was still a negative. There is not a hope for a plus figure any time soon, is there . I think they have some deep structural problems but they are addressing them. They are moving more into the convenience stores. Their sites previously has been pubs. They completely changed theiring. Accept lower margins in the u. K. And this is probably food price inflation. The next few quarters i think will be bad but it represents good value and pays a good dividend. What do you make of all of a lot of iter motivated by tax. We have been covering this story around smith and nephew this morning that medtronix might want to buy it. It looks like this is again about taxes. Is this something that were going to see a lot more of throughout the year . I think the government got their tax policy right in the u. K. They are attracting business into the u. K. And that is good for u. K. P. L. C. Will it attract a load of political issues as we saw with astrazeneca . I think investment in the u. K. Even if it is just for tax reasons will benefit the u. K. I think it will on until someone else reacts and cuts taxes elsewhere. The e. C. B. , the big thing of today. Lets find a new angle. Give me a new angle. His favorite one is if you were mario draghi, what would you do . I would carry on doing exactly as i have. I would talk a lot about doing stuff and not actually follow through. That is dangerous. You so many times with ill do whatever it takes. Three times . It has worked. Central bankers tools really soninlaw their credibility. He does have the credibility. The program to drastically reduce Interest Rates. I think he will do that today. The last rate cut we got from the e. C. B. Was a real surprise, wasnt it . I think were going to have a rate cut today. That wont be a surprise. I think he is going launch some form of q. E. But it is going to be in a typical e. C. B. Fashion. Incredibly complicated. Not actually workable. And never do it. And never do it. Rather than it being black and white, will we get q. E. Or wont we . Might it be a case of we sort of get q. E. . And the markets react in what way to do . I think it will react in a positive way. He is going to come out with a big announcement. And then it wont be needed. Thank you very much for joining us. That will do it for countdown. Next, on the move. Guess who is helming it today . Yes. Ill be back with you in a couple of minutes. See you soon. Welcome. We are in Bloomberg European headquarters. We are focused on mario draghi and his willingness to do what ever it takes. Here with me is guy johnson and hans nichols. It is a Beautiful Day here in frankfurt. A ray ofo draghi be sunshine or will he rain on the parade . He walk the walk . We will find out at lunchtime what the ecb will do. The expectations are incredibly high. Hans nichols is our International Correspondent. We head over to him in brussels. Thank you. We are here where the dinner concluded with a warning for russia. There is no unified stance on what the triggers would be for a third round of sanctions. Today, the topic is the economy and everyone is off to paris to prepare for the anniversary of the normandy invasion. Thank you very much. Thank you to you. That is a geopolitical backdrop and the european markets are opening up. Lets check in with caroline hyde. She has the touchscreen in hand. The details on how the market is performing. All of the eyes are on the European Central bank and the bank of england is going to get the