Transcripts For BLOOMBERG Countdown 20140730

By 1 5 today. Welcome to countdown. I am mark barton joined by one hide. The eu imposed its strictest sanctions on moscow since the iron curtain fell. We are joined by Ryan Chilcote. Lets talk about the shank the sanctions. Eu did it. It will surprise some people. Three is really the eu is going to ban state backed banks in russia from issuing new bonds and stock in europe. The second thing is they will ban some technology for the oil industry that they need for unconventional projects, more sophisticated drilling, deepsea drilling, shale deposits. The export of that material from the European Union is now banned. Get ane are going to arms embargo. The one caveat is that france will still be able to sell its warships to russia as it was hoping to do. These are not retrospective. I think obviously we were expecting these, but when you have 28 countries involved, and they all have their own vested interests, and those interests are vastly greater than the fact thaterest, the this happened, the fact that the shoe has dropped is a big deal and will surprise some people. The russiansl, themselves, what is the reaction amongst the Business Leaders in russia, many who are living here, the oligarchs . I was talking to the head of one of russias biggest banks yesterday. His bank has not been sanctioned. However, the reaction is one of dismay. Even if your bank isnt sanctioned, if you have a large bank in russia, this has consequences. As he was pointing out, that were already shut out of debt markets and not really to borrow at it in the conventional sense. Thisll make it all the more difficult. , there are now additional concerns of, what does this mean for banks and russias corporate clients . Squeezed,nomy gets that puts pressure on these repayility to ability to repay. Russia was just becoming part of the international community, the International Banking scene. Sense was sense was this was turning russia into a pariah. In this game of brinksmanship, if anyone thinks that is going to compel lieutenant come to the table, they are probably mistaken. He might actually going the opposite direction. Pointing out, what is it exactly that the eu and the west want . What would it take . Has been lost, and those lives cant be brought back. He could make it safe. Could contribute to deescalating in the eastern portion. Me was whener for he said, president putin is somebody who is prepared to go off a cliff in this showdown. Is the west prepared to go off a cliff with . There are links to russia. Oil technology to russian upgrade to Companies Like roz left. That could complicate the push. How does this affect the likes of total . A 17 stake in a Company Called nova tech, russias largest independent gas producer. Is part ofreholders putins learned inner circle. He has been sanctioned by the United States. Blacklistng to get a from the European Union today. It might be on that, as well. When we spoke with a few weeks back, he was saying, their biggest problem, not unlike the banks, is getting financing. Novatek, they are hoping to develop in the arctic. That costs a lot of money. It is very capital intensive. The banks have been reluctant to lend. The chinese as to ifis a question the chinese could step in. Here for ature company like total is, russia is already the fourthlargest supplier of oil and gas, and the plan was that it could become the biggest supplier by the end of the decade. This is a big complication. Thanks a lot. Interesting, coming from the company. Airbus, the playmaker, but also helicopters, defense and space. Firsthalf sales up 16 . That is 27 billion euros. Earnings before interest and tax, up 10 , 1. 8 billion euros. 0 neo, newly a32 equipped a320 they said, we are on track for the fourth order. Airbus,concern with which has been very obvious in the past few days, has been the a380. No one wants to buy this plane. They havent had any new Airline Customer in two years. They have to terminate an order a380s. The Japanese Airline says, it is the weaker yen. This is taking a lot to persuade people to get this doubledecker delivered earlier. Deliver 30 for 2015. No one wants them quite as quickly. They want to tailor them. They want these to be the flagship planes. They are enormous. That takes some time. It takes at least nine months to equip the cabin in that way. It takes time to lure in the customers. In their statement, it says, the first half of 2014 is about keeping our Main Development and serious programs on track and implementing our restructuring plans. Improvement in revenue, profitability. 350 theews on the good news on the a350. It is on track for the third quarter, which leads you to believe that it is on track to be delivered sometime this year. High hope for that plane. Theyre pursuing a disposal of that particular option, but overall, confirming targets. Everyone is going to sigh a little bit of relief. Under one hours time, barclays will announce its latest figures. It will Mark Anthony Jenkins second anniversary of company. Manus cranny is here. Everyone is happy to see me. I thought you looked edgy. I rather liked it. Where are we with the fx probe . I think it is still going to not tough one to settle, just for barclays, for ubs, for citi. The feeling that im getting is they are all desperate to settle. Barclays in terms of the ethics rankings has about 11 of the market. They are up there. Theyre one of the top players in Foreign Exchange. For jenkins is about reputation. I think its about the numbers that he delivers. Bank, one of the top type top five players in the United States. It is going to be less. Probably a fall of about 20 . Going to have we catharsis inside Investment Banking . This is the question for jenkins. Youve got Credit Suisse pulling out of commodities. You have barclays coming out of commodities. These are the facets at plate with the stock is down 20 . Fixed income is expected to be twice as bad for barclays as it was for everybody else. You are right, mark. Litigation is the absolute egg, that elephant a big, bad elephant in the room. And you have the private Trading Platform being open to all of these highfrequency traders. It took me a while to get out. [laughter] it was exposed. We have seen trading follow the cliff in the last couple of weeks with barclays. It has. Everybody is getting embroiled not. Thatd over way in the car various sources are saying there have been requests for information from a number of other providers. When you look at what jenkins has done, he is cutting 7000 2016,total of 19,000 by and when you look at rbss numbers, what it is for the british breaking side a banking side is impairment is going to fall. Litigation this is staggering litigation could be 4 billion over the next four years, but in the worst case, that could be up. Thatlion pounds could be up to 7 billion pounds. News before i asphyxiate Interest Rates will rise in the United Kingdom. Not too soon. You hope. Speculation is Interest Rates will rise in the United Kingdom. Debate is when in the First Quarter that happens. One of the biggest mortgage lenders in the United Kingdom is barclays. Lets see whether there is any new news on payment protection. They havent made any additional provision for that. Ouple of other things there is a move by the new york has come up with the plan, according to sources, to put moderate regulators, monitors i found that to be a tricky word. People, right . People in the banks on Deutsche Bank and barclays. Is a fairly aggressive step. Gratid. Na non it is that enough to live on a Trading Floor with compliance and a glass box. Then compliance comes to every morning, and you deliver your reports on a weekly basis. Reporting. Dit you report to you credit officers. Now you might have an independent monitor sitting right next to. You know what . Does that make for Better Business or health or Financial Markets . A catharsis for the end of the world as we know it . Who gets the coffee, the traitor or the regulator . I would say the regulator. We shall see. Still to come, soweto by sanctions, not likely. Our next guest says Vladimir Putin will dig in his heels as the eu in flex its toughest measures yet on moscow. Spiritgoing to speak to strategies managing director after the break. Welcome to countdown. Hours of debate eu agreed to impose its strictest sanctions on russia, the u. S. Follow suit with the measures targeting three stateowned banks. President obama says moscow has only itself to blame. Is once againia isolating itself from the international community, setting back decades of genuine progress. It doesnt have to come to this. You didnt have to come to this. For more, managing director at spiro sovereign strategy, nicholas spiro. Thank you for coming. What do you make of what transpired . I think this is a moment of truth for the west. Clearly, the litmus test, the over tot of the west face down russia was whether the europeans would get tough. What weve seen over the past seven or eight days or so is a seachange in the european sanctions regime. It has gone from practically toothless to very meaningful. Sanctionse mh 17 regime. How much do you think there are two separate issues. It is very meaningful as far as the europeans are concerned, but this is the moment of truth in the sense that now we are going to finally see whether the infliction of more severe is, inc pain on russia fact, going to make president clinton change course. President putin change course. Economic pain what do you mean . It is forecast to grow, albeit by a small amount this year. What is economic pain from the sanctions . The economic pain, for the months or so, russia has been flirting with recession. In the sense that weve already seen the central bank almost 300 basis points or so over the last three months, at a time when most of us were actually hoping for rate drops. Recession . I think it is fairly clear that the latest round of sanctions is going to take russia into a technical recession. Give us your hunch and how do you reckon put in response utin responds . I do not believe he has a plan b. If he has a plan b, it is to enforce plan a. He is on the warpath. Po is also on the warp. Mr. Poroshenko is also on the warpath. , as ryanhat the west knows, the west still seem to be underestimating the degree to which the ukrainian conflict is the biggest challenge to russia. Challenge toest russias dominance of the former soviet bloc, and he cant let ukraine go. He will not let ukraine go. From atoo much invested jubal a geopolitical standpoint as well as a domestic political standpoint. Talk to us about sovereign strategy. Iro is about it do you say, get out of russian bombs . Obviously, they are not going to be able to raise capital in european markets, but if you are a domestic bondholder, do you get out of that . , we have certainly not seen in terms of the bond market, particularly the local currency bond market, which is the more sensitive we have not seen a flight out. We have seen bond auctions that are canceled. It is important to say that despite the fact russia will ,lmost certainly enter certainly slide into recession, this is a country that still has a fairly strong Public Sector balance sheet. The rush of 2014 is not the rush of 1998. It is going to weather this storm. Putin is going to play mario draghi. He will do whatever it takes to ride this economic storm out. Should investors ride this out . They already are. I certainly sense that the dramaticallysing and that the Investment Case for russia now is a very difficult one to make. Neck of spiro sovereign strategy, thank you. Come, the blue bird soars with twitters share price increases by more than one third in afterhours trading. We look at why after the break. Welcome back. Is is countdown sales at twitter doubled less quarter, well ahead of estimates. User growth was also better than expected. It rose nearly 25 . Investors love the news of torture stock up more than 30 percent in afterhours drink water came to the market last november. 26. It soared to 73 in december. It plunged to 47. That was on fears of twitter wasnt growing fast enough to justify the valuation. Have those fears of disaffected . Disaffected . Interestingly, not only are they doubling in terms of sales, but theyve got active members increasing by 24 . You have people looking at their timelines far more regularly, as well. Interestingly, they are diversifying. It is not all about members. It is not all about looking at your timeline. It is all about selling advertising. They made some interesting acquisitions. Im going to be devils advocate. They are still losing money. They are losing more money than they were. I dont understand how you double sales and still lose 145 million. By making acquisitions. Yellens ability to they are forecasting a profit in 2017. Maybe you will be a member then. Maybe. Time for time running out for argentina. We will discuss that next. Welcome back. I am mark barton. This is your fx check. The dollar against the ruble the dollar is rising for the fifth consecutive day. That is extending the rubles decline since the beginning of july 2 roughly 46 to four and 6 of it is the worst performer of 24 emergingmarket currencies tracked by bloomberg. That is a twoday chart of one analyst we spoke to said sectoral sections will reduce access to external funding markets, putting downward pressure on the ruble, upward pressure on rates and we see a potentially more Significant Impact on growth from the major increase incident in uncertainty. That is now, an analyst at Morgan Stanley. Jacob knell, an analyst at Morgan Stanley. We are at 35. 85. Forexdian of our forecasters say it is not going to budge much. The 36. 64. You have dividend payments. The ruble is doing better than maybe it might at the beginning of next month. It all really depends on, as you are indicating, the central bank and how aggressive the central bank is. They rose rates last week to artificially prop up the currency. The central bank has been aggressive thus far. And eu are states putting more pressure on russias economy to get positive president Vladimir Putin to back down on ukraine. They have increased sanctions by targeting banking and Defense Industries a Presiden Obama now. Says this is not a new cold war. It is lookingsays into a report that israeli shells killed 20 people at a you when school within the gaza run school within the gaza humanitarian zone. Industrial output has fallen by the most since the 2011 earthquake. The drop highlights the widening impact of the april sales tax increase. Output dropped 3. 3 , more than twice the immediate forecast. Argentine officials finally sat down with the investors they call vultures they called vultures. No resolution as of yet, as argentina seeks to reverse a vert the fault on its sovereign debt. Hans nichols joins us. Will there be a resolution . How close are we to a resolution on this . Good morning. It depends on if you think a Frank Exchange of views and concerns, which in diplomatic speak means that the two sides were yelling at each other, get you any closer. There is no resolution according to the mediator. This is after talks went late into thenight and night and it is a complicated story. We want to get you into the technicality. 95r argentina defaulted on billion 12 years ago, 93 of its bondholders agreed to take . 30 on the dollar in restructuring. The rest held out, including paul singers elliott management. He demanded to be paid the full amount. In his case, 1. 6 billion. Hasourt after court, singer one, all the way up to the United States supreme court. Treatment clause and argentina bonds means it couldnt be one set of bondholders and not the other. That is the crux of argentinas argument, that if it is singer for the one 6 billion, they will be on the hook for maybe 120 billion. In june, argentina tried to pay some of the money. They tried to make an Interest Payment to the restructured group. The u. S. Judge said no, you have to pay everyone or no one. Bank of new york mellon, argentinas clearing bank, to send the cash back. That beginning this 30day grace time, the judge said, to negotiate with creditors. Imagine, as you can is not a popular man in argentina. That is where we are right now. We will see where it goes. Thanks a lot. We will speak to a little bit later. Hans nichols live in berlin. The German Chemicals and drugs group, just crossing the bloomberg terminal. It seems as if secondquarter net income 953 million euros. Analysts estimated 1. 04. Ryan likes to focus on this metric, earnings before interest and taxes. 1. 5 2 billion. The estimate was 1. 6 5 billion. Company, of course, focuses not only on chemicals, not only plastics, but he centrally, the focus is to push into pharmaceuticals and Consumer Health care. Aspirin, by the way, accounts for 1 of its sales. It still sees its earnings rising this year. A number of headlines crossing the terminal. We will come back to bayer. The big news is, it has missed earnings both on a net income front an ebit of ebitda front. Dont miss our interview later on the pulse. Lets shift gears and we are going to get back to geocode geopolitics. It wont agree to a nearterm truce until israel lifts its economic embargo put more than 12,200 palestinians, most of them civilians, have been killed in three weeks of fighting. 55 israelis have died. Elliott gotkine is live in tel aviv. Give us the latest. More than 1200 palestinians rather than 12,000, but the fighting still continues in gaza. Both sides are sticking to their positions. The latest incident, according to a Health Ministry official, tank shells hit a school run by the United Nations in a refugee camp in gaza. 20 people were killed, and more than 50 injured. The Israeli Army Says it is looking into that incidents that incident to find out what happened. It is unlikely to change anything. Says the siege of gaza needs to and to stop fighting. Those are seemingly irreconcilable positions and do not bode well for ceasefire to be reached in the nearterm. The diplomatic pressure may wrap up, but that is unlikely to change anything either. Peru and chile have recalled their ambassadors. Some reports say that israel may in fact try to table a Un Security Council motion to try to bring this conflict to a close. For now, im afraid things continue, and they continue to look bleak. Elliott gotkine, our middle east editor. Now we know what stricter sanctions from the eu look like. How bad can it get for the russian economy . Details after the break. Time for todays company news. The chief executive of Deutsche Bank is seeking to keep truman keep some to foul a criminal case against him. He has denied any wrongdoing. Yorks topnew banking regulator is said to be pressing to put Foreign Exchange monitors in place at Deutsche Bank and the barclays. That is according to a person familiar with the matter. This comes as part of an investigation as to whether traders manipulated benchmark currency rates. Skied deutsche lens secondlargest shareholder has rejected the buyout offer. It said the offer was too low and that it significantly understates the value of the company. Bskyb offered 6. 75 euros a share. Lcome back to countdown i am Caroline Hyde. Sharknado attracted an enthusiastic following online and became a surprise hit. Will premierework the inevitable sequel. It is also the debut of a new Home Theater Technology developed by scifi. We explain. Obviously, there were so many Unanswered Questions to last years sleeper hit sharknado that the Scifi Network decided to release a sequel with this time, they are bringing back rate hot with action not just to your screen but also to your lamps. Perhaps i should explain. Phillips likable, and there are three interesting things about it. Its an led bulb. It can generate any color you want. It has builtin wifi so you can control each bulb from an app on your phone. What do flying sharks have to do with this . The network is taking advantage of the wifi connection to coordinate the lighting in your room to the action occurring in the movie. Cyfys Second Screen app can listen for audio cues and then send instructions to the bold bulbs. Your room may be cast in a blue light when you are on the water but turn a shade of crimson red when somebody gets chopped chomped. Like anything involving sharknado, this is silly. Are actuallyons more interesting than just creating a lighting scheme for tara reid vehicle. Up until now, lights did two things they turned off and on. Smart ande lights colorful, different apps can control them in different ways. Your lights could turn on automatically when you wake up because your fitness to text that you are moving. Playing music, and the lights might set sync up. Now, a tired a starter kit costs around 200. Individual bulbs run about 50. Playing lighting designer doesnt come cheap, but two things are certain the price will come down over time, and there will most definitely be a sharknado 3. Any of you want to know where her reid, career went, she was in sharknado. Or c movie. Ven a b killer rulesiest c, land, and air as thousands of sharks terrorize the waterlogged populist. Return to serious news and back to our top story, russia, the biggest story out there right now the west imposing the strictest sanctions on moscow since the cold war. Joining us from the russian capital is no one other than one of the most knowledgeable guys out there. What do you make of the sanctions we got . We certainly werent expecting to move to stage three ago. Ions couple of weeks everything has changed with the downing of the aircraft and the criticism of moscows reaction after that. We have moved into stage three sanctions, the sanctions that will cause will have a ,egative impact on the economy surely noticeable in the short term. We moved into those sanctions, which is a serious move, but more importantly, it means any subsequent sanctions are going to be in this category and will tighten the screw even more. We are now absolutely waiting to see what will be the reaction from the kremlin. Will it be some sort of appeasement, try to climb back from the sanctions, or will we see a toughening stance from the kremlin, which will exacerbate the situation . What is your hunch . What does president clinton do next putin do next . The first reaction is going to be a tough response of some sort. We are going to hear some tough rhetoric. What we are hoping is we only get tough rhetoric. That there will be no specific somewthrough, perhaps threat to followthrough, maybe opening a window for some negotiations, but we are going to get some tough talk from the kremlin today. What we are hoping is there wont be any serious followthrough. Definitely tough talking. What this through means for Russian Companies thus far. We have the eu sanctions restricting access to state backed banks, European Capital markets. We had the u. S. Put the secondbiggest bank on it sanctions list. Or bans oftrictions some technology to the oil industry. By the open this morning in london, what can we expect . We are definitely going to see a hit in the market, especially on the banks. The currency will come under pressure. We may see the central bank having to intervene aggressively to support the ruble, as it did in early march. The central bank acting today maybe . Perhaps. We saw they had to do that on march 3 as the crimea crisis started up. If there is a hit on the ruble at the opening, i think we will tryingut stepping in and to support it. Looking at the sanctions, there is one category that concerns us, and that is the prohibition on the banks accessing the european markets. Tightens does is it the debt market in russia. It means that the banks will have to turn to the states initially and perhaps later to to substituteets that funding could the bottom line is it is going to make the domestic debt market very tight for everybody. The Big Companies will be first in the queue to access any available credit. There will probably be a very big squeeze on the availability of debt and financing to small and mediumsized enterprises, to individuals, which is likely to hit consumption and slow down spending and investment. Notsanctions as such do collapse the economy. Thead 1. 1 gdp growth in first half. We are going to see a slowdown in the second half of the year. No collapse based on what weve seen this morning. Market, higher funding costs, lower spending, lower investments. The danger is, now that weve moved into this new category, any subsequent sanctions are going to make the situation much worse. Does capital flight continue . The first half was worse than all of last year. Does it get worse from here . Can the stock of capital fleeing can we witness a stock of capital fleeing russia or not . I think capital flights will certainly increase. Capital flight is very sensitive to the ruble exchange rate. Sometimes we get the impression that russia is stuffing cash into suitcase and taking it across the border. That is not what capital flight is. The increase in capital flight in the First Quarter of this year was russians transferring their savings from rubles to dollars or euros, other currencies, specifically because they were afraid of ruble weakness. That is why i mentioned, if there was a hit on the ruble, the central bank will intervene. Further weakness in the ruble will encourage russians to transfer their month and their money into other currencies. That wretches at ratchets up capital flights and causes a Chain Reaction on confidence and economic activity. We are going to see a higher capital flight number in this period. It depends on the response we get from the government and central bank and where sanctions go from here as to whether this is a blip or if we are into a more serious category again. Chris, you are going to be a very busy man today. We appreciate your time. Coming up, the circus can be a lot of fun, but one bank is taking exception to this and calling the circus and moral. Immoral. We will tell you why. Welcome back. Im Caroline Hyde joined by mark barton and Ryan Chilcote. It is the ft headline here tightens screws on russia. A big deal, the sanctions, biggest since the cold war. One thing to say about this article and what has transpired bob dudley said it all at a press conference at 10 30, shortly after they issued the ceo, they said they would they werent sure what this would mean for their business. End of the stark warning to investors. It could in fact affect investment. Said sometimes events occur that are under tenant and change the course of history. This was one such event. Talking about the downing of mh 17. Im going to take it in the letter direction. This is an the times. Bank turned down a circus group, saying they were immoral. They had problems with the morality of the circus because a this particular outfit, burlesque dancer on stilts. They were looking into funding a business account to be able to grant work for charity. They wanted to work with terminally ill children. Isont know if this particularly the circus of uncertainty, but certainly, they are unable to get lending from santander. Pretty amazing that the bank manager has so much control. If it wasnt so serious, it would actually be laughable, but according to the everyday sectors and projects 10 things women have to face everyday. Being mistaken pretty lady. Being called good girl. Dean accused of menstruation when voicing a firm up in. Being asked if a man is available instead. Being asked about childcare plans. Being accused of baby brain, and avoiding wondering how. It is amazing that things havent changed. My mother faced one of those about childcare concerns. Countdown continues. Stay with us. Pressure restrengthen. Russia restrained. Russia is isolating itself from the international community, setting back decades of genuine progress. It doesnt have to come to this. It didnt have to come to this. No sign of the ceasefire would ceasefire. Hamas rolls a lumbar a ceasefire an. Testing times for chief executive anthony jenkins. Barclays results breaking now. Welcome to the countdown. And joined by Caroline Hyde Ryan Chilcote and we are awaiting barclays earnings across the bloomberg terminal. I want to talk about russia. The fx market is opening as we talk. It looks like it is down. Sometimes, it takes a bit of time to settle,. Should we move on to other earnings . Total. Foriss. 1 5 billion. A miss for total. They have a stake in novatek. What are they going to do . One of the big shareholders and the company is sanctioned. It is getting more difficult for companies to borrow money. The project that theyre working on together with novatek in russia, very capital intensive. Said hisf total has single biggest problem in russia is getting financing for that is what other companies are seeing, as well good this is an issue for them. This will be a squeeze, as chris weafer says. Market reaction, pretty muted. We are going into the green when it comes to the russian stock market. A lot of it was priced in. Thecompany that is down is tv capital. They popped up on a u. S. A blacklist. That is going to make it much more difficult for them to borrow abroad. Should we get to barclays and come back and talk about the sanctions, what it means for europe and business . Adjusted pretax 3. 34 9drops 7 to billion. The first half, pretax profit, billioimate was. 3. 6 2 billion. Provisions,pi payment protection provisions, 900 Million Pounds. This time last year, payment protection and barclays, 1. 3 5 billion. It has come down. That is nearly one billion pounds. The phone is still ringing. Im still getting calls that i ppi. On ppi i claim on net profit at 1. 3 billion pounds. Cutting costs, isnt he . He has cut costs quite aggressively. 700,000 additional jobs were cut earlier in the spring. The target is to cut jobs by a total of 19,000 by 2016. When it comes to your return on equity, this is slipping in the first half. That comes in at 11 . The ceo says the headcount is the lowest level since 2007. When you ask people to leave, and then there is holding up on to talent. One of the great issues with barclays in the United States of america, on wall street rather beenanywhere else, has human capital. 2014 will be a year of transition. That is the understatement of 2014. Adjusted operating expenses have fallen by 9 . Profits return on equity is also slipping. Says, we continue to make progress in terms of reducing costs. About e im waiting for the other number. Bankrsthalf investment pretax profit, 1. 6 million. Im not sure what the we will come back to the numbers. This is the twoyear anniversary of anthony jenkins. He is trying to improve the culture, and at the same time, he is fighting regulatory probes from all sides. How is he doing . Well with honor and intent. Time the man turns around, there is another what are those of moles that pop up . Waccamaw. Hackamole. Mismarketing, misrepresenting in the United States to clients and ongoing discussions with the fda and european regulators in regards to Foreign Exchange. Answerwill give you an whether it is the profits he made, the number of transactions you made in barclays is one of the top four players in the Foreign Exchange markets. It has been hurt. We are seeing Investment Banking revenue coming down 18 . Net income down 45 and these numbers. Clearly, we were expecting about a 20 drop in Investment Banking revenue, but that is still far worse than the u. S. Competitors, where they saw revenues about down down about 9 . Clearly, there are concerns about their highfrequency trading within the dark pools, their private trading. It has heard volume within the dark trading pool, hasnt it . Yeah, there are volumes have plunged, and some people are speculating that they may have to close. At the end of the day, it will come down to Investment Banking. Investment banking is 35 of net revenue. Youre not allowed to call it bar cap anymore. Produces 35 of net revenue within barclays, other what in other words, investment bank. Isnt equities more and more important to the bank . That is the story everybody wants you to believe. Debt underwriting, equity underwriting has been stalled warts within Credit Suisse numbers and ubs numbers. We know transaction numbers are down. Client activity is down. Volatility is down. You are bored to death talking about the fema run the table. It would be interesting to see how the retail element does. Banknted to reorient the to do more straight up thinking. Retail is about 17 of net revenue. It is what they do in europe. How has he done . He raised bonuses. He decried dividends. He is reducing headcounts. Im using polite words. Im trying to be as gracious as possible. The man paid out bonuses, slashing jobs. He was ceo for the past two years. Lx is a dark pool under the auspices of the ceo. To theit comes back reach and stretch of what a ceos responsibility is in terms of knowing what is going on within your institution. If that is most of the one of your star products, surely you would have an ongoing discussion with your staff. Areitigation costs overshadowing things, arent they . Absolutely. , whetheraway is Investment Banking dropped by 18 or 20 , it is going to be splitting hairs over the issue. Investment banking is down much more dramatically at barclays compared to its key institutional peers in the United States of america. There is the sum total it total, it is facing civil complaints in the u. S. Over the gold fix. How many problems are there . There fromes out Sanford Bernstein r that on a good case, in the best case looking atou are approximately 4 billion pounds worth of litigation costs. That could ramp up to 7 billion pounds. 7. Ura says between 4nging billion and 7 billion pounds to the question you have to ask yourself, if you are looking at 7 billion pounds worth of litigation costs over the next number of years, and by the way, it is hard to put a number on it that seems to be the rbs, ok,arnstorming topline numbers and it is a bit difficult to understand the size and skill of litigation and the impact that might have. Youre quite right to bring peoples attention to that. Ppi misselling 900 Million Pounds. Who in any litigation affects the banks of financial strength financial strengths. For example, ubs just broke through. The buffer of capital that you need it every time you have another investigation how many investigations have there been . They have cleaned up libor. Theyve just made another 90 billion pounds. You have Foreign Exchange. I dont have any insight. How do you work out a foreignexchange fund . On ubs, which is nowhere near the same scale of participant in the Foreign Exchange market as barclays, and i am seeing numbers for ubs of anywhere from between 3 billion, 4 billion, 5 billion, 9 billion. If that is ubs, which is nowhere r the scale of barclays it makes you think. Thank you for joining us. Weve got some big stories breaking pitch im going to do persia. It is europes secondbiggest carmaker. It has reported soft a betterthanexpected profits. Cost cuts, new models hoping that return. Operating income before onetime gains and charges amounting to 477 million euros. Of 100a loss last year million. That beat the average estimate. This company has been profitable since 2011. It has teamed up with a chinese to expand outside of europe where demand is gradually recovering. It is recovering from a two decade low. It is trying to and losses, which have stemmed from relying on a such a lighted car market in europe. It has taken a number of measures to do that. On operating income basis, it is profitable. Breaking news. Astrazeneca, which pfizer was going to be buying, is going to be buying a spanish respiratory franchise. The wrights were initially worth 175 million. Astros in the cup being up to payings astrazeneca up to get this. We arent going to see any impact in 2014, but it will start paying out dividends in 2016. A bit of m a. This is astrazeneca. To deter pfizer from coming back in 36 months. Theyre going to have assets further into respiratory medicines. We will break down the dark pools of money after the break. Welcome back to countdown. We have been looking at bank earnings. Today, it is barclays. Earnings. Into those gareth ryan joins us live. So many issues that barclays has been facing. The numbers, Investment Banking dragging down firsthalf profit by some 7 . How worried are you about a slowdown in Investment Banking at barclays . Good morning. I would have to agree with many of manuss comments about barclays earnings in general. We got some interesting numbers on the headline, revenue taking a bit of a hit. Net profit taking a bit of a hit for the first half of the year. A point i would make about earnings overall, banks and the current climate, weve got the earnings reports themselves, and then weve got the second element, and that is news and updates on settlements and litigation proceedings both in europe and in the u. S. In the current climate, i think that is equally as important, if not more important, than the earnings. Drilling into some of those new updated provisions, a 900 million the a 900 Million Pounds charge. The loan insurance, the young number is 900 million more than expected . For prettyproblem much everybody in the u. K. Retail banking business. It is a big number, a surprise for many who have been following rbs, andwith barclays, other u. K. Banks involved in selling these types of products to retail customers. We like to think that is a legacy issue. In the current stage of proceedings. Ppi and all of these other to the can start to move side of the stage. That is what jenkins is doing at barclays. Manus made some good points about that. What is the worstcase scenario . Manus was giving a few numbers, between four and 7 billion, how much it might have to put aside for litigation. Nomura has a 7 billion figure in a worstcase scenario. Have you got a figure . How bad could it get . That is the thing. Toss a coin in the air. When we move from one settlement, all of a sudden another settlement comes out of the bushes. With barclays, going back to 2011, we have libor ticking things off kicking things off. Some of us may have been fooled into thinking that was a oneoff item, but since then, we have happened up a can of i dont want to use the phrase can of worms, but weve opened up other portions of their business that have come under scrutiny. Fixing, is, the gold another example, albeit on a smaller scale. Like ann doesnt sound exceptionally large morgan when you compare it to what jpmorgan has been dealing with. Us,anus isnt sitting with and i know he would ask this question where are we in the Investment Banking cycle . Where are we right now talking about Global Investment banks . About howthat tell us wellplaced barclays is, which is heavily reliant on Investment Banking . That is a good question. The last time i came on your show, i was talking about Wealth Management. The great thing about wealth , theement as a business point i would make to these banks that are trying to cut their expenses, it doesnt require significant amounts of capital on an ongoing basis. That is why Wealth Management should be a focus not just for barclays and these u. K. Banks, the european banks as a whole. Ubs should be a symbol of light. That is one of the areas of barclays should be focusing on. Move away from areas that are high risk and require lots of capital on an ongoing basis. That is what mr. Jenkins should be focusing on. Thanks for chatting with us. 7 21 in london. Still to come, the bluebird sores. Twitters share price rises by more than one third in afterhours trading. We are going to look at why after the break. Welcome back. I am mark barton. Sales of twitter more than doubling last quarter. Growth at the microblogging site a better than expected in the three months through june. Rose nearly 25 . Investors loving the news. This is the stats i love. Because of world cup, specific products twitter created, there views on andion off twitter during the world cup match between brazil and germany. Thrashed. En they were the result in germany game when germany thrashed result. The world came alight during that game. Is almost as many people as there are in the world. Did you tweet during the game . I didnt. I was on holiday. You were asleep at that point. [laughter] it is fascinating they are luring more people to come onto twitter. People on twitter are looking at their timelines far more. We are starting to see a rampup up in membership. They are also diversifying. They are getting away from relying on just the membership. They are buying up a company that is all about distributing mobile. Ablets, your they are spending 100 million on another company that does not that does that sort of thing. Russian companies hidden sections, what are we seeing . Vtb, down about 3 . Watch out for it today. As the west tightens the screws on moscow, we get the view of one russian businessman based in britain. That is coming up next. Welcome back. There is only one currency we are watching today. Dollarruble, the ruble weakening against the dollar for the fifth consecutive day. That is extending its to klein since the beginning of july to roughly 5 . It is the worst performer among 24 emergingmarket currencies tracked by bloomberg. I liked the comment from Morgan Stanley sectoral sanctions will reduce access to external funding markets, putting downward pressure on the ruble, upward pressure on rates. We see a potentially more Significant Impact on growth from a major increase in uncertainty. The dollar rising against the ruble, 35. 76, but the analysts say it is going to stay around these levels through the end of this year. The median forecast from fx forecasters say the double the dollarruble will be at the end of this year. These are the Bloomberg Top headlines. United states and the European Union are putting more pressure tosias economy ticket get president Vladimir Putin to back down on ukraine. Increased sanctions by targeting banking, energy, and Defense Industries. President obama says this isnt a new cold war. Is lookingmy says it into a report that israeli shells killed 20 people at a you u. N. School. More than 50 others have been injured. Ruledtack came as hamas out a truce. Japanese industrial output has fallen the most since the earthquake in 2011. The drop highlights the impact of the sales tax increase. Argentine officials finally sat down with the investors they called vultures in new york last night. Discussions led by the courtappointed mediator went late. Or was no there was no resolution. Our International Correspondent hans nichols joins us from berlin with the details. Are we close to a resolution or not . It depends on how you read the statement from the mediator. That is, there was a Frank Exchange of views and concerns. Frank exchange of views typically means people are yelling at each other. Resolution. I havent decided if they are going to me today. It is a complicated story. It begins after argentina defaulted on 95 billion 12 years ago. 93 of its bondholders agreed to take about . 30 on the dollar in restructuring. The rest held out, including hedgedholsinger fundholsinger. He has demanded to be paid in full. Case, 1. 6 billion. In court after court, singer has one. Won. A clause in argentinas bonds said it couldnt pay one set of bondholders without the other. It is the crux of the argument from argentina. If they pay this 1. 5 billion dollars, they may be they may be on the hook for 120 billion. That gets us to june of this year. Argentina tried to pay some of the money. They tried to patent holders to make an Interest Payment to the restructured group. The u. S. Judge said, no, you have to pay everyone or no one. A bank of new york mellon, argentinas clearing bank, to send the cash back. Periodgan a 30day grace before default. Judge, you can imagine he is not a popular man in argentina. Thanks a lot. To a look at russian life in london grant forgive us for that cliche. The cofounder of hedonism wines joins us. He has lived here in london ever since his selfimposed exile. The case, he says, was politically motivated. Those who were charged in russia were acquitted. He has a unique view and perspective on the effect of sanctions and what it is doing with russians that live here on the thames. Thank you for joining us. I know you dont move in the same circles of Vladimir Putin s inner circle of Vladimir Putins inner circle. Nonetheless, lots of wealthy russians like your wine store. What are you seeing . Are russians concerned about these sanctions . Are they getting out of london . Good morning. Shop ithat our dont think they have a lot of links to government. It is commerce men, businessman. Businessmen. They dont think sanctions will do something. Sanctionsnt take seriously. We did lose ukrainian customers. I hope that we have not lost them forever. You have just as many russian customers as you had before . Customers,he 10 12 . Now it is the same share. You havent seen any drop off . So the russians arent afraid of coming to london. People arent worried about the sanctions. People who work for the government, yes. Many of dont know them. Do you think russians wont move their money out of london . That is a criticism of the government here, that they have been vocally clamped down on russian buyers of property. Do you think that should change . Try to save money in london, to five property and invest in new business. A lot of russian restaurateurs are looking for buildings. More russians are coming to london. People believe in the legal decisions. Court if russia tried to extradite them the u. K. Refused that extradition. [indiscernible] any friends and family you might have in russia, are they worried about what is happening . Are they concerned about socalled sanctions coming from the eu and United States . How much will this affect russian lifestyles in russia . Now, the sanctions dont work at all. It is just words. Not a big deal. In russia, the tv propaganda is very hard now. It is like the 1930s. Brainwashing. It is george orwellstyle brainwashing. An example ofe us what that is like when you say it is brainwashing . 88 of the people are sure t the Ukrainian Army fire the missiles. Think they are in the wrong. They think it is a fascist junta that killed the people. Channels, all the channels are controlled by government. Russians. W how is russia going to respond to these sanctions . Are they going to change anything . The whole idea of sanctions is po get president clinton to a lot of ukraine. O you see that happening . Sanctions dont work at all. Russia is separated from the rest of the world. If nato starts operations in the if they start the real operation you are not going to be a very popular guy moscow. Yes, i know. My point of view is not popular. The ukrainian crisis divides the opposition, as well. Some people support hu jintao putin now. On a lighter note, your business is fascinating. 700,000 7600 wines. 98,000 pounds. Tell us what is selling and what is in selling right now. Now, what is popular is hites because it is quite hot. Wine [indiscernible] have you tasted a bottle of that one . There are three bottles in the world. Two. Ve for one of the bottles, we already have an invoice to pay. Who are the big spenders . By nationality. Americans, chinese, brazilians, nigerians, russians, ukrainians. More than half of our customers are british. A little bird told me that Caroline Hyde was seen in one of your shops recently. I do love hedonism. It is very decked out. You have the gramophone, the music playing. It has a good five. Vibe. We have 600 wines below 30 pounds. Ive been looking at your tshirt. What does it say . It means freedom or death. They tried to fight against the communists in the 1980s, but that was. Ive gotten three or four messages since we began speaking from various russians in russia, all happy to see your tshirt and your hairstyle. Youre getting rid of the mullet. It is still there a little bit. Yes. We will have to leave it there. Thank you for coming in. Good luck with the business. A famous entrepreneur in russia and cofounder of hedonism wines. Acquitted. S 130 coming up, total results came out a little bit earlier. More on that. Stay with us. Time for todays company news. Total is preparing a companywide plan to cut costs after secondquarter profit fell 12 . The company says it is too early to assess russias stronger sanctions. Mainb the companys firsthalf sales were up 7 . Internetled by paid tv and interactive offerings as advertisers have touted online video. Deutschlands secondlargest shareholder has rejected bskybs buyout offer. It said the offer was too low and had significantly understated the value of the company. These can be offered 6. 75 offers a share. Lcome to countdown plenty of earnings breaking. Itv. Ts start with the chief executive has been speaking. All of the toxins Liberty Global bought that stake in itv is this going to, be a prelude to a full offer . He says, we are not selling off any parts of the business. Interesting though. Analysts think there might be a deal. Citigroup increased their outlook on itv recently, saying there is more chance they will be acquired in the mediumterm. Liberty global, of course, run has taken over numerous media groups in the u. K. They say Liberty Global is planting a flag in the ground for a potential acquisition of itv. Interestingly, could there be a tax incentive . Itv, u. K. Listed. In version. It could be another thing that would intrigue them. Overall, the numbers are looking good. Revenue up 7 . A lot of good news from the world cup. And they were broadcasting much of the world cup. Video on demand is big. People love their shows, whether it is x factor or downton abbey. I have never watched an episode. Nor have i. I watched it back in the days. I think they have a new series coming up quite soon. They keep telling everybody off. A miss. In this. Billion. Ons was 3. 25 interesting to watch them because they have an awful lot of russia exposure. Peugot beat and made some money. Andtill making a net loss will do so for a while longer, but it is profitable. The first time in a few years. That is an interesting one to watch. Ofuxna fell because russian concerns. Quickly, the russian stock market is up now. A lot of the stuff priced in. Lookout for itv shares. It could go up 2 overall. Stricter sanctions and a rate decision. Some things to watch out for. More after the break. Welcome back. 7 53 in london and we are minutes away from the start of todays European Equity session sanctions,ns or no it seems to be priced and fluid futures up on both sides of the atlantic. Of noisell hear a lot from politicians in europe about how theyve been more serious this time, but they are calculated. The french are allowed to deliver on one of their warship orders. They can still deliver on an existing order. They havent put any sanctions on the gas sector. Developedtions were to minimize the impact on the european economy. The big one is some of the russian banks wont be able to do equity funding, debt funding in europe. Weafer had an interesting point but it makes a tighter market at home. A lot of noise, but are they that serious . Yesterday, the yield curve inverted in russia, which means that the yield on the 5year note actually rose higher than the yield on the 10 year bond, which means you are not going to borrow to invest. Longterm borrowing is more expensive. That is quite significant. Greece, it used to happen to. Many debate what companies will start doing. Russian companies have been raising less money already. 4 billion raising money abroad. That is less than 1 5 come to what they did last year. If you look back, Investment Banking fees from russian ipos may not have been huge. I think there was a lot of hope i remember one banker telling me that geographically speaking, russia was the cities the single biggest pipeline for them in london, in terms of inbound ipos. That has vanished. Presumably, if you are looking forward these sanctions are slow burning sanctions. If you are going to order a warship, you plan that over the next five, 10, 15 years. You dont turn around and december and say, france, are you available . That is not how it works. It is going to take a while for them to take effect. The sanctions may not even exist at that point. 25 seconds on the fed. Youve only got this meeting in septembers meeting ahead of october, when qe ends. What happens next . Winelldone pit we will see a minute for five minutes away from the start of todays European Equity session. Futures are indicating stocks will rise here and in the u. S. Corporates the big story. Watch out for those shares at the open. See you nice and early tomorrow. And it is decision day and hardly anyone is talking out of oath of a new statute. Is talking about it. A new statute. Manus cranny and hans nichols. They did it and they made their move against russia. What does it mean for companies . We will scour the market. Profits fall by 7 and it keeps on coming. Payment protection and insurance. Verytment banking is the division they are trying to wean the bank off of. It is over and the fees are up. Thank you. We look at argentina and the prospects for default. The argentinian officials and joe fulcher funds. That is what they are calling them. Is a is progress and there meeting with no resolution. Over to you. Thank you. We are looking at futures down marginally. What will the Market Impact be . Does it stay isolated. I will bring you that. Lets go to the touchscreen. What are they focusing on