Transcripts For BLOOMBERG Countdown 20140812

It shifts its focus to wealthy welcome to countdown, im mark clients in the u. K. Rbs is cutting back investment barton joined by manus cranny banking operations and focusing on domestic consumers. And caroline hyde. A russian convoy is on the way to ukraine tonight. After the Company Received the worlds biggest night bailout. The vehicle is part of are you humanitarian effort, not a military operation. Ryan chilcote joins us with more. The global rights to the worlds only available in hailed this is a curious strategy. Insulin. That comes less than seven weeks after the drug one regulatory the way to the approval in the u. S. Southeast of ukraine. s second deal in that at thissay point humanitarian aid cant months. Wait. Situation in the southeast of the country is so tragic. They should get there this the drug loses its patent protection next year. Evening. Is concern that the the question is, what happens next echoed international bull market is headed for a committee for the red cross says reversal. That there is going to be an investment chief International Humanitarian aid effort without any military officer at avian private banking. Always good to see you. Convoys. What is russia going to do when they get their . Will they wait for other countries to join in . You think the impact of the various sources of tension will there are some practical Details Remain limited heard why is that . That still have to be worked out. This was something that was very economy could discussed yesterday between contract this week. President obama, president poroshenko of ukraine. Economic limited i think the devil is in the impact from tensions . Details. First of all, what we look at the german numbers, the orders could be a real interesting last week were seeing a lot of watershed moment where this turns into a diplomatic effort volatility on the industrial with the russians on board, or numbers. We could inspect expect some this could be a complete disaster and the beginning of an payback out of that. Intervention. Interventions,t it is doing pretty well as far as i know, even for july. We are also expecting sanctions actually, we could put we should not overstate this, because if we cut off all the russian exports german exports to russia, it will only a block on energy being deduct a 10th of a percent to transported via the ukraine from russia to the eu. European gdp. Ukrainian Prime Minister made at the same time, u. S. And europe are moving up. Comments last week. We saw Natural Gas Prices in western europe jump as a result youre pretty correlated. Of it. Failing,s the u. S. Is i think it was perhaps more of a eat than something that he we should not expect the european economy to capsize. That the ukraine actually intends to do. We got some clarification yesterday from members of if we look at equity markets, government and the head of they have all had corrections. That we will talk to later this americans have not had anywhere near the level of correction. Morning. Actually, what ukraine could do do think theres when the parliament dallas today, they will discuss the sanctions and it will be just more to come or is this a good one of the options they can look catharsis . At. Toy could effectively refuse this is a good catharsis for sure because we are in the middle of the summer lull. Transit russian gas through it is a volume vacuum. Ukraine. Even for the people that are so third of western europes worried, there are some hedges to consider. And half from russia it makes more sense to be long equity in emerging markets. We always see substitution of that comes through ukraine. Effects. With ukrainians said yesterday sanctions lead to substitution is what they might do is and adaptation in emerging effectively refuse to transit markets and emerging markets may benefit from this. The gas themselves. Of the eu has to go to the we could see china or taiwan benefiting. Russian border themselves and collect it. It means eu will have to pay more money. Thered be some financial now the moment of disgrace is more in Eastern Europe. Arrangement with the eu pays for if you look at it, the proof is the gas on the russian border in the pudding because of job through ukraine into western europe. The physical flow of gas from politics. Russia into western europe into asia hasy markets in the eu changes not at all. Fared pretty well. Theyre one of the best theonly difference would be performance. Will they continue to fare well if we see an increase in counterpart is that the russians rates in the United States. Engage with and who picks up the tab where. They had a moment of disgrace in january. If Natural Gas Prices were crews in other of disgrace or arise, that is a material issue something wobbles in the for the markets. We dont even know that yet. Currency picture . Why they going down this so far, the current see road, ryan . Is it to raise the voice in pictures pretty stable. Were seeing a lot of volatility terms of saying look, this is a. N turkey power that we potentially have, both politically and overall, the Political Risk in emerging markets is a positive economically, or is that the factor. Reason . I think that is part of the vector of privatization. Reason. It is certainly a way to get the russianss attention. It is a vector of change, a new not only does western europe agenda. We are starting from a new page. The could india. Need the gas to heat our homes,nd i dont know about you guys this is something that is positive. It is really counterbalancing all this big cube just geopolitical clout that we have but these are the all over europe, essentially. Largely 20 how the clients at the moment . What is her appetite so far this of the u. K. Gas comes from russia. In the easternes year . What are the biggest concerns . Do they want to be on this market . I think they are not worried, per se. Eu, all of their gas comes from russia. Consider they , it may noting is be the best card to play think that is why we saw ukrainians would like to see lower levels. Back down. As soon as ukrainian start , thetening eu gas flows the level of correction that we have seen on the Overall Index is maybe not enough for the client to enter aggressively. Russians have been talking about having another pipeline that would go around ukraine called south stream. Theres not much enormous worry. In a way it is out of solidarity with ukrainians in were huge discussant engages this geopolitical puzzle. As soon as the russians here them, but it is not a major that come with ukrainians say worry or panic. We will be back after the maybe they will close a pipeline. Break. Really one would think it strengthens the russians hand. Thanks, we will see later. From one synergy politics to iraq. The Prime Minister rejected a transition of power. He increased the number of troops and militia in baghdad. Speaking of take speaking on state television, he defied pressure from some fellow shiite political figures and from american president obama to step down. The refusal threatens to expand a threemonth stalemate. That is how militant sunni fighters of the Islamic State seized parts of the country. Continued strikes in the north of iraq. Minutes, the30 German Chemicals consumer maker will report on its secondquarter profits. The question is, the likelihood is they will not replicate what you saw in the First Quarter drama to a prices standout First Quarter, wasnt it . Blowout. Dont laugh like that. I use it. Are you using personal nonbiological . Do you use loctite glue . That shows you the breadth of politics. Chest tos have a war do acquisitions. Well come to that in a moment. 5 billion euros, caroline. What are we going to be most focused on in the numbers and results . First of all come earnings. , i know it is been the bane of your life last week. It will be the bane of my life this morning. They have considerable exposure to ukraine, russia and the near east. That would take toll in home care. A potential for acquisitions. That is for the big focuses. They seem to be looking with much great gusto at mexico and the United States. They seem to be the target. Schwartzkopf. He has a new haircut with that young and youthful look. Emerging markets prices. Right price, strategic fit and availability. Im caroline hyde. We are going to be rejoining chief Investment Officer didier that sounds like a standard is interesting that all of these companies that weve been speaking to recently duret. Even if we do start to see the spectrum of rate rises are looking more personal care. This is where the growth is. They say they will not be making coming in the United States. When do you foresee the end of acquisitions in emerging markets as much. Qe and the beginning of a rate rise in the United States echo how do you position that . Well want to spend a little bit how are you advising your more on how we look. Clients . Want to upgrade what it is we prepare the ground for , male andin your hair that. Be thet step will female. Is that look at what important thing. When should we expect the rate rise. Onwill have a moving target hrstedt has to do, he the horizon. It will probably take a lot of time to go to the next stage of the tightening which is raising is also making divestments. Rates. For the moment it is until june. It is possible that the market as you say, he is rebalancing the company. Will continue to push that forward. The message from stan fisher is he is halfway through his preclear. Planned announcements. He said he would share he was invited at the swedish summit. Nonstrategic is this with about 500 Million Euros in revenue. He said there are still some we will wait to see what are the slack. We really need to analyze the job market. Next moves on that. Sales of 4. 2 billion. I think we still have this issue of how far the u. S. Economy is rush is the fourth biggest able to reduce the longterm market. It is 200,000 employees in unemployment. Headquarters at there are some slack to be expected. How do you justify yields of eight production sites. One billion euros of sales. 2. 6 and 2. 7 in italy. That is no small market. In the u. K. They are 20 basis points lower. Rorsted said the consequences of the economies are completely different levels. In some of these poor what is happening in russia and ukraine will have a negative impact on the business and the free nations continue to fall . I think so. Economy. That was in april. What will he be saying in august bond, youuy a spanish when it has really moved on. Ubs has said the challenging conditions in Eastern Europe are get a real yields. Where their focus is when it you dont get that in germany. Did you see negative rates comes to numbers. Are actually helpful to your hopefully they will not try to case . Cover it up with earnings. This is helpful because it hes very vocal about it in the helps to reduce the debt when past. You have negative yields. You reduce the level of debt. It is good for the overall break its you in 30 balance of government finance. Minutes time. Would you be buying periphery a perfect storm, that is our next guest describes the government bonds in the ecu . Say five years and politics, growth warnings and volatility that is dominating markets. Above yes, not below. We speak to g plus economist looking at high yields for a right ina had a real after the break. The first of august. There is an appeal because again you have to catch a yields. Were catching a level close to 6 heard that is kind of a trigger level for reentering into high yield. I think the main driver of high yield is essentially the default rate. This is the basic root of it. There is global high yield. Fractionesent a small of the highyield universe. Will continueield to play it. This is a correction. At the moment, people will get will have to leave it there. Great to have you with us. 7 26 in london. More on ukraine. Stay with us here on countdown. Time for todays company news. Jet Airways India is closing its Budget Airline units. And a push to make its local operations profitable. The airline will close jet light and jet connect businesses and fly all its planes under a single fullservice brand. No itn character clients herecus to in u. K. Rbs is cutting back Investment Banking operations and focusing on domestic customers after the Company Received the worlds biggest bank bailout. Global rights to worlds only insulin. Inhaled that comes less than seven weeks one Regulatory Approval in the u. S. Product losesg patent protection next year. At 10 00 london time will getting a snapshot of Economic Sentiment in europe when the ew releases its economic survey. Welcome back to countdown. Time for Foreign Exchange check. Now the traders have had their good morning, lena. Breakfast now the question is whether to go short. Of 2014 is 1. 33. Recovery copean with this russian standoff or city has produced what they call not . I think the only certainty we have at this point is that your the pain index. It looks at his editions in the politics will come at a cost of growth headwind in europe. The fact that we have already spot market versus Fund Managers economist slowing overall returns. 100, positive 100. The closer you get to 100 so down. Short is a market. You get closer to plus 100 europe is more vulnerable than most in terms of an external two 100 the longer the market. Shock. When the markets are trading, european loader europe being this is you have extreme positioning. Lower, there are systemic that suggests in theory that you implications. Could ever market that is ready to change direction. Europe is still very much that might be dictated by the negative. You say that we are in a government index. Perfect storm and investors are twoyear lowing a on that reading today out of willing to pay a negative yield germany. Keep an eye on that. To protect the capital for to have a look at yen. When all the world has had your government bonds in enough of risk and enough of germany. Surely that is logical . Using to question the validity geopolitics, they decide they dont need to hold the and. So the second day of weakness of the move. For the dollar yen. I think so. There is a sense here that the that is 1 10 of 1 . Markets have been a bit too you can hardly call it an complacent about the risks that incredible move. Are facing the eurozone. The combination of three things. Of yen, day two. They are diluting the mark. Is is a Bloomberg Top effectiveness. National photo the which is headlines. Iraqi Prime Minister Nouri Almaliki has rejected a detergent best of flows from transition to a new government. Europe or the fact that we have a weaker euro. Increase the presence of troops and militia in the capital of baghdad. Is quite clear residence nominated another man to form a local government. Has sent 280 truck from already that even before the eurozone economies are slowing moscow to deliver humanitarian aid to southeast ukraine. Down. The news agency is said the for theical risk trucks are locate are loaded with food and drinking water. Tosians have been warned not questions the market still have about the implications. How to redirect trade flows. Use the aid mission as a pretext for military action. Lawmakers will vote today on new uncertainty about just measures to punish russia for its support. What effectiveness ecb policy is lawmakers could impose sanctions on russian companies. Really happening is really having. One measure would be to block the flow of russian oil and gas through ukraine to europe. Lets not forget we are in a region with very high unemployment, very high debt levels. We need much greater growth henkel confirmed his forecast of momentum in order to achieve organic sales. They missed estimates. They came in at 3. 3 . Debt scalability in the eurozone. The market is looking for 4. 4 . Were seeing that hot for lets talk to alex weber joins safety. Theyre going into german bonds, me now from unit. Alex, the stock has indicated accepting a negative yield. Lower. They have missed on their what then will force the hand of mario draghi to release quantity eight of easing. , their organic him to go downg this path . I think the markets are earnings number. Calling ecbs bluff here in emerging markets is done quite nicely. Would he think will be the key focus here . I think the forwardlooking terms of the inflation forecast very at there is a structural element is most important. Anchor to this, as well. In second half, the crisis in ukraine, relationships in russia convinced. Ply not and certain elements in the middle east will hurt their profit growth. There is general disbelief out there. The numbers so far this year have exceeded that for your forecast heard they have a little bit of leeway to play with. Bringing inflation up from less than half a percent of the when you look at the three divisions, it is very clearly moment. It is extraordinarily low. It has been quite low for some time. There is a concern, isnt there, the beauty side of the a negative policy feedback mechanism. Business has really missed in terms of the estimates. Havethink that is why they the markets behavior towards been investing as well. Ecb. The ecb is getting its own they bought a number of haircare companies in the u. S. Emerging markets are the places stress test from the market. Qe will push sovereign yields they want to go. In terms of making deals to plug lower. Those gaps, theyre not seeing the multiples which fit their they are already at record lows. Goals. Array of how much that may be where things are looking at. It will be interesting to see what they say then. Lower can they go if qe comes . We will leave it there, alex. Alex webb, Bloomberg News, it is wide open. German industry reported in there are many reasons for that. Unit. About half itss the first one is that the market is saying look, without stronger exports to europe through growth, the only way you can ukraine. Have italian 10 year yields only last year, the Prime Minister threaten to ban the passage of a third of a percentage point oil. Above u. K. Yields, when italy of ukraines energy was in recession in the third quarter, it is through some form Company Joins us for more on the phone from tf. Of financial repression. The fundamentals are not thank you very much for joining us. Justifying in italy. The parliament meets today. Are they going to ban the transit of gas or not . Our understanding of the if you say the road is wide open, then take me forward. Was that say to me about italian intent of the cabinet ministers yields. I am being quite serious. Is that the ban could be imposed those spreads came all the way whichtain companies in. Youre looking at spanish yields even below 10 year treasuries. When is it due to the periphery . Where do the spreads go . Ukrainian government believes has something to do with questions such as key terrorism. Was a practically mean for a key question. If up until now the markets were the and consumers in the European Union . Could bend the wondering about global risk theyre having transit of russian gas by other companies. Questions about global risk are you going to ban gazprom foundations for some time now. From transiting gas through what the fedt of ukraine . Is going to do now the queue is coming literally to and and. Theoretically that is also possible. However, any european country the cycle is coming to an end. Can have contracts with to transit gas that will have an impact on global risk. Now, we also have this highlight through ukraine. Between high velocity of money so one interpretation i read japan may fall into yesterday seemed to suggest that what youre talking about is that in place of ukraine transiting the gas from the recession in the second quarter. Russian border to the eu border on the west side of the country, in have a disjointed global there being a new european environment. We have weak fundamentals coming in. Counterparty that would take the stepping into focus more. We have geopolitics which may gas. Not be escalating, but they are effectively, the europeans would it contains stable situation. End up taking gas from your border with russia. Terms of that mean in more on the u. K. Economy and price accor does that mean that European Companies and european gas prices will as a result go the u. S. Economy next after the up . Break. Well believe it should drive prices higher. That will depend on what agreement could be reached between those companies and russian suppliers. Cost of if the transit is subtracted, the price will remain the same. Forgive me for failing to understand, what is the point if nothing changes . Is Ukrainian Company a lot will not have direct relations with gazprom. Is thatnd point European Companies will become the gas companies. Is a good idea to mess with the transit of eu gas at all . If you think about it, we just heard from the ceo of the Austrian Company that intends to build the last leg of the south stream pipeline. South stream pipeline, the whole idea is it would go around ukraine, avoid your country heard one would think that by threatening the supply of gas, even if it is this sort of more refined approach that you are taking now, that would strengthen the hand of people who said there should be alternate routes. We understand that. The transit is threatened by gazprom. If we look back at 2009, then the transit will stop for no reason. We believe that this situation might be repeated this winter. Earlier it is much better to resolve this in october than to go to january. I guess the first of them is scheduled for the end of this month. Is there any reason to believe that the result of those talks will be more conclusive, that you will actually get a deal than what we have seen thus far . Predict,difficult to because the situation has been quiet in russia so far. We dont see it getting any better. We are open to discussions and we are open to signing commercial a libel deals. So far, there has been no sign that this is possible. And u. K. Eople here welcome back to countdown, have begun turning the heat on. You dont have any supply of im caroline hyde. Economist,s, chief russian gas for ukraine itself now. That has been cut off. How long can the 45 Million People of ukraine go without . Lena, nova. With the launch of the new comenova. Gas pipe lines with a full reverse flow and with the what sort of clarity are we economy we have projected, we going to get from the inflation believe report, as to when we might see in interestrate hike . You pointedst, as would be within the fall of 2014 . Out, we have seen supply interruptions. In a word, can the europeans be the bank of england is sure they will get all the gas they need this winter . Stepping closer towards a consensus about when and interestrate should start if there is a situation with rising. Just what will happen with the gas transit, if the cast of uks productivity puzzle . The gas is not cut off, and if bluntly, either the u. K. Real wages will catch up there is a viable legal solution with the exuberance and the to transit contracts, then we topline gdp figures or vice versa, we will see growth starting to flatline and gas pump100 to the converge with real wages. But we have, the only certainty we have is that what we have now in full. Is not sustainable. Theyre trying to drive the use in your notes that the situation to the same place we clamor, the noise for a raise of to escalate the conflict in rates in the u. K. Will dissipate january. We believe the situation marks exactly because of that. The result. Because wages are not rising. Ukraines energy company. The issue i global thank you for taking the time to speak with us. Basis. Providelab brooks is a key point. Across develop markets, recovery enough digital success to has not kept up with growth. Attract investors . We will discuss that next. Result is this residual slack in labor markets which is been hard to shrug off. Aunderemployment rate hike is further away than the market is placing them at the moment . Whatever happens to it continues to decline. Or some 6 through the end of the year. That poses a big dilemma for the central bank. A key question is what happens to wages. We want to see is a sustainable inflation recovery. One that is not this inflationary. We had last year was moderate. When you look beyond the cpi and the retail prices, it looks like the last hooray when it comes to house inflation. They seem to be. Theyre only some a possibility. We can start to see other areas in the southeast in the north. Other areas of senior inflation of weve seen. We get stronger wages. The condom he can afford stronger wages. Where the not rising . Can we really look at a consumer that is not as chronically dependent it is still very much dependent on two things. Low Mortgage Rates and high homeequity. This is going to evaporate the minute the bank starts to raise interest rates. We have to move it on. Eva from jeep less. Stay with us. Welcome back. Im manus cranny. We have had the results this morning. Secondbiggest bookmaker came in at 27 point 7 million pounds. They are confident that the results will be in line with expectations. George, when you look through these numbers, some of the migrationke play tech , you said theres a little bit of a in these numbers. I think the pressure recently from shareholders has been really on Richard Glenn to provide a Digital Strategy and to increases revenues. The play tech integration has been completed, the digital revenues have actually decreased and digital operating profits have decreased by 87 . Look,n though they said we have achieved all the promises we have made ahead of the world cup tournament. Other competitors have been so many steps ahead of them in terms of the digital game. Customer acquisition is at an alltime high. Bookmakers are seeing operational costs increasing because of that. Theres has been heavy investment in marketing at this point. Is a difficult time for ladbrokes to try and acquire new users. Their denver well in acquisition of new users recently, but digital revenues have been disappointing. The idea before today, george was Richard Glenn to show investors his strategy to turn around the company has been working. Has he done that or not . Play tech are a fantastic company and they did great stuff for william hill. They have got tax software now back to count on. Integrated. That is a good news message from im manus cranny. Ladbrokes. Were checking in on the euro dollar. The big number is 1. 3 333. We 40 pips away from the low of it is up to shareholders to 2014. Decide. They need to sort out the digital product. It has a lot of catching up to do with the competition. Theyre still way behind and digital. If you look at some of mike citi have produced what they william hill. Call the euro pain index. It has dropped to 70 point 33. 40 of the revenues are made up s, that is aevenue the closer you get to 100 deposit of 100 shows you where the market is very long. Big golf. This market is pretty darn what are the tactics he short. Citi would suggest big moves on should be employing now . How do you limit people on to digital . This pain index. Possibly the market could be is a tough question. They will be a Big Marketing oversold. Spend until december. Of theoney coming out yen for the second day in a row. It will be tapering off as we have this in theory reduction people begin to expect that operational costs rise. Theyre making Good Progress in geopolitical tensions in. Kraine and russia in light of spain and australia. Necessity to buy yen in is a very important point. This geopolitical atmosphere someone like william hill who seems to dissipate. Has recently acquired sporting bets in australia. Correction user the bloomberg that is a fantastic strategy. Top headlines today. Ladbroke fish on the have iraqi Prime Minister nouri difficulty bringing new products almaliki has rejected a to market. Transition to a new government. Increase the presence of troops if youre going to emerging markets, you need to have and militias in the capital by dominateds president Innovative Products suited to those markets. Is anoing to new markets to form a new government. X in idea, but you have to use the right strategy. . Ho is dealing with it test 280 trucks from moscow to deliver humanitarian aid to southeast ukraine according to a who would you say is dealing news agency. The report says the trucks are with at best, not just in the u. K. , but in all markets. Loaded with food, medicine and drinking water. The u. S. Warned russia not to william hill and sky bet all use the aid mission is a pretense for military action. Have extremely strong strategies. As ukraine battles rebels in the east, lawmakers will vote today on new measures to punish russia the companies that have for its support. Localities abroad are going to be stronger, because the risk is one measure would block the flow of russian oil and gas through mitigated. Ukraine to europe. Anduld say william hill getting earnings now from omb, the Austrian Company building others are relatively strong. Part of the south stream withu spent a lot of time pipeline which will provide a way to transport gas out of russia without passing through ukraine. Technologies. Ryan is here with the details. Take us forward in the world of betting. It looks like a mess. 232 Million Euros. We have had bedford, the the estimate was 415 point 34 dominant blockbuster. Then it has dissipated little pretax. That is down 55 from last year. Bit. What is betting going to look like as we go forward . Like you said, they are building who is the strongest . The last leg of the south stream it is very much going to be a mobile tablet tv related pipeline. This is the line we were talking experience. About with gas coming through ukraine. It would go around ukraine. As regulatory systems evolve, they dont want to see it built. Gambling is becoming more responsible and socially European Union has thus far resisted it. Acceptable. At 132ome coming in youre seeing a larger portion of the demographic using million, the expectation was gambling products, but using that it would also be higher. Them for entertainment purposes. Again, a bit of a mess there. So you know, the countries have is company is saying that safe regulations for the future. Helpstects the user and impacted by lower refining margins. I have to say we have seen the company be responsible. Trouble ever since reps all is u. K. Getting that . Kicked off the season. Omg shares are down close to 6 . The u. K. Is arguably the leading country in terms of theyre down nearly 16 year to gambling regulations. Date. Is are still that run off the most interesting ping about this company is simply what they shores to gibraltar or malta or do and what they intend to do. Thereve been working with russia since 1968. Cyprus . Has that stopped . That has certainly happened. In june they hosted vladimir putin, the russian president , and agreed to build the final leg of this pipeline, and when point of consumption tax becauseiscussed, importantly, that pipeline will lead to their own baumgarten gas of emerging markets elsewhere hub. And institutions are stepped up there, theres artie very strong we are talking about the idea of gibraltar. The ukrainians banning the transit of russian gas. One would think that would only i think that will remain, but play into a company like omgs not necessarily expand. We will have to draw a line hands. Under there. Theeard the ceo earlier in week say sanctions would only lead to badness and also say 7 49 in london. That he thinks that pipeline youre looking at a birds eye will go ahead, you are not the European Union gives its view of the city of london. Explicit blessing. Market set to open slightly lower in about 10 minutes. 12 of the sales coming from central and Eastern Europe. What is driving the markets today . Refiners in general have had trouble this year. It is something were seeing across the board. For some reason, investors seem to think they are more exposed than others if you look at the share price, down 16 since the beginning of the year. Should refocus on hand cook . Theyre sticking to the fullyear targets for this year. Margin just widens slightly. Gets a little better. If you look at the three the estimate was for 4. 5 percent. This is where the acquisitions have been. The big mess is in beauty care. The estimate was for growth or 3. 3 . This is the key issue. Organic dairy at the benchmark that the market uses is organic sales. That comes in at 3. 3 and the market was looking for four. In regard to russia, weeks but escalation of the russian ukraine conflict as well as persisting political turmoil in the middle east. The negative impact on the market environment, Slower Growth in terms of earnings and a high degree of agility and flexibility will remain critical to them. They also say that Foreign Exchange knocked their overall 3. 5 . S by sales were impacted by Foreign Exchange by 3. 5 . It is a missed in terms of organic number. Margins up and it seems to be the area where they are trying 5 billion euros in their pocket to make acquisitions. Interesting again that we have not seen that much of a negative hit in terms of sales from these companies. Europe is saying look, organic sales are up but 2. 8 . They say their businesses in russia and turkey are the primary contributors to the sales growth. What is being hit is their operating profit because of the foreign currency. Sentiment so far, they havent been dissuaded from buying shampoo and glue. Emerging markets are so important for the company. They have this goal of 60 workers and half of revenue by 2016. But that was just a 2020 target. Russia is the fourth biggest market, a billion euros euros of sales last year. 200,000 employees. Are not getting welcome back to countdown. Out of russia. Were been there since 1991. We have 7. 5 minutes ticking down it is not an option to leave russia and return in three years. To the opening of . It. John joins us now. Nobodys going to leave russia. It comes down to a question what is going to drive the market in the is it ukraine or iraq . Are starting to shut down stores. Theyre being pragmatic. Up by 1 . Kets product or to do the the gdp, the Growth Numbers moode are justifying the in russia, to be fair, they beat by saying tensions are easy. Estimates yesterday. They were waiting for the real impact. I think you get it in the third quarter. You hit the nail on the head. I wake up and dont there are closing shops. Really understand what is happening. The situation in ukraine and ceo or aood call by dont understand. Youre talking about closing off gas it goes from rush into the eu . Is not russias gay . Board to say right, lets pull the chain on this. The big effect will happen in the second half. Who knows how big that effect are speaking to ryan come i just dont get it. Will be . Some could say russia could go im going to ask my guest whether he sees the situation into recession in the second the escalating. Half the year. What will happen to finland, estonia, latvia. One country that is taking the 1015 l rely on at least pain is the dax, germany. Of imports to russia. Long european financials this how their production is year. Within russia. E are not going to see so much brave man. Later this year. Lets get the justification for lets look at other areas of consumer focus right now. That from him. And then of course ladbrokes. One thing we havent talked apple suppliers in asia have started manufacturing new ipads. About is the legacy issue. That is according to people with the legacy issue is the high knowledge of the matter. Street presence. For now, were joined by Bloomberg News tech reporter they limited the amount of the machines you could have at the shops. With his book is got around it tim . Give us a sense of what is being lined up. Was quite simply to open more fors down the road and put tim cook are missing us an incredible pipeline. His is part of that incredible pipeline . More machines. Theyre selling out. Ladbrokes have been really wanting that down. Is gettingeline they closed 24 shops in the First Quarter. Pretty full, caroline. We know that on september 9, they said they were close 50 by 2014. They will finally unveil these they need to have a digital larger iphones. Numbered News Presence if theyre going to have more people. If i put two brands in front reported that it is ready for an unveiling the second tuesday of of you that you didnt know much september. It is a traditional time for the about that they put ladbrokes in front of you and william iphone. What is important about that as hill, youd think that a ladbrokes brand would translate they are larger in size, taking better online than william hill. On the likes of samsung which have done quite well with larger size iphones. Why are they so far behind and why do they rely so much more on what we have reporters in the six odd betting terminals last 24 hours is that the new ipads are now entering terminals and the likes of william hill. Production it is the largest im not talking about gambling size for them, a 9. 7 inch. But the arcade Digital Gaming it is a first formfactor they industry and with the gambling industry can possibly learn from them Going Forward. Had when they first launched the ipad all those years ago. I think it could be quite interesting. To know people who go to at 7. 9, the many ipad is getting ready for production. Arcades in play . They are packed. Both of those will be out by the end of the year. Theyre all these lines of slot that is at least four products. Machines and people get really their hit product for apple. Very addicted to them. Iphone is number one for them. Ipad number two. That is strong is a strong get rory mcelroy pipeline as tim cook has pointed out. Important for apple and those on the phone. He laid is that it ladbrokes. Consumers out there just waiting to get their hands on the next he is 100 grand richer. Type of product. Also, really crucial for the i think rory mcelroys dad needed that big wind to be any suppliers in your part of the world. Richer. Was is mean for the companies how much do you get from winning that you cover . The u. S. . What does this mean for the a couple of million . Companies you cover . Foxconn has had a pretty that is terrible, isnt it . Tough first half of the year. Only up 0. 8 for i didnt make 25 million this the first seven months of the year. Year. That is a really weak first half n e w coming up of them. Of course, always a third and next. Fourth quarter of the peak we will be talking to kevin lily. Areas. We will see you. If you do a year on year comparison, they need to do pretty well in the second half of the year. Given how weak the first half was, they really do need to get some hit products on their production lines turned out and pushed through their own pipeline to help lose that revenue. Revenue. Oost that honest, there are not a lot of companies that can manage 15 year on year annual revenue growth. They manage that for some time but it is slowing down now. These bigticket items come along such as the iphone and ipad, they really do need some boosting Going Forward as they transition to do other products. There are other Companies Like atron. Therell be looking for those kind of products to get the revenue up as a close out the year by the end of september. Music to suppliers in years. Thank you very much indeed. Quark still to come, how bad can it get as sanctions bite in russia . Will speak to citigroups chief russian economist when we come back. Here in the city of london. Futures inching lower. We are coming off the best day for european trading since april. Given the geopolitical picture, everyone is telling me tensions are easing. The convoy as part of an International Humanitarian effort. Over to you. Richard glenn may finally be starting to pay off. Welcome back. This is countdown, i mark he promised he is well the barton. It is 6 44 in london. Vision for growth. Shares are higher. By 0. 8 . Back to you. If you are looking at the stock about all matters futures, we are a little bit were joined by ivan lower. Ov. The economy did i did say were are coming back off the best day since april for european stocks. Manus cranny is at the touch manage to grow and the Second Screen with more. Quarter. Some analysts predict it could where are we going . Fall into recession in the second half of the year. How bad you think sanctions could bite the economy in the second half of 2014 . Think there are three salient points that need to mention. The first one is that it is indeed the case that the economy has been slowed down. The second important point in my opinion is that in the last two the economy has been performing better than expected. In our view this is mainly dashed economy is doing very well by the fact that the expectations about the economy have been very well. Despite the fact that the economy has been out of expectations. It has been underperforming to its potential. The economy could been going much faster had it not been for the sanctions. Of it not been for a number structural impediments that are sitting on the economy. Good morning, ivan. It is manus. Banbigger issue is the food. The nearest issue we have had raised is the food ban imposed by routine. What impact you see that having on prices and ultimately on inflation . In our view, the impacts will be moderate. We dont anticipate drastic impact. Addition to the food price over the course of the next one and a half years will be somewhere between one and one and a half percent. Is that a major impact. Menu ofct on the options at the consumers in russia will have, i think it will be relatively moderate impact. These welltodo russians will need to do away with consuming australian beef or even their sushi with norwegian salmon. The vast majority of the population will not the impacted trade we think that in a short. Of time, russia will be able to find substitutes for many of the products. Well see some impact on inflation. We will see some impact on the menu of choices. So far it seems to be russia response to sanctions brought to it by du and the United States. We now have talks at the ukraine might be imposing some sanctions, actually banning the root of gas or the ukraine from some companies with an russia to eat you. How much of a realistic threat do think this could have on russias economy . I think we should be assigning a small probability to that scenario that you outlined. I dont think the European Union is so dependent on Russian Energy will take a nice view of these developments. We have heard already from representatives that they better not be in favor of such a plan. I think we should i dont think it is going to happen. Ivan, what about the eus last round of sanctions . And thes on banks energy industry. What impact is that going to have on Business Activity in russia, on corporate loans with an russia. I think this is probably the channel by which the western sanctions who have the maximum impact on the russian economy. I think the portion of gdp to receive the most is investment. It is the most volatile portion of gdp. People dont like to invest when they see certain negative things coming into the future. Investment will struggle in the case of russia. I think it would take a lot of time for investments to recover in the future. Once again, we are talking about a quarter of gdp. This is how much investment accounts for in this world economy. This is a main channel by which the sanctions will impact on the russian economy. The impact could be really significant. Ivan, we cant touch on russia without touching on the currency. Yes, it has bounced. Overall, it is one of the worst performing currencies. Weve seen rates rise by 2. 5 . Bankead of the central obviously prepared to take action. What is next on the story for russia . Where it used to the currency going and the impact of this move that we have . I think it is realistic to of policy tightening in russia. The easiest way to explain this is to think about the impact that the western sanctions could have on capital outflow. My expectations are that in the second half of the year, capital outflows will accelerate. Remains that liquidity will be diminished. Liquidity will tighten. I think the central bank of russia will need to accommodate that endogenously. It continues to raise interest rates. Obviously, good for the impact of economic growth. Think the main channel by which economy could be affected will increase in capital outflows. This means that money will be leaving the country. This will put pressure on the currency. Of the year, the dollar Ruble Exchange Rate will be 38. 1. This is quite a significant impact. Ivan, we will have to leave it there. Thank you for your input this morning. Akarov. Aladdin is my personal favorite. The entry entertainment world is mourning the passing of robin williams. We will have that story and more when countdown comes back after this short rate. Short break. Welcome back to countdown. Just over an hour from most market trading for equities. Time to look at our top picks for today in the papers. With the guy, mark and mandi, aladdin, mrs. Doubtfire. What a range of talent. Very sad. Robin williams is dead. Just saying the words come i cant believe im actually saying it. Suicide. F suspected he was pronounced dead at his home in tiburon california. He had been battling severe depression according to his publicist, but what a man, mark and mindy, he played mork the. Deadon the planet ork poets society, good will hunting. A brilliant man. Such a sad day. The range and types of films he was in. Steve martin i couldnt be more stunned by the passing of robin williams. On. Ets move it i have an interesting one here on apple. Apparently, if youre going to ity, this univers is all about the simplifiedsso design. Front andremain center of what apple is all about. Bringing it down, making it very sleek and simple. Has a first time you have ever talked ball on countdown. Apparently we have to go. The girls have a new, more feminine uniform. Very nice. More after the break. H ukraine. Global equities advanced a humanitarian mission. Lawmakers prepare to vote on a bill that could block the route of russian oil and gas supplies to europe. We will speak to the chief the companys growth will flow in the second half. As thes power struggle crisis deepens. You rocks power struggle as a iraqs power struggle. Welcome to countdown, i mark barton, joined as ever by manus cranny and caroline hyde. Nursing a slight uptick in net revenue. Not much, though. Up 1. 6 percent operating profits coming in at 66. 8 million pounds. That is just slightly ahead of analysts estimates. Lets put it in perspective. It is down by one third. They slumped 35 overall in terms of operating profits. And aave had concerns slow process of rolling out their digital presence. It is all about going handinhand with play tech, the gaming provider. It is up and running. It is meant to be match fit for the world cup to really capitalize on that performance. It is meant to be the area of growth that many want to see. Mobile sports book growth. They say bets are up 105 . Of users, the amount growing by 74 . Migration completed. The new back office is there. You now have basically one single wallet. What they want us to see what youre doing throughout whether youre going into a counter or a shop or online. The whole engagement. This is one of the big criticisms. I saw some of this in the sunday newspapers as well. I am looking for the polite word. They were talking to sporting bet, 888. Techwent along with play and it is cost them dearly. The ceo under pressure. That is a question, isnt it . You have to deliver. It is taking longer to switch the gaming projects. His performance relative . My stab of the day is internet. 7 10 of 1 performance return. His peers . 7 return. It might give him some breathing space. Youre not starting to see a president a presence in the digital mode. Theyre also being hit by future regulation. They have the abb code. Code of conduct. Responsible gambling. Protecting those that are going in and using these machines that you can keep on pumping money and. Betting terminals. Carts they adopt this new code of conduct. It has hurt them in terms of machine gross when. Regulations third going to make customers stick more than 50 pounds and they will have to paid up front. They want those that are gaming to know what theyre going to be potentially losing. Thathave to protect us little bit more. Youre moving into digital. Theyre suing net revenues up 26 . In december, we get a new 15 online betting tax. They finally got themselves into gear to do a digital presence. 160 housecking up in 157 . Ireland, two. N in march, hed have a great world cup like the Hotel Industry is had. Has had. Who has their fact of the day . That rory mcelroy was winning. But that was 200 kuwait at 500 to one odds in 2004 that his son would win the british open within 10 years. Ladbrokes 100,000 pounds. It could cast him another 80,000 pounds. That is a big loss for ladbrokes from one bad. In horse racing as well. They did have a better grand national and they started to see a bit of improvement with the world cup. The chief executive is under pressure. Theyre wellpositioned for growth. Will keep that in mind. Russia is never far from our news. A convoy is on the way to the ukraine. It is part of an International Humanitarian effort, not a military operation. Ryan joins us with more. Ryan, i suppose a world will be but thiso hear this, is not military by cloaked. You know the United States, the European Union, many countries, namely the ukraine saw those assurances from russia. He warned russia that this for bringingetext in peacekeepers. The idea is that an outright invasion would be unacceptable, but if russia was introduced peacekeepers as is done in other parts of the former soviet union perhaps it would be a more palatable way to bring in Russian Troops into the east of the country. Headed to from moscow the southEastern Ukraine. Will happen when they get to the border . Done inbeing coordination allegedly with the icrc which put out a statement saying that they are in charge of coordinating this effort that will involve not just aid from russia but hopefully aid from European Union and United States , though interestingly, the eu has not even met on this yet or the russians are bit ahead of everybody. They need electricity and water. Crisis is for a city named luhansk. There are 200,000 people there. They have no electricity no water. To storm thed cities. It is pretty dire in both that city and another city called donetsk. The International Committee for the red cross says help is needed. The russians say the help cant wait. We will see what happens when the russian convoy gets to the border. To the russians wait for the European Union to get their act together . These are questions that everybody will be asking. Interior minister poland, however, says this is clearly a pretext to invade ukraine. Poland has been a very outspoken russian andhe ukrainian convoy dont start shooting at each other on day one. The polls have artie decided that this is over. Thisa deescalation is not a deescalation but an escalation. Stocks are rising across the world, yes . Stoxx wrote rose a tad this news. The russian stock market this morning has opened a tad. Though the ruble fell. It was headed to being down investors are scratching their heads. Ive been watching russell for 25 years and i am scratching my head. When i first announcement that russia intends to send his convoy, this is a statement he came from russia itself before anybody else has spoken on the matter, i said well, on the one hand it feels like now we are closer to an actual russian intervention in Eastern Ukraine then at any other point. On the other hand, if this is really an International Affair , as itdoes not go awry definitely has the potential to do, then this could be a masterstroke for the russian president. They have crimea. Hes going there tomorrow. In twove an army show days. They have been sanctioned, and yet they are prepared providing aid to Eastern Ukraine which will play well with the domestic audience. It is not the only geopolitical story out there. Escalating. Iraq ill maliki rejecting a transition to power. An increasing number of troops and militia in baghdad. Speaking on state television he defied pressure from fellow shiite lyrical figures and the american president to step down. The refusal threatens to extend a threemonth stalemate that helped militant sunni fighters in the Islamic State to seize parts of the country. The u. S. Continues limited strikes against Islamic State. Ilitants in Northern Iraq in the past half an hour, henkel has confirmed its 2014 forecast for organic sales. Around inen you look the business of henkel, it is personal care. These are the brands that you laundrywith henkel missed. Here missed as well. Other sections doing quite nicely. Theyre confirming the outlook for 2014. When it comes to russia, and this is a critical part, they warned on russia, ukraine and middle east, will impact and it will hurt the second half which goes back to the point that we are having a lively conversation which was set adidas has pulled back shops. The impact on russia, on into the second half. As is one of the key issues. In february the shares doubled. Earnings of 15. 5 margins. Analysts thought that was a little too conservative. Seegoing to be curious to what on the stock. 5. 5 of sales mark saved me from 10 pages. It is teamwork. The margins are doing better. Foreign exchange, the value of the euro knocked their overall sales numbers. The story is permeating across all of these results in terms of what the ceo does. He wants to look at mexico and United States. It is interesting that as yet sales have not been impacted. Sales are growing in russia and turkey. It is operating profit and the fact that you have the ruble which really hurts. Have the question. Should investors be worried about a big reversal in growth of stocks