Transcripts For BLOOMBERG Countdown 20140922

To tout down. I am mark martin. We welcome you back to the program. Is the last before next years may elections. We have put the scotland vote behind us in a sense. The legacy is still there. We are looking at an election next year. Conference season is very much upon us. In terms of this constitutional is put in a very tough position. They have promised this level of devolution with scotland. Lose theirhey could ability to control in england. The reform of scotland and the reform of england. Has them apart when cameron brought them very cleverly together. Two different trajectories. David cameron did lock them in together. We are getting close to an election. Election. May weekend, her the times about the level of devolution. He did Say Something about parliament. I am not in favor of new parliament and new politicians. I am in favor of one house of commons with 650 mps. We fought tooth and nail over the past two years to avoid our kingdom being split up. The mathematics is fascinating. Labour seatsttish, in the parliament. The polls are suggesting that he would win with a majority of less than 40 in next years general election. The mathematics points to the fact that he really needs the to be voting on english tax, spending, welfare. He spent yesterday trying to link the constitutional changes with the cost of living. Trying to get things back to the turf that he feels comfortable talking about. Felt they had nothing to lose were prepared to take a risk on losing the United Kingdom. That is what we might hear more about today is the minimum wage of eight pounds by 2020. A lot of concerns by Small Businesses. How is that going to affect profit margins, which are already being squeezed . The criticism of the tories for only favoring the richest in society will be taken up. The finance ministers are going to be talking about cutting mp pay and bringing back the 50 tax rate. Very dangerous tackles when he plays footballs against journalists. They will be separated by many hundreds of miles. You were following him while it you were in scotland. The polls put the labour party ahead. The tories at 31 . David cameron is still more popular. He was making the point in the sunday times he is not happy with his ratings in terms of trust in scotland. That. Has been testing we are getting some breaking news on tesco. They said that they have identified a statement on expected profit. It was overstated for the year. This is having some impact, including on timing differences. They are going to be investigating this profit overstatement and the results. They have seen profit overstatement i an estimated 250 Million Pounds. They are going to call into question the comments coming from the ceo. Beenis a business that has up against it. He took over it. We have had two profit warnings. We had one in july. Earlierover a month than many thought he would. Tesco faces many challenges. They said that we have uncovered a serious issued. He has not been there five minutes, has he . He is very new to this business. He came from unilever. He knows that side of retail. He has never managed at the highest level. Esco shares have been down 30 we will certainly watch that story as it develops. Has agreed to buy a company that makes turbines for the gas industry. Good morning. Who loses out on this deal . Potentially, general electric. There was a report that they wanted a part of this business. A Swiss Company that wanted to merge with dresserrand. We will only figure that out when we figure out whether the share price was bid up because of the other potential players. Like the winner. They wanted a piece of this business. They are big on oil compressors. You mentioned gas turbines. This is all about the fracking boom in america. You look at the price. It was 83 per share. When it closed on the 19th, it was up 20 . Inrall, it is 7. 6 billion acquisition. We will figure out, was the share price driven up by speculation . Peter is the outgoing head of siemens. Siemens has wanted this for years now. They want a piece of the action in the states. Oute have got some numbers this morning. Emeraldorlds a guest producer. These are the results. Revenue, 160. 1 million dollars. The Company Reported a loss of that measure the year prior to that. , 36. 8 million. K who better to talk about the results today than the chief executive officer . Good morning. Even better. What is driving it . Record revenues, what is going on . The economy is coming back after a couple of tough years in 2009, 2010. Young ladies where the jewelry place was predominately looking at diamonds. That with to do emeralds, rubies, sapphire, and color . That does not mean that you cannot have diamonds. Is that underpinning pricing . First of all, our ability to market and increase consumer awareness. A lot more consumers around the world are wanting the product. Most of the way in which we are able to deliver the product in large volumes. We have traveled by very small volumes of supply. As to marketing, promotion, demand, all of that is driving prices. This is the perfect opportunity for me to bring this up. Is one of your project and bass others. How are you marketing some of these stones . The way we like to market gemstones is the reality. Each and every color stone is different. Deflawless diamond, which is perfect. Those are all the same. We can celebrate the imperfections that entertained reality. Kunis is an individual. She is happy for us to showcase her individuality. Gemstones,re mining what is the logic in owning everything in the supply chain . Why does that make sense in your business . We do not do the whole process. We are not a mine to market company. We are a mine and market company. Is one of the bestknown and one of the greatest Luxury Brands of all time. It was always a champion of color. Not only did they use colored gemstones, it uses them in other projects. The artistry. Ates it is not just about a massive stone in a plane setting. When you own a faberge piece, the whole is as important as the parts. Tell us about that. If you look at the results, we are without a doubt the largest reducer of emeralds and rubies. To call that the traffic license color, the red, green, and blue. Using that is driving the demand for color. We can piggyback on othersstones. We are producing much of our emeralds from zambia. Colombia as well. Thank you very much for joining us this evening. The ceo of jim fields. We changed our screen. We can give you even more news on the right. You will be able to see bloomberg. You can see, there is also its of things down below. There is the dax, the cac. I feel like a weather girl. You are a magician. Jpmorgan sees itself his outlook on investing in emerging markets. Welcome back. I am mark martin. Time for todays company news. It has agreed to buy dresserrand. Just a rant makes compressor dresserrand makes compressors and turbines for the gas industry. 21 company reap boards a drop in profit. Sales grew at the let slowest pace in three years. Amorites president tim clark says that the airline is planning an extension into america. That would make it one of the top three sources of revenue. Ofht now, it gets just 3 its sales from the united states. Bywe are joined now jpmorgans chief Investment Officer. Thank you very much for coming in. Geopolitical tensions abound, is on its longest streak of quarterly gains since 1998. If you worry about geopolitical tensions, the place you worry about least is the u. S. U. S. Equities are considered a safe place to be. I do not think the performance of u. S. Equities is particularly surprising. Are emerging markets able to increases . Minent this is what everyone is worried about. Do we have a repeat of last turbulence. Le five i am a natural optimist. I will sit here and say no. Everyone is so aware of the feds timetable. The fed is being incredibly transparent. I do not think anybody will be. Urprised when rates go up when do you see Interest Rates going up . What assumptions have you been making . They have been warning about the potential risks by low rates. We are assuming, like everyone else, middle of next year. End of the Second Quarter next year is what most people in the marketplace think is an assumption. I love the way you compare the emerging markets and you light. T to a traffic if it were a traffic light, it would be flashing amber. Butshould progress, progress with caution. How should investors progress in investing in the emerging markets base . It is obviously not green for go. We have a lot of things to worry about. When we look at emerging markets , when everything looks great, they are expensive. Everybody is terribly optimistic. If you buy something when it is expensive, you will end up with a poor return going forward. You should not put your entire life savings into them today. You start when investors are still pessimistic. You build up towards that turn in the cycle. Dig down a little bit deeper to stay with us. Welcome back to countdown investments chief officer is with us. You have three primary Catalyst Investors that we should be monitoring. What are they . The first thing you need is stability of currencies. You cannot have a repeat of the fragile five. Then you want to see the Global Economy recoupling. Economies catching up with the developed market. See whatyou need to all of the Equity Investors need. Profitscorporate emerging. Unlike developed markets, they are very geared to economic growth. Play . T role does china are you fixated on the growth level that the chinese achieve . China is obviously the elephant in the emerging market group. It is the biggest economy and the most of portland. It is not about the level, it is the trend. When you see people getting a bit more optimistic about china, then you will see chinese equities performing better. As long as the trend is deteriorating, whether it goes half,ight to seven and a it is the deterioration. The chinese say that it might be a shortterm sacrifice for a more mediumterm goal. I see the government doing a lot of good things. When investors start to see reform as a positive thing rather than a reaction to a crisis, then i think you will in trend. Hange we need to see some policy data coming out of china. Will we see anything coming out of russia in the next few quarters . Would you touch russian assets . It is not about the economy it is about the political situation. It is the same idea. When the trend changes, you will see people coming back to rush up. When will that change . When they do a deal with the ukraine. Most Global Investors will be reluctant to invest in russia. Lets talk about scotland. Do you sense, talking to International Investors, did they get what was happening . People in london were surprised that it became such a big event. It could actually happen. Most International Investors could not understand what the problem was. From their perspective, the u. K. Is a very stable place. Why would you want to change that . Investors do not like uncertainty. The referendum process presented a great deal of uncertainty. India stands out, brazil is to come. How would you be positioned at ahead of the brazilian vote . The problem with investing in front of elections, despite all of the polls, you do not know what the outcome is going to be. In general, i am a fan of elections. Democracy is a good thing in the emerging world. Brazil is going to make a big decision. They will either go for the status quo, which investors will not like, or they go for change. As we saw in india, change gets people excited. How would you read rate office . Er 100 days in by any reasonable standard, he has done a really good job. The expectations were so high that he would solve all of indias problems. Some people are disappointed. The chief Investment Officer at j. P. Morgan. The Singapore Grand Prix Lewis Hamilton came out victorious. Welcome back. I am mark barton. Lets take a look at the new Zealand Dollar. Bonds and equities are rising after the Prime Minister returned to power in a record election victory over the weekend. His National Party promised tax cuts. His National Party winning 48 of the vote, securing the first in newparty to jordy Zealands Parliament since the Country First introduce proportional representation in 1996. As you can see, the new Zealand Dollar is down by 1 . Is rising. It has fallen for five straight weeks. That is its longest losing stretch since 2007. The new Zealand Dollar has fallen 7. 5 against its u. S. Counterpart. O 831. Ight cents t the new Zealand Dollar can be at 83 u. S. Cents by the end of the year. The trend, as you can see from july onwards is very much a downward one. Not today after john keane, a former currency trader, won his third election. G20 central bankers and finance ministers are worried about a market risk. They could look at monetary stimulus to bolster Interest Rates. Imf managing director christine is confident that Monetary Policy can reduce the danger. We believe that Central Banks do have the tools to react to sive valuation in corners of the markets and use them when necessary. We believe we are equipped to deal with some of those potential risks. John kerry has met with irans foreign minister to discuss the nuclear program. They discussed this at the United Nations General Assembly meeting. The u. S. Still remains committed to reducing Irans Nuclear efforts. Former president Nicolas Sarkozy said that he could not stay out of politics because he has never seen such despair in france. His first interview since announcing he is in the running to lead a political party. I do not want my country to be contemned to the fifth power in the world, to the humiliating show that we see today. Officiales his first visit to berlin today as some g20 finance ministers urge them to resolve their differences and improve the economy. Setces Prime Minister is to meet with german chancellor angela merkel. Who is going to give . Are the germans going to agree to spend more . The germans have given no indication that they want to spend more. Is a deficit target. And many ways, this is the same story in a different location. Angela merkel will be meeting over the weekend. We have previously seen it in milan. Juiceill germany due to the Global Economy. They will have a balanced budget. That is a clear goal. Frankfurt is going to turn to a proxy battle. The same fight we are seeing in the fiscal fund will turn into a monetary fight on just what the ecb can do to stimulate the economy. The Singapore Grand Prix on sunday eventually saw Lewis Hamilton come out on top. Turning us from hong kong is the Red Bull Formula One Team principal. Good morning to you. Hank you for joining us today. Good afternoon. I have come all the way from hong kong to see you in london. After the Singapore Grand Prix, would it be fair to say it is now a twohorse race between the mercedes drivers . Do your two drivers have a chance at lifting the championship . It is a long shot. The mercedes guys are in great position. It will be an interesting run for the rest of the season. Double points at the end of the year, nothing is over until the checkered flag drops. Do you put all of your efforts into Daniel Christian because the fact that he is only 60 points behind hamilton now . Do all of your efforts go into riciado . , daniel has aly better chance. We are going to let the guys race for now. Once one of the drivers stands no chance, then we will reevaluate it. It does not make sense to interfere with team order at this stage. How well do you think daniel has done this season . He is a young driver from australia. He has taken formula one by storm. What is he like . Character. Very cool he is very fast. Hehas done a great job since stepped into the team. He has been incredibly impressive, winning three grand prixs, exceeding all expectations, even his own. Is he the next Michael Schumacher . Where could he go when you compare him to some of the greats . You have one of the greats driving for you right now. We are very fortunate. We have two fantastic drivers. Aniel will continue to develop he will only get stronger, he will only get better. It is exciting for red bull. In young talent like sebastian, like daniel. A are coming to fruition now. How do you rate the Singapore Grand Prix . What is the feedback you are getting from drivers . Do they like it . What do you think of it . It is a tough one. It is two hours in length. It is tough on the cars, it is tough on the drivers. It is a spectacle. It is one of the busiest of races. Great atmospheric race and one of the prestigious once it you want to perform at. A lot of the formula one Events Calendar has been overshadowed to the benefit of the viewer has been overshadowed by the rivalry between the two mercedes drivers. Do you welcome that sort of rivalry . Is that good for the sport . It is fantastic for the sport. You have a pretty intense rivalry between those drivers. Going for the biggest trophy in motorsport, which is that formula one championship. It keeps us in with a chance to challenge for the championship. It is holding into a crescendo over these last five races. Will beu think bendle back if he does not win the title this year . He has had an incredible four years. Do you expect him to bounce back next year . For sure. Sebastian is a worldclass driver. Prixs won nearly 40 grand so far in his career. Races, heext few seems to be finding his form. It will be a big confidence boost for him as well. We will see sebastian start to get back to his best form. You are often mentioned in the same breath as bernie. Are you the future boss of formula one . The you mind being mentioned in the same breath as bernie . It is very flattering. He is back fulltime on formula one now. Hopefully, he can be there for a long time to come. It is very flattering to be mentioned in the same breath as bernie. The principle of the infinity Red Bull Racing formula one team. And prorussian rebels had discussions over the weekend. He visited the ukraine front line. You can forgive the soldiers outside this town in Eastern Ukraine for failing to be friendly. The last time strangers made an appearance, the locals say they came with 100 tanks. This frontline city was saved by the ceasefire. Industrialukraines heartland. This is steel country. That plant is owned by ukraines richest man. 50,000 people oil around the clock at just two of his plants. This one plant can produce a quarter of all of ukraines steel exports, enough to make 100 aircraft carriers. Production has been nearly halved, thanks to shortages of coal held in rebels territories. Workers not tois join the rebels is credited with keeping at least some of the east under kievs control. 500 a month pay for a steel worker is good money here. Many factories on the other side of the front factory workers also take part in Police Patrols to maintain order. They are not equipped to stop an invading army. Visit, oneshort checkpoint was shelled. Three ukrainian soldiers wounded. Another three suspected separatists arrested. On thee keeping its eye truce. What happens in this frontline town matters far beyond its borders. Stay with us for more from the Labour Party Conference. Theill be talking to chairman of federation businesses for more on what business is hoping to get out of the conference. The dollar index. Any news article that links the s, asr index and the beatle in the most Famous Rock Group in the world ever has my support. The bloomberg piece did just do that. They related the dollar index and the beatles. 19672014. Index, 1967 is the giveaway. Fordollar index has risen 10 straight weeks. That is the longest winning streak since 1967 when Lyndon Johnson was president and the beatles were prepared to release their Sergeant Peppers Lonely Hearts Club Band album. I was not even an idea in my parents mind. Lets not go there. Why was the dollar rising for 10 consecutive weeks . The fed raised its estimate for the federal funds rate by the end of next year. The june forecast at 1. 25 . Very quickly has the dollar index risen for 10 weeks. It closed on friday at its highest level since june. That every day you see a chart 1967, a decadeto before i was born. We will forgive you. Had its annualy conference. What are businesses hoping for before its next election . Joining us now is the chairman of Small Businesses. I wonder if we could start with what your expectations are for the conference, where you want the focus to be. From a Small Business perspective, what would you want a potential Labour Government to deliver . We are asking for Small Businesses to be put right at the heart of decisionmaking for whatever party comes into power next may. It may be a coalition. We will see what happens. Is clearly restored in the Small Business community. They are investigating. They are creating for out of the five new jobs in the u. K. They are looking to increase our exports. There is really good news on that front. Getant the labour party to the idea. We will be launching our manifesto at three conferences. That will be followed the following week by launching it with the conservatives in birmingham and then again in glasgow. What do you make of the labour party wanting to introduce a minimal wage of eight pounds per hour by the end of the next parliament by 2020 . Roughly a 3 increase year on year . What do you make on that. Nice to get some clarity on the mediumterm perhaps . What you have got to recognize is the low Pay Commission is the independent party that recommends to government what they feel the National Minimum wage here in the u. K. Should actually be. The problem that we have is that we have got politicians trying to set artificial targets, which is the wrong way for this to be going. The low Pay Commission has representatives from workers and other businesses. It has been set at reasonable letter levels that business can afford in the current economic climate. One thing we have been asking for is for the low Pay Commission to give longerterm views. To where it feels the National Moment National Minimum wage could go. Particularly for those businesses that are locked into contracts. More importantly, it has to reflect that lower end of the scale. That includes care home contracts and businesses as well where margins are incredibly thin and it will struggle if it goes up to that sort of level. Business rates, they are on top of the agenda for you. What would you like the labour party to pledge on that . What we are asking all parties to pledge on is total and absolute reform. It is a system in the u. K. That is no longer fit for purpose. It stops growth and it stops job creation. It is not suitable for the 21st century. It is based on almost subjective values. It does not reflect the current economic environment. It is hurting job creation. Thank you very much for joining us. It is 7 51 in london. Tescoe got the latest as announces it is investigating a profit overstatement of 250 Million Pounds. Welcome back to countdown. I am mark barton. For tesco. News its new ceo says that the bottom line will be even less. Here with more is caroline hyde. A mess, a mess, a mess. Overstatement of its first halfyear profits. Now they have realized to the tune of a quarter of a billion pounds it has been overstated. What they say in their statement is accelerated recognition of commercial income. They accounted some money to early too early and they are pulling some cost too late. They dug into the food business. This quarter of a billion pounds seems to have been flagged. They will be getting the lawyers involved. They will be doing an independent and comprehensive review. 250 Million Pounds is only about a 10th of the fullyear profit for tesco. This is just less than a month. He took over at the beginning of the month, didnt he . He started early. Clark. Rs for the tideanage to stem in market share. We are slashing our overall dividends. We will watch it at the open. Welcome to on the move. Its my favorite time of the day. We are minutes away from the start of european trade. If you look at the commodities market, a 2009 low. The chinese finance minister giving no suggestion of extra stimulus. Futures have been pointing lower. Will we get a higher open . Here with the stories is hans nichols and caroline hyde. Lets start with you. We start with the warning from the g20. They are saying it could lead to financial risk. Theyanaging director says do have the tools. We will have more on growth in spending debate in just a little as the Labour Party Conference kicks off in to looker, we start ahead to the uks next general election in may of 2015. Controversial reform is muscling its way onto the agenda. The labour party wants to talk about taxes and wages. Trouble on the shop floor. The troubles just deepen. They were meant to be given First Half Results on october 1. It is delayed because they overestimated their profit. How deep does this go . Auditors. T in the lloyds is doing an independent investigation as to why it has back to you. Tated. It looks like ms at tesco. Like msi tesco. We are expecting a lower open. China and lack of stimulus is one thing. Mr. Druggie speaks in brussels. Everyone is talking about qe possibly. Speaks inghi brussels. You have in looking at the commodities market. That is where chinese numbers have hit hard. We are going to dig into this concern over whether we will be getting more stimulus. We will be getting it from china. The finance minister is saying we dont really need it. The finance minister saying yes, the Chinese Company does face pressure, but we are not going to change policy in the major way. I know you know it may seo. He is from the italian central bank. We are seeing stocks take Risk Appetite is just waning as we feel there is a little cooling down in stimulus. Ftse up by 6 10 of a percent. Frances trading lower. Italy is really feeling the pain. It was really the commodities market but felt the heat of those statements coming from the g20, where we saw finance bankerss and central gather in australia. We are seeing oil traded lower as well. Concern of china where they get all that demand. And as we seend them not so willing to fight to meet that seven and a half percent growth target . Todo really want to start dig into these particular stock stories. Tesco cannot catch a break. To 10 . Ooled down 8 it is going to be delayed as orders come flooding in. After just a month at the helm dave lewis is hit by a shock. This time they have to admit they overstated their profit for the first half of the year. They were delaying when they would come in with those numbers. It was meant to be audit october 1. Now it will be october 23. They have already overestimated that particular figure. Could this go any deeper . They are going to dig into why this overstatement happen. In the statement it says recognition of commercial income and delayed accrual of cost. Costsre costing in some far too late. Competitorst to the siemens. It was a bit of a bidding war for the american company. They wanted to get their hands on dresserrand. He wanted to make the most of the sexy lineup for compressors and turbines. Apparently it is worth 7. 6 billion in cash. Winning the day, most ofe to make the oil in shale exploration. They have missed out on that tasty asset. To look out. Great work. That is the market open. Siemens is on the move lower after they agreed to by dresserrand. Paying 83 a share for the company. Lets go back to germany with hans nichols. He has got the details. This is quite the acquisition. It is quite the acquisition. You do see the price go up. In july these rumors started. It closes on friday at about 79 and now at a price at 83. It is 7. 6 million acquisition. Get in zemins wants to for more servicing. The longerterm contracts you about the u. S. Shale energy boom, fracking. There are some losers. Ge potentially wanted a piece of this. There are some reports of that. Of a merger. S what we have is siemens finally getting a piece of u. S. Energy business. They want to be a more pared down company focused on energy production. Paying quite a penny on it. We are seeing the stock down, potentially a result of that. Paying quite a penny for it. I know you and i like to talk washing machines and dryers. Siemens is getting out of their deal with bosch. You saw that last year with general electric. They were getting out of their Home Appliance unit. I think longerterm products arent necessarily at home but in building massive production facilities. Thank you very much after the break were going to talk market. Check out this stock on the move. Tesco has open lower. It is the biggest move lower for tesco since january of 2012. They overstated firsthalf profit by 250 Million Pounds. , but itssive number speaks to the company itself. They have asked for comprehensive review. Tesco down by over 10 . Another stop on the move is glencore. The Mining Industry under some pressure. Commodities hits a 2000 and nine low. Consumer of commodities is china. We will talk to the u. K. Shadow chancellor. Big issues to cover. We will be back in two. Via Jonathan Ferro in london. Is is on the move if you are watching us you will notice we have changed our screen. More news. Some of you get bored looking at me. Tops talk about another story this morning. The french Prime Minister makes his First Official visit to germany as some finance ministers urged the eu to resolve political differences and try to do something hardly any of them have been able to do to improve the economy. They will need. Who is going to cave . Pay the germans agreed to more . It looks like germans are holding fast to the idea they want to have a balanced budget and other countries meet to meet need to meet their 3 deficit. France is going to come in at 4. 4 . In some ways this is the same story that will be playing in germany that has played out in different cities over the past couple weeks and the past couple years. We saw it over the weekend in australia where you had the u. S. Europe to urging spend more. We saw it in the lawn. More pressure on germany to relax and loosen their strident opinion on what to need to do to grow the economy. The big question is how much is the debate. Is there any give within the ecb . Great deal of concern on the german side that these assetbacked securities is just a back door to start buying government bonds. Fight is as nasty in public as it is with the ecb, you and i need to spend more time in frankfurt to figure out what direction they need to take. We have had Strong Language from the u. S. About the need to political differences. It sounds like the americans are siding with the french. They have political differences as well. Here is what jack said. He said if efforts are deferred for too long there is a risk that headwinds grow stronger. I will translate that from american english to british english. That is that it is germanys fault of the economy falters. Getting them to change. Joining us is the chief investment strategist. You hear all this political noise from germany and france. Do you take much notice . I think it is interesting the u. S. Is giving advice on how other countries should operate political structures. E did our best job corporate profits have grown very strongly. More for how is the u. K. Proceeds than europe. Arguably the reason they have done so well is because you have an evening federal reserve. Ecb,hing to europe, the they do something, and they are asked to do more. Thisderstanding is attitude towards europe where you are selling everything. What is your view . I think that is a missed ache investors make. They dont realize where it may end up. I think what people are not paying enough attention to is while it was disappointing, the euro has depreciated by 17 . That is probably the single most impactful thing. We are modestly constructive on europe. Our overweight on equities is twice as large as the u. S. Better. Omy is doing we think we have a clear Monetary Policy picture. In that environment you have growth and Monetary Policy working for you. Underpinning risk assets for the largest economies. The u. S. And china. When i look at china iron ore that tells me china is not doing well. When i look at luxury goods makers it tells me china is not doing well. What is your view . To be soft again. We think volatility is going to keep up for several years as they make a transition to ward toward a consumptionbased economy. U. S. Growthonable with that kind of growth out of the emerging markets. We still think that is an ok picture. Can they tolerate growth above 7 . Is six and a half percent leads to that, that would be a problem. However, the working age population is not increasing in china. Ration they might feel to the slower economy. How do you invest around that . We dont think we make money investing just in china. So we would be more diversified to remove that risk. Another risk is russia. Terdays donations yesterday the nations biggeston staged the show. Give us the details from moscow. Welcome. The most famous political dissident in russia, who was released in december after 10 years in prison camps he said at the time of his release he was not going to go into politics. However, less than a year has passed. He made a series of interviews over the weekend in he is possibly running russia and a crisis situation. An interesting development. How much of a surprise was his decision to launch what some offensiveis an against him . When i look at the approval a real 84 this isnt threat, is it . I met shortly after his release in berlin. My impression at the time was this is someone he definitely does represent a threat. The ratings are extremely high for putin. The problem is the economy is heading into recession. Everyone is expecting very low growth or even negative growth over the next two or three years. Key khodor kovskys strategy is among the Business People as well. Attempt in then oil company, so i think there is potential, but putin could last two years. Only two years if he makes a mistake or another 20. Were going to leave it there. Thank you for joining us. In jim. Ng to bring russia, i think it is a given russia is going to ask aryans a slowdown. Is it a given it is also contracting the european economy down as well . As we think about investing in russia today we think it has moved from an investing environment to a trading environment it is it is 200 ball. You are seeing a diminution of capital flows not only from a from an standpoint but investment standpoint. We think this will modify russia. It is clearly a risk. Do you have to somehow cut through the noise you keep hearing . 90 of geopolitical events. Nd up not affect the markets you have to determine the event you are analyzing is going to reduce growth or inflation. We dont think what is going on in the middle east represents that risk. The middle east situation is worrisome because you dont know what the endgame is going to be. The buzzword is risk like the word we use around russia. The g20 is talking about easy easy moneyng to risk. They are talking about market risk. Real investor. Tell me where the risk is. There has been a squeezing of the margin of safety over the next the last couple years. People talk about a bond market bubble. That is an overstatement because you are probably not going to lose any money. Risk lies with investors or Investment Strategies that have taken on too much risk because of this low Interest Rate environment. Withe less concerned global bond market bubbles than individual investors taking on too much risk. What about the highyield space . You are underweight. The spreads have become so tight we havent seen this since 2007. When you look at highyield stakes surely there is risk. We think fundamentals remain relatively good. If you are constructive in the stock market by default you are going to be constructive in bonds because it is and ought to non an economic play as opposed to Interest Rates play. Asy are going to refund exists due refinance existing debt. Is it really fundamentals and pushing yields down . A reach forjust yield . I think it is, but the spread is a reflection of investors confidence the default rate is going to be relatively low. Is that a sign of complacency . I dont excel. Our view on the u. S. Economy is how slow the process has been means it is delayed. We dont see a recession risk. The final question for you, does the fed put off the day for the next 12 months . Moving untilee it well into july. What we have done is indicated if the fed does tighten as long as the market is not surprised you can still get positive returns out of stocks and bonds. Next good luck to fed chair janet yellen. As we head to the break, lets check in on European Equity markets. They are moving lower. Some concern about growth in china. Ministerse finance giving no indication of more stimulus. Ensco tesco down by over 10 . On the move is back in two. Welcome that. Lets bring you up to speed with companies on the move this morning. Shares of product fell the most. N three months net income fell 21 while sales grew at the slowest pace in three years. Fall onanies saw profit weak demand. Tesco shares are down the most this morning. The supermarket said it overstated its profit by 250 Million Pounds. It is asking lloyds to take an independent view. They will take a further update. Siemens has agreed to buy to buyd ran dresserrand. They are paying 82 a share for the company. The scotland vote is over, but u. S. Politics u. K. Politics is moving quickly with attention turning to the annual labour party meeting. The shakeups. You can follow me on twitter. We are opening this monday morning lower. Stay with us. We are back in two. Wont go back to on the move welcome back to on the move. This what the markets look like right now. The stoxx 600. Here in london it down. Not a signro theme, of more stimulus from the chinese finance minister. Stock in about a one london. It is. A quarter of a billion. It is really hitting the profit hard. Overall, the key take away. Company that is less than a ofth after profit, 7 shy what investors thought, slashing the profit forecast. And in the Capital Expenditure and they said we have overstated by mistake. 250 Million Pounds worth is what they think their first half profit has been overstated. It is another dire situation on the block. It that it ist moving unilever personal care and joining tesco. Sinceits lowest level 2003 on a just see air that on the fear of what is uncovered. At the investigation into why the prophets have been so overstated for the first half of this fiscal and how much will it hurt the worst. The troubles continuing. Keep an eye out. To getlost the battle into the sexy world of compressors and turbines. They lost out to the german giant. About allen talking of this morning and many had hoped it was as a way of getting into the action of shell oil and gas, exploring for it. They are left out in the cold. Almost down by 3 . Mining group saying they will be ending an agreement to sell. The disagreement overpayment. We do not know if it will be moving. If glencore does it, they could on m a. G more companies it seems to be about London Mining this morning. Let us bring you some of the top headlines. Chinese foreign minister talking down that the government will ease. If they do not see the need for major policy of falling danger into a recession as the weaker yen reduces purchasing power. That is according to a former diplomat. Near a six year low of cans of the dollar as the u. S. And japanese Monetary Policy begins to diverge. Said he cannot stay out of politics up a cause he has never seen such a despair in france. Stay out of politics because he is never see such despair in france. I do not want my country to be condemned. To the humiliating show which we see today. Laissez with politics. Labor gets to work. Gather for their annual conference, it will be the last one before next years election. Anna edwards. Let us talk about constitutional reform. How big a headache is it for labor . You can definitely argue that one. We are looking ahead to the election and it is a bit of a headache. Institutional form has been put from a on the agenda not only scotland that across the u. K. Put on a David Cameron on friday the labours later, party opens up in manchester. It seems that constitutional reform is like the elephant in the room. Let us remind ourselves why it is such h rookie situation. It isf people are saying fine. Let us remind ourselves why it is such a tricky situation. [indiscernible] he even came around to answering the question that he does not think we need an english parliament. Favor of a new parliament. I do not think that is the answer. I am in favor of one house of commons. Goodness, we fought to end at nell over the last we fought tooth and nail over the last year. The westminster parliamentary seat and that is why it means so much to labor. Thatdepend on those mps represent scottish constituencies when they vote in westminster. There is no getting away from it, is it . Is preserving labor influence in westminster. I imagine they like to push it down the agenda. What else is on it . Abouty would rather talk other things. The minimum wage is going to get a bit. Ed miliband has been linking to thell from the scots economy. He said the rail message we should take here is that people who felt they had nothing to take such a big risk to break up the United Kingdom and the as a the emphasis. She is top but a new minimum wage of eight pounds per hour. He is talking about a new minimum wage of eight pounds per hour. Some were saying they want to make sure politicians stay out of the setting of the number and left up to the lpc. He is going to be potentially incomesut cutting mps and the salaries. It will avoid the questions i will put it to him anyway. Thank you. Conversationhe going. We are joined by a chief economist. Thank you for joining us. When you look at the referendum, it spoke to similar movements across europe. Catalonia, spain and whether it would energize those movements. Waking up monday morning, it has become a bad . Politics again bad politics again . It hassles it is not relieved the pressure. It has, it has not relieved the pressure. Youre absolutely right. U. K. Of fair. Essy scotland will get further power. What happens to the rest of u. K. . It does not seem like they should leave others. Scotland will get concessions. That is clear. Whether Prime Minister cameron his eulead when he gets k eu referendum. If he gets it. Take it to the ash and get something back. Take it and get it back. It is 2 parties. Eu and wedo with the will be unsuccessful. Whether camera can get 2070 cameron can get 2017 and be successful . The only way to get that far is to win the next election. If they do not catch up, cameron will come under pressure. It does not seem to be going anywhere. To ask of the question on a subject we talk about his business, economics. How tainted our assets after this . Markets can look live happily with federalized u. K. Constitutional change can sometimes seem pretty archaic. Most markets would be happy with the idea with more business friendly, english none parliament or taxes. That seems to be the direction. The risks that will be worried about is the risk of what happens if maybe the u. K. Gained some ground. The english nationalist pressures. You have asset to risks rising up and that will be the one to worry. One aim. Rkets is if i see one and context rate in scotland and one in england. It is a bit messy. It is a headache to businesses to deal. Countries in other whether the u. S. Or germany or other countries that have this federalized structure deal with it. You are right. A big change. A big question is what taxes do the Scottish Parliament get a hand on . Is its Corporation Tax . That will be a big deal for a race to the bottom. Is a how much could they vary. What about Capital Gains tax . Its a bit of a headache. I will ask about politics. Who is the loser here . Ed miliband or David Cameron . It is still up and in the air. The labor market is under the most pressure. Here faces a big problem with the english mps. And gabriel big problem right now. You had up to the election and it could swing the other way. And that is in the big problem right now and you head up to the election and it could swing the other way. They need to make up a lot of ground. Thank you very much. We will keep the conversation going. To the shadow chancellor. He joins us from the partys conference. That is next. We are back in two. Welcome back to on the move. I am Jonathan Ferro. The one corporate story that is dominating on the ftse is tesco. Their troubles continue. Byy overstated the profit up a quarter of a billion pounds. They said they are launching an investigation. Lets get insight. Of where we aim of saw shares are really take a hit but because they said it is probably not going to meet expectations. We are cutting our dividend by 75 . That happened on august 29. They brought the new chief executive on a board. Now they are coming up and saying to the tune of 250 Million Pounds. We overstated how . They counted some money to early and putting back some costs too late. Simple mathematics seem to be going wrong. Are doing a comprehensive review. They will have external lawyers. The key issue is that a quarter of a billion pounds is about 1 10, not diabolical. Is dave lewis going to have to uncover at the company . At saying that was to change our reputation through doing and not talking. He is doing that but how much more to go. An internal like mistakes. The market wellpositioned is another problem. Exactly. A company that 3. 5 years ago under clark was trying to regenerate and rejuvenate and bring the new upscale stores. Trying to freshen them up. Underave been woefully invested in. I which want to focus on media strategy online. Many believe it is a money misspent. They are coming down on expenditure. David lewis comments from unilever, a focus on personal careful step one analyst said he focuslly trying to a on personal care. One analyst said he is really try to focus. And putting the right products on the shelves. Simply eret share was oded. The research showed that the last three months leading up to august had of the worst sales in more than two decades. Down by more than 4 and lost the market share again. It keeps a disappointing. How much longer will investors keep up . Many are selling this morning. Down by 8 . Pounds wipedillion off the value of tesco for overstating profit. 1. 5 billion pounds wiped off the value of tesco for overstating profit, it is a punishment. Alibabas ipo is the biggest ever. An option to boost the deal by 15 according to a person familiar. Shares sold 38 on the trading debut on friday. The biggest first day job of 10 billion. That is it for on the move now and we will be back. Welcome back to on the move. I am Jonathan Ferro. Ack to the labor meeting we are joined by the shadow chancellor. Thank you for joining us this morning. I am sure is a question you have been asked all morning and all weekend. I will give you the chance. How does labor a square the offering of more power for mps without giving the same power to english mps . We have a unity in which we have degrees of evolution to and londond wales and different regions and that has bench rule in our constitution for hundreds of years. Sureuestion is how we may it continues to work in a coherent way in a fairway without complexity with proper accountability . You are right to to say that more constitutional reform in scotland is going to require constitutional reform as well. It deeper accountability and more scrutiny. These are things we are going to look at. There is some simple solution where mps only vote on english laws. That leads to the undermining of the parliament system. It is not an easy solution to this. We wanted to be done in a fair way. For a lot of people, it will not make sense. The scottish permanent undermines the english. For a lot a oh, they will see the labour party as extremely exposed because of your influence. For a lot of people, they will see the labour party as extremely exposed because of your influence. What is your response to that . , the answer i gave and the situation we have is true for hundreds of years. We had a in which a scottish mps have sat and made decisions on of the budget we have had it where the scottish mps have sat and made decisions on the budget. Ase University System wea evolved, that has been how it has been for a long time. I have to say the idea that is it as an easy way you can change that and say we will have scottish mps only voting is something english mps only on something and it is not as easy as that. The government has said it do not rush to easy solutions. Labory it is all about defendant is potential majority. I will say to you it is all about David Cameron dealing with division in his own party and the threat of the u. K. Put the Party Politics aside, the right thing to do is to have a proper Constitutional Convention that starts from listening to people across wales and scotland and do it for a couple of months chaired by william hague. No one thinks it will be quick or easy. Let us put it aside. Aboutst logan is not Party Politics was to it is a fundamental question. Washes scottish him. The west logans not about Party Politics. A fundamental question. Why should scottishmps get to vote on english laws . It is a factor that if you have within a union, one country, england 85 of the overall total, if you tried to move to federal structures of a voting, you end up with 2 Prime Ministers. Parliament and 2 two classes of him peoples and we fought to persuade the people scholar not to leave our union. Why people not gone for would fast track scotland and wales out of the United Kingdom. It is an easy question and a complex answer. There is not some quick fix. If we can achieve reform, i want to do it. English laws voted on by it was him. Mps voted on by english which a David Cameron supports, it is not fair. Talk about the election next year. The u. K. Has a larger budget deficit dan frantz. If you get into government, what are you going to do about it . The u. K. Has a larger budget deficit then frantz. I want to keep it from falling. With had difficult times. It will be spending cuts. George osborne said he would balance the budget that is not working at all. One clear fiscal objective to balance the books and secondly we would have to be very tough on spending. Looking at every pound we spent and also making fiscal decisions on the benefit. You take away from the richest and i said it we would have to cap one freeze at the 1 benefits for the first two years of parliament. Ahead with the income tax cut for the highest honors. Those are the broadest shoulders that need to bear their fair share. Well will take a 5 pay cut as ministers and freeze our pay for the next of parliament. These are the things we have to do to get the budget balance. Very quickly. Takes the burden, will the labor put the burden on business . To be probusiness but not business as usual. We have to changes in the way our banks are regulated and energy works. We are saying we want to cut and freeze businesses for small firms and work with businesses to great the jobs for the future. Toto create the job create the jobs for the future. Said that is e that is ed balls. That is it for us. Tesco home bowls. The managing director tesco tumbles. The managing director talks about inaccuracies. Siemens. Labour gets to work. Opposition leaders are set. Stick around for the election of agenda. We will be live with the shadow business secretary