Transcripts For BLOOMBERG Countdown 20141014

Welcome to countdown. It is just 6 00 here in london. Hong kong police are using to takedownnd makeshift barricades. It comes off to the hong kong ceo warned he was losing patience with the demonstrators. We are joined live a from the protest site. Give us the latest. As you can see behind me, traffic is flowing in both directions. This is something we have not seen for 17 days since the protests started. The protesters had blocked off of this road. This is one of the main thoroughfares leaving in and out of the financial district. About three hours ago, the police came in. Bambootesters erected barricades to reinforce steel ones. The police had to move some of those barriers as protesters spent most of yesterday reinforcing the ones they had. Police took them down pretty quickly. Right now, the road opened up maybe 10 minutes ago. The truck is picking up garbage all along the road. There are still hundreds of suree here trying to make that protesters do not come back onto the road to reclaim it for these protests. They want the protesters to stay on the road parallel to this one to continue their protest. The government said they would help them move. This operation today certainly is part of the governments decision to reopen the road for normal public usage. The protesters need to get off the road and let the public reclaim them again. Thank you. Some very clear roads emerging behind her. Ar more, we can now welcome member of the Hong Kong Police force for 18 years. And then at political consultant agent. Is this the beginning of the end for protests activities we have seen in hong kong . It is a very significant stage whether it is the end, theref the are other pentup emotions. Police has been pretty effective and cleared a large area of roads. police force, what you make of the tactics being used by the police to clear away these barricades if this is the beginning of the end . We saw tear gas used september 28 but things have been a little calmer since then. What may have triggered the decision to make, to clear so quickly was of their wares at on civilian clashes yesterday between because there was civilian on civilian clashes yesterday. It is very difficult for police to get caught in the middle of two movements right now. Moves logical for them to as quickly to prevent further incidents. It was a wide move wise move. What is your assessment of the police being involved on the streets of hong kong . Difficult to say. This is a unique situation in hong kongs history. They are different players involved or Different Actors involved in this. Of taxiys triad drivers are apparently an uncoordinated attack on the central people has many people asking questions as to who was behind it. So, it has been a unique situation. From an international perspective, there is not been a smashed,ne of glass no vehicles overturned. Really rather tame if you compare it to the scale of wto protest in london and elsewhere. From a Financial Markets point of view, i suspect it is a positive. Will they have achieved anything if we see the end of the demonstrations . Will they have seen any of their demands met . Frankly, not. All they have done is raised awareness of the discontent in hong kong but in terms of influencing the mainland government, i think they made zero progress today. Thank you for joining us. For the battle of the budget in luxenberg, finance ministers convened to talk about 20s 15 spending 2015 spending. Hans is in berlin. Good morning. How strong there is the german resistance . Good morning. Reading the local papers, it seems like there is an exception for france and germany is not holding as fast. They are looking for a way out for france. They are out of line when you look at where they are 4. 4 budget deficit. It will be for three 4. 3 next year. You have stronger comments coming from the dutch finance minister saying with all due respect of france, the gap must be closed. In some ways the finance ministers will be talking to the friendship but also talking to the new European Commission head. He needs to figure this out when the budget gets submitted to him. France showing no signs of letting up. Frances budget deficit is a matter for the french parliament. No give from the french side. Guys . Are the germans or dutch prepared to give france anything . Here is the movement overnight and there was a lot more talk about topping off the European Investment bank, an Infrastructure Bank getting close to 300 billion. Listen to what the luxembourg finance minister said. I think there was a large consensus that we need more investment in the european union. Good countries that have fiscal situations should do more in terms of Public Investment on top of fostering private investments. Commissionn of the which is expected to be implemented soon will be a very good stimulus to growth. Problem with the European Investment bank those funds would not be available until later this year. You have to wait a little longer. The question on all of this is france too generous . Mark . Thanks. Hans, our International Correspondent in berlin. Deals from the Top Media Companies the gathering for the annual conference. It is all about the quest for content. Francine, what are the ceos looking for . Do they have deep pockets . Tell us all. Yes, they do but they have deep pockets for the right content. This is truly the battle for the best content. We have been speaking to a lot of ceos who are here because they have survived. You use a good to a Satellite Company five years ago and say i have these 20 channels to give to you for certain amount of money. Now with netflix and the like, they have to make sure they are at the forefront of innovation. If you look at internet advertising, it will grow more than traditional linear tv by 2018. We have seen a lot of producers, ceos and they need to make sure they buy the right game show or right tv series otherwise it will be a bust. What is going to be on our screens next year . Is it more game of thrones. What is the jon runyan the g enre . The jo the we think it will be game shows. There are a lot of producers and tv companies that say there may be a resurgence of this. They say that tv is cyclical. We have had not a great game show for the past few years. I caught up with one of the biggest Production Companies of the world that has a turnover of one billion euros. They are behind big tv shows like x factor. Game shows may be back on. Eventhave not seen a big game show in a while. Are we ripe for a big game to come back . Possibly. If i were a betting person, probably. Can we see games coming back, yeah. That is a possibility. We still have everything here. We also have the resurgence of the webisodes. These are little clips that are cheaper than tv series or things done anelsewhere. We have seen a lot of Production Companies by those up buy those up. Talk about the chinese companies. 2018 will be when that market comes to life. Are they present . Are they the buyers . I remember the price is right. You may well do. A lot of up with Production Companies that say they are try to target the Chinese Market but it is very difficult to do. I spoke to a ceo and she was telling me there is a lot of Production Companies banking on china because they will become the largest market in a few years from now, certainly the secondlargest by 2019. 8. It will be very difficult for game shows and tv series that are catered for the Chinese Market. A ceo of onewith of the biggest internet sites in china. He has 500 million views a day. They will go up to 2 billion in two years. He says he is buying anything that is american. At think the next wave is movies because we are working out a way to collect peoples money like a dollar or two dollars per view. It will grow into volume. I think we will buy a lot of american movies because the movies, you cannot sell advertising. There was not enough time is not enough time. The payment is not an issue anymore. I think we are going to buy a lot of movies. He was talking to me about feature films but also about u. S. Tv series. Isseems the general workout do not cater for a Chinese Market, just do what you would do for an american and that will also sell in china. The government has Just Announced they will cap a 30 the amount of foreign films available on the internet, 30 from 2015. A lot of Internet Companies have to be ready for that. They will only allow 30 of their 410 of their portfolio. Francine, thank you so much for joining us. A little on in the show, we will talk to the Global Entertainment later. To hear about the second screens and the rise of social tv. The interview is at 6 40 a. M. U. K. Time. The london edition of the call a 42. 6 Million Pounds worth of sales. Steven murphy will join us at 10 40 a. M. U. K. Time right here on bloomberg. You to join the conversation on twitter. Tell us what you would like to see more or less of. That is where you can find us on twitter. 50 minutes past 6 00. 15 minutes past 6 00. Stanleys managing director joins us with the answers. That is next. After falling last week for in first time in eight continuing the dead drop, the dollar is rebounding this morning. Will that continue . Morgan stanleys global head of fx joins us this morning. Volatility is back. We are getting used to some of the bigger risks. Looking at the dollar, is this a blip, a temporary pause in the overall momentum of the u. S. Dollar . We have a nonsymmetrical growth globally. Weakish. Oing you have problems in europe. Accounts andtal full convertibility of Foreign Exchange. You will see Foreign Exchange markets reaching a new equilibrium very quickly. What the point i am making is that when nonsymmetrical growth exchangeing, yothe rate is reconnecting the world again. Of have a period nonsymmetrical growth but no decoupling. What you have is a very quick a judgment adjustment. It implies the u. S. Dollar is going through a shallow correction. It is a flatish correction but overall it will go higher. Others against europe and high yielding that has foreign funding needs. Of that is something the fed is worried about the impact of the strength of the dollar which could have on their own growth prospect. How significant a worry is that . That is the difference between the growth prospectus. When you have a stronger u. S. Dollar than inflation inspect patients expectations may decline. We cannot ally the high u. S. Dollar is tightening. On the other hand, you see something that is unusual namely that you have gdp growth at 5 plus and at the same time you have nominal funding cost. 10 year bond yields are 2. 3 . The gap a significant is significant. Low local funding cost has loosening of financial conditions. Looking into matters of Inflation Expectation therefore it is more reducing its projections on potential rate hikes and that is in line with our own view. Our view at Morgan Stanley is if the u. S. Dollar goes up, it will delay the rate hike well into the First Quarter of 2016. And what level is the dollar uncomfortable because it seems to be getting uncomfortable . Thehey would have to adjust rate adjustment. That means the potential of 2015ng rate hikes in may is getting delayed into 2016. We are talking about the impact of the u. S. Dollar on rate policies. We are not talking about the u. S. Dollar increase. That is a big change. To whenwell like is touchingtates the u. S. Dollar, they have to look at the opportunity cost. Ityou say it is too high, would have a higher u. S. Dollar implicitly. Europe is the bigger problem. If you have High Expectations like in germany and later on for the entire euro zone, if you have Inflation Expectations that could be very bad for this country. The United States could be affected and be very bad for trade in this environment. The opportunity cost would be quite high and therefore the u. S. Is fine with the u. S. Dollar but they would have to adjust its Interest Rate profile. How critical a position is europe in . You say the euro is now the funding character and that has come through from the gas recently. Quite a critical call on europe. Is it a reference to japan . How bad is it in europe . What we have to consider is the weakness of the euro will buy time to do necessary adjustments. We take a view that you only buy time. The weakness of the euro is not the solution, it is buying you time. One example when you look at japan when japan was going into inay, it went into deflation 1998. Three years before that, they had significant yen weakness. 80 tollar was running 130. It did not prevent it. What we need to use this time in europe to do the necessary reforms. We all know where the answers are where we need to reform. That needs to be addressed a very quickly. If we are losing this time, i am afraid the deflation problem in europe will occur. If euro being weaker does not solve the problem, can you say the same about quantitative easing . Portfolioorking on a effect. When you have that and people are adjusting there are spending behavior, i think the impact is bigger and more lasting. You all right. That is what we are currently singing which looks like we are going from one problem to an even bigger problem by solving the previous problem. The imf was pointing out a number gross debt before lehman was 105 trillion u. S. Dollars. Trillion so 150 that means it has jumped significantly in a few years. Debt andve a very High Sensitivity of economies to why Interest Rates high Interest Rates. Economies immediately lose its theme and that implies the rate of normalization, it takes a long time to get this type of normalization. Thepe that we get technology improvement, productivity gains. That would be the solution to this problem, but it is not that we will get close momentum to take us out. Spent 6ntral bankers billion trying to prop up the ruble. What is going to happen to spend come the end of the year. Give me a figure. First of all, you cannot operate with the figure. It tells you what a dutch disease can do to you. Namely, you have a commodity dependent economy and you see other parts of the economy being fairly uncompetitive. Oil prices are falling so what do you get . You see a currency a judgment adjustment. The central bank leaning against it will not turn the tide. For the ruble to turn around, you need to have higher oil prices. Give us a number. Thank you so much, hans, global head of strategy at Morgan Stanley. Welcome back to countdown. Lets check in with the Foreign Exchange market. The dollar has just begin to weaken again. The dollar yen just turning a little bit. The longest losing streak on the yen is unwarranted which seems to be the view of the markets. We does have the conversation any Morgan Stanley that dollar weakness would be shortlived. In dollartance and dolla yen. By at around 107. Lets take a look at the euro. We have the conference which is later on. The euro declined about 2 10 of 1 . Message wastanleys the decline in the euro is what you saw and the yen in the 1980s. Japanese. T save the the eurodollar declining. Industrial production estimated to come in at 1. 6 . We are seeing japanese bonds that have driven it lower. That is the part of the big mood. Lower on thear morning by 2 10 of 1 . Of these are the top headlines. Hong kong police used a and sledgehammers to clear barricades in the citys busiest district. Police have in trying to open the roads for the past two days and since the occupy protest has happened more than two weeks ago. It comes after the hong kong chief executive signaled he was losing patience with the protests. The u. K. Is stepping up its preparations for combating the ebola virus. Passengers arriving at Heathrow Airport will be screened for the disease by being questioned and having their temperatures taken. The Health Secretary says he expects britain to face a handful of ebola cases in the coming months. Banks from jakey jpmorgan faces 870 billion, according to estimates. Barclays estimates the shortfall could be as little as 237 billion. So wide because proposals from the Financial Stability board outlines various possibilities that amount lenders need to have available. The board will submit draft rules of for the Worlds Largest banks next month. League premier russian president Vladimir Putin as the u. S. Continues to give sanctions to russia. They are becoming more dependent on trade with china. Who needs who more . I think they both need one another. When it comes to weapons, the chinese really want access to high tech weapons. They get a lot of weapons from the russians but they hold on to the best of the goodies. The 235s, russias most recent fighter jet. They have been reluctant to give to china because they are worried the chinese may reverse engineer it and creating knockoffs which would compromise russias ability to sell them weapons in the future. And russias ability to sell weapons to anybody else he does the chinese could directly exploit that. Anther weapon is the s400, antiaircraft weapon that they reserve for themselves. They sell the s300 to the likes of iran. If they give the 402 the chinese, they could to down any plane they want overtime one. Over taiwan. There is something they both need from one another. For the russians obviously, they are looking to find access to funding, trade. They are doing 89 billion of trade this year. Met with theister chinese Prime Minister and says they want to move it to 100 billion and have a fiveyear plan of 200 million. Russia has been isolated by the sanctions. They are very skeptical of one another when it comes to getting closer. These are two countries that fought a war in 1960. What about currency . These two countries have done deals involving that. It is a way of supporting trade and supporting the importance of their own currency and deemphasizing the importance of the dollar. The three factors these countries are considering when they did this three year, 21 ruble swap or 21 million. Is that the biggest deal the chinese have done . They just did one with the ecb last week that was worth 60 billion. They have done one with brazil which was a bit bigger than this. They have done it with other emerging markets but it is important for the chinese because they want to diversify away from the dollar, promote their currency as a reserve currency. You can imagine their issue with the russians because if you think about the rubles decline Something Like 19 this year. Exchange,t the moscow they do about 1 billion worth currencyruble trading. A huge increase. Nonetheless, if you look at the number of rubledollar exchanges during the month of november 374 billion. When russia is able to cut deals with countries where they buy their own oil in rubles is a game changer. That is what they would like to do. They did that 30 year, 400 billion deal with the chinese back in may. They reached an Intergovernmental Agreement on it now. If they get the chinese to pay for that gap with rubles as as they dodollars now, that would mean a lot for the ruble. Lets see what the headlines are. Good news and good pr. Liad is the agenda on, i looking to buy a stake in u. S. Tote tmobile. They refused to entertain a new bid. Caroline is in paris with the details. Give us the latest. The bid has been rejected. It has been made up of cash and sin entr synergy. Sells twiceiliad the global unit of telecom but it was rejected twice. They offered 33 per share and 15 billion in cash. At the time, that offer surprised many because iliad remains a small french company. They dont have any footprint in the u. S. It is like the small guy trying to buy the big guy. Research in germany said it was a joke. This offer was rejected at the tmobile also abandoned their discussion with sprint which would have created the thirdbiggest mobile operator in the u. S. Iliad had another shot they put 36 on the table for 67 take in tmobile and they said they would have 2 billion of savings for the year. That was enough to convince Dutch Telecom and tmobile. Keller that Dutch Telecom refused to entertain their offer. The other potential bidder was dish network which might be a benefit in terms of antitrust regulation in the u. S. We just have to see where iliad set their eyes on next. We are back in cannes. We will be exploring social tv trends at the Global Entertainment leader. That is after the break. You are watching countdown. The topic today is google news chief executive says he deserted the companys biggest search competitor. The Financial Times said he argued that google should not be regulated as is as if it were the gatekeeper of the internet. The chairman will become the interim at chief executive after the italian Eyewear Company lost its second leader in a little more than a month. He will leave the company until a pair of coceos takeover. Virgin atlantics expansion is being curbed by a shortage of ecoairports. The limited Slots Available means they have to have a route before the new destination. They have scrapped four routes as they expanded to north america after partnering with delta airlines. Lets head back to the south of france way our anchor francine is at the event in cannes. What have you got for us . Day. Did rain all there here and discussing power of content and trying to figure out who was going to be a winner and who is going to be a loser. We will talk to a lot of movers and shakers. I am pleased to say we are joined by a representative from pwc. Give us a sense of the trends. We knew that consolidation was coming. We knew there was more of a shift towards digital content. It is the speed at which this is happening. The speed is within infrastructure and technology and then jet and that drives consumer adoption. The consumer is very mobile. Mobile behavior is becoming a norm and that is really dictating what kind of content we watch and how we watch it. What are we looking for in terms of content . And it seems were looking at a possible resurgence for game shows. Websiodes. These are things that have been done on the website. It is exploiting a trend we saw about gaming. All the growth ibeing done by social gaming. That is a very close cousin to what you are talking about in terms of webisodes. What is the thing that is most surprising in terms of how you monetize it . A lot of websites struggle to make money out of this three years ago, now it is no problem. That is not saying the problem is going away. Most good content is still expensive. There are Revenue Streams coming through. Our they sufficient . No. They may be sufficient for some but as a whole, not yet. Monetization is still a huge issue. China will be the secondlargest market by 2018. How can i sell to china . As somebody who was dealt with china for 26 years, we know it is difficult in terms of a market. Partnerings around and partnering with local content producers. That is what it is all about because local matters. That market is huge. It is still very difficult to enter directly. You have to do it through collaborations. The ceo of fremantle was telling me it is so difficult because people want to crack china but think theyre waiting for westerners to come in. It is all about local production at the end of the day. Exports are very important would you have but behaviors are different. You cannot wait for the adoption of western. You have to localize. Make sense if i were producer and to crack china to align myself with Internet Companies instead of networks . A lot of the creativity is in the online video space. Yes, five years ago, people do not have that option. It was always within a boundary and difficult to get into. Helping for the creativity viewpoint and produces more talent as well. What about game shows . They seem to be the one thing that is the comfort food of tv and we have had not a good game show for the last at least 10 to 15 years. It depends on where you are in the world. That is in some markets but local genres are really what drives viewing. I would agree with you but it has to be market specific. We have not really seen a big game show that has gone global in the last two to three years. On. Rguere due it is cheaper and you can eggs engage. It is content plus engagement. You monetize through the engagement now through just the content. The more you can build a relationship with the consumer, the viewer, the more likely you are to monetize in different ways. You have been coming here for years. What is the one thing that surprised you this year . We heard from simon cowell. Is there anything as strikes as being different or is it the same old, same old content . Other than the rain which is different, the content is about the engagement point. You have to think of something beyond the concept. We heard that from james and simon. I was eavesdropping yesterday and a lot of them begin by saying if i were a teenager or it seems a lot of producers are looking for the target audience. If you look at u. S. Figures, it is the female, 15yearold. This is different globally because if you look at china, it is all around use content and short form youth content and short form content. I mentioned the videogames which is the same demographic. The key thing is understanding where you want to play, who you want to play but also realizing if you can get the relationship with the consumer, you opportunities for oneonone dialogue and oneonone Relationship Building is much higher, that gives you more monetization options. You have to be prepared to take the risk. A lotta producers tell me they now have to compete with tv series for talent and for producers. Theys, to some degree didnt really mix. As formats change and become shorter and more interactive, you are bound to get talent moving from one to the other. The key thing is understanding what the consumer wants and the consumer still wants longform sometimes. They still like going to movies a lot. However, it tends to be shorter content. Thank you very much. Ther on, i will speak to director of discovery interactional international. It is bigger than the u. S. Market discovery. We will talk about what trend that means for the future. Thank you very much. An interesting conversation. You know what they say there is no such thing as anything new. Of that was very good. Very impressive. I am trying to find out who hosted 3, 2, 1. You are right. I tend to be more glamorous. Be careful. You dont see yourself with that kind of future, mark . There is longevity. I can see you with that. Who would you like to be . Lets move on. Who wants to be a billionaire . Discuss what will ingrty spice is tellin pop stars to do. Welcome back. Newspaper time. Ryan is on set. Oil ining about geopolitics and the phenomenon that is the falling price of oil. 88 a barrel for your low. The wall street journal focuses discord in opec. They are not due to meet until november 27. If there was unanimity, they could cut prices. That unanimity does not exist. You can find this story. The saudis have agreed to discount their oil and the iraqis and iranians. They said do not expect a Production Cut from the end of november. Somebit more serious than legal threats. It is being picked up by a number of newspapers. The opposition to broadcast proposals. There will be three debates on the run up to the u. K. General election. When it gets to the fourway, you get a seat at the table. Westminster and they are threatening legal action over this. Has suggested an online debate in stat because they think that will attract a younger audience. 1997 spice girls at the brit awards. Look at what they are wearing. That is sporty spice. Thehas spoken out and said female pop stars need to have more dignity and stop being so overtly sexual. Crop topsgirls war and quite sexual themselves wanted to look nice but todays pop stars are about looking sexy. Our fiveyearold daughter loves hanna but would not let her look at pictures of her. That is what happens when you become a parent. Not leaving the house until she is 18. Be careful how you smile in your photos because there is face recognition. Are you smile, they checking what you are doing on facebook, what brand you are wearing. You to join our conversation. The second hour of countdown continues after the break. Terry and the barricades hundreds of police use chainsaws and build cutters to take them down. We are live on the city streets. Finance ministers meet in luxenberg to review next years spending as the region faces economic slowdown. Iliad abandons its tmobile quest. His plan to acquire a majority stake after his improved bid was spurred by the owner of deutsche telekom. Welcome to countdown. London. 00 here in Hong Kong Police are using chainsaws and barricades to take down barricades blocking access to the business district. It comes after hong kongs ceo warned he was losing patience with the demonstrators. Chin joins us live from the main protest site. Give us the latest. As you can see behind me, the road has traffic going backwards and forwards on it. This was not the scene a few hours ago. They were barricades there were beer cades there were barricades. The Police Remove the some of the barriers and refortified. It was pretty quiet and then within a several hundred remove andbarriers using chainsaws big clippers to cut the ties off that were holding them together. They cleared the area within a short amount of time. There were a lot of police. It was not really much of a struggle. The protesters had to move to make room. This road is a main thoroughfare. It has been blocked for some 17 days now. It is one of the key routes the government has been asking protesters to release in order for the public to use. The protesters have been taking up the road. Removing the barricades for the many people to use this road. The protesters are still in the main protest area. They are still there. Police have not tried to move them from their and there was no use of force this morning in terms of reclaiming this piece of road. Is this the end the beginning of the end for the protesters . Some of them have made two of her sites made to other sites, have they . Yes. They have moved into the main thoroughfare. There are three main ones. There is a shopping area down the road in another across the other side of the hong kong harbor. Theyre looking for new places but the police have been clearing the road. It does mean the protesters have a less power because the only bargain they had it was to occupy these roads and that will present a problem for the government. One of the student leaders have said they were prepared to stay here on the road because this is really all they can do to make the government listen to what they want which is authentic democratic reform here in hong kong. Of this road,se the area they are occupying is becoming smaller and smaller which is diminishing some of the power these processors have. Even if they reclaim the road and the government takes them off the road, the chances still remain and they are still fighting for the same cause which is democracy here. Thank you. A little bit of breaking news. Erry has just delivered their first halfyear numbers. The total revenue comes in at 1. 1 Million Pounds billion pounds. When youre looking for the correct number to compare last year with this number we are seeing overall comparable retail sales which is 10 just below the estimates. It is doing well in rainwear. Even though it was a fairlys dry september, the back business is doing quite well. The bag business is doing quite well. Women withor men and aztec designs. The external market is getting more difficult which is the message from the ceo. Looking ahead, talking about for one negative impact of for exchange on the full year has recently reduced, this benefit will be partly offset by more difficult exchange and varmint like ukraine, tourism, those of the big issues. Lot of people questioning whether the ceo. What is he doing with amazon, alibaba . The numbers come in in line with what the market is estimated. Of that will be some of the earnings we get . Earlier this season. The world number two brewer giving them updates on the sales for the first half. Reading that expected to see an increase but that number has come in at just 5 . A little bit below the estimate. In terms of where they see strength and resilience coming through, the chief executive of sabmiller safety perceived Revenue Growth in the first half powered by latin america businesses. Growth wasage value increasing balance by stronger growth in soft drinks. Beencial performance has affected by ongoing currency movements as well as weaker Second Quarter trading conditions in china and australia. Weaker trading conditions in china and australia, some strength in africa and not in america and latin america. Beer tory of declining markets in the more developed parts of the world has been the story for many years. That is the story where we are with sabmiller. Heineken rejected their bid in september. Many thought that bid was an attempt to deflect attention away from others who may be interested in acquiring it. Could we see that . There was a bit by sab bid by heineken to deflect that. The stat of the day. The Worlds Largest natural Gas Producers missed estimates. Usually it is the worlds most Profitable Company in nominal terms. Not as profitable as investors had expected. To under 28 billion rubles 266 the expectation of 21 or 28 billion rubles versus the expectation of 266 billion. Ublesuio what the flock they are less money than peopled them to. There is a hope on the horizon. There are a lot of people talking about the prospect of a gas deal. The russian and ukrainian president met together in the lawn. Milan. There have been signs of deescalation. Thispeople are saying might be opportunity to buy russian stocks which are the cheapest in the world. Trading at the biggest discounts for any of the emerging market peers since 2005. Pricek stat for you, range ratio versus price versus projected earnings for next year on the Moscow Exchange is 4. 7 mark 4. 7 . S p, what is it about . About 2. 7 . It is taking a pasting. Weve been talking things all things luxury. For the full year of the luxury handbag and other items maker. They see significantly below estimates. Profit coming in and they say wholesale sales continue for the rest of the fullyear. They do say things in the wholesale markets improving in 2015 so keep an eye on mowbray mulberry. Finance ministers meet to review the Spending Plans for 2016. Hans is in berlin where officials have been firm on the need to abide by the eu deficit rules. Is anybody listening . How strong is the german resistance from any movement from these roles . Impose the same kind of regulation insistence of the roles being followed as they did for portugal and greece . If you were to swap out greece and portugal for the articles being written about france, you would see a double standard. Luxembourggermany in with the finance and ministers are meeting, you heard some very strong comments. The netherlands talking about with all due respect for france, the gap needs to be brought into line and needs to be closed. We know what it is at 4. 4 , that deficit is a percent of gdp. They need to get it down to 3 and will not get there until 2017. Saysterview this morning frances sovereignty is a matter for Frances Parliament and they wont be kowtowing to brussels. Dutch rmans and the they prepared to give anything to france if they want some leniency on this . Where the movement seems to be and there is a lot of talk in germany about topping off European Investment bank. This is a bank that would fund longterm infrastructure projects, put it in the range of 300 billion euros. Here is what the luxenberg finance minister said last night. I think there was a large consensus that we need more investment in the european union. Good countries that have fiscal situations should do more Public Investment on top of private investment. Commissionn of the that is expected to be implemented soon will be a very good stimulus to growth. Here is the issue at the European Investment bank these are projects that will not get out the door until later this year. Endoftheyear projects, hard to get money stimulated into the economy that quickly. It totally glosses over this issue of what france is going to do to get in line with eu rules. They have to submit their budget later this week. It is the first test on whether or not france will get a special and how long that will actually last. Interesting. Thank you, hans. Those budget battles from berlin. The london edition of art million worth6. 9 of sales. Us to talkhy joins about the masterpieces. Do not miss it. You could join the conversation on twitter. That is where you can find us on twitter. 100 million, the value of assets. After the break, we will ask him how he is taking care of that in the current economic climate. Time for todays company news. Iliad offered to buy a majority stake in tmobile. Over whetherplit the carrier should sell its only asset according to the source close to the asset. Gopro phil under 10 in new york trading yesterday after the camera maker was sold. The formula one driver was left with severe brain injuries after the crash. According to the new york post, his son blames his fathers condition due to the fact he had a gopro mounted to his helmet at the time of the incident. They say they are trying to get more information before commenting on that report. High google chief executive eric says hesays he argues they should not be regulated whether they were the cake keeper of the internet gatekeeper of the internet. Equities and other risk are at a critical juncture, our next guest says. The chief Investment Officer Stuart Richardson joins us onset. When i got talked into your notes, i wanted to run out the door and sell everything i own. A dark mist. The imf is worried potential instability, in experience investors piling in. Liquidity doomed. Equity risk up. Where are we . I think we have covered it all. We have seen a five or six year period where investors are encouraged to reach for yield. Put any flow of money into bonds. Mostly corporate, highyield. We have seen the proliferation of abs, etc. With covenant light making it come back, this is a consequence of the fed supported policies that all Central Banks across the country have been encouraged to. We think a lot of investors would of got into areas they would have not done in the past. They are not committed longterm investors. Will the exchanges be able to get out . If there is no liquidity, how can these guys get out . There as been talks about gating bond funds in the past. This is a really big question. What is going to happen to the price . If you are worried about credit markets, which parts are you worried about . Where will we hear screening coming from . If you begin to look at what is happening in the global economy, we are seeing stagnant growth in europe, japan falling backwards. We dont know what is happening with the u. S. At the moment that they could also slow down. Slowdown, that will make it harder to jump for companies to jump and service their debt. That coincided with rising yields, falling prices and triple digit deficit. In 2007, we saw that. Luke ability has made it much worse on the market. Thank you. Stuart richardson from rng. More from him after a very short break. Welcome back. 7 22. With Stuart Richardson right now. Something big happened yesterday. Elows p fell b hits moving average. Do we care . A lot of people talk about it. Some institutions follow in which could make it important. You have to be aware of what investors are doing. What is really changing is the psychology of the market. The fed has stepped away from qe. We dont have that natural support for the best part of two years. Up the batake for equities . This is the lack of growth in europe. It is coming out of several parts of the world. It should help corporate earnings. You see the lack of injection of people are suddenly reappraising why they are paying top dollar for equities. It is a double whammy. It is not a technical breakdown, therealso the realization is the unlikely chance of seeing rates go up. It is assigned a Central Banks it is a sign the Central Banks are going into deflation. Even if the u. S. Cover economy does recover, now with bear markets a number of oil prices. If that continues to happen, how is that for the u. S. Economy and how that will push inflation . It pushes rate expectations way out. About 2016 . It is the evil you and of economy it is the evolution of economy. In terms of the inflation outlook, the Commodity Prices are going down. It will lower the cost of inflation which should help the consumers with gas prices. It is the strength of the dollar which is coming in the rise. The reports coming out of europe is a consequence of the weakening euro. It will be interesting to see what happens with corporate results. Some of the more methods every last it is a reward for them, almost another reward for the other part of the world. A strong dollar has caused other problems in the past. There was the crisis in the early 1980s. The asian crisis in the 1990s. Dollar combined with a very weak Global Growth is a problem. Next . Re we going to do this is a very critical juncture in terms of the global economy, Central Banks and paying top dollar for equities which does not make. Sense. Thank you for chatting with us today. Tomorrow is another day. He is fine. All that talk about game shows in the 1980s. Burberry reported the numbers for the first half. Chinese tourists are not shopping in hong kong. Find out what is changing at burberry. Has the ceo combined the role of ceo with the chief director . Welcome back to countdown. I am manus cranny. The dollar yen, you see. No one wants a low, i should say. Though one a month along should say. The longest losing streak on yen. 107. G in a market around the euphoria and you will touch u. S. Gher in the europe will play the catch up game. U. S. Equities came lower. We have to play the catch up again. It will fade, according to sachs. Euro is declining. That expectations will continue to decline in Industrial Production in the eurozone, a negative reading. Japan, one of the big sellers in bonds. Some ofing pressure to those euro trades. The view from Morgan Stanley this morning, i am looking for the tweet and i will send it out. Dollar ratethe hikes will not contribute to the First Quarter. Edwards. D go to anna i am anna edwards. Hong kong police in use chainsaws and sledgehammers to clear barricades and the business district. Police have been trying to aggressively open up the roads since the demonstrators occupied part of the city two weeks ago. The move comes after the hong kong chief executive is signaled he is losing patience with a protest. The u. K. Is stepping up its preparations of combating ebola virus. Passengers arriving at Londons Heathrow will be questioned and have their temperatures taken. The Health Secretary says he expects burtons to face of ebola cases. York stockn the new exchange yesterday and shares ended the day up by almost 2 . The carmakers ceo spoke to bloomberg. Chrysler has a large portion of the space. We are finally taking chrysler sinceo the u. S. Market the late 1990s. It is a comeback story. Here for ao be variety of reasons. Access to the biggest Capital Market and are the world. Finance a lot of the plans. It is like being home. We are in the right place. Of the Top Media Companies are meeting. It is all about the quest for content. Francine lacqua is on the ground. What are chief executives looking for this year . Well, we are here and trying to figure out who they are targeting and what kind of content they are looking for. I spoke to the ceo of fremantle, one of the biggest Production Companies in the world was a turnover of more than 1 billion a year. They have the x factor and the ceo, told me game shows may be back. Eventhave not seen a big of a game show in a while. Ripe for the game show to come back . I think so. Probably. Can we see games comic back in the next couple of years . I will say it is a possibility. Said she also told me that a lot of people are focused on teenagers, the Younger Generation they use tablets to watch assume medium so we must not forget that the older generation because in the states it is the 4550 demographic that rakes in the money. The industry is clearly changing all of the time. Our feature films still prevalent . Are but i have to say a lot of producers are worried they are fighting for the talent with the tv series. If you look at the success of downtown abbey and breaking bad, it is clear these guys are just as big if not bigger than the feature films. We spoke to actress liz hurley and she is starring in a new series and said four or five years ago, she never would have thought of saying yes to a series and she hopes this will be her big break. It is just that at the quality of television has gone up and up. The quality of writing, producing, performances are phenomenal in the top tier. They go everywhere. It has a consistency. Ametimes, you can make fabulous movie and no one sees it. That can happen. If you make fabulous tv, the world gets to see it. That is a very attractive proposition if you can do a show that rings peoples bells. That is what were hoping for. The game is on. Theres a huge appetite for content. Its cap come from tv series, game shows, feature films, and webizones, shows produced and web that makes him so much cheaper. Thank you. See you later. Burberry just reported their first half retail revenue. That came up 8 . That was in line with analysts estimates. Guest joining us from tokyo. Thank you very much for joining us. You look at the set of numbers of by burberry and you have to sort of say, Christopher Bailey, is it enough to judge him on . Still very early in his tenure. What did you make of the numbers . They are great at numbers. Goodrry, that is very news. As far as judging Christopher Bailey, it might be in little as aarly to judge his role ceo just because he has been appointed so recently and the company would have had a lot all plans and put in motion by his predecessor. Its a little too early to judge Christopher Bailey now. Risk in japan. A couple of issues you raised. One is that burberry clothing is japanese licensed. And you said the japanese and perhaps the chinese, they are changing what they want from a luxury brand. It is a big risk, isnt it to the banner brand of burberry . Yes, absolutely. Burberry has announced they will close their franchise business here which is worth about 500 Million Pounds retail in japan. They just received royalties. Usually would close of the business to purify the brand or where licensing is doing a lot of damage to the brand and you will probably expect me to say it is the thing they should be doing. If you look at their business right now, they are doing extremely well. They are one of the leading brands a you can see it is not damaging the brand. Clothing is something to be put in question, especially that they are selling products of the older generations and pick up from the media and lets not forget the older generation as they are the ones to spend. In japan, they are spending. Whether they can pull it off by building their own network, that remains to be seen. 500 Million Pounds of business is a lot to go for. Was something i wanted to pick up from you. Desire, the demographic of heritage. Uniqueness, craftsmanship. On the globalift luxury stage that is what the buyer want . They want to more heritage, local heritage. Theres the risk for burberry and a possibility. We get their numbers later today. Yes, absolutely. You are absolutely right. It is almost a generational shift. The older generation, especially in japan, the bad weather and the trendsetter for most of asia is the older generation who is inspiring so much of the western that thenot something Younger Generation seems to be aspiring to. Maybe is because they do not have the money that their parents used to have acted near young age to spend on western luxury goods. Maybe its because they are not as interested by the western brands as the older generation. This is a shift that is happening that is quite strong in japan and the Younger Generations. Burberry rightct now. If they keep targeting the Younger Generation, they may be targeting people who cannot afford or interested. Thats a longterm shift that in these brands will have to address. A great insight. Fabrice, the lunch rebrand. Africa has been facing a shrinking economy and a Credit Rating downgrade. How the finance minister plans to take on the challenges with his first budget presentation. That is the next. Welcome back. I am mark barton. The 10 year guild. This see yield going back a year. Steadily declined last yesterday. 10 year bonds have risen for a six day. Sixth have fallen for a day. What investors are doing in the u. K. , there are betting on a 25 point hike. Inestors were voting february. A good shove the rate of inflation has slowed which is the slowest in five years. Not just the u. K. Economic environment that is changing investors mike, but the investors minds, but the backdrop. The twoyear yield making u. K. Bonds the bestperforming tracked by bloomberg in the last month having risen by 2. 6 . Eurozone security and u. S. Bonds are up. Watch out for 10 year bonds rising for a sixth day. The longest streak of 2. 5 years. South africa is a finance minister is preparing to present his first budget update to parliament after only five months and the job, he is had to contend with a shrinking economy and the currency sliding. To see you this morning in a. Tell us about the pressures as he delivers this. He is under pressure. What is influenced him . We know the strike is increasing and that has created a lot of worry as to what position labor is going to have. He comes from a background of the private sector and he also instituted the very first strike action in 1990 within the financial sector. He understands the labor perspective and nose as finance minister he needs to pull back as finance and knows minister he needs to pull back spending. He least when sure he pulls back on spending, Government Spending and Wage Negotiations will be underway with the Public Sector and they are demanding a 15 increase. And the fact we will see people leaving their jobs as well. And debtent, 25 rising. What about a budget next week . Can he afford something for everyone at this time . I do not think so. That is goingity to require more funding and they have a budget shortfall as well which means to be spent on Infrastructure Spending and making sure their labor is going to be happy as well. You have south African Airways the needs more funding and make sure the investors are happy and a revenue shortfall. He has a full plate and many audiences to please. Look at the market reaction. You can hardly call it a turnaround. It is seen a little bit of reprieve. What is the investor communitys take . You have growth expected this year. It is grown by 5 . It gives you an indication of investors arech cognizant on. The currency is down 24 year to date. Theook the position and brand has depreciated around 7 . There are several global fact theres. Investors are very worried about the Growth Scenario and they want to see how south africa is going to balance its budget. Investors are not [indiscernible] can go via nigeria, looking at kenya as a viable option. Are going, south africa, what did you have to offer us . Competition this day. Thank you. You can watch the full interview with the South African finance minister at 9 30 a. M. London time during the pulse. A live shot of the city of london were equities are expected to play the catch up again. We open in 10 minutess time. What we can expect from the earnings season. Very welcome back to countdown. To end the controversial of the double tax. David luna and has been under mighty pressure to phase out the attacks used by Many Companies including google and apple to drastically cut the Corporate Tax bills. How theenzie explains double irish tax actually works. The double irish has come to represent flaws. How does this controversial loophole work . U. S. Companies say uncle sam licenses is intellectual property to an irish company, legally based offshore. Like in the bahamas. These guys license the rights to a second irish company. This one based in ireland. It receives income and pays next to no taxes because they are offset by fees which are taxdeductible. Uncle sam pays no federal taxes on the income from the irish subsidiary because the earnings were not made in the u. S. It all adds up. Americas largest multinational collected more than 1. 5 trillion of a nearly 12 from a year earlier. Loss toates to revenue the u. S. Of 90 billion. [laughter] we will continue our chat later and we will talk to the former Irish Foreign minister and he will be joining the pulse the bank irish the pulse. The irish has done something remarkable. Thelea he leaves budget untouched today it will be 30 billion euros cut in the past five years wisdom that is what it does. I flew back from ireland sunday afternoon from the republic of ireland were the biggest protests, outside one of the main political buildings. The new charge. It is interesting how the backlash, the backlash against austerity is really kicking in on the streets. As a banner headlines, trying to tempt the voters with a 2 billion euro giveaway ahead of the election next year. Won a couple of parliamentary seats. We site over the years we saw it over the years. Lets look the markets. Theooks i we will start trading day a little bit weaker for european equities. We talked about this the last couple of days, the fact that certain voices in the fed suggesting if Global Growth is weak, it could delay rate rights. We heard from Morgan Stanley how how they do not think rate hikes will come until later. I know i included Morgan Stanley. That kind of conversation is not listing lifting equities. Thet is because can world divide with higher Interest Rates . Equity markets obviously cannot. Yeah, a number of luxury brands. Burglary. Burberry. Rglary we have burberry. Even though it is dow year to date it has outperformed every other luxury company. It has beaten the other. It is all the handbags. On the move is up next. And the open of equity trading. As they will Pay Attention to burberry. Ry. Mulber stay with bloomberg throughout the day. We will be looking at druggies pledged to do whatever it takes. s pledge on draghi to do whatever it takes. That goes on trial. And if you thought quantitative easing in europe was going to be easy, think again. We will look at the British Fashion battle. Mulberry Group Sees Revenue ile burglary climbs. The ftse is lower. 54 points lower on dax futures. The u. S. Equity in europe. It is going to be interesting to see whether we can find any sense of reprieve. The chinese drop their interest in asfor the first time many weeks. Equity markets are opening lower. 1 . On down a quarter of do not squander the opportunity that a low euro brings to you. That was the message from Morgan Stanley