Go into the numbers. Thank you. You are watching the figures in 15 minutes from now. Indeed. We are expecting a drop in profitability for the first time in a decade and there is emerging markets and a bit to china. Want to know about the divisions be undertandards could the microscope. That will give us something to look at. China and were watching the ukraine, the futures, the ecb. The index in europe and the payrolls and the United States of america. It is called adt. It is a curtainrazor. What is happening in europe. It is from Morgan Stanley and he said the big debate is between deflation in the eurozone and the risk is high and rising. Today in piece written our print division and he is the chief economist. The risk stands at 35 in the eurozone unless the ecb gets the ax gather. And it is rising by a tense of one percent. The numbers are doing nicely. Lets give you a quick indication on the companys that we mentioned at the top the show. Still waiting for this to open. David tweed just pointed out that it is about the impact of the emerging market drop in value. That is a doubleedged sword for mario draghi. The strong value of the euro and the doubleedged sword of the emergingmarket currencies are the challenge for the German Companies and it is the reason why the dax is down. You get an opening print. The market is disappointed with the numbers and they were hoping for one billion euros and they fell short. Look at the markets and we have an update on the top story of the week. Lets get to Ryan Chilcote. What is the latest . Off and the kicks u. S. Secretary of state is going to meet with the Russian Foreign minister in the neutral city of thes a few days after russian president spoke with barack obama for 90 minutes and they got nothing. Crisis escalate since then and president putin is willing no one. Yesterday, the president suggested that he had no intention of escalating affairs in the east of the country and he looks set to stand his ground in crimea. Lets take a look at the relationship between the natural gas producer and the ukraine. Relations and russia says the ukraine owes them 3 billion and this worries people that there could be another gas war between russia and the ukraine. We will take a look at that later in the show. Thank you for that. That with the latest. Jeffrey. S is richard investmenthief officer. It is great to speak to you. How it wasense about in the ukraine. This is the market story and this enters the cold war. Markets should not be too beaten up. I am not sure it is an either or. And itre lots of nuances. S a reaction to a philosophy there is not a full richard to be had and we do not have enough if there is ad call to change our investment strategy, my guess is that it is not. When you see what the markets did on monday and on tuesday, that is the warning and do not react to the last bit of information. Should investors be more cautious in russia and the emerging markets . Should they keep it as it is . Investors should be able to do so. If investors have exposure to russia, there is a signal here. There is concern about the impact in the way that the is going one emerging markets and you may say that is fortuitous. There is a situation between the ukraine and russia and we are looking at the impact that comes through commodity and energy prices. Today, it does not look like this is going to be a deflationary event for the last. That is something we have to be wary of. Talk about emerging markets and we have elections in india for april and we have a lot of movement in china. Without corporate default. Are you more cautious than you were . I think the answer is that we remain cautious on emerging markets and the growth cycle has not yet got to a pays for a base that benefits the emerging markets and you are seeing the problem come through in china. China knows they cannot rely so heavily on the west for demands and gdp growth on exports. There is also investment spending that has been a big contributor to growth and cannot continue at this sort of pace that it has been. It has to come more from Consumer Spending and that is hard to generate. There could be a lot of pickups. The chief investment officer. We are back into. In london, this is on the move in london. Were streaming on your phone and tablet and on bloomberg. Com. Lets get back to richard. Thank you. I take two things away from the conversation so are. The investors should not panic about the ukraine and the second is on the emerging markets in china. You are very cautious. How long are you going to be cautious . Is there anything that can change that . At the moment, we continue to a necessary rebalancing and what is happening is that we are excesses of the time before the financial crisis when we saw a deficit and policy toion is being designed rebalance the economys and were seeing that happen. While the trade deficits are coming down, the demand for products from emerging markets, whether commodities or manufactured goods, that demand is not growing as fast as it was when trade deficits were expanding. The markets are going to find the environment stuff. What is the concern china or deflation . I dont think there will be deflation and i think we will see a long time of low growth. I dont think inflation will be a problem. Of alarm also its bells and i like to put the word demand in front of deflation. And thatalling wages means following command and a negative spiral. It is not just falling prices. Is lots of sectors. You see groups and things like that. Falling realu have wages that that is the problem. The cycle that japan went through and if you do not touch it at the right time, it is difficult to turn around. Are we in a scenario like that . Deflation and the specter of it hanging over us unless handled correctly. One of the characteristics of japan that contributed to the slow growth was a rapidlyaging population and people having a lower propensity to consume. That changed the balance of growth in the economy. There are european economies that have rapidly aging populations and it appears to be a social issue and an issue that has a profound Economic Impact and lots of implications that policymakers have to think about. The exacerbates deflationary tendencies in japan. Talk to me about the value and looking at the markets. Where should you put your money . U. S. Best value is the i am positive about it and it is an economy that is on the front foot and Getting Better earning growth through corporations. We have seen a lot of expansion and it looks expensive. European markets look less expensive and if europe can produce growth, we can get that through to Earnings Growth and european markets can outperform. Which ones . Are we talking about small spanish retailers that are doing better . Andployment is coming out it is the untold story of success in europe. It is determined by how growth comes through and the United Kingdom could look at the market and the recent trends in investment spending that we saw. If they are prolonged due to productivity growth and better profit margins, we can see them and they have failed to come through any meaningful way. Continental is a similar story. If germany can push through in a similar situation to the u. K. Talk about earnings in general. That wee first time have heard about currency fluctuations. In this going to be a concern for the companies . It will be a problem when the currency that you have not thought about in an emerging market, where companies have big exposure and it suddenly moves and there are the translation effects. That is something that is in the background. So far as major currencies are concerned, i do not see huge moves taking place between the euro and the dollar. It is almost which currency do you like the least. It is not a massive factor. It is something to be wary of. Where do you put your money . Is there something that you think is overvalued . I think we have to be worried about what is going on in emerging markets. South america looks to be in a difficult state and i think, in terms of the market, it refocuses and the situation in china is unset. It is unsettled. The creditlear where bubble is being created and if it will deflate slowly or pop at a stage. There is investment in property and a wasteful capital investment. How will that rebalance . There are issues in the emerging markets to be aware of. Thank you, richard jeffrey. We are getting results right now. Manis, tell us the numbers. Profits and the profitability of the bank dropped seven percent. 6. 958 billion. Sees inet likes what it terms of the top line. The bonus pool dropped 15 . The most contentious issue was raising the bonus and this is a asiafacing. The top one profit missed analyst estimates and the big issue is divesting and selling businesses in the business of building capital. The buffer of capital that you have comes in at 11. 8 and slightly above where the market was focused. Year, it is a great a topline News Announcement and that is no shock from standard charter. Andk costs are broadly flat go into 2014. Is said to be challenged with income and profits and you know the stock at 12. 88. Look at standard chartered, they pushed the stock, relative to with thesetitors numbers and that is the topline takeaway. Im waiting to see if there is any more details. They are looking at smaller components of the bank and lebanese and swiss operations. E will talk about that thank you for the latest from standard charter. Headlines and breaking news from the Prime Minister of the ukraine. He has asked for an extension of the regional powers and talking about the economy. He said that the Russian Troops are negatively affecting the economy. We will continue monitoring the press conference. He is still speaking to reporters now. We will go live shortly. We are speaking with the chief executive of a chain. We are joined after the break. Welcome back. We have interesting breaking news and a great guest. This is the chief executive. Largest retaile chains in russia. Seven markets in 45 cities and he are funny of when plenty of markets. Thank you for joining us this morning. Take us through the imported goods in your sales that are impacted by negative currency swings and the ruble has had a tough time. The import is not a big impact and last year was 10. 2 . This coming in from europe and i guess that over the next couple of months, we will have to see how the inflation will develop. If there is a strong impact, we will look at different sources to see how we can diminish the impact. Would you be able to have increased costs to customers . Ande would try to avoid it in the end, we have to follow up on it. What we do is write comparisons and followup on the price dynamics. We then adjusts. What were trying to do is look for alternatives within the russian borders and we have different parts of the world, like china and south america to do imports. We are less impacted by exchange rates. Tell me how the tensions between russia and the ukraine affect consumer confidence. That is the funny part of the story and we do not see any affect. We did not see it and there are stories that there is consumer slowdown. We had a strong Fourth Quarter februarynuary and month went as expected. There is nothing that makes you worry. Actually, it is something that you need to take into consideration. It is not something that worries me day by day. And political question political tensions. There is the remarkable ability to recover quick and i expect that this will happen. Talk about the biggest concerns and the russian gdp growth is slow. Talking about my biggest concerns, it is the Human Capital part of the business and the sense that we see opportunities in these markets which are very strong and we see and weing in the company want to have the ability with people. I think were in a good position and i think that going public is helping to profile our business and i think that we are wellpositioned with our , thatures that wont wont damage our business. Right. Interesting conversation. Thank you for the time. We are taking a break. The ceo. We wear back in two minutes. We will talk about more. Welcome back. On the move and bloombergs European Headquarters and these are the top headlines. For 2014 andarget the target may make it more difficult for policy makers to the credit risks and National Meeting of Peoples Congress was told that they wanted to protect jobs. Morgan stanley sees a risk of deflation at 35 . The offers say that the president risks making the same mistake as the bank of japan decades ago. Top u. S. And Russian Diplomats meet today to discuss the tensions one day after vladimir himn said that he saw him no immediate need to invade the ukraine. Spoke on the phone with envelope Merkel Angela merkel for one hour yesterday. Tosia is considering a loan pay the natural gas exporter and the gas supplied to the ukraine remains at the center of the economic relationship between the countries. Ryan chilcote takes a closer look. Square, thendence speaker calls on the men in the crowd to sign up for the army to take on Russian Forces and the expectation here is that the next front may not involve troops at all. The ukraine relies on russia for most of the energy and relies on national cat natural gas. Could punish the ukraine by cutting the gas off altogether. Gas, russia turns off the what would you do . Turn it thery to other way. Gas. A cannot misuse square, on independence they know a thing or two about dealing with the cold and have been out there for more than three months. They also know about gas shortages. Russia has turned off the gas twice in the last decade in the first gas war. Not everybody is convinced that the russians are up to that. For how long will they be able to be in this situation. Ukraine. O the what will happen to the economy . They are celebrating back in their homes. The gas is still flowing. It is still an invisible threat. Lets more on the latest, go to where Ryan Chilcote is standing by. What are the chances that they turn off the gas . They have not done it yet. That the gas is flowing through the ukraine as usual. Withdraw have done is the discount that offer the ukraine on the gas supplies and that was part of a deal with yanukovych. He was ousted the week before last. That has gone away and he says that the ukraine owes them a couple billion dollars and wants to be paid. Look, i think the biggest episode in the gas war was back and the curtailing of gas caused supply issues in europe as far as germany. Things have really changed and there is an abundance of gas. The feeling is that if there was a curtailing of the gas, that may help the ukraine and would be a disincentive for those to threaten to cut the supply. Everybody remembers what happened in 2006 and 2009. Thank you so much. We will get more throughout the day. Lets look at how the markets are reacting and get to jonathan ferro. The sentiment is the same as yesterday. The escalation risk has diminished in the eyes of investors. The perception is what drives it right now. Here are the visuals. You saw the european equities and the losses for monday and the softness in europe. It is nothing like earlier in the week. Are investors of more comfortable with the situation as it stands right now . Yes. It is not about what happens in the ukraine. Gdp isphrase, the annual 175. 5 billion. The stock market capitalization of the equity market is about the size of walt disney. Get lazy abouto this and it is not a mickey mouse issue. The fact of the matter is that the situation is intense and you are one headline away from a Market Reaction and a political risk. We have politicians on both sides of the fence and it is more the sanctions that they are throwing around in the coming weeks. Thank you so much. That is the very latest and the views on the ukraine and central asia. Assets atf central ubs bank. Thank you for joining us. Tell me about the ukraine. Is this an emerging markets problem . Allhe gone beyond that . The you saw on monday had market taking it down from a crisis to a standoff. Pricing is on the back of this and there is complacency. It is possible that the situation in the ukraine is the way it is and people forget about these offers and move on. That there is no risk premium in the market right now. And emerging market bonds the ukraine bonds have come back quickly. At this point, the market is complacent. Just because they do not understand the intricacies . The market does not understand what to expect because this is not rational and not all markets are rational. That is what they do not know what to expect next. The market does induce a bit of a risk premium. Actually conducive to risk an emerging markets are not feeling that. It is conducive to this. Has come off this year and Commodity Prices have done ok. And thethe spread european credit. The dollar was weak and this is the risk environments where there are risk assets in emerging markets that do well. That is why the markets say, when in doubt, buy. I think the ukraine and russia have problems. People have been questioning whether it is the right thing to andn the emerging markets the asset class that people are invested in. Of russia, you may see markets that get hit that have nothing to do with trade linkages and go as far as mexico, perhaps. If you think markets are complacent, you want to cut down your exposure to emerging markets. Would you cut down your exposure to ukraine or russia . Would you have more exposure as a whole . We think that it is still reasonably expensive and we have it has moved a long way. It looks like they are defensive on the assets, that is for sure. I think places like south africa are still very vulnerable and you may find that people who have to take money off the table in the ukraine and russia have to go to south africa, as well. These are the places. What is your take on india . Yes. I think that india is a binary political story and it is increasingly likely that it comes true. A will see a little bit of run in the elections and some more modesty after the election. India. Issues do not entirely related to Monetary Policy and i think that the issues are Political Leadership issues and what happens to the labor market and the fiscal side. We are concerned and we think the growth inflation makes is worse. Structurally, it is a good question and i do not think the election answers these questions. This is something that investors should be wary of . There is a tactical opportunity and the market will get excited about the elections. There will be more questions i have often mission about the elections before too long. Talk about china. We have Growth Prospects that we talk about and we may be looking at the First Chinese default. To me, the markets are brushing it off. What did we learn today . Nothing, in terms of the hard numbers. The numbers are similar to the 2013 numbers. The growth target is 7. 5 . Policy, we do not learn anything, in terms of gross signs. What we learned was between the that they people say are flexible. They say theyre going to pay more attention to pollution and the quality of growth. The credit continues to go up and you will see the Monetary Policy for the price of money. And ill see more in china do not think this is the last one. The chinese equities, as an asset class, already have a fair amount of good news. The chinese credit markets do not. You will see more problems moving forward. That, you will see more problems in the chinese credit market and i think it is likely that you see Monetary Policy staying tight. I think chinese policymakers recognize that gdp is rising at a fast pace. Credit growth is at 18 and nominal gdp growth is hard. Youre seeing it raised 10 every year and china is getting more and more as we speak. The numbers tell the story and you cannot argue with figures. Absolutely. We did not learn anything new from the target and the growth target is flexible. That is important. China is always going to be a marathon and not a sprint. We will not see this happen every night. People recognize that we need to improve the quality. Officials have the eye on that. Thank you very much. The head of emerging markets across asset strategy at ubs. Ballmer callsve microsoft a two trick pony and we will bring you what he had to say after the break. Welcome back. Oxford unione debate with the newly retired microsoft executive. He spoke after handing the reins over and it seems that he was very candid with this interview. Had a lot said about software, hardware, and what microsoft wants to be. He was flamboyant as ever and he went to the oxford union to address students. That microsoftly was ahead of the game to begin with and he feels that they topped the ball when it came hardware and software together and combining the two. He says that Companies Generally have one trick. If you are good, you have two tricks. He says that microsoft was a two trick pony and the question is ow about people said, why did you not do the third trick right . Toi do not know if we were busy or if we only knew the jewels of the first two tricks. Do you know what the challenges are now . The tricks go for a lot of years and in our industry, you have to do a third trick. Feels that the invention of the modern pc was the first trick and the second was the processing. They have to get the phone division right. What younted to know want to do next. It was painful because he says that all he has ever done his work for microsoft and that he is terrible at golf. Is for you, what next. Wife has said to waste a year. He has ideas about where he wants to be and he said that he does not want to be in a substandard ebony. I had my run and i had the coolest experience in Business History in my own humble opinion. Added it all up and why would i go to some lesser thing. I have experience. Is a man who joined microsoft when it was 13 people and he is in charge of 100,000 people. It is incredible what he has achieved and he feels that he has been there and done that. Like to dould advisory work in the United States. A b team b ande 18. An a team. Thank you so much. Great interview with steve ballmer. You can see the speech in full on the weekend television. Pulse and it is the im joined by guy johnson. We talk about the ukraine and we talk about banking. Lets talk about the ukraine and they are going to give us analysis and we are going to hear from a man who formerly ran this country. The former president is obviously the guy and advice would he give what happens next . Relations with russia and so many things to think about. That is coming up. In terms of corporate news, added assets and recently resigning until 2017. Has ana big plan and he issue in russia. He completed a Distribution Center and all these things are going to come together. Im looking forward to the program. The numbers and by davidd from lee. And what markets were they referring to . I want to talk about something else. Very briefly, before i get onto the currencies, we did not three we did not see 3. 5 in the share price. It is now down a tad. Why is that . Lets talk about the currency. If you have a look at where the sales come from, you can see the sales are coming from latin america and that is one of the fastestgrowing markets. In particular, argentina, mexico, all together, they had 19 increase in sales. When you translate that into euros, it is only a six percent sale. The question is what are investors looking at. When you look at the numbers on their own, they are not doing too badly. They are making the sales and increasing the sales. They have been hurt by the currency in 2014 and they are stuck to the target for 2015 and that is what the market is looking at. The final thoughts are coming up next. Welcome back. For a recap on the market movers, lets check back in with the markets team. In terms of what we are watching , the big corporate. Yeah. Korea. 1y are getting guidance and billion last year. The Consumer Bank will make a loss. The guidance they are getting from china is clear. Thes very selective and exposure to the shadow banking area. It is cautious and limited. We hear the upgrade on the headline and that is the message. The key messages. Atning 3. 15 and we look china as the one to launch the First Corporate default. The Interest Payment is small and it is about the sector that they are and. Solar energy and the renewables sector. Big number. Ty it is a big deal. People are saying that this is the first of more to come. Thank you so much. The diplomatic reach. Andu. S. Secretary of state russias foreign minister hold emergency talks. Same target. China retains its goal for growth. And currency crunch. Exchangerate swings. We are live with the currency giant ceo. Good morning, everybody. You are watching the pulse. We are live