Learned that day one. Telefonica and telecom reporting earlier. That was in line with the expectations of analysts. What they might be looking a little harder at is the fact that they have got this deal for 1 billion to buy the loan share digital plus, which gives him the rights. Many investors might hold on before doing anything with telefonica until they know the outcome of the commissions decision with regard to its bid for the German Telecommunications operator. You are watching iag, arent you . I have indeed. Iag deal turning the into something that will make money. Were talking about the return of dividends. Willie walsh negotiates very well. At britishdropping airways. The losses are narrowing. Things are improving. Youre quite right. Not exist at all in reality. What else are you watching . You get a little bit of data from the u. K. We will get industrial production. Anchor, producer and rector. I would tell you what. And director. I will tell you what. Italy, stocks opening in the red. Got prime dropping in italy. Lower expectations in china. Will they go for more stimulus . Wonder they will, one day they wont. Here in europe, no action from the european center. Case in from the European Central bank is how i would pitch that. Some of the companies on our eurotoday here is the dollar for you. 1. 38 28, so it is actually coming down. Here are these companies are actually keeping an eye on. Moving the most . We have alcatel lucent. Business losses narrow. Coming in at 73 million euros. I will leave that for david tweed to talk about a little later on. Blicis. Just mentioned pu the business deal is off. He always knew there was a bit too much ego going on there. I am not being ironic in that statement is euro dollar is trading at 1. 3828. Lets see where that goes too. Mark, back to you. Markets at multiyear highs, cant break above them and sustain the advance, why not . There is always the issue of seasonality. Im sick and tired the same old thing. I have done my analysis. I want to debunk this a little bit. What i found was, the majority has not been, may a bad month. May normally is ok. It may actually be somewhat better than ok. What people are really looking at is the june to the end of september. , which, it is true, is popular for stocks. However, from an asset allocations point, bonds have artie done very well this year. Normally, june to september. Is when bonds too well. I think theres been a lot of preemption of the fed, of the ecb and of course inflation as you pointed out, housing driving lower. Etf ofinvested in an long bonds in the u. S. Come new york made up to 15 already. Who wouldve guessed that . Many certainly didnt. I think it will be difficult to continue because we have said had such a big movement. 30 or your sponsor move from four percent to 3. 4. Is going to be difficult to see that continuing, particularly if we do see a macro pickup. We are starting to see that in continental europe. We have artie seen it in the u. K. I think we risk seeing that as well in the u. S. We risk having gdp growth of around three percent. It is not spectacular, but think it would be enough to stop bonds from falling further. When do we really Start Talking about the u. S. , to talk about imminent rate hikes . What i say imminent im talking within six months or so. Is that coming for later in the year . I would say so. At the moment, the trends in overall inflation are not at all anywhere. Clearly, not in the u. S. Theyre actually trending down. One of the prime components of inflation, particularly core inflation in the u. S. Is housing. Janet yellen cited housing as one of her worries. Exactly, it is weakening. Contrast to oversee your new u. K. Where the bank of england are thinking about using a macro prudential measures to try to tame the Housing Market because they dont want to touch it. Their doubts about macro or micro prudential tools to soften Housing Markets. What do you think . I think it is unproven. In the same way that qe was also quite untested, yet everyone launched into it. I think the bank of england will clearly try to exercise these new powers. Remember, their new powers. I think they will do that because it really do not want to jeopardize the overall upturn. Heres a look at what else is coming up today on the move. 35 billion deal. The the does go on at apple. Beat does go on at apple. We dont see any major hurdles. ,t is only a lengthy process and something which is taking more time than we expected. We dont see any major problem with chinese authorities. All the questions that put to us, we dont see anything that could come in the way of an agreement. What a difference a month makes. Hat was maurice levy speaking the news overnight, the big news is that megamerger with omnicom has completely fallen apart. They are actually trading higher. You are in the newsroom with more detail, jonathan ferro. Take it from the top and actually think about what the deal was about. It was not all about synergies and cost saving, it was about getting market share in pushing forward aggressively in the industry. The two companies have talked up the regulatory and tax obstacles. Was that the reason it broke down . They will tell you this was about managerial issues and organizational structure. Then i have to ask the question, was it a surprise . What we were to told this morning. At think we were surprised with the speed at which it fell apart. After the q1 call they made a few weeks ago, i think it was highly predictable that it was going to fall apart because he didnt separately. They semicriticize one another. They actually both said it was better for them or it was good to be separate as it was to as good to be separate as it was to be together. Have a little bit is there an element of schadenfreude . Are they the big winners here . Maybe it is all about competition. The bottom line is, this comes down to clients, how best to serve their clients. Serves tone Company Competitors under the same building . It is one of the reasons this deal got killed. Extent tot to some the competitor. The ability to spend and push forward to expand and push forward. Publicis, how big will the hangover from this deal failure be . At companies, are they in your sites are not . Not really. That done very well already, mark. Their classic cyclical companies. It picked up remarkably well, operating modules have recovered. Blicis and omnicom wanted to get together to drive down costs. Employees today are probably breathing a great sigh of relief, because we all know this would have met more jobs being lost. In an era where we are seeing so many deals announced on a daily basis. I think that is right, mark. Bear in mind, a lot of the m and a deals are driven much more by cheap money. This is more of a strategic deal. I think now we are starting to see some of these economists pushing back, saying, wait a minute, you cant have me and my competitor as your client. Are always clashes of ego. In the advertising industry, it is obviously one of the worst places for that. I want to turn to telecoms. We did get numbers from telefonica. Earnings fell 14 . Much in line with estimates. This deal makes it the most powerful tv operator. Tell us about this deal. The deal is a response to what we saw in terms of the earnings. Air under pressure in the higher markets, especially mobile. What with vodafone and just tell. Tel. It is gone ahead about 56 of digital plus. Digital plus gives it really the lions share of sporting rights in spain. All the games with fc barcelona and real madrid, you can imagine this is a valuable turf to own in spain. Theyre going to take their digital and cable and television operations, merge them together and bundle them up and hopefully a new revenue stream when they are under pressure in their traditional markets, as in traditional telephony. Wellre under pressure as because of the decline of currencies. The argentinian peso is down. The statusabout in terms of completion of this deal . This could be coming up in june. That is when Telefonica Deutschland the idea is that they would by the mobile unit of kp and. If they put those two together, they will become the biggest operator of folk the biggest wireless operator in germany. More people are using these phones than anyone else. It is actually a huge deal for them. The competition authorities are looking very hard at this. A bit of good news. They said theyre planning to offer wireless communication, wireless phones here in germany as well. That could be good news, because it means another entrant onto the stage with could reduce concerns about competition concentration. Telefonica deutschland they reckon well get a decision made in june, even though the European Commission yesterday said that they have extended the deadline to decide on this because they havent got enough information from telefonica. Watch this space. It is key for telefonica shares. You like some of the telecoms, the highyielding ones. That is right, mark. I think in contrast to telefonica, the French Market has consolidated. You have only three main operators. Prices of already come down a long way. Their stabilizing. There is little chance they will be attacked further in this market. They want that dividend. Evident aristocrats. I love that. That is one of your big themes, is mid . Who are they, these ristocrats . To have a good record of paying consistent dividend growth. Companies would include an insurance company. You think it would be an odd business. However, it is incredibly consistent with its dividends release. It has a fantastic dividend released today. As internet stocks continue to decline. , think the dow jones internet positive was down around 20 . You love Old Technology rather than new Tech Knowledge he. Names such as corning and microsoft and Even Companies such as ibm, which pay above market dividend yields today, but again have plenty of cash and consistently grow their dividends. Does it come a time as a punt to start looking at the social media stocks, these internet stocks, which some of them have fallen roughly 20 . I think you have to sift through the wreckage. I wouldnt Touch Company such as twitter or facebook. I would go back to valuation. Remer, one of the reason these things collapse is that they have a ridiculous to assert battle valuation. Single digit pe valuations are the ones i would pick. What is your overriding worry . My real big concern is not russia and ukraine, it is much more the ecb, that they do not act quickly enough and that we risk deflation in europe. People have not been talking about this recently. The bond market has been telling you that the bond market recognizes this as a clear risk. Tanks, edmond. Always good to talk to you. Management, right. Coming up, flying high. I ag pushes through major cost cutting at iberia. More on its later group latest report next. Welcome back. This is on the move. I am mark barton. Lewisorp. Named william as a ceo of its dow jones the interimmoving title. The previous ceo was ousted after tepid reception at the revamped subscription service. Liberty global and discover communication. The new valuation is just over a billion dollars. The worlds biggest steel maker posted a 12 rise in firstquarter profit. Earnings climbed to 1. 75 billion dollars. The Company Forecast in february that profit would rise 16 . That is on the bound in need on the rebound in u. S. And european demand. Manus cranny has been digging into the numbers on i ag. Right across the band spectrum. The british flag carrier really coming in quite nicely. It is iberia with the most germanic operating loss that has been crushed. Down by over 50 . We are seeing a flat position. The various core parts of the business are improving. The overall operating loss for the quarter comes in at 150 million euros. That is much better than what the market had it at 168 million euros. On an operational level they will be profitable this year. Absolutely. Look, it is a theme and the airlines and that they are all narrowing their losses. Fuel costs drop, wages drop, by nearlyhed, down 12 . A dividend story. There hasnt been a dividend for six years or so. 2008, youre quite right. Wall street is on the take this morning, on the conference call, saying to the market. The dividend will come. Is something that will be discussed with the time is right. Give us an idea of how big a feat it was interning iberia around. It was no small achievement, was it . It really wasnt. , aerve you some context lingus battered the unions. British airways tortured the unions. 3000 jobs went out at iberia. He managed to put out a costcutting program where wages drop by over seven percent. He sold out a deal between the ground staff and pilots. He recently signed up a deal there. No small feat at all. Manus, thank you. Russia flexes its military muscle. Aesident putin puts up demonstration in the red square we will put you up to speed in russias international standoff over ukraine. That is next. Ill come back to on the move. For francinen in lacqua. 8 30. We are early minutes into trading. Lets see how things are shaping up. Arthur declines all around. Market declines all around. Market manus cranny is at the touch screen with three stocks to watch. They are saying theyre not going to make the numbers in 2014. Theyre lowering the estimates from two of their key ventures that they look after. Fourth Straight Year declines these boys. Are the biggest in the world. They made a profit of two billion euros. Second straight quarter of gains. 12 units. D over willy whilst delivering all around him i ag. Quiteto find for us a paradigm for a ceo. The euro poised for its first weekly drop. Signal that the policy makers may give in in june. Thati said yesterday theyre comfortable with taking action if needed. Consumer prices rose 1. 8 in april from a year earlier which missed economists estimates. Domestic demand in China Remains muted. South africas ruling party won its fifth Straight National election. That ensures the second and 20al term for the president years after taking power from nelson mandela. Another story today that is taking everyones attention is in russia. Tanks and Missile Systems rumble across red square today to commemorate the soviet victory over nazi germany in 1945. Russia flexing its muscles in the standoff with the u. S. And its allies over ukraine continue to heat up. The parade just ended. That the putin said significance of the anniversary should be to celebrate national interests. , is hel question now is going to attend a naval procession in crimea set to begin in 4. 5 hours . Is a 2. 5 hour flight. You could make if he wants. President merkel was concerned enough about him going to crimea. It is his first trip there since the annexation. She said he shouldnt do that third we will have to see. We are in an interesting space. President putin made this for a consolatory calm that comments about ukraine saying he was prepared to ds click the markets. Ukrainians have been talking about holding peace talks with separatists that donor blood on their hands. Yet, it seems like were still headed for more trouble, because the easternmost regions are set to hold referendums on sunday where they will ask people in those areas whether they want to secede or whether they think those places should be independent of the central government. On monday the European UnionsForeign Ministers are set to meet here theyre likely to introduce new sanctions against both russian individuals and, as a first, some russian companies, which is something we have seen the United States do already. As a look at pictures from the parade, what is the significance of this, ryan, and ukrainiant of the standoff . Obviously, victory over not see germany in russia was a massive affair. Tens of millions of people died in the conflict. That is in itself a huge thing. This is really about patriotism in many ways, which is at an alltime high in the postsoviet. Right now. Events inly with the crimea. That is one. The second thing is that the kremlin has described some of the events we have seen in ukraine like that fire we saw in odessa where about 40 prorussian activists basically burned to death inside that a fascistn odessa as attack. We certainly have seen this characterization of the central government, and particularly the right sector which is his ultranationalist group militia that is operating in western ukraine. Basically, the way that the orns have described are portraying this is as a continuation of world war ii. The russians against neonazi types in the western ukraine. Stay with us, ryan. From joined by phone moscow. Chris, thanks for joining ryan and myself. How is telling us patriotism in russia is at an alltime high. What is the risk that the situation worsens and starts to the man and woman on the street and putin in the government starts to lose control and popularity among the people. How big a risk is there of that right now . There is not much evidence of that today. Awaremakers are very well that this is at work in the background. It is reflecting the fact that there is concern that sanctions are beginning to bite and have a detrimental effect on the economy. If the sanctions expand, it can really impact the daytoday numbers in the economy. Then we could have a long time determination. I think it is a factor in the equation right now. Chris, ryan here. The markets closed today. We have a very we have a big weekend ahead of us. Say they still intend to hold. Look at your crystal ball, what will happen on monday, both geopolitically and market wise . The referendum will go ahead. Absolutely, all eyes and ears will be on the kremlin to see what its reaction will be, specifically people who want to see whether the kremlin will in somehe referendum way or accept it. If the kremlin were to accept the results of the referendum, then you will see the market taking a big hit in the currency coming under pressure. That would be the worstcase scenario for investors at this point. The escalation of tensions between russia and the west and stageore likely the next of sanctions that everybody fears. What everybody would like to years at the kremlin either rejecting the referendum or somehow or other continuing the peace process, calming down, specifically not accepting the referendum. We are waiting for that reaction from the kremlin. Time, butt have much beijing has confirmed that president putin is going to be going to china on a state visit. Is this a russian pivot to the east . Can the east replace western europe and western countries in a sort of business relationship with russia . It might pivot to the east, specifically the headline could be a big gas contract to china. China could be importing more gas from russia. A slight pivot. Absolutely, everybody accepts that china cannot replace european and western companies in terms of investment partnership. Needs partnership, the expertise and the knowledge. Bp exxon has the technology to explore the arctic. The chinese do not. East, most people would regard as a longterm disaster for the economy. Chris, thank you. Well speak to you soon. Chris weaver there, senior partner at macro advisory amah and our very own ryan chilcote. Will tell you why apple may be closing in on the beats brand. That is coming up next. Minutes into the european trading session. The top stock we watching, of they ares publicis. Up by about a quarter of one percent. They were up one percent earlier. Lets get the details of what happened and what is next for these to tablet type these two advertising giants. What brought this deal to his knees . I think you have to start at the beginning which is always a good idea very and this is always an unlikely combination. We actually broke this story under a year ago, nobody believed us for the first 36 hours because for anyone in the advertising world, this is like mars merging with venus. It was seen as completely impossible. The Companies Made a big show of saying that this was a combination they believed in, that it would work. Obviously, there were problems. On the one hand there were some regulatory and tax issues. Theyre trying to bring in a complex structure. As part of it. Theres a real clash of personalities, a clash of egos at the top, which prevented this coming together. What does it mean for the ad industry in general . This changes the calculus for everyone. Martin sorrell the chief executive of wpp will barely be able to conceal his goalie. His glee. Theres another big american Advertising Group, interpublic, which is always seen as the more likely merger target for either oficom or publicis. A lot analysts and industry observers will think they have a bit of a target on the back now. Tier,ere is a second dentsu from asia. We may see some or dealmaking from them as a landscape shakes out. Deal was hoping that the uncertainty would continue so they could continue to benefit. As a whole industry benefited from this deal, from the uncertainty . Certainly seems to have benefited from the uncertainty surrounding the deal. That is a good question. Obviously, it is martins job to Say Something like that. These are enormous companies. There are really quite serious chinese walls between agencies. They do compete with each other. When you talk to the rankandfile, the party line is very much business as usual, we continue to do what we do, that there were big things that did happen heard microsoft took on interpublic as its main Advertising Group at one point. You did see a little bit of an effect. I dont think it was huge. You, matthew campbell, r bloomberg deals reporter. Is in talksmpany with microsoft. With apple. What is going on here . It would be the biggest acquisition ever for apple. Steve jobs is didnt like going after big companies. Apple has a lot of cash on hand. Heres why it is offense event defense of area today been wanting to get into the game was streaming. Streaming music, pandora, spotify, those would be the challengers. They see some of the revenue being lost from actual downloads. 2013 was a first year since Itunes Stores open the downloads are actually down. We know from the tech world that whenever there is no growth, it is cause for great concern. Now there is growth on beats. This is a company that started out making really high and had highend headphones. First month, first day, 1000 users, then they get to 24,000 users, 28,000 users in march. Pandora has 76 million. Revenues from subscriptions are to 1. 1n the year 21 billion. All these people are cooler than you and me. May we can get some of that credit suisse. Wearing the headphones. Who is going to cash out on this deal, hans . They bought a Minority Stake for 500 million. It looks like their investment of 500 million will return just 1. 5 billion. Seven and a half months, 1 billion, that is a good deal. Get me to dr. Dre songs, just two. All knowwe chronic. I only do east coast rap. Thanks, hans. Good to chat. Is the latest nr series on entrepreneurs. We will share their secrets next. Were focused on the u. K. Luxury skincare company. Spoke to its founder. The apothecary now operates a two Stores Across the u. K. Suggest consumers still buy pricey makeups in tough economic times. Has kept growing. Wepened the doors opened the doors when people were still suffering. International business includes 23 stores and concessions in the u. S. , alongside a growing online presence. The internet has opened the customer o a growing countries like japan and korea have such a heritage and people welcome skincare regimens. Nikkis passion for the beauty world started in childhood. It is passion that makes for successful business. Ethnic if you want to be an entrepreneur, you have to be truly passionate about what you are involved in. If anyone could be good at anything, but you feel passion for that particular topic, youre going to do the job so much better. What about getting outside money involved . You have private equity money involved in the business. You give up a little bit of control when you have other peoples money involved. Absolutely, for me was always about other peoples expertise that comes on board. You can always find money somewhere, but it is getting the right money with the right mindset behind it. You want people involved to have a common goal. Theyre all going in the same direction. From theoins us now newsroom. It seems to be all about passion, then harriet it is. Passion for his subject makes for a successful business. She has been heading this business for decades now. I thought it was really interesting that she was saying it is not just about getting money invested in a start up business, it is getting the right money, the right money with the right attitude. She is suggesting that you cant get people that just interviewed money, they need to contribute advice as well and have the right mentality and help to build your business along the way. Range of a growing mens products, mark. Youre never personally far away from the makeup counter, i know. Oh, im not so sure. You never know, i might he persuaded. It is very confusing today. What is coming up . Not even with guy. I am flying solo. We have a packed show. He thinks the markets have actually overestimated the divergence of where the ecb is going on rates and where the fed is going on rates. The cap has got a bit big. We will analyze that with him a little bit. Who also talk about the ukraine. We have been bringing these amazing pictures of the victory day parade taking place in russia. That, of course, is putting very front and center the most recent geopolitical tensions over russia and ukraine. We will talk about that. What significance do these historic pictures have when we are in the midst of a geopolitical he tends environment. We have the eu Foreign Ministers meeting next week to debate further sanctions. We will discuss all of that during the pulse. Lets check in on equity markets across europe today. As you can see, 55 minutes into the session, stock markets are trading lower. Ftse down by a court of one percent, cac 40 down by a third of one percent. The dax is down at about a quarter of one percent. Mario draghi intimating there would be some policy action next month when the Ecb Governing Council meets in june. The euro fell yesterday. It is down against the dollar for second day, albeit for a small amount. 1. 38 34. One guest i had on earlier said there will at least be a rate cut from the ecb next month. What else . Continue next. E anna is back next with the pulse. See you on monday. Have a good weekend. Megamerger meltdown. Publicis and omnicom scrap their 35 billion deal to create the Worlds Largest advertising company. Apple makes a play for dr. Dre. The tech giant is close to buying beats electronics in its biggest ever purchase. Putin flexes his muscles. Tanks rumble across red square for victory day as europe readies new sanctions. Welcome to the pulse. I am anna edwards