The top. The ceo steps down and was his departure means for britains biggest retailer. Good morning and welcome to the pulse. I am guy johnson. We are going to go to our top story of the morning from the corporate landscape. After 4 decades, the ceo of tesco is leaving britains biggest retailer and handed it over to dave lewis. For more is caroline hyde. Investors are welcoming the news. We saw a ruthless Shareholder Meeting and now we know the results. At that time, it was only in the earnings season when they said give me time and asking for a more relaxation from investors. And then they realize what they called a fresh perspective. They need to dave lewis and an outsider from tesco. The first time in tescos history, the third biggest retailer in the world after walmart. 500,000 employees that have to be managed. They have changed a management. The language they use in a statement saying the chairman saying it is building on strategy and changing management. They like the experience lewis is bringing. 28 years. That unionthings provides. It negotiated with tesco over the years getting products. He knows tesco intimately. New chief Financial Officer on the board. Now a new chief executive. A new dawn. Ntually a billion up round upgrades inund of stores paying off. [indiscernible] b if you came from mars, you are almost provided a proven track record. Is enormous. As with the sea and the share prices, coming with the announcement of the leaving the chief executive was another profit warning. This a company that has been point five years, seeing sales down. 3. 5 years, seeing sales down. It is a key concern we are not seeing a turnaround in sentiment. They said they have a more challenging environment they expected. Eating away. They have formidable competition. You have British Retail Consortium numbers showing increasing back in june. An area of a weakness. The euro price wars going on. This is a very challenging environment. A 30 marketin share. How do they grow it. Very difficult. It will be a real challenge for dave lewis. Riggs it will and we watch it closely. Caroline hyde. World leaders said they are almost certain that russia provided separate is in the ukraine with the weaponry that shut down mh 17. Calls for even tougher sanctions on moscow. There are reported that some of the bodies from the wreckage has been moved by the same separatists. Ryan chilcote who is one the few journalists who spoke where ukraines Prime Minister following the crash and he began by asking what needs to be done for the crash investigation and if they can do their job. Together with the security forces, we provided safety. We will do everything needed in order to investigate this International Crime and the International Community, all evidence related to this International Crime. Theres a lot of confusion about the location of a black boxes. Where are they . There were a number of rumors. Some tried to find out whether have been moved to russia. These russian 11 separatists made a statement that they decided to move the black boxes to russia. Is in violation of International Rules and standards and law. Vel a believe all of these black boxes are at the crash site. Are you that every body will be convinced by the evidence you are gathering that is was prorussian rebels that brought to down this plan with help from russia . We are to talk only about the real things and evidence. They shot down the plane in the area that was entirely controlled by the russian led guerrillas. The second issue is the missile that is the way they named it. It is russian made. The particular name at the system is sure. Ukraine has the same Missile System ande disclosed and unfolded read it to presented to the it turn National Investigators the location of every, single ukrainian Missile System. Aere was no ukrainian missed dutch Missile System in the area and we never used it through Missile System in the area and we never use it. The u. S. Already confirmed that this plane was shot down by the missile. With the International Community, we need to define the right and resized location. And precise location. Russia does not know the difference. A lot of footage is already on the internet. These Missile Systems moving in areas. Led terrorist few hoursning, and a going back to russia. We need to confirm everything. Evidence is on the table. We are expecting more information to come from the Prime Minister and he will be speaking. As soon as it starts, we will bring it to you. Well make sure you are up to speed. Ryan who was speaking, he is back from kiev. Is on talking about what the table. A lot of people and about the next 24 hours as being critical. This committee coming up. The expectations are rising. Well see fresh sanctions, more aggressive sanctions . That is the expectation. We have seen britain and the netherlands pushing hard and there seems to be more momentum. Any time they get together, they need to how you unanimity among 28 countries and it is not easy. Britain and france and italy leading. They look like they are on the same page. The netherlands pushing hard and what have to see. This particular instance and it is very difficult for some of the countries who have been sayected, italy, austria to that we think its too early to do anything and this could be damaging. He said we will like to sell the russian. He is not been an apologist but he has been very pragmatic and engaging with the russians. The netherlands are a big trading partner with the russians and they have been reserved and how they have handled it. The fact that rutte is a saying we must take action means a lot. The unit says is pushing, nudging the europeans along. They may come out with their own sanctions. That is definitely the Prime Minister has taken to the podium and we will monitor the situation. And in the. Net and the city of donetsk, another reb trolled rebelcon city. A big city of one million people. That is one place that ukrainians need to bring troops into donetsk. Thats a state a objective. That would like to get it back. What we might see is an effort by the Ukrainian Government to move and push the separatist that. Ryan chilcote, thanks. Back from kiev. Pictures coming from the ukrainian capital. Speaking atnister the moment. He is speaking in ukraine, what exactly is going to emanate. Thee red flashes or news at moment and will continue to monitor. You know aboutre it as soon as possible and. We will take a break. Well see you in a moment. Welcome back. You are watching the pulse. Watching the Prime Minister. He is addressing the situation of flight mh 17. Lets take a look in and he is talk about what is going on and the investigation. It is understandable to , prorussianystem terrorists cannot do that. Trained andt people we have information that this training took place on russian territory. Russia, bothfrom financial and arms and training. This terribley incident not to the International Incident happened. This International Crime against humanity. It has to be investigated by the International Community and i will say once again we are ready dash for the netherlands to management of the investigation and coordination as a country that suffered the most out of the International Community. But once again, my deepest condolences. My deepest condolences to those families who lost their beloved. Pray for everyone, we pray for the families. And ukrainian nation mourns. Let me update on the latest developments. Ukrainian authorities discovered 272 bodies. Which are already loaded refrigerator. We sent 2 trains, 4 cars of each. These bloody guerrillas do not allow the trains to leave the area. Will leavehe trains the area as soon as possible. Readyian government is a no come for confer a International Investigation to our dutch friends. Could lead the process of investigation, together with the entire International Community and ukrainian authorities. Ready to transfer all bodies directly to amsterdam. Wellequippedbest forensic laboratories in amsterdam. Agencyan security already started a comprehensive and thorough investigation into these deadly terrorist attempts of this crime against humanity. Betweene agreement ukraine and the netherlands, who we are ready in full cooperation with the dutch side and international and foreign agencies could to conduct this investigation. Those who committed this International Crime, those responsible, will be held accountable and together with the entire International Community, we will bring to justice everyone responsible. Country which is behind this crime. Supplied illegal weapons. Provided the financial support. Trained these people. And supported. Thiseven orchestrated this despicable crime. The Ukrainian Government will do everything to investigate this crime. To transfer the bodies. To provide any support to all respective governments. Unfold to the entire world the truth. Thank you and i am ready to answer any questions. Can i ask if the priority is the recovery of the bodies and removal of the bodies from the crash site and taking them to amsterdam . Will they have to go through donetsk . And what about the military action this morning . The key art or before us is to recover the bodies, collect all evidence of the crime. As i have already said, we have recovered 272 bodies. Which are loaded in the refrigerator. We have facilitated on how to deliver these bodies to any distant nation that is needed amsterdam as i have already said. Get therdam, we can forensic expertise. Our dutch partners can provide the well equipped facilities. Indication of any kind of military activity or operations in the area of the crash site. We understand our responsibility. The priority is collect all evidence in have a thorough investigation. How are the negotiations going . How do they happen . [indiscernible] you said as soon as possible. What is the time table . [no audio] ok, we have a problem there. Wouldve already been pretty clear on the view coming out of kiev. The situation on the ground at the crash site and neighboring cities. Talking aboutyuk the fact in his mind it is clear where the weapons came from, russia and the training for those operating the weapons, russia. Let us talk about where it is going to go from an economic stand point. We have a strategist from Deutsche Bank joining us. Good to see you. Down on been a fairly the russian economy. The defense over the last few days, we are likely to see sanctions and the acceleration for the russian economy. How significant do you think economic sanctions will be and how do you think they will impact the Economic Situation in front of you . First and foremost, listening to what we heard from the such a human tragedy. It almost seems counter intuitive to talk about Financial Markets. But nevertheless, there are implications. Weapon negative about russian financials for years. And associated with the longerterm as well. It comes with a caveat. It is over the short term market, particularly Foreign Investors have departed. I refer you back to argentina 4 years ago when they renationalize in the way that market shot up. Often geopolitical events and what is considered geopolitical events and have consequences over the medium term. And it is counterintuitive. The outlook for the russian economy is already very, very poor this year. What tothink the u. S. Do most of the heavy lift them. I think clearly it will be increased pressure on the eu and that is the main result. Within the eu countries to increase the involvement of the eu sanctions. The u. S. Has really shown it is still in control of global monetary and Financial Systems. And that is where the emphasis will still be. You talked about the russian economy and the reason it is a conversation we need to have is they the european leaders will be looking at the russian economy trying to figure out what the point of maximum pain is going to be. How do you get what you want . Jeff to figure out that bit. Where do you see it . What are the weaknesses . The targeted sanctions are going to be made . The witnesses are likely to be in the restrictions on Energy Exports and the banking sector. Haveroblem is it unintended consequences. First of all, very direct implications for the european economy. All know july and we that with russia supplying 30 of europes gas, we know what the result will be. Also direct involvement from european and u. S. Companies and some of these Russian Companies as well. This takes me to the second point. The second point is it made result in russia adopting a more isolationist stance. Also Financial Market and of course, that will have unintended consequences as well. It will likely have negative is a quizzes for portfolio and direct investors. My advance my point has been clear. , fisher market advisors really state out of the equity market. The implications for emerging markets, you have russia as part of a bench mark. They tend to be more tactical. Go down onoad we invest, the risk of unintended consequences is particularly high. Over the medium term, especially if the oil price comes down, it will be very poor indeed. Thank you very much joining us from georgia and. Much foryou very joining us. A link between one and another. More on the story. Well see you in a moment. Good morning and welcome back. You are watching the pulse. I am guy johnson. Let us find a how the markets are trading. Jon ferro joins us. 19 minutes in. Losses. Down. C 40 by zero. 4 . Own it is not all geopolitics. The ftse is down by 0. 4 . Will beof tesco stepping down. What is it worth for the markets cap . It is up by 400 million pounds. The market was given tired. The stocks are moving higher. That it is by a profit warning from tesco. It has to do with the man at the top leaving. Morrison is down by over 2 . Problem, whatving does it mean for competitors. . Morrison is trading lower. This move here, something to do with ukraine house prices. A decline for house prices. Does it take pressure off of the bank of england . I will say it is a stretch. We are going into a busy week. Gdp will come on a friday. Did anybody putting their hand out for a rate hike . Governor carney speaks the same day. He might have something to say. He certainly will. The point. Ok, ok. Jon ferro joining us with the latest on the market. U. K. Ukraines Prime Minister has been speaking making it very, very clear where he thinks of the weapons that shot down flight mh 17 came from and the training for those involved in that incident came from. He is pointing the finger at moscow. Rebels say they have the flight recorder from the malaysian jet. Thatrities have demanded the boxes be handed over to an international team. The latest. The view on this is very clear, isnt it . We need the black box and now. We need it now. That is causing an outrage. Not only the black boxes but the bodies. The bodies were left lying around. The malaysian Prime Minister has said it repeatedly that he was the malaysian victims bodies to be sent to the country as soon as possible. The people here, the people of malaysia have been outraged with the lack of respect given to the victims at the crash site. Is mourninghere going on around kuala lumpur are. Is beingt the flag flown at half staff. Remember this a country that has been rocked by two backtoback aviation incidents. 370. Before if you look at social media, whether twitter or facebook, a lot of disbelief. A lot of people are saying, why us . Why now . What have we done wrong . There was talk on twitter this morning there were protests outside of the russian embassy. Anything to it . Might are hearing, we hear later that malaysia will move forward from this. Can you bring us uptodate on those subjects on what we need to know . Itin terms of the protests, is a small protest. All under control. It stems from the fact that the malaysians are angry about what happened as to the Malaysian Airlines. It is the biggest shareholder of Malaysia Airlines holding 69 of the company. How Malaysian Airlines it could be a case of making it public and the other is to declare bankruptcy. We know [inaudible] if you take it public, we do not release thiswill week. One thing to know is the incident is probably the last straw. This incident has been saddled with financial woes. T has been trying to rally as it was in the midst of a these incidents happened. Haslinda, thank you. The latest coming out of kuala lumpur. Toortant to bring you up date with what you need to know. The middle east and u. S. Secretary of state john kerry traveling for a ceasefire. In thedliest day yet fighting and gaza. Elliott gotkine is in tel aviv. Ring us the latest. Die, intense and i, intense fighting between palestinians and hamas. The death toll on the palate on the palestinian side is over 500. The latest incidents is israel saying they described 2 terror squads the digging tunnels north of the gaza strip. One was hit with an airstrike and soldiers engaged killing them. No reports of israeli casualties. There been various reports suggesting there are some. Also report from al jazeera saying there is a general strike that will take place on the west bank due to product due to protests. There are efforts to get a ceasefire. We are not there yet. Not. Certainly are what difference will john kerry make . What is he expected to do . The outside world will hope he can knock Heads Together. There was a proposal last week that israel accepted and hamas rejected. And a ceasefire should show the u. S. Is serious about getting a ceasefire. These calls are at gold from the council and world express a concern over the casualties. Hopefully, john kerry will be up to get things moving and inching toward a ceasefire that will bring this twoweek conflict to an end. Elliott gotkine joining us from tel aviv. Lets go further south. Into dubai. Builder,largest continuing to be under pressure. After the staterun Investment Company failed to reassure investors of and support. Bloomberg News Reporter joins us now from dubai with the latest. Give us the latest. Stock was trading it hasay and since then returned back to the market after suspension last week. It has been down pretty much every day for the second day now. It is because of the company has failed to tell investors a much about what a plans to do with a by the held about outgoing ceo which is about 29 of the company. The company said it wanted the report. Basically, they have several ideas they are considering. And it is confidential. When are we expecting some clarity . What is the timeline . We have not been given anything in terms of the timeline. As far as we know they are in talks and a price range is higher than the shares. When the shares are right now. Does not the company did not give us a range. In theeally still up air. That is why uncertainty is waiting on it. Thank you very much. The latest from the by. Dubai. Latest from changes at tesco. What is the ceos the parser means. Departure means. We will see in a couple of minutes. Welcome back. You are watching the pulse. Let us get to the top story. Tescos ceo is stepping down after it yet another failed estimate. Help . Management shakeup good morning to you. Thate will be speculating it is time for change of personnel at the top. Is bringing somebody in the right step . They understand from a different point of view and maybe the market a little differently. Is it the right course of action . A newstay within tesco, set of eyes is required. A fresh perspective for was heard. It will come from you know lover. Unilever. Sharper insight into the business as well. Dave worth remembering, coming into retail. That balance has been unfortunate as not a set the world on fire. Patchy tenure. He came from mars. A lot did. Guys have been there for a very long time. A patchy track record with move into the retail world. How different will the plan to be . I think there will be some similarities. Range picture and focus on convenience. Strategies that will live on. What we need to start seeing is clarity in sense of purpose and the u. K. Environment. Built tescos success is no longer. Discounters or lowpriced businesses. This is kind of a speculative question. About he going to feel taking on discounters . [indiscernible] brands. Not do will he bring a brand point of view . Or be more pragmatic than that . Aroundway to turn tesco is to be everyday a discounter can it be. Service letter, quality lead business. He doesnt need sharpening on prices. He does need sharpening on prices. Exities from the shoppers point of view is incredible. Needs toclarity and reinvent itelf. The communication is fairly complex. Lots to do. Clark has done a lot of good things. The markets. Ened track. Back on the right bringing restaurants and things like that. He was therefore roughly 4 years. Past 18 months, it was clear he would have problems. How long the honeymoon period be . Will it be less the custom market is frustrated . It will be a mix of patience. Changes put in place and investors will want to see Immediate Impact as well. Promotions are marketing or thats kind of thing. Issues arescos selfinflicted. Changes in the market with a longterm changes in shoppers behavior. They have made mistakes. They have to work on certain aspects. It is a very slow moving the business in terms of how long it takes to change perceptions. N is a joining us. Rallying. The thirdlargest Wealth Management posting earnings. Well talk to the ceo. Let us get straight to manus cranny. A decent numbers. Plenty of changes. Chris a lot of challenges. A lot of challenges. Ofsaid it will be the nature dealmaking. A Treasure Mission is a transformational deal on bank of america. A transformational deal on bank of america. Respect,. Hes getting respect,st in that hes getting to the cost. It is improving. Merrill lynch broker. Was reassuring. He said things are coming together. That is goingd higher. The question is the most read story on bloomberg. Com, our russian billionaires concerned about what is happening politically and how might it investments . We have a difficult business Ineastern Europe in decline some other key cities in europe. London and zurich and france. It is that exposure if you well. Isnt there a risk in the u. S. . Isnt there a risk in terms of taking is there a risk in terms of taking a company . Incident europe and the entire industry europe and the russians the entire Eastern Europe and the russians a number ofs plus activity going on in russia domestically that this is happening where there is a clear trend of they are understanding. Dividends and Equity Ownership. Undeniably too early for the Wealth Managers to really assess exposure to russia and havinglateral damage of huge exposure. They do not have a huge exposure. It is direct exposure. As the situation changes, so will the demand for action. Will russians have their money . China is still going to be an area they focus on. Your partnership rather than concrete roots. A cracking set of numbers from baer. Tomorrow i will catch up with brady dougan. That interview with credit suisse. Losses post agest lehman. Indy ubs and what those big ceos are looking at. One of the biggest losses postlehman. He is making sure he does not do brings a litigation. Another exclusive for us with ceo. S baer manus cranny joining us from zurich. He will be back tomorrow. Right. Californias Clean Energy Crisis and the worst drough in decades. We will do that when we return. That in a moment. Good morning and welcome back. You are watching the pulse. We are streaming on your phone and tablet and bloomberg. Com. Let us turn to new energy. China will introduce a policy to promote electric vehicles. The plan will be a tax incentive to car buyers and increase and encouraging businesses. They are increasing a Wider Network of charging stations. California is struggling to make clean energy because of the ongoing drought. Intoelectric farms reservoirs are running low. Putting greater stress on a less clean sources. The state legislation is pushing hard. That is an empty reservoir. Parkritish National Trust authority well offer a plan for a giant wind farm. Ministers have approved plans offshore turbines the offset in england. Almost 500,000 homes. Now, it is time for the pulse number. 170,000. That is how much Rory Mcilroys father won by betting his son byld win the british open 26. Ofis an extraordinary piece foresight. The father and the france be friends bet. It can write it down to the wire. He just did it. His father was confident he would do it before 26. Amazing 4 rounds of government. Of golf. Expect that the train will leave the area as soon as possible. Strong words from ukraines Prime Minister. He made it clear that the missile that downed the plane came from the weapon that was supplied by russia and training that was supplied by russia. Its groundexpanded offensive in gaza. Past 500. Toll rises the top for tesco. The ceo has stepped down. We will look at what his departure means for britains biggest retailer. Good morning. Good evening to those in asia. I am guy johnson and this is the pulse. We are live in london. We want to talk about the top corporate story. Tescos ceo is leaving the biggest retailer. He is handing over to a guy. Lets find out what is going on and why some people are supplies surprised by this. Investors are hopeful that the change will be delivering results. That is why the shareholders shares are up. That is what the hell dave lewis will bring, change Management Experience in building the strategy arnie in place why phil clark. He will have been there for three and a half years. He has overseen a deteriorating sales. Profits are down 6 in the last full year. Investors want to see a change. Dave lewis is their man. He has 20 years experience. He knows the business well. This is the first time they have gone outside tesco. He is an experienced person outside the firm. This is the third biggest retailer on earth. It has some big problems. They are eating away at market share. Said they are from edible in terms of competition. Things are becoming savvier shoppers. We want to go to a higher end luxury products. How do they send about off . . Price competition across the board is ee man. This is a company that needs to deliver. They are trying to rejuvenate the stores. That has aompany Massive International foothold. They have half a million employees. Project fornormous dave lewis to take on board. The sales warning that came out with the announcement. You are in first name terms with them . Thank you, caroline hyde. The ukraine Prime Minister has been speaking. Russia must deescalate in the east of his country. Crash of the clash the malaysian jet. It is getting worse. We did not have any real relationship. This is the truce. Before . Ave tried the idea of trade ties is strained . That is true. The idea of supporting ukraine in economy, we need to survive. Think tradedo you ties with russia could mean to your economy . 5 billion per year. It will severely hamper ukraine. Up two 2 . You think theres a real possibility this could happen . Very high possibility. But me explain once more. It was russia who decided to decided tos ukraine be with the European Union. They want to eliminate the state of ukraine. They will do this with all of their tools and means. They waged a war. They supplied terrorists. They supplied weapons. They cut off the gas supply. Stop our bilateral trade. Is ultimate goal of russia not to have ukraine on the map. The imf is said you might need more money because of the conflict in the east. How much is this were costing you . Billions of dollars. Our per limoneira assessment is that we need 1 billion until the end of this year. For the rest of the 2014 alone . The cost of all of this economically . Revenues from the east have dropped substantially. We still pay all salaries and wages. We still pay all entitlement programs to those who live in the east. We cannot abandon those people. How much money might this be . We are still in the program with the imf. We agreed to a new austerity package. Believe and expect that the imf is going to support ukraine. This is within the same loan deal. The last question i have is everyone was discussing this just a few weeks ago. The idea of an energy deal between ukraine and russia is something we contested by now. We brought them to court and they brought us to court. A few weeks ago we had talks with the coo. Russia theto marketbased approach. In low season, the price for the gas is 300. In high season it is 325. This is entirely marketbased. Russia refuses to accept the deal. It is all about politics but not becoming. They use gas as a weapon against ukraine. The prospect of a deal looks less likely . Plan on hown action to survive. It is very difficult. 7 billion cubic meters of gas. It is quite supportive for us. On the other hand, it is not enough. We have also seen another press conference with the Prime Minister. He made it clear that it is now almost certain that the weapon was supplied by russia that downed that plane. The training was also supplied by russia. It was carried out in russia. That is some of the allegations we have heard before. The ukrainians on thursday alleged that russian servicemen had pressed the button. Theyve scaled back their allegations. These are prorussian rebels with they were trained inside russia and russia provided the weapon. They accused the russians of everything except wishing the button. They need to be brought to account for that. The other thing i think is the update on the recovery effort trade 272 bodies of been recovered. Bodies are loaded onto two refrigerated cars which he said they wont allow to leave the station. Railcars,es of those that train will take them to a city under Ukrainian Government control. The crash site is under separatist control. He said the bodies can then go to the netherlands with it will be identified. The netherlands can lead the investigation into what happened in the crash. The russians objected to the ukrainians leading the investigation. Thank you very much for that. He is just back from kiev. We will talk more about this from a little bit later in the hour. Are gearing up over the next 24 hours to find out whether or not the ee you will impart the sanctions. Lets turn our attention to the middle east. Look at a travels to egypt sponsored ceasefire. This is after the deadliest day yet surrounding gaza. Meatiest editor. Middle east editor. It is still going on. More casualties today on the palestinian side. There are reports of more casualties on the israeli side. Dead. Palestinians are we have rockets being fired into israel as well. The air raid sirens. Two rockets were intercepted over tel aviv. Also looking at the focus of the mission. Israeli military was to destroy the tunnels militants used to come into israel. Squadsere two terror north of gaza. One of them was hit from the air militants were engaged by soldiers and killed. They have discovered 46 entrances to 14 subterranean tunnels. That is been the focus of this mission. They are also trying to prevent these rockets being fired into israel. Off acrossens going israel. Those rockets are still being fired. Is john kerry expected to make progress . Will we get anything from this . He would not become and if you did not think it would make a difference. We have the egyptian the planet and israel excepted. Hamas and others have rejected. Is would hope that kerry able to knock some Heads Together and push this forward. There is no love lost between hamas and the current leadership of the egypt which has been crashing its sister organization. They would prefer others to be involved. Left that meeting without any initiative from the qatari. Thank you very much indeed. He is joining us from tel aviv. Will the shooting down of that plan be a game sanctions the russian stand up. We will talk about that in a moment. Welcome back. Youre watching the pulse perko. The dollar is up. The dollar keeps getting stronger. We are talking about these pairs. Look what has happened with the turkish currency. You saw the dollar strengthening. The turkish currency has restrengthen an. More jittery than others. Just compare and contrast. It has turned around a little bit. Fresh sanctions may come through. Led by america we have a meeting with the ukrainian ambassador. Furtherld lead to sanctions coming through from the European Union as well. Up this is a reaction to the downing of the malaysian flight. This will change the dynamics its again. Good morning. Nexten you look at the tony four hours or 48 hours and you assess the applications for the russian economy, how severe can these sanctions become. It will be hard to sit across from the dutch. For the last few months thereve been a number of European Countries quite closely allied with russia and were reluctant to roll out sanctions. Mentioned, given the events of last week, it wouldve go for those countries not to go down a much more rigorous sanctions route. The americans rolled out some additional sanctions last week. I would expect the European Union to follow the netted states. Targeting specific Russian Companies. A more aggressive stance that has been applied so far by the European Union. Is it possible to be a rational investor in this environment . Russian markets of done relatively well in the last couple of months despite all the noise about ukraine. Even last week, those were pretty seismic developments. A horrible scenario with very strong indications that suggest the u. S. Administration and ukrainian ministration of direct involvement by russia. Very lucid. That reflected the fact that many people thought that the extremity of the situation would force russia to come back to the negotiating table and compromise over ukraine. We have not seen any of that. To gloss thisg one out. That europe and the u. S. Step of the sanctions regime to something will hurt the russian economy. We had are to guest on earlier that said it is only the most specialist investment who should be looking at this. You should not see this as a Retail Investor or as a broad market investor. You should not be going anywhere near this. You dont understand the amex of what is in play here. Howm still surprised at good the markets of been doing. The backdrop is very loose global monetary policy. There is a drive to carry investors willing to put Political Risk of a back burner for now and just go for carrier. I think what we are seeing at the moment in russia is the change of direction over ukraine in the last six months. This is a major change in russia. View. E to change how we the west is going to change the way it relates to russia. I think that means the investing environment will be very different. It is not a great story anyway. Even before the ukrainian experience, there was no growth and no real policy reform. Putin has no ideas for the economy. That is why ukraine has been so important to him. That is in tatters now. Unless he together, backs down the which would be a humiliating about turn for him and defeat in ukraine, which he will find difficult to face at home and they will face nor more sanctions. How gun shy is the Financial System of russia . Banks have learned their lessons. Crossedpens when you the line in dealing with sanctioned countries . Is that going to be in terms of if you are unable to deal with banks in london, how difficult is that going to be . The west could cripple the russian financial sector. They dont want Foreign Banks International investors dealing with russia. Any European Bank would comply. The problem has been that the u. S. And the European Union want to devise a clever sanctions onime that tries to impact russia and change the direction hurtlicy but not really western a business interests that much. In the end you may come to the conclusion that you cant make an omelette without eggs being cracked. There will be repercussions. Onhere will be pain imparted western businesses if you want to achieve what you want to achieve. Putin is overstepping keyboarders. Is needingk that stopping, you would argue for more sanctions. Business in the west will suffer as result. Still to come, we will take a look at the crisis in ukraine. A key sanctions meeting. We will see you in a moment. Welcome back. Five diesel makers in hong kong are urging the government to regulate cheap imports that they say are derived from us sustainable sources. Researchers have drastically increased light collecting efficiency. It could revolutionize solar cell technology. Landowners in australia have an incentive to increase their soil levels. They have a new method of earning carbon credits. Were going to take a break. Focus back tothe the crisis in ukraine. That is coming to you from brussels. I will see you in a moment. Good morning. Welcome back to the pulse. I am guy johnson and these are the top headlines. Ukraines Prime Minister says the down the flight was from russia. He asks them to respond to questions about the crash. Enough is enough. Those who committed this International Crime, those responsible will be held together withd the entire International Community we will bring to ,ustice everyone responsible including the country that is behind the scene. Theerious concern is over increasing fighting in gaza. The Israeli Military has concerns that they have infiltrated into underground tunnels from gaza. Set to opentors are a criminal investigation into manipulation of Foreign Exchange benchmarks. The investigation could be in as soon as this week. Jonathanrkets now, ferro. Theo in a half hours into european session we are setting up for a day of losses. Of we have session lows. Day not just for geopolitics but plenty of Corporate News in europe. Manus cranny is in switzerland. 6 . Stock is up manus cranny will be there for that one as well. There could be a big loss on the back of that massive fine. The news is in the supermarkets. Tesco is up by 2 . The ceo steps down. Risesrket cap significantly after he leaves. He did issue a profit warning. If they are struggling, what does it mean for morrison. Indeed. You very much it we will conclude in just an hour and surveillance will begin. We been talking about the story all morning. I am sure you will carry on. Not only the crisis in ukraine but israel and gaza. It is a Double Barrel to international relations. Joining us is gideon rose of Foreign Affairs magazine. He has a terrific synthesis of international relations, not only what goes on the council for an relations but across all of those thinking about solutions to what we see in Eastern Ukraine and israel and gaza. Steve miller will join us from aig. It he will talk to us about the ramifications. We will talk about Business News as well. These two stories are still front and summer center. Looking forward to the program. Thank you very much indeed. Tom keene with bloomberg surveillance. Europeansador to the union joins us now for an exclusive interview. Ambassador, good morning. Your colleagues in the European Union, when you address the issue of further sanctions, what are you hearing . What should we be expected over the next 24 hours . Will the eu go further and match what we have heard from the United States . Thank you very much. We have completely changed. Thepolitical context of situation. Nothing can take place in europe in complete isolation. Strategy in ukraine was only the threat of the ukrainian people. Now the International Community is at threat. We call them to be resolute action. Mr. Ambassador, to the question, what are you getting back from your european colleagues . You made it very clear what you would like to happen. What do you expect the European Union to deliver . Need toyou think they deliver in order to change thinking in moscow . The European Union could take some efforts and measures to stop the bloodshed in ukraine, in particular things like more resolute restrictions and measures like to stop all kinds of financial operation and withdraw russian leadership to like g 20e in levels summits. They should call up the french the russian stop federation. Recognizethey will organizations like the ukraine as terrorist organizations. You are the ambassador. Youre in brussels. Youre talking your colleagues in the European Union. Do you think that the European Union is ready to do the things that you just suggested . Are you hearing that that is going to happen . Yes. I do believe that the European Union at this stage is ready to go for further restrictive measures. They are very much united and concentrated and i see a lot of solidarity. There is an understanding of the necessity to act in this manner. I will beassador, joining you in brussels tomorrow. You are speaking to the other ambassadors. France is ready to give up on helicoptere of those warships. This is a contract they have made with the russians. It means billions of dollars for the economy. The french are prepared to kiss that contract goodbye . Yes. Of course. Law and security should her veil. Over selfish interests. Is in contradiction with the eu code of conduct. Why currently the contract is in contradiction with eu rules and standards. This contract should be at least put on hold. In terms with the European Union can do, for ukraine are there some things you could benefit from . All, we are not in favor of punishing russia. We want to take measures to enforce russia to change its behavior and be constructive and do some small steps. Illegalsupply of weapons to separatists. Betweenose the border ukraine and russia and not permit infiltration of russian mercenaries into ukraine. Avenue the activity Recruitment Centers which are on the territory. These are three steps which russia needs to undertake in the near future. Were just going to finish this interview shortly. I want to come back to one of the points that we just made. You made it very clear what you think the rules should be. The sale of that equipment is a contradiction with the convention that we currently have. Are you hearing that the french are willing to give up that contract . You must be talking to the french. Order telling you . All, i respect the appeal of chancellor burkle merkel. The level of foreign minister of the United States, the ruby a serious discussion on this contract. Thank you very much indeed for taking the time to talk with us this morning. Ambassador toes the European Union. Meantime, lets talk to somebody big corporate stories. Third biggest wealth manager in switzerland. The results were reported and they were good. Lets talk to the man who spoke to the boss about this. Manus cranny is in zurich. Numbers. Still a lot to do. A good set of numbers. The market seems happy. The message is coming from boris kolodny this morning. The margins are getting a bit better for the Merrill Lynch bankers that have come on board. They are getting towards targets. Culture has improved. The cost of integrating the why the stocksis are reacting positively. Those costs are coming down ever so slightly. A variety of institutions in zurich will do their deals with United States in regards to tax probes. They are buying assets in luxembourg. Leads the legal issues behind. This is smart dealmaking. When it comes to the issues that you just touched upon, it is escalation in terms of what might happen between europe and russia and the consequences for this is clear. Things are it on hold in regards to russia. We have the typical business of Eastern Europe. This is in the wrecked exposure. That there a risk in russianin taking citizens . From what i hear, the entire Eastern European business and russian business is on hold. The russians are waiting to understand what directions the sanctions could be going. There are a number of activities going on in russia domestically with this new authorization that is happening. There is a clear trend of understanding who is the beneficial. More Equity Ownership back into russia. It is still early to make substantive calls in terms of the impact on the russian story in regards to private wealth and management. There are no boots on the ground. They will continue with joint ventures and associations in china. Back to you. Thank you very much indeed. Dennis cranny is in zurich. Where going to take a break. We will look at how the stock is escalating conflict and whether john kerry will have any luck. We will see you in a moment. Good morning and welcome back to the pulse echo returns. Erry his arrival comes as the death toll in the conflict rises sharply over the weekend. 500 in gaza. The us live in tel aviv is president of a geoPolitical Risk organization. We are going to see a diplomacy story over the next few days. Do you expect any tangible progress to be made as a result of what the secretary of state is going to try and do here . Thank you for having me. I dont believe we are going to see any progress at least for the next three or four days. The reason for that is there is no need for an agreement. Israel has a lot of work to do in cleaning up these tunnels in the order area of the gaza strip. Signs its not show any is going to budge on any of its demands and if were looking at the original ceasefire that was offered several days ago as the basis for a new agreement, the gaps are too wide at this point. What is going to close them . Simply more military pressure on hamas is going to close it. Bureaue the politics which sits largely abroad. With their sync armed wing fighting in the gaza strip. They feel safe underground into bunkers. That they dont believe their own lives are under enough pressure to they dont feel enough russia to capitulate. It was a member who said that if they agree to a ceasefire it would amount to political suicide. The people would rise up against them. Hamas entered with a noose around her neck. They need to deliver tangible results for the people of gaza. We mean a loosening of , theictions, the blockade return of prisoners and hamas has not been offered that. They trying to up the ante in an effort to close the gap the pulley other to bend on the egyptian ceasefire. What youre telling me is that hamas has expectations that are in excess of the reality theyre likely to achieve. Are they simply too optimistic about what the results they can achieve our . If they carry on long enough and stay in the conflict long enough, are some them achievable . They are too optimistic . I would say they are optimistic. They have nothing to lose. They were spiraling. They were in a downward spiral in terms of political marginalization. They had 42,000 Civil Servants and gone three months without pay. They had a serious political marginalization. They went into this with an attitude of taking everyone down with us. They went to shame egypt and the Palestinian Authority into given them the concessions theyre looking for. It is not about them being optimistic. They have nothing to lose. The longer this continues, the more likely the chance that they will be major civilian casualties that will get the world to pressure israel and will get egypt to give into hamas. They are trying to pull israel into this ground operation. Thank you for your time, daniel. Come, murdoch looks to increase his badge bid of four time warner. We will talk about the financial surroundings of mr. Murdoch in a few minutes time. Lets look at Foreign Exchange markets. This is the ruble. It has not regained some of the lost ground. The same thing is true of the turkish currency. It is a currency that is sensitive to the fed. It is regained some of its ground. Aroundotes are floating about what rates news by the central bank under pressure to do to this pair over the next few months. Lets carry on a conversation. Continue to watch this russian story as we build up to the meeting and possible further sanctions. Gather. Oreign ministers not just withged, the downing of the plane but the handling of the crash site. There is momentum to do something. What they are going to do is a good question. The names of the companies and individuals that the european ,nion has agreed to sanction there is the possible ban on European Union weapon sales to russia which is something the french objected to because they a helicopterell warship to the russians. We will be all over it. It is a bit of a titfortat. It would understand that Rupert Murdoch is considering upping his bid for time warner. The 75 billion wasnt quite appetizing and off. How will he finance that . Sky italian. Off that they are getting close to a bid of what they would be willing to pay for a european giant. This makes yourself stronger. Clout in terms of getting deals to buy programs. If you are the Program Maker then you have more litigating power with the network. We will watch that story very carefully. Thank you very much indeed. We are going to keep this right here on a bloomberg. We hope you do as well. We will be live from new york over. Om keene taking that is it for the pulse. We will see you tomorrow. Like no a disaster other. 247 bodies await transfer among mutual distrust. This as Vladimir Putin accuses mercenary political goals. In gaza, hamas battles back in a sunday of fighting. Monday brings secretary of state kerry to cairo. This is bloomberg surveillance. We are live from our World Headquarters in new york. Im tom keene. Joining me, scarlet fu and adam johnson. In addition to the obvious crises in gaza and ukraine, there are a few things we need to talk about. Starting in london prices and property fell for a second month in july. The increase of new homes softening the market for sellers. Inis like what we are seeing new york. The money flow seems to be looking for assets in difficult times. Economics out of the u. S. 8 30, the chicago fed. As far as earnings, before the bell, halliburton