Transcripts For BLOOMBERG Countdown 20140414

Welcome to countdown, i am mark barton. Ready to deliver the stories that will drive your day. In ukraine,ents protests in the eastern part of the country escalate. Johnson ferro has insights on Mario Draghis comments on monetary is in hong kong following the deal for glencores peruvian mine. Camouflaged gunman fired on kiev Government Troops killing one service man and wounding five. The ukrainian president spelled out a deadline for prorussian separatists to lay down their arms. That ends now. What next . According to the deadline, he said that the National Security and Defense Council has decided to launch a fullscale antiterrorist operation involving the armed forces of ukraine. We will see exactly what will happen now. The risk is that any provocation that comes from the Ukraine Armed forces against these progression separatists is going to inflame the situation with russia. Remember, near the border of the ukraine and russia, there are nearly 40,000 troops, which are armed with combat aircraft, tanks, artillery. Everything that is needed to support an invasion into eastern support the prorussian separatists. The situation is extremely tense. Earlier, we saw the Russian Ambassador to the united an emergency meeting of the United Nations. That turned into a trading of blame and insults between the u. S. And russia. The u. S. Representative to the United Nations saying that insecurity in ukraine has been written and choreographed by russia. This is what she said. Talks we know who is behind this. The only area entity in the area capable of these professional military actions is russia. The russian representative to the United Nations has said that kiev who areis in backed by the United States and the European Union needs to withdraw. If there is any action after now,headline, which is that is going to be put a drip talks which are supposed to take place in geneva later this week between the russians and the ukraine and the United States. All of that is up in the air. Foreign ministers meet today. Will they impose sanctions . Thene of the things that European Union and the Foreign Ministers would need to do is to establish a relationship between russia and the prorussian separatists in the Eastern Ukraine. The finance minister was talking on german radio. There are clear signs that the russians are fanning the situation in Eastern Ukraine. It remains to be seen. Some people are saying it is crunch time for the Foreign Ministers to be acting on sanctions. They could end up hurting the european economy. Ourait and see. Europe editor in berlin. Global finance chiefs are trying to ignite growth in their economies. Exactly how to do that was the theme of the weekend talks at the imf talks. Theo draghi used opportunity to take his eurosst stance on the rise. The Exchange Rate would require us to remain equally accommodative. It would require Monetary Policy accommodation. The strengthening of the Exchange Rate acquires further monetary stimulus. I think we are all together on that. It was really strong from him. We know a strong euro would ease back on inflation. It could take half a percentage off of the inflation rate in the eurozone. Saying that we need extra stimulus, that is quite big from mario. Specifically, they eurodollar, this is on inflation. We need to do something about this. My question, has the market become desensitized to Mario Draghis words . It did not move much lower last week. A big move last week. Can mario do more . Maybe they have been siphoned out by all of the qe talks. We know that they are unanimous on using nonconventional methods. We do not know what measures these would be. Are they all together on when we should use them . Economists say probably for the next couple of months. The new french finance minister, he was in washington. He sounded fairly upbeat. He is optimistic. The budget deficit needs to come down to three percent. The forecast this year is 9. 9 . That is going to allow them to that deficit. Reaching the three percent deficit target is our objective. Not because it is expected among nations in europe. Because it is in frances best interest to achieve that target. Only when we achieve this target can we reduce our debt. We need to do this in france and in europe. It is our goal to achieve a level better than the three percent target in 2016, 2017. Record of failing to meet these targets. He thinks that they can hit three percent of gdp by 2015. Last year, it was three percent. It was meant to be 4. 1 . They keep missing those targets. S traderal will buy a peruvian mine for 525 billion. It is a big some. That is shaking up the Global Mining industry this morning. Chinassentially gives metals control of the mine that is supposed to produce 400,000 metric tons of copper. That is equivalent to about 13 of imports of copper i china, which is the worlds biggest the buyer. Trading has been up about 6. 5 . This is up seven percent in the hong kong trading session. I interviewed the ceo of mmg. He would not tell me any acquisitions they were eyeing. He said that they are always looking to add. We have a pretty good feel for long life, low cost operations. Year of contained copper. That puts us in the top three of world production. It is below a dollar cash cost. He goes on to tell us that duedid eight months of diligence. This is subject to approval by regulators. What will glencore use the money for . That is a good question. As will immediately be used to reduce debt. The company will look at reinvesting capital. It is returning some of it to shareholders. May invest in copper projects in the democratic republic of congo. Glencore says that the development of bus bomb bus is almost complete. There is roughly 2. 4 billion left to be spent on the site. Here in hong kong, you can see shares soaring on this big news. Ahead, our next guest says that the u. K. Economy is finally getting a foothold. We will dig into the fundamentals when we return. Time for todays company news. We have breaking news from persia. They targeted a two percent operating margin by 2018. Later today, the new chief executive unveils his strategy which includes a return to half it in russia and latin america in the next three years. Shares of sharp dropped as much as and may raise about 2 billion in the fiscal year of 2015. The company has not decided how it will raise the capital. A chairman says that International Regulators will probably ask tanks to hold more capital relative to their total assets. This comes after the leveraged ratio requirements. Banks require at least six percent capital as part of their asset banking unit. To boostk may have their capital. I am mark martin. 7 14 here in london. It says that the u. K. Economy is finally hitting a foothold. Lets get more on the findings with the companys chief Economic Advisor. The company is on a firmer footing, is it . It has been fueled by people saving less. Ere seeing a labor situation where the market is tightening. That means that wages are picking up at the same time that inflation is falling. Ist means that the fuel coming from real wages and employment. This is the week that we might witness that. Job data could be accompanied by wage data. That has not happened since 2010. The kind of figures we are looking at are not spectacular. The point were making is that they are pretty stable and they are not sustainable. That is because of a broadening from the consumer to investment. Investment is very strong indeed. Companies that have been worried holding casho are and are putting cash to good use. Are exports the lake that the economy leans on . We are a little bit more tentative about that. The overseas markets are doing much better, particularly europe. We are looking to move into positive growth. It is flat on the year. 10 . Months, it is up it has outperformed the top 10. Yes, it has. Exporters, it is not great. The point is that our exports tend to be very highvalue added. They are not very price sensitive. You saw where the pound fell out of bed in 2007. People cannot stop talking about it. They came out with the latest report. Asking prices in london and across the country are at a record high. You say that an unsustainable boom will be prevented. Why . Very stronge, supply response from the House Building industry. That will keep prices down outside of london. In london, we are seeing the income multiples. Those kinds of prudential controls are binding. We are back to the 41 income ratios that we saw at the peak. Provided the Financial Conduct Authority and the lenders make sure that is the maximum, then that means that house price inflation, even in london, can only move at the same rate. Of affordability is enough . They have the tools necessary for now . What thes pretty well authorities have, apart from a rise in Interest Rates. The Interest Rates increase forecasting. You are going for the second half of next year. The politics do not really come into this. Lot of reasons including rising Interest Rates in the u. S. Member though one suggested a rate increase it could come in the spring. Would you be surprised if we did not see a rate rise in the Third Quarter . I would not. If the economy continues to outperform the forecast, then we could see that. I think the consumer will pause for breath a bit. I think the economy will slack off a little bit. We will chat more about business and the risks to the u. K. Economy. Peter spencer, the chief Economic Advisor. Welcome back. It is 7 21 in london. U. K. , are wen the set to overtake germany in the employment table . I know that is something that you look at. That is something that we pay a great deal of attention to. And great number of people coming into the world deciding to go for late retirement rather than early retirement. Those kinds of factors are important. And keeping the lid on wages. We want wages to rise. Not too much in the goldilocks sense. That is all very important. What do you think the chancellors announcement on pensions, do you think that changes the dynamic on when people will retire . Will they work for longer or shorter . Thate of the reasons people have been retiring late is because of very low rates. The chancellors move to make it easier to retire. On earlymics retirement are still very unfavorable. The kinds of rates you can get on any investment. The long retirement that you have to finance make it very expensive. A lot has changed in that time. What are the big risks in the u. K. Economy . Bythere is a big risk posed the search for yield. That is always a problem for the u. K. In the past, we have always had a Housing Market that is heavily dependent on overseas finance. This time, it is very different. The finance for those higher mortgages are coming from repayments. I think that we are relatively wellplaced if there are problems. We do not have to worry about the risks associated with credit this time . Not yet. That is the point. So far, the expansion has been funded from domestic sources. Of course, that is not the only risk. We are hearing today about the ukraine. So far, the markets have taken that rather well for various reasons. You never know. Thank you for joining us today. Peter spencer, the chief Economic Advisor heror. We took a look at special dishwashers that start working at the command of your tablet. Director ofdivision appliances. This is our app. You see the center of all of the products connected. We can start the dishwasher process from the ipad. This is not just for the gadget itself. It always must have a benefit for the consumer. There ss a huge trend for handle kitchen devices. What you see here is a dishwasher. A very easy way to open. We call it not to open. People think it is more integrated. That is a huge design direction. Lets have a quick peek at what is happening to european underwaythe session is in 30 five minutes time. Stocks fell on both sides of the atlantic. The indication is that the fall will continue today. The cap futures are down. By. 6 e futures are down. Declines on wall street and in europe led by Technology Shares within the Standard Poors 500. Falling 20 from alltime highs in february. Investors will be keeping an ion the u. S. Technology and biotechnology index. Coming up, well copper turn into gold . A 6 billion deal for encores groovy and copper mine. Back. Come lets get right back to jonathan ferro. This right here was the talk of the town at the imf meeting. Down by. 3 . Mario draghi, off of the cuts. Requireange rate might further monetary stimulus. We did not see much of an impact in asian trading. The stocks are down by about. 3 . At all. Not the ecb it is the Federal Reserve and the u. S. Recovery. Sales, we are looking at 4. 9 growth. That would be the best mark for september im a 2012. The Un Security Council has held the emergency meeting. Russias ambassador called ikea have to start a genuine dialogue about the u. S. There are increasing signs about russian involvement. We know who is behind this. The only entity in the area that is capable of the coordinated military action is russia. He wants to maintain his russian investments. He is worried about the situation. The economic sanctions. We willder russia be investing. Then we will see what is happening veryg. There is Nothing Specific very the search for the missing Malaysia Airlines flight will begin later. Officials announce a fresh sighting of an oil slick. An underwater vehicle will be deployed on the ocean floor. The United Nations Security Council held an emergency meeting after protests escalated over the weekend. From meyer has more moscow. What is the situation on the ground in the ukraine after this and the violence over the weekend . Obviously. Ry tense, we have the first bloodshed in the ukraine, you just mentioned. One servicemen killed and another five injured in a clash just on the outskirts. The deadline, which expired this morning by the Ukrainian Government for prorussian forces to relinquish control of government holdings, which they have occupied. They have occupied a number of local council buildings. And the potential there for more violence is there. It is a tense situation. A spat occurred in the United Nations overnight between russia and the u. S. With fingers pointing in opposite directions. What does russia say to these accusations that it is instigating the unrest . Evidence. Us with the there isnt any. What we see is people in camouflage and the ukrainian they are Russian Special services involved. Is there a way to prove it . Air is no doubt in the minds of the u. S. And its allies. The concern is that the russians are going to escalate. This is in the runup to the elections on may 25 in a bid to undermine these elections. Short of a National Military invasion of the east of ukraine, it will be hard for the u. S. And the eu to justify fullscale sanctions against russia. We are likely to see an extension of sanctions, which have already been applied to individuals and one bank controlled by a billionaire associate uproot and. Of putin. They would be modeled on those it used against orion. Iran. Cutting the bank off from the entertainment system. Those are not likely to come forth before fullscale military intervention. There is a disagreement within thanks for joining us. Henry meyer speaking to us from moscow. The state owned metals trader, a group that will buy glencores peruvian mine for 5. 5 billion. Good morning. Estrada selling one of their key copper assets . 400,000 tons of copper a year. It is a huge mine. Regulator forced a sale of this asset as part of their approval of this process. That has taken them eight months, a most a year to sell this asset. It is definitely above expectations. People are expecting about 5 billion. Maybe north of that. Give us an idea of how important this is to china. And a couple of years, it will be producing a lot of copper, isnt it . 400,000 pounds a year is huge for production. China is obviously the worlds biggest consumer. What will glencore do with the proceeds . We have little detail about that so far. They will use it to pay down debt. There are a few options. A special dividend. Perhaps m and a. I thought that was off the table. Bhp selling some nickel assets. Lots of minors are selling. And the chinese are really the only buyers at the moment. Thanks for joining us. 7 37 in london. Ive it equity groups say that chinese money is changing the way that global and then they deals are valued. This could be the key to the further rejuvenation of europe. Europe was stuck. The banks continue to try to get better. They continue to try to offload things. The thing that is most attractive is the Zombie Companies which have been sitting bank controlled for seven years and are starting to come out. A little bill murray reference. He keeps waking up on the same day over and over until he has some sort of arsenal reduction. What needs to happen in europe to get off of this treadmill . It is not as extreme as the reform needed in japan. Some of the protections need to be taken off. We need to take on younger people. Reduce youth unemployment and reduce graduate unemployment. The older let some of people move on and go on to retirement. What are your discussions with Chinese Business leaders and government leaders to get the chinese more inch interested in investing in europe . Thatat i say to them is europe is not going to collapse. 20092012,ed between it is nonsense. On the other hand, europe needs capital. Some enthusiasm, some life. The chinese definitely have that varied and they have cash and they have markets. How would you judge the private equity rate . How do you see those pools of money that are collecting in aina changing the ma and landscape globally . It will have an effect. Some of the larger chinese firms are not on the same scale, but they are approaching it. They will be competing for businesses, which they can then leverage in china. Because of their chinese connections, the price that they will be able to pay will be higher. In certain sectors, you will see an increase in price. Frankly im a you will see some of the western firms priced out of the market. They are looking for strategic commodities as well. Whether it is assets in canada, australia, the United States. Cattleave a very large farm in australia. We are very keen about that that they want to buy beef. Is it on the market at the moment . It is not. I will always listen. That was an exclusive interview. Just ahead, hirsch a announced that it plans to cut its auto lineup by about have to restore profit. Welcome back to countdown. The time in london is 7 43. Starts at the top of the hour. Here with us is manasquan any. Anniversary. They did add a year ago. We have a ceo. We will have great conversation. Our tastes changing . What is going on in the luxury world . Deal and he said it was love at first sight. A look back at the original interview. That is a way to describe a deal. We are talking about luxury. We are also talking about markets. The euro dropping. Jon ferro said that he does not think that draghi is much for the markets anymore. Has the market becomes slightly desensitized to mario draghi . We did not see much this morning. 3 . The euro was down everybody is talking about the strengthening of the Exchange Rate requiring monetary stimulus. I think this continues during within the ecb, there is not much unanimity about which to use. This will help the euro come down. This is one of the things that came out in the debate in the afternoon. Which was, its going to be the strength of the dollar. The solid believe that the dollar and the u. S. Economy will recover. Currency. St of a there is a top and a bottom to the euro. 1. 39. Is at is where they do not want it to go any higher. It is a push and a pull. It whole russian question, is amazing when you take four days out of the office. It has been quiet the last four days here. It can be arranged. The takeaway from dave vos . Look at the opportunities where you can add value. The one thing was about technology and capital expenditure. It was huge for it to come in industry in the United States of america. Likewise on technology. It was this big shift in technology. He was saying that about the uk. We will never get back to where employment was in 2000. Janet yellen had better catch up. Caroline hyde is here. We know every journalist love say pun. Chief executives of Car Companies do as well. It is called back in the race. That is the Business Plan unfurled by peugeot today. He is trying to outline after 7. 5 billion euros of net losses over the past 2. 5 years, how they will get back on track and return to profitability. He has some tough targets to meet. He expects the net profitability. O be about 2. 8 he wants to scale that up to five percent by 2023. Types of cars. On they will be cutting the vehicles that they offer from 45 to 26. Almoste slashing up by half. It seems to be all about emerging markets. They want russia and latin america. They say that the amount of cars that we have been pushing out in china is going to be tripled by 2020. Some key targets being outlined by peugeot. Onour next guest is focused one of the stocks. How she sees coppers slide affecting the company. Welcome back. This is countdown. We are nine minutes away from the start of todays European Equity session. She is the chief Market Strategist at ieg group. We looked at futures earlier. They were down earlier. Ftse is difficult for the to get back on the right foot. With the ukrainian crisis escalating, there seems to be a movement from the Growth Stocks into the value stocks. I think it is an opportunity to look for certain amounts of value, maybe from a longerterm perspective. With that in mind, we had see the big deal with glencore since the dax is down february 14 . I think we underestimate the chinese hunger for copper. Thisands at nine percent year. They have managed to buy their own mine. They have not decided to pull back on any of their production. They are going to ramp up between now and 2018. That is to garner more production. That is one area to look at. Chinas slowdown is definitely there. Chinas gdpee when figures are released. Smiths group calls itself a Technology Company. It is a medical equipment and scanners. Fundamental business unlike some of the tech stocks. It had a big fall this year. Certainly. We see it going to about 12. 75 per share. There was a shutdown of a german plant. They are improving i. T. One of their profitable arms is the john crane gas arm. Research a strategic manager coming in. He will start at the end of this month. We could see some changes there which could put that company back to where it could be. You made a dig at some Technology Company there. Are the declines justified given that these were the stocks that led the advance last year . In some senses, they probably rallied a little bit too hard. Of thely, a lot Technology Companies are duplicating each other at this moment of time. A little bit like 1999. Too many of the same companies. This is an opportunity to pick out the real companies, the ones that have value. Produce something hardcore like medical devices. The inset will stand the test of time. A lot has been said about how the s p had a decline of 10 or more for 500 days. Are we in the early throes of the weekly yeah coke decline was the biggest since the middle of 2012. You see the sense of stock areas last week. We reached levels that we only saw when you saw the last 20 klein. It is long overdue. Far,e earnings season so it is early. It is wednesday. We have burberry sales later in the week. How is it going so far . I think the supermarkets white see a little bump upwards. Liketheless, it does seem they are starting to cannibalize and lot of the market share. That will be a problem for tesco for some time to come. 7 55, five minutes away from the start of the European Equity session. Stay tuned for the exclusive interview. Andrea and all of the news that is moving the markets today. See you tomorrow at 6 00. Welcome to countdown. I am manus cranny at Bloomberg European headquarters in london. Francine lacqua is out today. Coming up, an exclusive conversation on the luxury jewels market. We will speak to the pomellato chief executive. That is later this hour. The markets team has everything covered. Here with me now, caroline hyde. Jonathan ferro on the markets and david tweed also joining us. , another weekend, another pathetic prophetic statement. Really, we are talking about it. It is the dollar side of this trade that is going to drive the euro lower. That is the big number. Caroline, you are looking at loreal on the skin product side and peugeot. A bit of a mixed bag. They are both french. Loreal coming out after the bell today with a sales update. A 4. 4 expecting increase. This is a phenomenally inquisitive company. 28 brands. I defy anyone to walk into the bathroom and not own something loreal makes. Only one is homegrown. They are buying in china with magic. They are buying in luxury as well. I want to focus on peugeot for the opening this morning. Business plans, every journalist loves a pond. Every cheeky executive at peugeot loves a pond. They are back in the race. That is the Business Strategy they are outlining today. They want to cut costs, get more profitable. Shares up by 1. 6 . Off by 1. 6 . Read,rything that i have but we will getm to that story surely. David tweed is standing by in berlin. The situation in ukraine looks like it is beginning to escalate. Deadlines and the language over the weekend whipping up a frenzy. The ultimatume, that was laid down by the acting president passed down about an hour ago. That was an ultimatum for progression separatists to lay down their arms. We are waiting to see what happens on the ground. I just spoke to our reporter in Eastern Ukraine. He says nothing is happening yet but we are watching that situation very closely. We will get a full report very shortly. I am keeping and i on glencore. This is the global miner that got together with extra last with xtstrata last year. It is about Debt Reduction, returning part of that capital to shareholders. It is a compelling offer. A little bit higher this morning, you can see, up 0. 8 . The ftse and the rest of the equity markets all a little lower. Good reaction on that news. Else, you mentioned the u. S. Retail sales. That is the next point to watch. Coming off the back of the worst week for european stocks in a month, it looks like the loss is going to continue. For a broader look at the European Equity markets, here they are. Ftse 100 up by 0. 4 . The dax up by almost 0. 8 . Geopolitics back on the radar. The tension between russia and ukraine back and play. Dividers escalating. Equities selling off once again. In fx, it is not a russia story. One trade right now is euro dollar. The talk of washington. Mario draghi had some very strong words. The strengthening of this Exchange Rate requires further monetary stimulus. That is pure verbal intervention. The euro not really sounding off through asian trading. Down by about 0. 3 . You talk to many a strategist, many and fx trader, they will tell you what is really going to drive this one lower is a u. S. Recovery and a Federal Reserve that will start to heighten policy. Look for u. S. Retail sales. 1 30 u. K. Time. Looking for growth of 0. 9 on the month. That would be the best month since september 2012. Thanks for that roundup. Joining me now, george king, rbc of strategy over at investment management. With great to have you here. As you look at the world, we have had the imf over the weekend, draghi and the politics of russia. What is the most important element of that . Draghi is probably the most important element. The others are more news and distraction. The central bank in europe, the stability it is providing to the Banking System and the check we are expecting to come out of the Banking System is the biggest rick factor. Ukraine, unless it escalates into something enormous that causes Energy Prices to spike, that could really foreign threaten the recovery, is going to be more noise. Se havey markets per come off the board. Maybe i am being generous. , the worst the u. S. Week since 2012. Europe down over 3 last week. How concerned are you . Concern is probably too strong but it bears watching. The best news is we are back to a market where we can make fundamentals and valuation. If you look at it that way, fundamentals are broadly supportive. They are more supportive in the u. S. , less supportive in the u. K. , a little less supportive in europe. Probably, things are improving. The valuation picture has changed. It is hard to find as much value. There is still quite a lot of value in europe. Beingk being passive and brought is probably the wrong strategy inequities. Being targeted and pacific that job is getting harder as volatility rises. When you see these kind of corrections, you said in yourare normal occurrences. It is a reminder that there is risk involved in this markets. The markets dont move just one way. The trending markets seem nice but they build risk. The volatility is both worrisome but also creates opportunity. What we look for is volatility that is based on something more fundamental than just things blowing in the wind. What we are seeing now, spikes and volatility create to either immunize the portfolio or take advantage of something you wanted to have previously. It is not necessarily bad if you have a strategy. It only works if you know ahead of time what value looks like and can take advantage of those disruptions. Where is the biggest possibility . That is fantastic macro theory. Re is the biggest policy possibility through 2014 . There are pockets everywhere. Emerging markets, japan, europe. The good news is there really is a broad as you say, it is getting hard to identify them. We will talk about those opportunities when we come back. George king from rbc stays with us. Here is a look at what is coming up. The euro slides as president draghis comments. Pedal to the metal. Peugeot wraps up its sales targets and streamlines its car lineup. Ken pomellato keep its shine . The chief executive joins us for an exclusive conversation. I am manus cranny in london and this is on the move streaming online, on your phone, on apple tv and now on amazon fire tv. Here is a stock that is on the move, glencore. They are selling their peruvian mining assets for just under 6 billion. And thecompelling offer proceeds will be used for Debt Reduction along with returns to shareholders. That is the stock up over 1 . In london you are seeing the u. K. Market down by over 0. 25 . A different direction there with glencore. Global finance chiefs are trying to ignite growth in their economies. Exactly how do they do that . Ecb president mario draghi used the opportunity to take his strongest stance yet on the euros rise. The strengthening of the Exchange Rate would require to make our Monetary Policy stance to remain accommodative, would require further Monetary Policy accommodation. The strengthening of the Exchange Rate requires further monetary stimulus. Here with a little bit more we were hopingif for a dramatic response from the euro, we didnt get it. It doesnt seem that way. We will put up the charts for you in a second. It was an attempt to bring the euro down. That is called verbal intervention. We know the euro is a drag on the inflation rate but in draghis own words it is becoming more and more important. These were pretty strong words. Check out the reaction over two days. I will show you euro dollar right now. This is in fx market that is pricing in quantitative easing. We know that officials are unanimous in their commitment to use unconventional tools. But are they together on which tools to use first and what pushes them over the line . Right now, that debate does not seem to have been settled. We caught up also with the french finance minister in washington. He sounded fairly upbeat. When we talk about france and french economic issues, people are likely to point out the budget deficit. They need growth. He is optimistic that they can beat the 0. 9 gdp forecast and rein in that deficit more. Reaching the 3 deficit target is our fundamental objective. Not because it is expected in nations among europe because it is in frances best interest to achieve that target. Ieve a 3 we ach target can we lessen our debt . We need to do this in france and europe. It is our goal to achieve a level better than the 3 target in 2015, 2016 and 2017. There is some optimism. Here is the problem. They have a twoyear extension to get that budget deficit down to 3 of gdp. The deficit last year was 4. 3 of gdp. You see the theme developing here . A record of missing targets. Many people will be questioning his optimism. Thanks for that. Still with us for more perspective is george king, head of strategy at rbc investment management. We just heard mario draghi. You said that is one of the biggest issues. When you look at europe, where do you want to the invested in europe . I think the kneejerk reaction for a long time has been, if you can be in German Companies that have a Global Manufacturing or sales or distribution base, that was the strongest. I think that is a little simplistic these days. We have seen some structural improvements in some of the peripheral areas like spain, italy. You have seen ireland really pop out of that and come back strongly. France, which was just on the news, is probably the area we are most concerned about. You have seen the least structural progress there. We try not to look at it geographically. We try to pick individual companies or sectors that are going to benefit. Principale those sectors that you want to be exposed to . That is getting more interesting. We were in more defenses. Recommending easing out of that and coming into some more cyclicals. Think our Going Forward expectation is you are going to see oscillation there. It is not a one trade market. You are going to see some defense of pharmaceuticals or staples doing better. They might rotate into some more exposed areas. Back and forth with the course of the year and Going Forward. Because Economic Conditions are so weak you are likely to see a bit of oscillation around that tailwind of economic strength. Overe of the big themes the past number of weeks has been technology. How do you look at the Technology Space . I think that differentiation worry is key. We were just writing recently about the continuing opportunity in u. S. Tech in general. And abroad as well. Sector really is dominated by the companies out of the u. S. You tend to have a synonymous argument if you are protech. You are usually prou. S. Tech. Fromnies that can benefit what we expect a hat which is after years of not having acknowledged, companies that have been under investing, with more confidence vote at the board level and in Economic Conditions starting to unlock that capital and redeployed into capital expenditure. In a of companies are position to take it vantage of that. That area of tech as opposed to facebook and so forth is what we have been writing about. It is enterprise inside as opposed to the consumer side. Stay with me. We are going to go to one of our other leading stories. The protest in Eastern Ukraine. They escalated over the weekend in the town of slovyansk. Camouflaged gunman fired on anernment troops in antiterror operation killing one servicemen and would think five. The Ukrainian Government said various things. David tweed is standing by for us. The president spelled out a deadline. You mentioned it at the start of the program. S to layion separatist down their arms. We passed that an hour ago. Talking to our reporter outside some of these municipal buildings which have been taken by the russian separatists. There is not a lot of action happening. The explanation for that might be in this announcement that has just and made on the Ukraine Interior Ministry website. They say there will be a National Resort Third National reserve guard squadron that will commence combat duty in the slovyansk region. Stopquadrons aim is to terrorism, localize and contain the situation in the region. It looks as though we are not going to get any actual action from the Ukraine Forces against these prorussian separatists who have taken these buildings until tomorrow. It is an extremely tense situation as more than 40,000 troops, Russian Troops near the Ukraine Border on the russian side are ready to support any insurrection in russia in ukraine. What happened last night was that we saw the russians actually held or called for United Nations Security Council meeting, an emergency meeting. That descended into a whole lot of naming and blaming between the u. S. And the russians. It was the u. S. Envoy to the United Nations that said the insecurity in the ukraine is written and choreographed in russia. Listen to what she said. We know who is behind this. The only entity in the area capable of these coordinated professional military actions is russia. The russians came back. They said the government in kiev is backed by the United States and the eu. They claim they are neonazis and said specifically this is why they called this meeting that they wanted the u. S. And the European Union to get kiev to back down on its threats to go in there and take action against these prorussian separatists in Eastern Ukraine. The eu, the Foreign Ministers had a meeting today. The biggest question is this, a great deal of rhetoric, but how real is the appetite to take a bold step and upscale the sanctions against europe . There are two things going on here. One is the fact that the European Union is finding will find it very difficult to absolutely establish that it is indeed russia supporting these prorussian separatist. They are, butough where is the actual evidence . They dont really have any. Any move to actually upscale the sanctions onto some of these like iranstyle sanctions where they go against the banks, against shipping, against the ports, that will be very difficult for them to do. There is a lot of disagreement within the European Union about how to do that given the fact that it is going to give so much pain to the europeans as well. David, thanks for that roundup. I am sure we will hear from you later. With me is george king of rbc investment management. Just seeing those images, we started the conversation on how concerned you were with russia. Surely it must come up in conversation around the risks at play. All the time. The problem with the geopolitical events is they are completely unpredictable. They can flare into something globally significant. It bears watching but it is unpredictable. Final thoughts on something we talk less and less about, you say the u. K. And european corporates have more upside relative to the u. S. Probably true. Always difficult to speak in generalities but that is probably true. The status of the dollar is probably the only one that people still regard as a safe haven. It makes those assets slightly overvalued. That said, the u. K. Market is quite small. You have a lot of buyers for a smaller pool of assets. You can get some huge missed valuation here too. We have to leave it there. Great to have you there this morning. George king, head of portfolio strategy at rbc investment management. We are back in just a couple of minutes. Welcome back to on the move. I am and a scrawny and london. Lets get you some company news. Shares of sharp are down the most since november after the company said it is continuing ways to increase capital. The company which supplies displays for apple hasnt decided how it will raise the capital. The japanese newspaper says that sharp is looking to raise 2 billion. Chinas main metal minmetals is paying more than 5 million for glencore extras project in peru. Gives china control of a mind that is forecast to generate 12. 5 of the Nations Capital imports. Weber says theel swiss and International Regulators will probably ask the banks to hold more capital relative to their total assets. This comes after the u. S. Raised their leverage ratio requirements under the new u. S. Rule. Banks require at least 6 capital. Webers comments are first admission that the biggest swiss banks may have to boost their capital levels further. Coming up, an inside look at the business of the italian jeweler pomellato. One year after the brand was brought by the luxury brand kering. The ceo joins me for an exclusive conversation right here. Also, you can follow me on twitter. Welcome back to on the move. I am and a scrawny at bloombergs European Headquarters in london. Francine lacqua is out today. Lets take a look at how the markets are shaping up. It is a down day all around. The periphery is taking a little more pressure. Ondon being bolstered caroline will have more on that. It is day three of this decline and European Equity markets. You are seeing american equity markets give up value for the year. Equity markets, just a little bit of pressure. Caroline hyde has three big stocks to watch. I am going to kick off with an opportunistic note. I am starting with the green. One of the top Performance Today is loreal. It comes out later today with numbers for the First Quarter. We are expecting a bit of a slowdown but still a 4. 4 increase is what is expected. , it bought 27 of them. Glencore up 1. 75 . Something for a cool 5. 85 billion. China gets its hands on a key copper assets. Keyeot, one of the followers today, down by 3. 3 . Coming out with its strategy Going Forward. The new chief executive saying, we are back in the race. He is saying, look, we are writing back to profitability we are getting back to profitability. They are cutting the types of cars they make from 45 to 26. They are cutting cost as well. The market a little bit concerned. Back to you. Thanks for that roundup. Top headlines for the morning. The euro is weakening against most of its major peers after the ecb president mario draghi said its strength requires further monetary stimulus. That rhetoric was echoed by other policy makers during the weekend. The meaning of the imf and the world bank. Investors are betting the central bank will act to spur inflation. The u. S. And russia clashed at u. N. Security Council Meeting amid violence in Eastern Ukraine. Russias ambassador called on pf to start a kiev to start a genuine dialogue. Increasing signs of russian involvement in the violence. A chief executive intends to maintain investments in russia but is worried. We consider russia as a partner country where will you be investing. Where we will be investing. We will see what happens. Nothing specific about russia. The new french finance minister says the countrys economy may grow faster than projected this year. He told bloomberg that his strategy is to accede expectations. What i am trying to share is the core of our objective. To find the best way that allows for increased growth while simultaneously lowering the deficit. It has been a year since the designer italian jew your jeweler pomellato was bought by kering. Here with an inside look is andrea morante, ceo at pomellato. Great to have you with us. Thanks for taking the time. The luxury stories are the ones i have covered a great deal. How is it changing . How is the world of luxury changing for you . I guess you are right that it has been a very interesting ride for the luxury industry over the last 10 to 15 years. , if we looktoday out in the next five years, a number of complexities that perhaps were not there yesterday, but may be there tomorrow. Of sizeple, the issue of the company. Some of the companies have become so large. A 5 one thing to be Million Company and one thing to be a 500 Million Company in terms of growth. There is another issue of the landscape, the competitive landscape. There is no doubt that new entrants have joined the market. As a result, it was a little bit easier before then it will be tomorrow in terms of assessing what youre Competitive Outlook is. The third element is also the issue of dependency on markets. Pomellato haveat been dependent on the italian market. That obviously is a negative but we have no presence to speak out in the chinese market. Thet of companies within luxury industry have developed on the chinese market. That will shape things in the future. People build this relationship with kering as an opportunity to expand your footprint. Are we going to see new pomellato stores in china . How does that play in . It plays exactly in that direction in the sense of not creating dependency on one single market. Having the opportunity through participation of establishing a sales presence across the globe which allows you really to be well spread within the three most important regions. That is the objective. It has been a year. Has it worked . You said, that is what we set out to do. Has it worked . Is it working . Yes, i would say it is by and large working in the sense that we have since our takeover been strategicquire new positions in terms of retail spaces in parts of the world where perhaps on our own we would have never made it. That is a clear signal that we are going in the right direction. Of course, it takes time and these things dont happen overnight or in a year. Where are we going to go . Everybody is moving to this nonbranded highend luxury. You have got a couple of different strategies in terms of price points and synthetics, not just absolute jewels. Where im going to see the pomellato brand . We are experiencing a very interesting trend. On one hand, we see customers in the American Market being extremely attracted by our tango line, the higherend line. We are talking about pieces of jewelry that sell between 40,000 and 70,000. That is really our highend. Time, we are also witnessing a significant and interesting increase in what we call our bread and butter segments. Which for pomellato is around 2000 or 2500 euros. Are in ouregments particular case the segments that are growing the most. In a way, it reflects the fact that for the very wealthy, pomellato represents an opportunity of being different within that specific line. Our bread and butter business has always been a favorite within the ladies who have to choose either between if you will, buying a leather good or buying a piece of jewelry. Lets talk about the ladies. They make the decisions on the buying. Demand . Seeing change in you talk about the products going to extremes. What is going on with the womens tastes . That is an interesting phenomenon. Within the luxury industry it is true that women have had a ofdominant play in terms sort of showing what patterns of consumption will develop. In the jewelry industry, mens influence has been extremely strong over the years. Especially when it comes to investments over a certain price. As a result, most jewelers have targeted also men as very important buyers of their jewelry. We have taken a different approach over the years. We have targeted only or principally women. It is turning him the right direction as more and more women are in fact not only deciding whether they buy alsohemselves or not, but in terms of having a very Strong Influence in terms of what men will ultimately buy for them. Is the top of our news register here at bloomberg. The new Prime Minister renzi, what do you make of him . Int do you need in business italy from this man . First of all, the fact that we have one of the youngest if not the youngest Prime Minister in europe, is it proof of perhaps how the italians were fed up of the old political guide. Having said that, i think if you terms, hecorporate represents an opportunity to really shake things up. In a positive way. He will be, today announcing important decisions in terms of who are the new Leaders Within the publicly held companies. I would not be surprised if he chose professionals who are totally different than the usual suspects. As far as our industry is concerned, it is very simple what we need. We need a legal system which is better structured. Years toroughly 2. 5 have in italy a firstdegree hearing in a courtroom while the average in europe is between six and 12 months. Processesthy judicial are really hurting the industry. We need a reform of the judicial system. We also need a better tax system which allows also a lower tax rate on the individual employee who is today taxed worse than in other parts of europe. Go, in termset you of the political shakeup that he has invoked, from the other peers that you speak to, is there a strong sense of support for private business . Yes. I would have thought there is a support which is clearly there. Hopes that he can make the difference. We know that the industrial backbone of italy has at times thought that it could do without politics. There was a time in which governments would change and industrialists would react, saying that doesnt really my chances of or being successful. It is no longer that way anymore. Withompetitive scenario the euro as one single currency is such that you have to also realize rely on a government that understands your issues and helps you focus and resolve those issues which only at the government level can be resolved. Great to have you with us this morning. We covered a lot of ground. Ceo ofmorante, pomellato, thank you so much for being with us today. Will cover return to gold for Minmetals Group . More on the 6 billion deal for glencores peruvian copper mine after this break. I am and as cunning in london. Ons is on the move bloomberg television. Lets return to one of our top stories of the day, the megadeal from glencore. China minmetals is leading the group, paying 5. 8 billion for the assets. Joining me now is our Bloomberg News reporter. This was flagged up. They had to do this deal. They werent going to sell this at any price. It was a very protracted period of negotiation. Almost eight months. Ity were close to completing but there was some disagreement. Analysts had expected it closer to 5 billion. A fairly positive result at 5. 85 billion. Is he going to do with the cash . Return to shareholders . That is the big question. That is what the market is focused on. Scarce detail about what they are going to do with the funds. Pay down debt is the first priority. Of 52 billion at the end of last year. They are going to work on getting that down. The majority of the cash will be used to pay down debt. The rest could be a special dividend. Talking about the 5. 85 billion. That is almost a billion more than what we thought. How did they arrive at that . How did he squeeze that . This is one of the worlds premier copper assets. 40,000 tons of copper is a huge annual production base. It is 10 of chinas annual consumption. It is a game changer for minmetals. To get this asset was a big coup. There is this debate whether we are going to see surfaces, the commodity price has been under pressure. That whole debate, the timing of this asset sale, is what struck me as interesting. That is true. It has been well flagged. It has been a protracted predawn period of discussion. Lets leave it there. Work hard. Jessie on the metals and mining deal at glencore. Loreal is one of the worlds Biggest Cosmetic Companies and it will announce its First Quarter results later today. So far it has been a fairly inquisitive year for the company. Is caroline us more hyde. What is the story here . You are too kind. It is all about exposition. It is phenomenal how loreal has built itself up over the years. 28 brands, just one is homegrown. Loreal paris of course. 27 it has bought into. It has a strong track record of driving up sales. In a nail polish brand, i am not sure you are familiar with it, they brought it back in 2010. They have driven its size up 10 times. They did something similar for an lx six an electric face washer. Since 2013, 8 deals already done. 5 billion is already spent. Ve is the most acquisiti company in its genre. Talk to me about magic. That t such a big bet . Magic is a maker of phase products. You wet it and you can peel it off. They have one that caught my eye, snail cream firming hydrating mask. Sounds terrifying but it is one of the biggest areas of growth in china. Thatis why loreal chose some 696 million to get its hands on it. It is the fourth biggest disclosed deal that we know the reality is ever done. It is getting into 32 chinese provinces and betting big on the growth of the middle class. That is why they are paying for brands like chinas magic. That is why they are focusing on Luxury Brands as well. Shiseido. Deal to buy these are more luxurious spa brands. Middleclass, betting big on luxury. Loreal Going Forward seems to just be wanting to purchase up and snap up other companies. Today we get some numbers. We are expecting firstquarter to be up by 4. 4 . Slightly slower than last quarter but it is luxury that is set. Lets see how the numbers turn out later today. The pulse is up in just under nine minutes. Guy johnson is in the newsroom. We have got these tensions in ukraine. Thehe same time, on Corporate News story, we have a big story with peugeot. And we are going to further investigate snail facemasks. We need to find out more about this. [laughter] am i going to be the guinea pig . If you want to go that way. I am sure we can make it happen. Caroline can whisk some up. That is going to be a great story. We need to make sure we are on top of this Eastern Ukraine thing. It is turning into something more dramatic than we thought on friday. The latest development in the eastern part of ukraine are certainly worrying. Are we looking at crimea 2. 0 . The emergency meeting last night of the Un Security Council pushes us towards that. We are tracking that story. The euro story is fascinating as well. Morning thatthis they were pouring hot water on the fact. We are going to pick up that. We have this interview to deconstruct as well. What did we learn from the french . We are going to do macro, geopolitics and snail facemasks. What more could you want in a program . Probably Francine Lacqua but she is not here today. I will see you a little bit later. Coming up, mind, body, golf. We are looking at the business on improving your swing. And what it is going to cost you. Weekend, american golfer bubba watson clinched his second green jacket in three years at the masters in augusta. Finisheder, 69, he three strokes ahead of jordan spuieth. Spieth would have become the youngest player to win one of the four majors. Pretty impressive. A quick recap on how these markets are doing, john farrell is with us. Equities lower, euro lower. Generally, a little bit of concern about risk. The euro dollar story is the mario draghi story. The strengthening of the currency requires more monetary stimulus. Would you have expected more . You raise a very fair and valid point, which is the impact that he had perhaps. It is goinghe end, to be a hard one just to talk down. I dont see anyone trying to call this one lower, looking for a rally on the . U. S. Retail sales, that is a big one. Thanks, we will get together tomorrow morning. Stay with bloomberg television. Guy johnson is up next with the pulse. That is it for me today. We will see you a little bit later on. Trading blows, the u. S. And assia clash at the u. N. Violence escalates in Eastern Ukraine. Eu Foreign Ministers kicked off emergency talks shortly. Back in the race, peugeot slashes its lineup in a bid to get back to a profit. Its ceo unveils his Recovery Plan this hour. Dont worry, china will save us. Dsivate equity titan guy han said the countrys appetite for m a is key. We will bring you that exclusive interview