Good morning, everybody. Welcome to countdown. Im anna edwards. We have eyes on both sides of the atlantic this morning. Researching Angela Merkel this morning and a mythical beast came into my mind. This is a sprawling, huge group. Ceo and reviewing assets to decide which ones. Delivering69, 31 are just 2 . Percent the endet by june, by of 2016, return on capital of at least 15 . Right now its 8 . Leviathan is my image of the day. Focusing little bit on amazon looking at the earnings from the Largest Online retailer. The stock is down heavily afterhours. They are investing heavily in the future of their business. How long will they go along with the heavy Investment Strategy . Watching the ongoing developments, of which there are many, in ukraine. First and foremost, the Prime Minister is going to resign, a bit of a shock. He made the announcement in parliament. He says he cannot get the legislation he needs to get through in the Ruling Coalition has fallen apart so i am resigning. In february when i met him, he had just become Prime Minister. He said he would be the least popular, most hated Prime Minister in the countrys history. That did not exactly last long enough but he was well on his way. Addition to that, he was the guy that brokered the imf deal involving a lot of pain at home in terms of hiking, tariffs electricity and benefits. That was one thing hes trying to do. The imf program wanted them to push things through and they ended up not voting on it. Thats the problem. The timing and the way it came about that was surprising. Sounds like the kind of thing ukraine needs. Ukraine needs a parliamentary election this year like a hole in its head. This is really not great timing. Antirussian or those who have more of a sentiment against the fighting part of the crisis, will they see an election as an opportunity to show the proukrainian colors . Chance of that. You really have a recycling of the political elite. When the revolution happened in they got theuare, president ial election and they have been waiting for the parliamentary election so that they could effectively push out the old supporters of yanukovych who effectively switched sides. , those who were antesting and this would be opportunity to push them out. This may be a hardening of sentiment and this could consolidate power to push through those reforms. A could stabilize things a little further out. What about the latest on the sanctions . We have been waiting on that. We have two developments, the draft of the backlist for the eu. It will be similar to what it looks now. It is effectively a bunch of spies. Putin is the leader of that. We will get another as they stick to its timetable. Friends and family, the crony list, that will be the one to those who are directly involved. They might actually have more of a business complement. What does ryan chilcote, the big mac index, and ukraine have in common . I like to study purchasing power parity . The economists big mac index came out and i already knew what it was going to contain. This is an index that looks at how much when you translate it from its local currency cost into dollars costs. The the u. S. Is the benchmark. A big mac is for dollars . 80. U. S. ,way, 7. 76 in the a big mac is 4. 80. In ukraine, a big mac comes in of what itne third costs in the United States and it happens there was a mcdonalds next to my hotel in kiev. This shows you exactly how many big macs. Because of my work ethic, i did not want to take a whole lot of time eating lunch. It was right there. Despite the fact that they do not take American Express which is how we pay for our meals at bloomberg unless we want to pay out of our own pocket i dont think they want to know that. So i popped out to the mcdonalds a few times. Even at that price, its a long way to go for a big neck. Big mac. Company weabout one will be scrutinizing today because bskyb reports later this morning. The focus may not necessarily be on those numbers as we are waiting news of the potential purchase of sky deutschland and sky italia. What is the driving force been behind all of this . Rupert murdoch involved in a number of ways in the deal here. Murdoch is the linchpin here. He wants to fill his swag bag at fox to get a better offer for time warner. It encourages him to do a deal to get rid of the European Assets in germany and france. Would i be without people correcting me on a continual basis . The same time of creating a very appealing bid for bskyb here in the united to aom taking it paneuropean level. Murdoch is trying to get control of bskyb a number of years ago and was passed but it fell apart because of the hacking scandal. For me, it is the 18 billion revenue, a 20 billion aid to the Customer Base and two point two 5 billion worth and profit not the least putting it with john malone. The buddhist league be ndesleague in germany, italian assets, its all about content. Interestingly of course, fox cannot vote on the deal. Ceo at sky has a heck of a job to do in terms of convincing. You have to win over the minority shareholders. Block . A stumbling picking over the evaluations and they are difficult to discern. If you look at sky deutschland, you think its a great deal. Not so. Of the other topfive shareholders say you will have to pay a premium here. I think the other dynamic is sky italian is owned outright by fox and its a little bit more opaque. What is the valuation . Ive read of to 5 billion euros. Would bskyb pay up to 5 billion euros . What are they paying for . Theyre paying for two companies. Italia subscriptions have dropped, the penetration rate is way below the european average. Or does that mean you have room to pick up . Germany,her side in one of the top five shareholders said they have just under 4 million customers at the moment but germans love their foot wall, as you know. Love their football. The idea is that sky deutschland would grow over the next five to 10 years. Everything is there to make this a cracking deal. Ubs says we are perhaps underestimating the valuation. To their we will speak cfo later on during the program in the next hour of the numbers come out. We will ask what their intentions are towards the European Businesses and what they want to do with them. U. K. Gdp figures coming out today and it could reveal the economy has recovered from the financial crisis. Infrastructure projects are fueling the growth and European Business correspondent Caroline Hyde is down at the biggest construction project london. You are at crossrail. The sheer scale and noise sounds enormous. It is pretty enormous. I know you get up early, mark, but the people behind me, these people are working 20 47 aroundtheclock. The sheer scale is phenomenal. Below me now are two tunnel boring machines. Each weighs the same as 1000 cars. They have really been cutting under london and taking out 100 kilometers long and being connected to south east london. Theyve had to do some really intricate feats around the last five years of construction. Theyve had to navigate ancient burial grounds. Theyve had at some point less than one meter away from the northern line shuttling commuters back with these in our most tunnel boring machines. Its quite a feat and it comes at quite a cost, 15 billion pounds is the budget. Economic growth. They say, look. We will double if not triple your money back to you. 42 billion pounds a 3 boost to the economy in the end. More efficiency, more commuters being taxied about. Able take as little as 30 minutes to get out to heathrow, the biggest airport. Set to add to it the u. K. Economy . Said, 42 billion pounds, a 3 increase on the u. K. Economy going forward. Clearly, quite a feat of construction. Many being added in terms of jobs. We keep seeing unemployment figures falling down. 55,000 jobs is what they are saying this entire construction project will have trains moving by 2018. Interesting news today coming out of more mergers and acquisitions this time between two of the Biggest Builders in the u. K. A 3 billion pound merger coming closer as these two Companies Get together. Project being delayed, construction with australia and previously, crossrail biggest Infrastructure Projects in europe showing construction is back on in the united kingdom. Back to you. Hyde live at the crossrail project. We want to tell you about air france. 600 41quarter earnings, million euros, slightly ahead of analyst expectations earnings before interest, taxes, and appreciation, amortization. The company sees a tough operating environment that it is on target to hit the target of 4. 5 billion next year. They are trying to rein in costs in the threeyear plan called transform 2015. Stay tuned for our exclusive interview later with the Air France Klm chief executive coming up later on the pulse. , coming up after the break the fastestgrowing g7 nation this year, that is what the imf predicts for the u. K. A had, we discussed the health of the british economy. Welcome back. 6 17 a. M. London is growth figures out likely to show the economy is back at prerecession levels. Elena joins us now. Mervyn king talked about seven years of growth and seven years of famine. That was his speech which has been borrowed and adapted by many others. Does that mean we are periodhing another good of growth for the u. K. Economy . Were apparently one of the three economies in the world, the others being china and india, sharing the fastest growth this year. Its not bad complete to be sharing. Quiteully, it is biblical, the seven years of famine, seven years of growth. Its becoming more realistic. We are having signals from the business surveys showing the gdp growth somewhere around 3 . Thing, but what is still missing . Demandside wagedriven inflation. The measure of how deep this realery is back in the economy that were ultimately still determining. Puts use one hand, that in a sweet spot. You do not have the pressure but the reason we do not, as you suggest, is partially due to the lack of wage growth which is not such a sweet spot. In a looks like we are goldilocks economy. Remember that before the crisis . 3 gdp growth will be really good if it is confirmed today. We also have signals about the drivers and signals of growth that are more encouraging. Early on in the recovery, gdp consumerlstered by savings and housing and now it is broadening out to investments and hopefully wages. You believe the imf forecast. It was more scolding osborne and warning that growth might not add up to much in the u. K. And now we have this reversal where they say this is the place to be. To revise up. Ad what we cannot forget is that the was the time when the u. K. Have the worst gdp growth and the reason for that is still with us. It is quite likely that we have seen the worst inflation figures behind us which is a good thing because housing overheating was one of the things they identified in the recovery. Weaker housing wealth effect according to consumer confidence. We still have the huge leverage when will be increasing they will raise Interest Rates. , chief komileva economist at g plus economics. We will be talking all about the german Business Confidence report today. Stay with us. Welcome back to countdown. Im anna edwards. We are back with Lena Komileva. Indicator of the economy out later today for the german economy. What will we learn about geoPolitical Tension between russia and the west . What can we learn about this from these numbers . Desperate for some kind of uncertainty, the degree where there is a systemic risk. And verya priced little risk because we have the eurozone crisis where we are used to trading western european political risk. Partially because we still dont know the full extent of the economic sanctions that will be introduced against russia. What was surprising was how was reflected in the pmi this week. There has been a disconnect between the business surveys in germany and the actual production the last couple of months. Is if we see a of the iphone and the german pmi, they will probably take that with a pinch of salt since we still have to factor sanctions and its very fluid on the ground with Energy Supply potentially disruptive. On the other hand, we see the convergence and people will really start thinking about what. Hat means later in the year i think the concern at this is showing the cracks from the potential russian sanctions existing in terms of the week pockets of the eurozone economy. Are sanctions and there are sanctions. It is quite limited. What would it take in terms of a you sanctions before we really saw in effect here in western europe . Important. Very this is just coming into effect now. This pointarly at the prices are important. How we have any impact that this will have on the president of the eurozone. If we do get a shock the euro zone growth, it becomes more systemic and economicwide, this. Esponse is calibrated , thank you very economics. Our next guest runs a Modeling Agency and use one of the best Economic Forecasters in britain. Welcome back to countdown. Lets head to manus cranny for the fx check. Weekend terms of data. Jobless claims coming in at an eightyear low. The dollar overall i just off of a onemonth high. Next week we get the gdp and the nonfarm payroll. The overall momentum in the dollar will begin to ramp a little bit higher as you go into the december period. U. S. Treasury yields also rising just above 2. 5 . Lets have a look at the euro. You just had a conversation with Lena Komileva who said the info if it comes in better than estimated, people will be questioning the validity of that with the underlying numbers. 3490 on the upside resistance and if you break that down, 1. 3503. A little too early to call the impact on sanctions. Thats the view from Lena Komileva, i left guest. Nmmanus, thanks. These are the Bloomberg Top headlines. No word on what brought down the flight. Believed to have died. 50 french citizens were on the plane. Planearks the third major disaster this week. The eu is preparing to sanction russian top spies and Security Officials after the downing of the Malaysian Air flight. United states also says the Russian Military is firing off from within russian territory. This is the first time officials have publicly alleged direct ofticipation on behalf separatists. Palestinian Officials Say 16 were killed in a shelter run by the United Nations and northern gaza. The facility was hit during the ongoing battle between israel and militants in gaza. It also served as a school and the seven children were among the dead. That the medic efforts have intensified to and the conflict. Secretary of state john kerry is in the region trying to broker a truce. All businesses have vested interest in the british economy. The owner of m. O. T. Models works in high, commercials, ads. He uses it to predict how they will perform. Ots managing director at m models. Weve had this conversation before but i find it fascinating. Had you go from running a model agency to developing a hobby that you take quite seriously to forecasting for the british economy . Is inbackground mathematics, statistics, i. T. I got into the modeling industry by accident. My wife had set up an modeling industry. I have loved looking at numbers all my life. I look at the numbers within our business. Get,k at the inquiries we the castings we have to do, the bookings that we do, and from there i can extrapolate the level of Business Confidence within our economy. Indicatorgood leading looking at bookings for the Modeling Agency . I believe so. Big companies that constitute most of the people that we work for really only do Creative Advertising when they feel confident about their business. They will then book models to do Creative Advertising and it leads me to then say hang on a minute. Business confidence is pretty good or its pretty bad. All the money that investment banks spend on research for Economic Forecasting is a waste of money. We have you to do it. Your forecasting to do it has proven true. Right nine times out of 10. Thats a different thats a decent result. [laughter] last year i remember i did the information i had fourth thener 2012 and extrapolated that for what i saw happening in 2013 and i saw a massive growth in the u. K. Economy. The economy was in the doldrums. People were wondering if it was going to continue. I produced my Quarterly Report the same week that the imf and the bank of england cut the forecast for the u. K. Economy. Threeicted Something Like percent growth last year which was pretty close, anyway. I cannot get much closer than that. Your forecast for this year . Yourself as a bellwether because you have the broad spectrum. Not fashion or just luxury. The scottish widow commercial. Other things like the guy in the audrey have burned galaxy chocolate commercial, the shofar in the car there. We do a lot of things like that. We are dealing with a large portion of the ftse 250. Your forecast for this year . Between 1. 5 and 2 . . So the imf a french broadcaster just saying now the visibility on that is very limited. Why do you think you have some visibility in ad spending . We have a very, very broad base of clients. One sector is down and another is up and it balances out nicely for us. We have a massive number of clients. We will bring you back Third Quarter next year. Most economists have made mistakes in their lives. Unfortunate to hear the economic forecaster i should not say this they are not as pretty as some of the models. I said it. Models managing director. Brand not to run your into the ground. Dont miss that conversation. Welcome back. Time for todays company news. The virgin group is seeking more than half a billion dollars in financing. People familiar say some virgin Branded Companies to be taken public within the next year and including Virgin Active and virgin money. Considering offers for its portfolio of older offpatent drugs. And others all showing interest. Internal documents values the portfolio at 6. 3 billion euros. Soda stream is said to be in talks with an Investment Firm about taking the company private. People familiar say the israeli maker of home soda machines is the target of several private equity firms looking for a leveraged buyout. It could value the company at 820 8 billion. Shares soared after bloomberg broke the report. Welcome back. I am m mark martin. This was founded by two runners with a flair for business. Onire and bill discussing how to keep your brand exclusive in an age when discounters rule. Thank you for joining us today. Luxury goods and retail analyst in the city for 22 years. What was the Tipping Point when you woke up and decided that was enough. To run to work everyday to canary wharf. As i ran along the embankment, it occurred there was nothing luxurious to wear when i was running. It was a eureka moment along the embankment. How do you compare yourselves of theplethora sportswear companies out there. What sets you apart . Is really trying to create a vintage look even though we are quite technical. A very modern look and we really want to hark back. O the days which is where the iffley road name comes from. Weary do i need to something glamorous when i run . I resign myself to that. Again i remember going and not enjoying anything there at all. It looks so very technical and i think its a lovely to run in something a little more understated. Youve been at it now for about a year. Was the 59th anniversary on the sixth of may. We are just over a year old. What has been the Biggest Surprise for you . It is such hard work. You have to kind of peak keep putting the brand out there and getting into their minds. Aire spend a lot of time on talking about the emerging of tech. Are you finding that people would like your vintage clothes with kind of a tech aspect to it . Claire and i were talking training for an ironman. We were out running for two or three hours. You can wear for long time but away. Ll wixkcks when you are out for two or three hours do you just talk business . [laughter] we should say that you are a husband and wife team. Is a lot of hes a lot faster than i am. You have 22 Years Experience analyzing companies. What did you take from that in setting up iffley road . Lessons were really the importance of controlling or distribution, controlling our pricing and the importance of service. One reason we are really selling on our own website and through mr. Porter is we really want to control the distribution. We are not on sale and are not planning to go on sale. Discounting has become a real drug for the consumer and its something we really want to avoid. It does away with all of your profitability . You would go the volume route to really pump out the stuff. You are suggesting it is a slippery slope. They respect products more when they do not go on this count. It is like a constant sale. Its a massive mistake. They did not discount and they outperform. They did better than discounters who had a bad christmas. Its proven on the high street. They never go on sale outside of the main seasons and that is extremely unusual. Where can we find your stuff on sale . [laughter] ebay maybe. Founders of iffley road, claire kent and bill byrne. Going through the center of the british capital, crossrail is spending over 15 billion pounds. Caroline hyde takes us inside the Subterranean Construction site. Of the many giant holes cut into the streets of london hidden from view. This is crossrail. Is the biggest thing london has seen and 100 years. It is massive cutting through streets of london. Responsible for the western tunnel and that 64 inches, he is dwarfed by the project. Gives you an idea the scale of what we are doing. This is our platform tunnel. It is 250 meters long. Us aroundis showing what will be the new bond street station and its expected to handle 220,000 passengers per day. Crossrail started in 2009 and it is now 80 complete and on schedule to open may 2018. Handleerating, it will 200 million journeys per day linking europes busiest airport, heathrow, to the shopping mecca of Oxford Street in the Financial Hub of europe, the city of london. Tunneling is slow and relentless work. Specialist concrete sprayers are reinforcing the tunnel and it takes 24 hours to move just four meters forward. We were 24 hours per day, seven days per week. Rotated. Rews that are we have a christmas break but we pretty much run through the rest of the year. 44 million working hours have been completed on the project and there are still four years to go until its finished. There is one number british taxpayers wont forget, the staggering total cost, over 15 billion pounds. London is expected to grow by another one Million People in the next kid and crossrail the cityto keep moving. Caroline hyde, bloomberg. One Million People over the next decade. Protect old buildings, if they are showing signs of tilting slightly, they put a web of subterranean tubes underneath and a pump in grout, propin your bathroom, to it back up. I was interested in that. Engineering. Mechanics. You have a big interest in it. Shall we say whats coming up after the break . Results sending amazon shares down 11 , can the fire rekindled profits for the worlds Biggest Online retailer . Welcome back. Im anna edwards and the time in london is 652 a. M. Breaking news on a bskyb and skied which land. Do you want to run us through the headlines . And bskyb deutschland. Is that the price expected . The Closing Price was six 6. 66. When you read through what the top five shareholders have been saying, theyre going to want a reasonable premium to do this deal but it may be that the deutschland this would be the easier the two deals. 21st century fox hoping to sell both sky deutschland and sky italia. There are rules about where the offer must be made over the previous. When it was first speculated, there is a rule that you have to offer more or less where the 90day Closing Price was. Thats a small premium, as you say. 6. 75 euros. The more interesting part of this story to drop his what if they have agreed to the sky ranges overin this 5 billion euros on sky italian. We will get the numbers in the next few minutes so he might get more details on sky italian but for the moment we have the sky deutschland. Nonfox shareholders might not accept the offer, the 6. 75 euros per share offer. This is about gaining complete control so we will see what else they have to say at 7 00 a. M. , just a little bit of a premium to what we originally had. We will keep an eye on it. Lets talk about amazon. Turning 20 years old this week. The online retailer giving cause to celebrate. Shares down over 10 after milliona loss of 126 dollars, nearly 60 million more than estimated and profitability investment in new warehouses. This is a business that first loss for the quarterback in 2012 and now they are reporting another one. Thinking about great businesses like amazon that have been profitable for 10 years going into an area where they do not divest. One analyst we were talking to overnight at Bloomberg News said investing in the business is not something that investors have been punishing them for so they have just been investing and investing. One group there is a cloud. Looking at google, microsoft, facebook. The bloomberg billionaire list has just come out and because of facebook results two nights ago pushing their shares to a record high yesterday, mark zuckerberg, and wealth, has overtaken jeff bezos worth 32 . 6 billion. Zuckerberg, 33 . 3 billion bezos millionr 20, 33. 3 and number 20. List andg is 16 on the hes 30 years old. Which would you rather be . Any of them. Amazon starting to ship the fire this week, the smart phone that will sell starting today for 199 that will let you take a picture of something a 3d image. The perfect antidote anecdote to getting something for your significant other. It has not gone down well with the critics that have seen it. Your wife is happy. I have not tried it yet. Maybe that is the secret. Countdown continues. An offer for sky deutsche land and we will see what they have to say about sky italia. We will talk to the ceo of bskyb. Sanctioning spice. Addeuropean union is set to russian officials to its blacklist. Fighting continues. Are the u. K. s seven lean years over . Well look at the countrys growth rebound through the lens of its biggest infrastructure project. And bskyb offered 675 euros a share for the rest of scoy deutchland. Well be speaking to their. E. O. First in a few minutes welcome to the second hour of countdown, everybody. Im anna edwards joined by mark barton and ryan chilcote. We already got confirmation that bskyb is making an offer for sky deutchland. We have a few things coming through from bskyb. They are saying they are going to purchase sky italia and the stake in sky deutchland that it doesnt already own. It is going to be 4. 9 billion pounds. There will be a lot of currencies involved in this story. Bskyb saying they are placing new ordinary shares, placing 156 million new ordinary shares to part funds the proposed acquisitions. Clearly a lot of moving parts in this but we were expecting they were going to make that announcement today. We broke the story on bloomberg a number of months ago this was in the offing. The aim of course here is that they are able to expand their Television Distribution business further across europe. They have become a bigger entity. They were able to sell some of the services in the u. K. Industry over to other parts of europe. That is the plan here. On the other side here, of course, the u. S. Owners of these businesses will be able to make further acquisitions on the u. S. Side. Thats what were getting out of before bskyb at the moment. 9 billion pounds. This is obviously a massive mining company. How massive it is became very clear to me this morning. 69 assets. Big in copper, platinum. Today but a few of its commodities. Earnings just crossed the bloomberg terminal. Net income 1. 46 billion versus 403 billion last year. Analysts tend to look at the earnings per share. The first period is 1. Analysts were estimating 89 cents so it beat expectations and it beats last years 98 cents level. Whats happening in Anglo American is simple. The c. E. O. Who im speaking to at 8 00 took over in april last year. He is reviewing the assets and wants to upload the underperforming businesses. Here are 6 assets held by this stralling group. The big news today will be what are you selling . It is selling. Its stage there are going to be more asset sales. This is what the Investment Community are going to want to know. Earnings have Beat Estimates on an income basis. The First Quarter update on the sales picture for vodafone, down 4. 2 . Better than the market was looking for. The key question is how weak was the southern European Business going to be to what extent could that be offset . In terms of the European Business, First Quarter revenue down by 7. 9 . They have been spending heavily on investments. 19 billion pounds on network mprovement plans trying to get faster Wireless Technology and expand their business. The worlds second largest mobile phone just before get to breaking news on lloyds, the u. K. Banking group has confirmed it is in late stage libor settlement talks. A number of banks have already been fined. Barclays one of them. And it lost its chief executive robert diamond over the whole libor scandal. Which was quite a while ago. Two years ago now. Late stage libor settlement talks. The settlement remains to be agreed. When we get more details, ill tell you all about it. The big news is twofold. We have the e. U. Coming out with its new blacklist today adding a bunch of russian spies, head of the security agencies as well as the ukrainian Prime Minister announcing his resignation and a real big shakeup politically speaking in ukraine. Those are just a couple of things going on. Where are we on the sanctions front . That is a good one. It is a never ending story. First off we have this drumroll that seems to be increasing in the United States in particular, the u. S. For the First Time Ever accusing russia of firing on ukrainians from its own soil. Shooting at the ukrainian military. That is a big allegation. Also saying that they the u. S. Knows that russia is about to provide more heavy weapons to the rebels in the east of the country and that they have been using training camps. In terms of where we are now with sanctions, the u. S. Says it is going to Work Together with canada to halt funding from the world bank for russia. We have seen a little bit of this ebrd announcing it is going to cut funding for russia. Were beginning going to get the official number of this blacklist for all of these russian satisfies that will come later in the day and then we get more meaningful croin list crony list that is going to target friends and family of the russian president in an effort to encourage them to deescalate the crisis. We will have more on this conversation of course as we go through the program. Bskyb. Ack to b they just reported numbers. Sky italia and deutchland both being bought. The c. F. O. Joins us now. Thank you very much for joining us. Tell us what you hope to achieve from these acquisitions that you were announcing this morning. Good morning. It is about an ability to grow faster. To deliver better return to shareholders and to do a better job for customers. The enlarged group that the three skies together will be a pooverpb choice for anybody who wants to distribute partner of choice for anybody who wants to distribute content. It will serve 20 million households on day one and the capability of all of the three skys is to let us do a better job for them. Is this about taking some of the services you piloted in the u. K. , local tv advertising, the sky mobile products, is it about to take that and take it into the rest of europe . Is it about being bigger in your negotiations with content providers . What else is driving this . Certainly the services in the u. K. Are scaling really well. We announced strong results. U. K. Revenue is up 7 . It is taking those and cascading them across all three markets. More red room to germany and italy. The number of tv customers is at a lower level than in the u. K. 7 out of 10 homes have yet to make the switch to pay tv. We expect those markets to show stronger growth coming through. It is about spending our money more wisely. We expect in the near term to realize 200 million of synergies. That will continue the grow. That is a milestone along the way. The the three businesses today are essentially doing very similar things and we can make our money go a little bit better and that allows us to give a return to shareholders. It is majority funded with cheap debt and that means we will be able to create a more valuable business for shareholders for the medium term. You have a battle going on in terms of showing sporting events at the moment. B. T. Showing the battle for premier League Rights 20162017 is vital to their business. Im sure you consider it vital. Im sure they are not watching us. Can you tell us about your strategy . Our strategy is to do a great job for commerce. If we get more commerce, our ability to pay for it because were doing more original commissions just continues to increase. The financial position of the enlarged group is very strong. We have funded this in a balanced way using some debt and equity and some asset sales. Were going to have continued financial strength. And were going to be in a good position. But you win these things on screen. If you look over the last season, we have done two things. First of all, 49 of the 50 most watched matches have been on sky secondly, we have grown our tv business. Being in the market faster than we have at any time in the last three years. The business in u. K. Is in very good shape. Were building on very good foundations. We expect this business to continue to perform very strongly in the future. Are you doing some analysis on how this competition is damaging your business at all at the moment . Look. The evidence is we continue to grow our business in broad band. Were taking our share from other providers. Weve had good period in sports. Were not losing audience. Viewing of sports is reaching record levels. Were continuing to reach more customers. Were adding more customers for things like now tv. These are tragedy strategies that we can deproy employ across now. Deploy across now. It becomes our home market. We have more ability to grow. We can do things once and deploy them across all three markets. Were very well positioned. What it is not about is any particular competitor in any one particular market. Together the three skies are very strong. All number one players in the markets they operate. They have good experienced management and leadership teams. Were excited by the prosects of what we have been able to announce today. You recently announced you were taking a 70 stake. It might be a small acquisition. What can it tells tell us about where you see the business going . The balance of sport versus other types of contents . Well, increasingly, we see that original content that we can own, content that we can distribute in many different ways and develop for commerces is something that customers tell us they really value. You look at the launch of skylantic a couple of years ago in the u. K. , that high end, exclusive content has been really appreciates. One of the single most often cited reasons why anyone could take pay tv services. Investing in original content, currently 600 million just in bskyb alone. That number will be enlarged as we complete this transaction. Well be spend manager money on original content. That is something customers play back to us that they really like. They really value. It is a good reason why people switch to pay tv. Probably more so now is than sports. Sports have been a big driver historically. It is a big driver in italy and germany where they both have leadership positions in sports as well. But as you broaden out your offering as you get to higher level s of takeup in the marketplace, some of the motivating factors broaden out a bit. That is one reason were spend manager in original production. We brought the producer who has a strong pedigree in creating that content earlier this week. What can you tell my about that arge shareholder their intentions are towards you. Does the deal change in any way their intentions to try to get a hold of the business . They did try to buy the rest of the business years ago. That didnt work out. I dont think so. They remain supportive. They understand and can see the strategic rationale of in a world that is becoming more international being able to deploy things at scale and undoubtedly the three skies together will be a scale player. They will be europes leading pay tv business. Think have also followed their investments. Today they have undertaken to support the small equity rates that were doing to put in place the finance. So 21st century fox are fully committed to that. Were very, very lucky to have a broad base. All of whom i think is supportive of what they will see at the very Strong Financial returns that will come through from being able to bring these three skies together. Andrew, thank you very much today. Ing us the chief financing officer of bskyb. Breaking news. They released an unexpected preliminary interim statements and they have a lot of things. Ill try to rattle it down for you clearly. The first half pretax profit of 2. 65 billion pounds. It is an improvement yearonyear. It is on track to deliver its targets of a billion pounds in cost reductions this year. Restructuring costs are expected to be higher in second half. It cease about 1. 5 billion pounds of restructuring costs, a chooverpblg that nature in 2014. A couple of other sthause have stood out for me. Lit indication litigation issues. That is a slight warning. Legacy issues. This is what the c. E. O. Is trying to sort out. It says it is managing down a significant legacy. When we talk about litigation issues, this is the cost to redress customers who are wrongly sold payment protection insurance and Interest Rate swaps. This is what is hampering the bank now. Loan losses and the spiraling costs of dressing those customers wrongly sold those products. The new c. E. O. , who of course took over in october last year, he is setting up this bank. Combining divisions. He is scaling back the investment bank. He has a lot of Hillary Clinton his plate. At least on the pretax profit level, it will improve yearonyear. Right. 16 minutes past 7 00. A lot of news at the 7 00 halfway county for countdown. Lloyds is in late stage settlement talks for libor. Stay with us on countdown. Welcome back to councel. Im mark barton. G. D. P. Data comes out of the u. K. A little later. Could reveal the economys recovered from the financial crisis infrastructure project, fueling the growth in our European Business correspondent Caroline Hyde is down at if countrys biggest construction project here in london. He scale must be enormous. For five years already, they have basically been building a subterrainian world underneath london. Eneath me now are two tunnel borrowers each weighing 1,000 tons. The same amount as 1,000 cars. Doing the most sbrickath tunneling. These huge tunneling excavators just removing all of these all of the Building Work beneath us and Building Back up new stations are being built to help ferry more people. It will take you that much faster from heathrow to the southeast of london. It is only going to take you half an hour. The trains start going in 2018 but all of this comes at a cost. 15 billion pounds is how much this project is costing. Basically about 230 pounds per person in the united kingdom, but the return, they are almost triple that. 42 billion pounds to be added to the economy. That is about 3 of our current g. D. P. In the u. K. Of course that is adding jobs, about 55,000 jobs are being add. Clearly that is saying look, youring bang for your buck here. Thank you. Well see you later. Caroline hyde there live at the cross rail project. After the break, past its prime. Disappointing results. Amazon shares down 11 afterhours. Can the fire rekindle profit of the worlds Biggest Online retailer . Welcome back to countdown. Im anna edwards. Amazon turned 20 years old this week but their latest earnings havent given investors a cause to celebrate. Shares in new york are down 10 after a loss of 126 million. You think of a company, a business like amazon that was making money and profitable for 10 years, proceeding 2012 suddenly reporting losses but that is what it has done this quarter and a bigger loss than expected. The cloud competing arena seems to be to blame. They are up against google and microsoft in that. They are having to invest in the business a lot whether it is in cloud or other parts of the business trying to lock people into the amazon ecosystem hoping it gives market share and reaps eward wards. Part of the investment, part of locking people into the amazon ecosystem is the fire. Which they have begun shipping this week. It is going to sell for 199. I was thinking people would be lining up outside of walmart to buy it. In any case, you can take a picture of a product that you want to buy and it will recognize it and you can just order it simply through this phone. The question i have is the phone good enough to become your phone . The 3d technology. The battery isnt great, they say. The killer is lack of apps. If it is going to be your one phone is it good enough . Other analysts suggested they are good at revisiting this technology that is not quite taking off. Zuckerberg my bezos smack down . Mark zuckerberg, the facebook founder, his wealth went to 33. 3 billion. Bezos is worth a mere 32. 6 billion. Bezos is 50 years old. Uckerberg near 30. Coming up, lord david young will be with us on Program Welcome back. Im anna edwards. Lets head out to manus cranny. What happens with the dollar dominates the entire Foreign Exchange market. You can see inching slightly lower through the morning session. We touched a onemonth high on the back of jobless numbers at an eightyear low. We want to remind viewers of the fact that u. S. Rates may rise sooner than forecast if labor markets improve more quickly. You get those kinds of numbers, thats what drives the markets. Momentum is still up towards a onemonth high. The past 30 days momentum has been for a higher dollar. Credit agricole said that momentum will continue as we go into the summer. Others say the diverge ens between u. S. Rates going higher versus europe being flat to lower simply isnt there. Lets have a look at the twoday chart. A look at the euro. Gain, we wait too today. 1. 3468. The i. F. O. Data will come out. 1. 3490 is your resistance. Well keep an eye on that. The i. F. O. Will drive the sentiment after f the german data showed services at the highest of three years. Will the i. F. O. Data confirm that . These are the top headlines. No word yet on what brought down an air algerian flight over mali. 116 believed have died. 50 french citizens were onboard. The French Military is moving in to take over the crash site. This marks the third major plane isaster this week. The United States says russias military is artillery at ukrainians from positions in russian territory. Palestinian Officials Say 16 people were killed in a shelter run by the United Nations in northern gaza. The facility was hit during the ongoing battle between israel and militants in gaza. Seven have children were killed. Secretary of state john kerry is in the region trying broker a truce. U. K. G. D. P. Figures are out later on today. Could they show output back at level not seen before the financial crisis . Joining us now to talk about plans to create Sustainable Growth in the u. K. Economy is David Camerons advisor lord david young. Thank you for joining me. Lets start with the u. K. G. D. P. Numbers. They could show this encouraging picture where were back to output levels not seen since before the financial crisis. Does this recovery look different . It is very different. It is a different economy. If you go back to 2008, it was financial based. Today, the last two years over half a million new firms a year, this year looks like 600,000. Employment at 30. 6 million. We have never had this many people employed and it is small firmbased. That is a much more sustainable recovery i think. Before the break you said 19 out of 20 firms in this country employee fewer than 10 poem. These people are doing what . Making money. Employeing themselves. Keep themselves going. This is not manufacturing. Oh, yes, including manufacturing. All services. It is cauled caused by the internet. We all know what internet has done for social media and the way young people communicate. It has lowered the barriers to startup incredibly. We launched a program a couple of years ago called startup loans. 5,000 pounds and over 19,000 and it is set up growing 300 a week, week in and week out. Surveys show 18yearolds now, the majority of them want to work for themselves. They dont know how to. That has never happened before. So were seeing a complete transition in this economy. You put a lot of emphasis, you released a report on the Education System, how we get more trepnurep flair into the School System. One of the priorities seems to be not teaching conformity but teaching creativity. Not just in not just children but also for Business Schools as well all way to the age groups. We dont want conformity anymore. This is an age of people doing their thing. Everybody but everybody is going to have a multiple number of jobs doing their work. They are going to be doing different things. You know, when i was young, people would join a firm and retire with them. Now if youre doing five years with a company, youre probably the longest employee. What do you think many just think it is the ability to become an entrepreneur. It is much more than that. It is the ability to see glass half full, not half empty. This is about cultural change as well. You know, every successful person who comes into this place and sits here sees the glass is half full. Nobody who sees the glass as half empty has ever succeeded with anything because you never see the opportunities. At risk of being seen as seeing the glass as half full or half empty. Youre one of the mavericks. Difficult to create sort of this drive towards creativity in the schools when you have 30 kids. I have three kids in School System here in the u. K. And in the state School System. You have class size of 30 kids. Conformity makes it a lot easier for the teacher. The Education System was based on conformity when we lived in a Big Company World where people go in army and it was all mottled. Modeled. Yes, we have large classes but there is no reason we can do that. For example, last month we gave 27,000 primary schoolchildren five pounds to see what they could make of it. It is going to double that next year. One day well get up to 100,000. They had all planses for live little businesses. Were going to broaden the education. Education has been about new academic results. Those going to university and leave the day after they forget all about it. We are bringing in something called enterprise passport that will show all the extra things you do around school, whether you form a company, got an Outward Bound do, all sorts of extra things enterprise related because the world of tomorrow is the world in which we have to stand on our own feet. Very quickly. Did a bit of digging this morning. Not too much. Looking at your share holdings, i was on the parliament website. Youre a chairman in a Controlling Shareholder in a federation of companies which produce technology in the oil and gas industry. One is camcon oil russia. I didnt have much time to dig deeply. Can you tell us about it . Can i tell you about is that . This is a technology that will be used worldwide. Frankly i did not trust china and russia to take our technology. So we formed individual companies and if they want it, they will have to buy the whole thing. Given this geopolitical it is just emfifment glin what we have got now, in terms of what the cost is, for countries if they do for themselves if, they introduce sagses against russia, the sanctions against russia, the french have been saying if youre going to tell us not to sell warships maybe you should take the hit at home and do something about all of the o oligarches running around london . That s that going to hurt the economy . I think it is much more important we dont let ourselves be bullied by one country over the others. You really have to go back to the 1930s and learn a lesson from that period. If we would have stay tuned earlier, we could have saved ourselves a should trade should be used in this way then as a tool. What were doing now is not cutting down on a few coneys it seems to me. Cronies. What about taking it is ecretary tomorrow and trade . Can you manage without russian gas . That is one of the problems we have to face. To find a way around that. At the end of the day the is much more important than the present. You really have to look at whats happening politically. Ook at whats happening now in kiev. All of those places. Thank you very much for joining us today. Reat to get your thoughts. 7 40 in london. Coming up, could Political Tension turn the tide of the market . Well follow that story. Welcome back. GeoPolitical Tensions and volatility have risen in the last month. The markets at an alltime high. Mark joins us now from zurich. Good morning to you. Thank you for joining us today. Thank you. Mark, lets talk about the markets. The s p 500 record high yesterday. Global equities have risen 100 in five years. It is a simple question, but it is a question Everyone Wants to know. With these equity market goes higher . What are your evaluation metrix telling you right now . It is a great question because we see these levels but we do look at the underlying evaluations and one of the things we look at is simple p e. The reality is that say the s p 500 is on about 15. 7 times forward earnings right in line with its historic average. So we dont see extreme evaluations in something that is going to hold the market back at this point. In your latest report, mark, i love the line where you mention how many, many analysts and commentators are linking the market. They are calling it artificially enhanced like previous Tour De France winners which is after it comes to an end. Is it artificially enhanced or not . We think it is important that we take into account what some of the largest Central Banks around the world think about that question. So if we go to the words of janet yellen, she does not think the market is artificially enhanced, at least based on her comments. She has gone out of her way to say while there are pockets of evaluation in things like biotech and some of these internet companies, the markets as a whole are in their normal range of evaluations. He the commented about the slack in u. S. Labor market. The bank which is supposed to be tapering, still talking about these kind of issues that make them want to be stimulative, we think there is still room to run for equities. Interesting you mentioned biotech and social media stocks alluded you say the fed to, mark. I happened to glance at the Financial Times today. The headline was about the junk bond market. It said has the junk bond bull run come to an end . It could be the lowest in over a year. Is that market showing bubble symptoms or mot . Or not . In our view, it is not. The market still remains open. There have been some e. T. F. Selling. We reduced our holding to high yield bonds last month. We think it is an important part of portfolios. We think defaults will remain low for the foreseeable future and that is going to help this market add some return to peoples portfolios. Talking about the i ideal portfolio, i noticed that youre tactically overweight. You prefer u. S. Assets. The line that interested me was you have recentry hall fed the size of your overweight position on eurozone equities and are overweight on canada. Explain the thinking behind that. Absolutely. Well, we like the european equities because we think margins are going to improve as europe comes out of this recession, but to see that earnings turn around has taken longer than we thought because of the treng of the euro. Were seeing strong earnings momentum in canada. It is linked in part to the u. S. Economy and so the risk reward balance changed and we have adapted a little bit. Why is so much cash going away from that to the huge reserves of cash being held by individuals and by companies now and one stat stood out in your monthly report. Almost 30 of your clients in switzerland are sitting on cash. When are they going to put that cash to work . You know, this is so interesting. We just got back from hong kong and singapore. We interviewed about 1,200 clients and prospects. They said on the one hand they thought equities would be the best performing asset class in the back half of the year but 25 of them said their Largest Holding was in cash. So there is this cash on the sidelines. There is also cash on the sidelines with corporations. That started to lead to mergers and acquisitions. Maybe as the corporations gain confidence and start to spend some of their cash, more of the client cash and individual cash will start to come in to these markets. Of course at the start of that, that can help take the markets higher. But when everyone is fully invested then there is no one left the buy but were far away if that at this point. To 8 re saying 7 returns . Is that your longterm forecast . Yes, mine, as we said, that the earnings valuations for the s p 500 or the other major indices, are kind of muddled values. Not at extreme, either cheap or expensive. We dont think there will be a lot of multiple expansions at this point. Were looking for the returns on equities to be in line with earnings growth. In United States, we have had a great Second Quarter so far. About 9 . 8 over the next 12 months is what we expect in equities markets. Mark, great to chat with you. Cyhl even well see you again. 7 49 this friday morning. Still to come on the program. The deal is done. We bring you the details of bskybs purchases of sky italia and sky deutchland. Welcome back to countdown. Im anna edwards. 7 52 here in london. The deal is done. Bskyb is buying sky italia and sky deutchland. Manus cranny joins us. How much money . There. Nt go lay out the deal for us. Bskyb in the u. K. Getting sky italia and sky deutchland. Italia owned by fox. Fox is going to net 7. 2 billion. Less than everybody with who guided us. Fox are going to keep their holdings in bskyb. Bskyb are going to issue just nder 10 new shares. They are funding this deal. Bskyb funding it through issuing new stock and issuing new debt. You spoke with the c. E. O. Earlier. He focused on the synergies of the deal. Ultimately more head room available to germany and italy. The pay tv penetration, the number of tv customers is at a lower level than in the u. K. 7 out of 10 homes have yet to make the switch to pay tv. We expect those markets to show good growth. It is also about synergies, spending money more wisely. We expect in the near term to realize around 200 million of synergies. That will continue to grow. That is just a milestone along way. The milestones the question is will the market assess they are paid too much or too little for sky italia . That is going to be where i think the market makes the assessment. Sky deutchland they got for a discount. For the past 52 weeks, where were they trading . Sky italia, ive seen everything up to 5 billion euros that they possibly will have to pay for that. It comes up here, this is in pounds, 2. 45 billion pounds, reading some of the notes on terminal, that is more than perhaps what the market had us at. This is one of those deal where is Rupert Murdoch gets some more cash back. Lvma reported last night. Foreign exchange took a knock on the numbers. Cognac sales down. Fashion and leather good missed estimates. Watches and jewelry missed. Overall, things are tough. They are tough out there for lvmh. That is the Second Company that i can tell you about the value of currency. Currency a dominant theme. Lloyds confirming it is in late stage settlement talks this morning. Cost targets are on track. Lots to watch out for at the start of foreign equity trade. That will do it for countdown. Have a good weekend, everybody, when we finally get there. We are right here at bloombergs European Headquarters in london. We are Just Moments Away from the start of european trading. What have we got for you . We have got earnings from airlines, media, mining and some of the big ceos covering those sectors this morning. To be talking to Anglo Americans ceo. Lots to find out from him. His first interview of the day after earnings Beat Estimates. So much news to talk about. We have great reporters covering the stories. Manus cranny is here. Caroline hyde is on location. Ryan chilcote is covering russia. It looks as if 21st century fox has more swag in the bag. Over 7 billion is what they will receive as bskyb gets their hands on sky italia, sky deutschland. The question for the market is, good value or not . Six years after the financial crash, are we back to where we started . We are going to get u. K. Gdp figures expected to show 0. 8 growth quarter on quarter. That comes out at 9 30 a. M. Arguably one of the key projects helping fuel that growth is right here. The biggest european infrastructure project. Tens of thousands of people. It comes at a cost of 15 billion pounds but they say they are going to return that threefold back to the taxpayer