europe. just waiting for momentum to build. one of our best days yesterday in almost two months. 600.over 0.9% on the stoxx let me take you on a journey. this is what everybody is focusing on, the magic number, 17,000, the united states on the dow jones. whether the s&p 500 can continue momentum. whether you believe in the dow theory. that is where they ignited the concept that this bull rally could continue. when you are actually talking about it, sometimes it is over embellished. the u.s. took the lead and they went charging ahead in asia. six-year highs within the asian markets. here we go in europe. the french prime minister tells the markets that the euro is overvalued. not good for exports. the ecb should do more. paris down by 0.2%. have a look at some of the corporate stories. a baby sales company. they had discussions with destination maternity. destination maternity offered 300 pence twice and have been rebuffed. let's see how mothercare opens. when it comes to the number one , thecupation in the u.k. houses, whether you own one or , 1298 is where we are on persimmon. we spoke to the ceo. this market is strong. lending is good. there is very disciplined lending coming through. that is what the ceo of persimmon told us. caroline told us about that announcement from orange. iliad -- i thought it was talking to orange. stock down 4.7%. who am i to question? aussie-dollar down. you are trading at eight months highs yesterday. there was this tour de force taking the aussie dollar higher. we had the french prime minister's comments. he is trying to talk down the euro. nobody can really achieve that. not even mario draghi at the moment. we will wait for the eurozone numbers to come out later on. all of this is on that buildup for the next 24 hours. what will the u.s. jobs report be? off for aobably nip bit of lunch, come back and see that. >> let's bring in richard jeffrey, cio of capital management. manus talking about the dow theory, when transportation and industrial stocks must rise in tandem, which is a positive sign. that tells us that market gains are going to last. both those indices rose to records yesterday. we had brent at a good level. 400 stocks on the s&p 500 rising. that tells us about the strength of this old market. how closely do you watch measures like that? the so-called dow theory? >> we certainly do look at breadth. one area we haven't seen breadth in europe recently is financials. we might expect those to join in at some stage. if investing was as easy-to-follow, you wouldn't be working. sometimes they are helpful. we are looking at cyclical developments. that is what you are trying to pick up on. each cycle has its own characteristics. --this cycle is putting pushing the s&p and the dow to a new high. valuations, 18.1 times estimated earnings. that is what the s&p is trading on right now. what metrics do you look at? what are they telling you about the u.s. stock market? >> we look at a range of metrics. ands straightforward yields trying to take out the effects of the economic cycle on earnings. most of those measures suggest that the united states markets are quite expensive but not too expensive given that it is probably leading the economic cycle. when you look at europe, the cheaper market really looks to be the u.k. at the moment. strongestly to be the g-7 growing economy this year. the u.k. looks quite good value. elsewhere in europe, there is value. the next interesting phase of the cycle is whether the stronger growth in western economies is going to feed through to the benefit of some of the emerging economies. that could be the next phase of the investment cycle. the u.k., the big question is interest-rate increases. in an environment where rate increases could be on the cards in the next nine months, is that an environment of positive equity going forward? >> it would be raising interest rates because the economy is growing strongly. that should be a positive signal. why are we persisting with interest rates that were set in an enormousofa economic crisis? we have to be starting to normalize. >> are you in the cabinet that says we need to start the normalization in 2014? why wait until 2015? >> definitely. we should be starting the process early. the authorities are beginning to worry about lending into the housing market in the u.k. they are beginning to get concerned. one way of making people more cautious about borrowing is taking up the cost of borrowing. that should be happening now. i have said that on bloomberg in previous months. they probably won't cull house prices in the short term. is that about right? >> i am not sure what thef pc was trying -- the fpc was trying to tell us. what signals the bank of england is trying to give us at the moment. on one hand, mark carney seems to be saying, we are not going to raise interest rates yet. then he says, they might go up sooner than markets expect. they should be raising interest rates relatively soon. >> richard, stay there. here is what else is coming up. sarkozy under fire. the former president is being charged with influence peddling. ♪ >> i am mark barton in london. this is "on the move." here is a stock on the move today. iliad. down by 4.6%. the big news out of orange today, its big competitor. four mobile number network operator in france. it can't takeaid part in a consolidation with the french telecommunications market after the company examined the possibilities and found the conditions haven't been met. does that mean we will see less consolidation in the french mobile phone industry? iliad shares are trading lower. let's stay with matters of a french nature. former french president nicolas sarkozy has been charged with influence peddling following 50 hours of questioning by police. that is according to the afp. let's get straight over to caroline in paris. good morning. what is the latest on this? >> charge. sarkozy has been charged officially according to this report. he is very surprising in french history. also surprising that he was held in custody for so long. 15 hours in this courthouse in the suburbs of paris. that hasn't been seen for a french president in recent history. nicolas sarkozy, he is allegedly accused of having influence of a high-ranking judge, seeking information in exchange for promising this judge a prominent position as government advisor in monaco. information that nicolas sarkozy was allegedly seeking is related to another investigation on alleged illegal financing of his 2007 presidential campaign. his mobile phone was tapped. his agendas were seized. investigators are probing whether he received alleged illegal funding from the former libyan leader, muammar gaddafi. it is this phone tapping that led to the current investigation. at the moment, nicolas sarkozy is denying any wrongdoing. we will have to see how the rest of the day pans out here in france. his lawyer and the judge have also been placed under formal investigation. >> caroline, what is the consequence for french politics? blow course, it is a big for former french president nicolas sarkozy. he was widely expected to make a return to politics very soon, probably as soon as this fall. his right wing party has been damaged by political infighting. there is no clear leader at the moment. he still remains the favorite among the conservative candidates to run against president hollande in the next presidential election in 2017. in 2012 when he lost against hollande, he said at the time that he wanted to quit politics. since then, especially this year, he has been traveling across france meeting with the french people, even meeting with the german chancellor, angela merkel. an indication for many people here that he was planning to come back. >> caroline, thank you. we are back with richard jeffries, cio of capital management. let's talk about central banks. the ecb meets tomorrow. last month was the big meeting when all sorts of measures were announced by mario draghi. how soon, given that inflation is at 0.5% and manufacturing is hardly picking up and unemployment remains at 11.6%, how soon before further measures should and will be considered by mr. draghi and his colleagues? >> we might have to wait quite a long time. i don't think the ecb feels as pressured as the market think the ecb is feeling into taking further action. probably the ecb is taking a broad view of what is going on in europe at the moment. it is looking at some countries where the recovery does seem to be being initiated. in spain, numbers are coming out -- [indiscernible] absolutely right. the countries where there are problems, for instance in france, that is more structural. i suspect the ecb doesn't feel there is absolute imperative to take further action. the problems are much more deep-seated than simply small monetary policy actions. i certainly don't think the full scale quantitative easing would be particularly effective within the eurozone. there would be a risk for any liquidity that was injected tending to flow into the least would notomies and have the impact in the economies that you wanted it to. >> what happens to bond yields in the interim? thehi devotes -- debates nation of unveiling more measures. do the pearl river a bond yields stay at -- the pearl river he -- yields stayy bond at these levels? >> while growth remains very low,ed, inflation remains the t-bond yield, the german bond yield is going to remain low. having said that, it is not good value at the present time. the risk premium you are seeing between parenteral bonds and german bonds is incredibly low. i think it is artificially low. there is bad value in those markets. >> where is the value in the bond markets right now? >> i think you have to be very careful. you have to be willing to take more risk to get value. markets,tment-grade the government bond markets are all looking expensive. particular the with growth picking up in economies like the u.k. and the u.s., the risks are on the upside for bond yields. you have to begin to travel into noninvestment grade. keepo think you need to maturity in your duration very short. >> what about emerging markets? we have a story saying foreign ownership of local debt leaves nations like indonesia and brazil very vulnerable to a flight of capital. be of thathould we worry? >> that is always problematic. what investors are looking for is yields. they are not finding it in the west so easily so they are looking for it in developing and emerging markets. ande is more risk there investors have to go in with their eyes open. nevertheless, people will be looking in that direction. >> will we see a repeat of january, the bank of international settlements said that central banks face a bumpy road to normalization. >> central banks do face a bumpy road. that they problems is are leaving the process of moving towards normalization very late. in particular, in the u.s. and the u.k., they need to be getting that process initiated sooner than perhaps anticipated. they are still looking over their shoulders. they are saying the greatest risk is in tightening too early. the greatest risk may be switching to tightening too late. they may be encouraging an environment in which too were three years down the road, we get unanticipated inflation as a result of the policy decisions being taken today. >> it is picking up, isn't it? the fed's preferred measure is 1.6%. it is nearing its 2% target. >> there are some signs that inflation is picking up but it is not to a degree yet that will influence central banks. they tend to look over their shoulders. what we have to take into account is that the inflation trends of tomorrow and the next day, they are being determined by decisions taken today. it is these lags in the market which tend to take central-bank spice up rise. they shouldn't but they do. at the moment, if you look at the numbers, they are picking up a little bit in the u.s. but not very much. not enough to frighten them. >> what is considerable time? what is the considerable time that janet yellen decided between the end of tapering and the beginning of interest rate increases? that bullard recently said maybe rates should rise in the first quarter of next year. voices are coming out of the woodwork. >> it is the same as in the u.k. people are beginning to look at momentum building up in the u.s. economy. wet should be the signal begin to start tightening policy. that is not a threat to markets. that is a sign that economies are normalizing. in thevery unhelpful united states that we had a very weak first quarter. almost certainly weather-related. that has allowed the policymakers to pull back a bit and say, we don't need to do anything for the present time. >> what is your biggest worry right now, richard? what is your biggest risk on the horizon? >> there are all sorts of risks around at the moment. there are still risks within europe that europe just fails to recover overall and it struggles and remains in the slow growth environment. i think if we were to look two years out, the biggest risk probably does have to be inflation and the consequences for the world economy of these enormous injections of liquidity. that will have an implication at some stage. it may be after the time that people stop worrying about it. >> richard, thanks for joining us today. up next, dressed to impress. virgin atlantic introduces new uniforms as it he gains a search . ♪ >> virgin atlantic turned 30 last month. the company celebrated with a high-fashion makeover. founder richard branson unveiled new vivian westwood designed for uniforms last night. bloomberg's aviation reporter now joins us for more. what are these new uniforms telling us? are they a sign of a bigger revamp? >> it is coming at an interesting time for virgin. they are getting their dreamliner later this year. you are seeing exceptional things coming out of the middle east. etihad is rolling out the residence. for virgin, it is so important that they maintain this cutting-edge hip profile that they have. , would youthe ceo ever want to be just another that would be the worst possible scenario. >> they have to differentiate among the other airlines. they are all changing and revamping themselves. >> absolutely. westwoodforms, vivian tapped into french cut your. -- french couture. i was speaking to an analyst yesterday and he was saying it is great to have the uniforms and those sorts of things. at the end of the day, a passenger cares about in-flight entertainment and the seat. it will be interesting to see what they do with the dreamliner. >> does that mean they are in growth mode? looked tove very much return to profit. the goal is to be profitable by the end of this year. he was very pragmatic when i asked about this order. he said, we are looking to replace some 747's. butan ask them some leases, we would like to bear the potential to grow. super pressing right now but at the same time, they want to keep the edge. >> thanks for joining us today. kari lundgren, our aviation reporter. we are back in two minutes. you are watching "on the move." ♪ >> welcome back. this is "on the move." i am mark barton. it is a: 30 in london. we are 30 minutes into the trading day. let's see how things are shaping up so far. aboutoxx 600 is up by 0.2%. the cac 40 declines. happened in the united states yesterday. record for the dow, record for the s&p. manus keeps telling us about the dow theory. that is from the dow jones. the transportation stocks rise in tandem. it is a very bullish sign, isn't it? >> incredibly bullish. you got there in the end. let's be clear about what we have got here. movementittle bit of in the equity markets overall. some individual names that caught my eye, orange makes a statement this morning. that takes iliad back almost 5%. this is the number four player. --ginally speculation was let's talk about mothercare. what are new babies and kids worth? destination maternity says they are worth 300 pounds. they made an offer. the latest one was on june 1. it was a strong basis for discussion. mothercare said no. iag, this was the number one gainer in london but it has dropped from the number one position. time waits for no buddy. barclays put out a report on european airlines that oversold. these tumbling valuations are not necessarily correct. isthansa was cut but iag the preferred stock in the airline industry. it is the best restructuring story. strong management and a global presence. we like that word, global. back to you. >> another stock we are watching, nn. today,gan trading raising more than 1.5 billion euros further financial services company. areerns over ipo fatigue spreading in europe as investors grow more discerning. i am joined by ruth david. good morning to you. tell us about nn. why did ing sell its stake? >> ing said as part of the european union bailout they are going to exit their stake by 2015. one thing that is interesting to see, the shares are up today. >> up 5%. >> yes. in a market that is up 0.7%. there is a comparison to be drawn between ing and the psb ipo. nnn we were talking about earlier, we were looking at valuations of about eight olene euros. they have come in at about -- 8 billion euros. they have come in at about 7 billion. they are offering a good discount and we like this company. >> it is a trend, isn't it? more and more ipos of the last quarter have been priced towards the lower end of the valuation range. >> they have. it is interesting. in the second quarter, the returns from the ipo market were about 2% compared with 18% in this first quarter. i was up until midnight last night because of an ipo. that is happening still. like i said earlier, there is ipo fatigue. >> investors are becoming more selective about where they put their money? >> yes. that is not good news for private equity. they formed about 60% of the issuance that came out this quarter. >> so private equity-backed companies are performing worse than non-private equity-backed companies. why is that? >> one of the things investors always say is that we have been dealing with this market for so long. the companies have more leverage. they have a price and they stick to it even if it probably means stock not trading that well. i think we have seen a lot of examples of that. thehat is the outlook for second half of the year for the ipo market in europe? >> we think there will be less focus on ipos. maybe not as high volumes as the first and second quarters. probably more financing for m&a. we could see the focus shift a little bit from the ipo. >> ruth, thanks. ruth david talking about the european ipo market. these are the bloomberg top headlines. foreign ministers from ukraine, russia, germany and france plan to meet in berlin today. the meeting comes after president petro poroshenko ended ukraine's cease-fire with russia. he has about to retake territory vowed to retake territory from separatists. jamie dimon has throat cancer and will begin treatment shortly. he told employees and shareholders that his condition is curable. he said he will continue running the firm as normal during his radiation and chemotherapy. is one of wall street's most powerful leaders. former french president nicolas sarkozy has been charged with influence peddling. sarkozy had been expected to attend a political comeback in time for the next presidential poll. sarkozy denies the allegations. let's talk housing. u.k. housing. earlier this morning, persimmon reported first-half total revenue grew by 33%. to chief executive spoke bloomberg and weighed in on the housing market. >> i think recent weeks have been a little uncertain over exactly what action the bank of england may take. last week, we saw they introduced some measures which in the short term will have little effect. good.k confidence remains the mortgages continue to be available to those people looking to enter the new housing market. >> jennifer joins us now. thanks for joining us. house prices according to the , are continuing to rise. >> they are. it is still a london story. you see gains in capital around 26% on the quarter. there is a broadening of the increases around the u.k. all of the regions tracked by nationwide show positive increases. >> nationwide mentioned the fpc's announcement last week. it doesn't seem like they will have an effect in the short term. >> it is a bit too soon to tell. itself said that given its central forecast for house price increases, the measures are not meant to have an impact. , what isrket itself the true picture right now? some surveys are a bit more buoyant than others. , what isapproval data the true picture of the housing market right now? >> it is a bit like we heard. there is improved confidence. the question that the bank of england was focusing on is, how well our house prices matched to earnings? that is something that nationwide notice. nationwide said there is room for a slowdown in the pace of growth but they still see that the picture is positive. >> do investors having had a week to digest the measures, do they think they were strong enough? be that thems to fpc could have gone further. >> there was a sense that they could have done a lot more. the bank of england will argue they are not trying to undermine the market. they are trying to prevent over exuberance in lending criteria. >> the biggest concern is still indebted to us. thanks a lot, jennifer. " we haveing "the pulse more on the housing market. an exclusive interview with kate parker. that is at 10:40. coming up, global m&a activity is at 2007 highs. deals are being done with 2014 creativity. more on the new era of dealmaking after the break. ♪ >> this is "on the move." are stolencom stocks today on news that orange isn't proceeding with a consolidation deal in its home market. here with more is caroline hyde. good morning. not much detail in our statement. >> very lacking in detail. were theylidation planning? they are not specific. operationt pursue an that would have led to consolidation. that is why we are seeing iliad down, boy does down. sll on the back -- bouguye down. what really seems to have been out there is that many thought they would be buying bouygues' telecoms unit. that has been facing regulatory risks. many analysts say they are not going to get the ok. it looks as though that had been the deal on the table. the government of france is very pro-consolidation. the industry minister saying, we want three players, not for players. we have four players if you add bouygues telecom, iliad and orange. clearly, orange not pursuing it. what next? will iliad pursue bouygues telecom? vodafone. better for the eu expected to agree its bid for ono today. >> thumbs-up from the eu area that is what we are expecting on that 7.2 billion euro offer for the cable operator in spain. vodafone flush with cash after portited that u.s. data that it did hold over in the united states. they have a lot of money that they can put towards deals. it looks as though they are going to be able to expand more in spain. they are gaining some 2% market share. they will have 27% in total. 2 billion euros in savings. this is important. companies such as vodafone are struggling to have a square peg with a round hole. they have to invest. they have to expend on infrastructure. you and i download more and more in terms of data on our mobile phones. they have to invest in infrastructure. meanwhile, sales are falling. we also have the eu pushing for a cut. a cut in roaming charges when you and i travel abroad. it costs us half the price now to access data. that eats into their revenue streams. how do you invest when you have sales falling? that is why so many companies in europe are saying, please let us merge. please let us join forces so that we can save cash and invest in a better way. this is why the eu is giving the thumbs-up today. this is why vodafone is looking at cable operators. 10 point 5 billion euros earlier this year for kabel deutschland. they have been expanding into other cable operators. they don't want to just have data on your mobile. they want your television when you are at home. that is why you saw john malone biting the dutch cable company. the cable company in france buying a mobile unit. it is not just data to your mobile, it is data everywhere. consolidation across the board. be at a standstill in france at the moment. >> thanks, caroline. let's keep the conversation on m&a. the busiest quarter of takeovers since 2007. we are joined by jill. own markets editor manus cranny joins us as well. thank you for joining us today. $913 billion quarter according to the bloomberg m&a function. why has it taken so long? it has been a favorable interest rate environment. >> absolutely. they are almost back to precrisis levels in m&a. total volume, about 70% up. the condition has been good for quite some time. low interest rates, companies have much more cash, increasing confidence of ceos and board rooms. had aality is that we quite long period of stability and now this is kicking in and people are feeling the need to start to look for transformation and strategic transaction. if you look at the type of deals we have seen since the beginning of the year, almost all of them are strategy deals. deals that make sense, whether there is synergy. >> do we include tax inversion deals? inquiry might say -- the acquiree might say this has nothing to do with synergy. tax savings, ito think companies are trying to find ways to create value. you have seen a lot of asset swaps. a lot of the acquirers do need cash. they don't want to acquire only. they want to share the value with the seller. that sells assets, they want to have participation. >> the actual funding for these deals, the whole story for years was, lots of cash in the balance sheet. the complexion on how people are doing these is changing. the rise in equity valuations. people are beginning to use paper versus cash. is that good for the market? cfo's are the becoming more conservative on the amount of debt they put on balance sheets. i don't think we are going to see the same kind of leverage we saw in 2007. i think equity valuations are quite high. people are using stocks as a form of consideration. boardsid before, i think are trying to find ways to create more value. >> talk to me about acquisitions. week cover a great deal of activist investors in the u.s. we were just chatting and you said, this is something you are going to see more of here in the european context. what makes you think that? where are we going to see that? >> it has been mainly a u.s. phenomenon. over the past couple of years, we have seen this come to europe. there are a number of activist investors from the u.s. looking at european companies. i think activism itself is an enabler for m&a. activists have to force companies to do m&a will return capital to shareholders. we continue to see that. in europe, it is a bit more of a difficult market. there are more barriers to entry. i don't think it will have the same impact as the u.s. >> the barrier to entry is a great example. you look at the astra deal, the ge-houston deal -- ge-alstom deal. if you are a shareholder in one of these companies that governments are getting involved, how frustrating is this? is this going to continue, governments getting more involved with the deals that affect employment and research within a company? bighen we are looking at strategic deals, there are a lot of shareholders that have to be taken care of. there is interest to look at the reaction from the various stakeholders. the barrier to entry is more related to different jurisdictions in europe that create more complexity for activists. you are right. all of this has to be taken into consideration. -- we cover aense lot of stories here. we talk about m&a. give me a sense of what happens in the m&a discussion as you get ready to talk about m&a. changed over the past 20 years in terms of the industry interaction? give me a sense of doing a deal these days. >> it takes much longer than it used to take. companies and boards are doing much more work when looking at transactions. there is a higher level of scrutiny from investors and boards. takes longer to prepare and longer to close as well. >> are we back to 2007? we started comparing to 2007. one quarter doesn't make it. this is the m&a boom. what do we need to see to return to sustainable quarterly performance like we saw in 2007? >> i think the conditions are good for long-term growth of m&a. this increase in activity is different from the activity we saw in 2007. the conditions are quite good. ceo confidence and stability is what we need. u.s.at happens if the starts raising rates? the normalization of rates that we talk about every day. is that bad for m&a? >> low interest rates have been an enabler of transactions but it has not been the only reason why people do deals. people do deals because there is synergy and strategic rationale. if interest rates start to rise, it would be more costly. >> just to finish, in terms of tying up m&a, do you think that much more should be -- that rim in a ration should be tied -- tied totion should be targets? >> that is going to be very important. as an investor, they are going to put more scrutiny on how deals get integrated. over time, people will really make a will do a lot of homework to make sure of what integration is going to be. >> it has been great chatting to you. thank you for joining us today. manus, thanks for joining us today as well. 8:52 in london. we are back in a couple of minutes. ♪ >> let's get to some company news. nearly 40%s are down after the company released a trading update. link says trading in the first half was below expectations on lower-than-expected demand. jpmorgan chase chief executive jamie dimon has throat cancer. he will begin treatment shortly. he told employees and shareholders in a memo that his condition is curable. he said he will continue running the firm as normal during the treatment. facebook is being investigated by u.k. data regulators after a study found a psychological experiment influenced what 700,000 users saw in their online feed. a researcher has apologized. "the pulse" is coming up. i will be anchoring today, a special treat for you. we are going to talk virgin atlantic. -- theestment director airline recently unveiled new uniforms designed by vivienne westwood. we will talk about airline branding. we will examine the housing market in the u.k. we are speaking live with a former npc member. ♪ >> sarkozy under fire. we are live in paris as the former french president is charged with influence peddling. just short of 17,000. will the dow jones passed that threshold today for the first time ever? and thumbs-up for a telecoms tie up. the eu is set to approve' vodafones bid for ono. welcome to "the pulse," live from bloomberg's european headquarters in london. i am mark

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