Exclusive. Some of the biggest names in bank arrange at the global summit to rethink banking models. No small topic on the agenda today . Yeah, the future of finance and there are some big, big questions. We talked a little bit about credit provision. When you compare and contrast what happens heres have in the United States. You look at the United States, some of the big fines imposed and there is a risk of regulatory overreach. Are these banks becoming overwhelmed . Something that doug also flint talked about recently Douglas Flint talked about. Ill be talking with him and then i have Andreas Dombret of the bunde bank. Well talk about his role on the supervisory mechanism. We have to be clear about this. What are the difficulties here in the eurozone . I know he has something to say on what he calls reform fatigue. Look at for that one, anna. Interesting when you consider just how much banks are spending and should be spending on regulation when we have witnessed some enormous fines in the Banking Sector of late. Yeah, anna, when you look at some of these fines on the back of some of these compliance issues, some of the fines in a lot of peoples minds are justified. How much do you equate for . 9 billion for one bank. 2 billion for another one. Are they plucked out of thin air . At the end of the day, this is a legacy of the financial crisis. Hour do you get what is called Financial Stability . Is that an Impossible Mission . When you look at how much they are spending, how overwhelmed are they and distracted are they from doing the job we want them to do . Thank you. More from john later on. A remirnede Jonathan Ferro is going to be having conversations on the future of banking. Andreas dombret will be with him very shortly. Diplomatic talks in berlin have caused tensions. Ukraine continues to accuse ussia of stoking the conflict. Hans, yesterday, the Foreign Ministers of you crained russia seemed to be talking past each other in terms of the conditions they would lay down for a ceasefire. Where are we this morning . There is a potential that Angela Merkel is visit kiev later this week. We dont have that confirmed yet and her office is not denying it. It is very tense on the ground. There are reports the ukrainian, a rebel position has been firing on ukrainian refugees, civilian refugees that would clearly mark an escalation. Rob called for a ceasefire and said no preconditions. We ran that very idea by the ukrainian prime minister. He was quite dismissive. Have a listen. Progress has been reached audiotape number of issues. On a number of issues. Have reached considerable progress on political issues like closing down the border. Like effective control of the order. We have continuous inflow. Money. And that did not to me sound like a diplomat that is optimistic about the fivehour talks that he had. Merkel eels office is saying she merkels office said she is considering a visit but nothing firm yet. What about the prospects for further talks there in berlin . S there always the prospect. They need to go back and report to their president , putin and poroshenko and have confrontations and if they decide another round of talks could be truthful, they will order them. It is hard really to see where there is much space for agreement and where they get off their positions and come towards each other a little bit. Seems like were at a stalemate and the moderate progress was moderate indeed and almost minuscule. Thank you very much. Lets turn to one of our top orporate stories this morning. Aresing announced a share maersk announced a Share Buy Back this morning. What is driving them this morning . We can break it down because it is exposure to ports. An oil company and largely what is it is a bellwether, i thinks it owns the biggest container line, shipping company in the world. They transport 15 of all the world contain rs. A great way of giving the flavor of what traders like from a global perspective. That is coming into these numbers. We were worried about what sanctions might do. They warped themselves they thought they were never predictable. Generally, this company does really rather well. For a second straight quarter, profit has more than doubled. They have beaten therefore their forecast. They have raised their fullyear forecast. That they are going to improve this year. They say 2014 will be ignificantly better than 2015. Parent company upping its overall forecasts as well saying were going to make 4. 5 billion. Notably a buyback as well. The management telling a maresing an hour ago that the michigan eanch rsk that the structure cousin too what about the concerns over russia and ukraine . What details do we have there . Getting into the statement, nothing really. Saying we uped investments in ports. When we spoke to chief executive he outlined how big a player russia is within their Business Model. Not much. Even if the tensions escalate, if it gets worse, this really is in the going to be impacting their business much at all. This is a company that is always having to navigate having to navigate geopolitical risks. They have thailand. Tensions in thailand hitting at some exports, imports in asia. That is company that has to weather these storms Going Forward. Wasia is not uping the ante that much. That is what came out front and center from that statement. The developed market will continue the upward turn. The economies will continue to improve. Thats why they see shipments up four to five . Capacity is still a problem. They basically ordered far too many vessels. The problem in the middle of he financial crisis. They are called eee vessels. Three are landed in the last quarter. They have another 11 coming in 2015. This is why they are doing deals, cutting deals, particularly with mediterranean shipping. The number two player out there in shipping and they are going to share vessels and help stabilize the price that they can charge for freight. Volume yupes are up and they are managing volumes are up and they are managing their costs. Thank you. Here is what else is on our radar this morning. B. H. P. Billiton has awaited a long awaited spinoff. The new company will be based in perth. B. H. P. Billiton is the worlds biggest miner. Well have more on that story later on during the pulse. And paying as much as 300 million after resolved claims by new yorks banking regulator that it didnt flag suspicious transactions after promising to do so in 2012. The settlement should come as soon as this week. President obama said the u. S. Will continue limited air strikes in iraq to support Kurdish Forces who are backing militants. He also said that the u. S. Is working to pull together an International Coalition to support humanitarian relief in northern iraq. Coming up on the program, applying new ideas to reshape the future of banking. Jonathan ferro is live at the global seminar with a bloomberg exclusive. He goes oneonone with Andreas Dombret. Thats next on the pulse. Welcome back. Lets get back to salzburg and the banking seminar. Some of the biggest names are there. Jonathan, to you. Thank you. With eased to be here Andreas Dombret. Thank you very much for joining us this morning. Were going to start by talking about some of the headwinds that banks face at the moment. Regulatory headwinds. We have all of these stress tests and some complaints that banks in the euro zrone overwhelmed. What is your take on that . This is a very, very exercise which takes quite sometime and the results are very important. So it is kind of clear that this comes with a cost. I realize that. It is also comes with some stress. Nevertheless, i believe that the positive effects of that exercise outweigh the cost by far and that the given problems we had in the banking crisis, this exercise is very much justified. Just think about this for one moment. The single supervisorry mechanism at least we think is a lodge colorado step of single monetary unit and we need to do this and the costs come also with benefits and the benefits outweigh the costs. One of those benefits might be the way the eurozone deals with bank failures. The fallout was quite isolated. That was a very, very small Portuguese Bank. You oversee german banks. If a german bank fails the stress test later this year, are we prepared to deal with the fallout of that if they have to raise a significant amount of capital . Im not going speculate what is going to come out of the stress tests with regard with the german banks. We absolutely cannot make any predictions. We havent finished all of the asset quality review. We have just started the stress tests. It is unclear what will come out of it. Im not speculating whether german banks fail or do not fail. Should they fail or should a german bank fail we would have to deal with that. There is a difference between accounting and prudential measures. In terms of accounting, we would see after the asset quality review how sound the banks are. He stress test is solid. What if there is stress . The g. D. P. Would decrease over a certain period of time. This is not necessarily a reality. I would urge everybody looking at the results of the stress test to see what is accounting and what are measures. Accounting is backward looking and stress tests are forward looking. These are two different things. Even if you had an issue and a challenge to stress test, that doesnt mean you are insolve ept at all. One of the biggest issues is when you talked about Financial Stability in the past, you said the biggest risk to that is reform, fatigue. We are looking much better. Than we did 2012. With regard to financial things are normalized. You just mentioned a very large actually the largest Portuguese Bank and the effects of the spreads of portugal were minimal. This gives you a little bit the impression that things are fine. Stock markets have been rising. For sometime. Now they are falling a little bit again. But it shows that if you have reform fatigue. If you believe everything stays as it is and were in safe waters, you are making a big mistake. The crisis in the ukraine is a reminder for all of us that things can happen very quickly and that there are unknowns that we cannot really factor in. We have to be careful and we have to continue on this path of reform because reform fatigue would be one of the biggest dangers we could have for, you know, future development. Are you seeing a risk of investor complacency . Something we talked about a couple of months ago. Not so much very recently. When you talk about spreads coming down are you more concerned about investor complacency or political complacency . I do not give any recommendations to investors. Im not criticizing them either. Investors have to make up their own mind. Im talking about the reform fatigue possible, political Decision Makers relax when things look better and deviate from the path of reform and less than what would be good. What is the e. C. B. s freethrow line that . Last week we had some not so good Economic Data to be fair across a lot of the your ozone. I off the back of that, that was almost celebrated as bad news equals good news and they were looking straight to the e. C. B. Are you worried that the e. C. B. Could become the only game in town . The e. C. B. Is an important game in town in terms of Monetary Policy. We should not confuse responsibility for fiscal policy with Monetary Policy. Off the back of that when you see the likes of france hitting the targets. You here the likes of renzi calling for more leniency. How concerned are you Going Forward . With m most impressed those countries that stick to the reform plans. Do you want to see france do more . When they talk about a weaker euro, what is the response of the bundesbank when you look at that situation . France knows what they are doing and they are responsible for their fiscal policy. On the issue of Financial Stability. When we put these stress tests in the context of Monetary Policy, in the context of Financial Stability are these stress tests coming at a bad time . They are coming at a predictable time, you know, we knew very early on that in november we would know the results of the a. Q. R. And the stress tests. Bloomberg and others play an Important Role in that. There is never a good or a bad time. We have to stick to thank you very much for joining us. That was andreas of the bundesbank. A very, very special guest for this morning brought to you live and exclues frive salzburg. Wyle bring you more later. Back to you, anna. Thank you very much for that. Jonathan ferro live in salzburg. Also coming up, the chairman of hsbc Douglas Flint cashing in on classic cars. Find out why it is full speed ahead. That is coming up later on the pulse. 9 20 here in london. Well take a short break and see you on the other side. Welcome back to the pulse live on Bloomberg Television and radio and also streaming on your tablet, phone and bloomberg. Com. Now it is time for todays hot shots. We kick things with picturesque paramotoring unlike parasailing which you might do on the beach this summer. This gives you all the controls you need of where youre going. No ocean necessary. Next we head to argentina where this person is going down the mountain taking us for a journey. It is like skiing but not for the faint of heart. Finally, they may look like flying squirrels but these dare did he feels are wearing wind suits to help them as they glide to the ground. I dont know if manus would indulge in any of these hedonistic sports. A hedonist at heart. Only on tuesdays. At least now you have any dropping a little bit in italy. Day two on the big brother program, day two of markets rising. We are rising again. We caught up with philip this morning from m. N. I. Talking about the ukrainian situation and said this is about putin trying save face and come up with a political solution, perhaps. In the u. K. , day five of stock market rising in the united kingdom. Well wait for the inflation data. It is giving me a whole new world to play with. To translate, less words. You can see this is the overall trajectory of where we are in the past few weeks, this is a 14day view. Youre actually seeing aussie dollar dela and the dollar beginning their upward trajectory at the moment. These will be the funding currencies of choice overall. Youre seeing euro trend lower. Currency is definitely on the move as we await the c. P. I. Data. 1. 8 is what were looking for to come from the united kingdom. That could give carolina y what needs to pause or hold off on rates. When you look at equities futures, nasdaq. A bit of a tough ride after 2000. I remember it well. Home building confidence. The highest close since 2000. Futures up. 25 . Again, youll get inflation data coming from United States of america. Thats it for me. Back to you, anna. Coming up, the l. A. Clippers and fans are thrilled to have a new owner but no one is more thrilled than Steve Ballmer himself. That story is coming up next. Welcome back to the pulse. Im anna edwards. U. K. Inflation data just coming out now and it is weaker than many in the market had been expecting. We were expecting 1. 8 . It is 1. 6 pnth. Last month we had a surprise on the upside as far as inflation was concerned. In june the number jumped to 1. 9 . That was a surprise for investors. Now it is weaker than had been expected. This month we have 1. 6 . Not the 1. 8 that had been expect. Lets see how the pound is reacting to that as we carry on to discuss where this is going to leave Interest Rates. You can see the pound moving lower on this. Does this take away some of the pressure on the bank of england if they were under any to increase Interest Rates . Lets talk to bloomberg economists jamie murray who joins us now on this topic. Interesting to see this number coming in at 1. 6 when economists expected something a little higher at 1. 8. There are a few things bouncing around in the inflation figures at the moment. Prices. Ose is one of the things the bank worried about last time in their august report, they said, they were expecting the timing of sales to be possibly a bit of an issue. More likely affects the weakness in demand strength in demand for clothing and footwear. It looks like that is not the case. It looks like it is probably bouncing back again. Thats one of the reasons for the surprise on the downside. Maybe a blip . Could be just a bit of a blip. Will this take away any of the pressure banks might have been feeling to increase Interest Rates . It probably does, the margin a little bit. The broader outlook for inflation is fairly weak. The sterling is headline prices. Very, very weak wage growth. There is nothing pushing margins. The outlook is quite weak for inflation. As i said, the margin will help the banks. You have been doing some analysis of the style of the governor of the bank of epping land, mark carney. You have been taking a trip down memory lane and reminding us of alans comments in 1998 at the establishment of the m. P. C. About different types of policy setting. Whether they were foxes or hedgehogs. Sure. In that speech he delivered, he was saying one way to set policy is in the way of stocks is to think of many things. Look at loverts variables. Build up a big picture of the economy and go from there and set policy accordingly. Another way of doing it is like a hedgehog, to focus on one thing at a time. That might be unemployment or wages. Mark carney doing both. Paint a picture of him being a hedgehog and a fox. There are things that i remember about mark carney. He is thinking about lots of variables. He likes to focus on one, easy for people to understand that. You need to remember the bank of england is looking at all the variables building up a picture over the economy. Interesti