talking about. >> we have to keep a close eye on that. let's get straight to westminster and guy johnson, all over u.k. budget day. to be athis is going budget long on politics and short on economics. it is about setting the narrative in advance of the general election in the united kingdom next year. politics, not economics. there could be a few giveaways to get the electorate more towards the tories rather than labor. >> in terms of corporate, you are watching inditex. >> it has been the business model that retailers aspire to. adding your fashion within the shops in two weeks. it left h&m in the dust. starting to see a little bit of weakness he cause of the euro strength. big inflation from the emerging markets. thata, brazil, we know

weakness in those currencies are going to hit their sales. a realf a relief after selloff in the shares this year, trading higher today. >> thank you. we will have plenty more from inditex shortly. of a companyhe ceo coming up about 15 minutes from now. they said that improved underlying trading in the second half is what they are expecting, but they are seeing a lot of foreign exchange impact. from of these earnings another u.k. company. some 4.8%.p down we have corporate news and geopolitical tension. we have the u.k. budget and we have janet yellen. context for into us. >> i will give it a go. futures are mixed or the mornings. it gains yesterday across europe. today is going to be busy. bank of england minutes, unemployment data, all dropping

at 9:30 u.k. time. then you have the small measure of geopolitical risk as well that has not left the radar. forward guidance is the buzzword. we are pretty much dead flat. mib up by about .1%. the ibex up by about .3%. theybody is talking about level thating to a it has not seen in 11 months. -- thetral bank of japan central bank of china may have widened the trading band, but at the end of the day, every day for the last couple of days, they have been cutting the reference rate. they are guiding this currency laid -- lower. why are they doing that? the debate goes on. >> joining us with his investment strategy is the investment director at london

and capital. great to have you on the program. how much riske of you see in the markets. certain days, the markets are very complacent. we still have a lot of things they could go badly wrong and yet the market seems to be ignoring it. we have already seen volatility rising compared to last year. rising all the way through the end of the year. as we come to the end of the tapering, the market will continue to get nervous even though the bank of japan is making up for what the fed is taking away. but i think there will be a lot of volatility as investors get used to the changing environment. we have to wait and see what the ecb will be doing and so on. >> you are talking about central banks. this is something that was -- you look at some of the growth

figures in some of the economies. in china, we still do not know where property developers will go from here. we do not know if they have the situation at hand. we still do not really know what is going on between the ukraine and russia. china, we about always have difficulties understanding the data that comes out of china. there are a lot of other indicators. the stress in the system is already rising. -- a little bit of a slowdown means that the heavily-borrowed companies are having difficulty financing the capital maturities. there is some tightening. every time it tightens a little bit, there is a lot of difficulty and so on. growth. is to slow the

>> do you think they have this firmly in hand? >> it is a tightly-managed economy. process innage the terms of how the market impact comes through. >> so you are not concerned too much about china? >> we are concerned in terms of what happens to the people who are the biggest beneficiaries of china's growth, which is the asian communities and the commodity producers, so on. they will feel the impact. iesalready sense commodit heavily under pressure and that will continue through this year. we have seen a slowdown in brazil and so on. more importantly, a lot of the asian companies were importing -- were exporting into china. if you look at the percentage of the exports into china compared to the u.s., many had already surpassed the u.s. sent to the u.s.

china had become a very important export market for a lot of countries and companies. i think they will begin to feel the slow impact in the quarters of the slowdown that china is going through. >> what is your take on russia and ukraine? could this develop into something a lot nastier? ita lot of people are saying can. nobody wants to have a full out conflict. in that sense, the extreme outcome is off the table. it is a question of increasing sanctions until they begin to bite. in terms of the market if they arenly turned off in the europe, then we have a discussion taking place. >> when you look at the global economy, you are confident but you see risk. you are confident about global growth with risks. >> correct. the global economy is on the

mend. but it isspectacular, not bad. on top of that, i think we got very accommodative policies that have kept the risk markets stable. as we go through the year, expect the volatility to keep rising because of where we have come from in the past two years. markets and the other risk markets have had such a big run and they are no longer as cheap as they were. slightly pensive, there is no cushion to absorb the volatility. one needs to be more cautious and careful. still no need to panic. >> keep cool. thank you so much for now. we will come back to you and talk a little about currency swings and the impact they are having on earnings. here is a look at what else is coming up. taking her mark. it is janet yellen's first fed meeting as chair and investors are betting on big changes to forward guidance.

and inditex sees the slowest profit growth in years. , a settlement with the u.s. to end criminal probes. keep it right here. ♪

>> i am francine lacqua in london. ons is "on the move" bloomberg television, radio, and streaming on your tablet and bloomberg.com.

stock that is on the move is smiths group. a few talking to the ceo minutes from now. their figures were not bad at all. their underlying trading in the second half, they are seeing it to be improved. impact is quite big on this route. -- on this group. jonathan ferro is on central bank watch. let's kick it off with the fed. what are we expecting? >> not so much about tapering anymore. that is a bit 2013 already. another $10 billion looks to be dead on. it seems like the bar is set very high for them to change direction today. today is yellen's opportunity to put a stamp on things. forward guidance will be a huge focus. the 6.5% unemployment threshold

that nobody seems to care about tweake, how does one forward guidance and change that altogether? they may even take it back to old-school central banking. also look out for the feds forecast not just for growth and inflation, but where each policymaker believes the first rate hike will come. that is where the story might be. >> big changes on the bank of england. the strategic review has been unveiled. mark carney laid out a vision not just looking at one thing, the inflation target and price stability, he basically laid out his vision. >> he did. let's listen to the man himself. >> the initial focus obviously made sense. the greatest challenges of macroeconomic policy in the late 1970's and into the 1980's was the fight against deflation. in theght culminated

adoption of an inflation target which helped secure 15 years of price stability and sustained economic growth. it has to be said that, with became aealthy focus dangerous distraction. very 1980's.s, conscious about price stability and financial stability as well. and the relationship between the crossover between the two and the personnel changes that have been announced that the bank of england are a reflection of that. mark carney and the bank of england want a central bank. much.nk you very jonathan ferro with the latest on the central bank. we are also getting some live pictures or sound from the ukraine prime minister. he is attending a cabinet ministers meeting. we will be on top of that and bring you anything out of that briefing he is having with the

government. george osborne is set to unveil the u.k. budget later today. guy johnson is in westminster. >> lots of politics today. not a lot of economics. this is a big political set piece that is all about the narrative running into the 2015 general election here in the united kingdom. the chancellor will be able to deliver some good news. the british economy is pretty much back to where it was in 2008. unemployment is falling. we will get the data at 9:30. and inflation is ready much in check. that is good news. for the first time in a number of years, we will see wages rising faster than inflation. everything is pretty much on track. politics, we have a general election coming up. george osborne is a tactician. he will want to position his party for the run at that election.

that is what this will be all about. he will be talking very much about the situation of trying to improve the living standards. he is not going to make the same mistake he made when he came to lowering the tax band for the higher earners. this is going to be about trying to remove some of the political ground from the labour party, which is very much focused on the story surrounding the cost of living. that is going to be the story and the focus. there will be a few political giveaways. it may be net neutral and might be a little bit easier on the british economy. central banking is going to be, you know what, the recovery is on track, but it is still fragile so we cannot trust it to the labour party. >> george osborne actually tweeting a picture of himself. >> yeah. that tells you an awful lot about what this budget is about. it is not going to deliver

anything economically. the fact that-- we are getting a new one-pound coin tells you a lot about what is going on. yes, it is going to be harder to forge. one-pound coins is apparently big business. we will get a new coin and it will look more like the pre-decimal currency we had pre -1971. a little bit of history for the chancellor to talk about as well. >> looking forward to it. guy johnson will be live from westminster all day. u.k. viewers can watch george osborne deliver his budget live and in full from 12:30 london time on bloomberg tv. still with us is the investment director at london and capital. let me get your take on u.k. equities. u.k. growth is not bad. a lot of countries around the world would kill to have this kind of growth. this is ae time,

little bit of an erratic economy. we do not know how strong it is, especially when you look at the retail figures. om what we had was a mini-bo that has been engineered with the house prices being inflated. that has created a feel-good factor which has improved the spending cycle. we are getting some very good growth numbers. the underlying trends in terms of the deficit reduction, we are still running more than 5.5% on budget deficit. that means the economy is still getting a lot of fiscal stimulus . it is basically electioneering here. the numbers remain quite buoyant. next year and the year after that, we still have to get into the deficit funds. it will reduce the growth rate back to subpart trajectory. in terms of what has happened right here and now, the

strongest growth has had an impact on the sterling. we do not know how long the strong sterling is going to remain. we are at the top end of this band. that means it is probably getting overpriced, but it may remain so for a quarter or two before it comes down. it will create a lot of noise in terms of the company earnings coming through. the impact on the equity market is obviously positive as the growth rate is good. because of a large percentage of the ftse 100 earnings, non-sterling earnings because they come from around the world. >> and the impact of the currency swings is probably the biggest risk to ceo's right now. >> it is. because the sterling has moved quite a lot in the short term, many companies probably do not always do affects hedging. there is always some going on.

expect some damage in terms of the earnings. the underlying volume growth will be ok and will be fine. the margins are stable as well. those who can take a medium-term view can look to this fx swing. one would expect the sterling, a year from now, to have calmed down. >> we are almost out of time because we have our next test in the wings. it is the ceo of smiths group, one of your favorite equities. this appointed in the figures today? >> a little bit. there is a little bit of a slowdown in spending, which they were depending on in terms of the scandals and everything else. the underlying businesses are very good. i think the business is looking quite good. i think it is slightly undervalued right now. for a medium-term investor, it is still very good. the pre-cash flow generation is still very good.

reasonably good and rising over the medium-term. >> thank you so much for joining us today. , theg up on the program chief executive of smiths group joins us. we will look at his company's latest on agile results. stay with us. we are "on the move". ♪

>> welcome back to "on the move

". i am francine lacqua here in london. engineering company smiths group , the company's revenue fell 2% during its first half, missing estimates. let's get more on the results from the chief executive officer, philip bowman. we had an asset manager on before and he was very complimentary of smiths group and he said this is all being overshadowed by fx trading, which is hitting a lot of other companies as well. what can you do to protect yourself? >> the first one is clearly foreign exchange. we are essentially a u.s. dollar denominated business. 4% of our revenues come from sterling. -- the u.s.s to the dollar translates into less

sterling. , we haved thing is significant exposure to governments around the world. that has been a major headwind for the last ever years and it continues. that is true in the medical sector, security, and the military sector. all of those have made a quite difficult first half, but there is some strong performance from the oil and gas side. >> can you hedge against currency swings? no one is expecting the dollar to remain weak, especially as they are tightening policies. >> in terms of transactions, we are buying things in u.s. dollars and we do head forward about -- hedge or word about 12 months. the results are simply the translation and that is expensive and something that we do not do and very few other companies do. >> give me a sense of how long it will take for the fx story to take place? >> a lot depends on the exchange

rate going forward. if they remain roughly at the level that they are, by the time we cycled back into 9-12 months time, the headwind will disappear. >> are you concerned about geopolitical concerns? >> like you, i am surprised that the u.s. dollar has remained as weak as it has. at some point, that clearly must reverse. the u.s. is very well-positioned. low-cost energy will transform the u.s. economy. i think we will be a beneficiary. >> talk to me about the various divisions. some of talking about the divisions and which one will be the strongest. where is the growth going to come from? the business is performing well and the margins are continuing to grow. where is demand coming from? >> broadly around the world, except for europe. positive trends in places like the middle east.

the are continuing to see positive trends in the u.s. the other area that is performing well for us, we are exposed to both marshall and -- to both commercial and military aerospace. there is a pickup in construction and that has been helpful. if i look at the other businesses, in the case of detection, there is a lot of activity in terms of tenders, but commitments tend to be deferred to government funding. the same thing we see in interconnect, where the military side of the business has been under significant pressure. i think that will stabilize. >> i was going to ask you that. when do you expect it to stabilize? the next couple of months? is our products that get delayed until they are approved by the government. >> i think they will be delayed for more than a couple of months. as we get into fy15, it will be

a more stable environment. looking at the details of the latest appropriations, we are beginning to see not growth, but at least the demand stabilizing. >> when you were talking about you crane, you said received a demand across the world except for europe. yet we have so many stories saying that europe is slowly coming back on track. >> in terms of oil and gas, it is an interesting question because energy costs in europe are so much higher than other parts of the world. taxes make it less competitive to manufacture. there is a real challenge for european politicians. what we see in most of our european businesses is still pronounced weakness. that is still true on the health-care side, where procedure numbers continue to be sluggish. >> and this is because of government-funded medical procedures? >> yes.

it is much more in terms of government-funded ones than on the private side. even in the u.s., when the economy is picking up, or cedar numbers are relatively static. we have not seen a strong -- procedure numbers are relatively static. we have not seen a strong rebound yet. >> the peripheral entries are trying to get more cash in their coffers. >> i think that is right. i think it will be a difficult period in europe. the politicians in brussels and countries have a large amount to consider. >> does your medical unit need a fresh approach? >> we have changed our leadership at the medical unit at the beginning of this month. i think that was an appropriate decision to make. we are investing heavily in repositioning that business. the story, we are very dependent on developed markets, primarily in the west. we have been investing. a 20 million pound investment 18 months ago in emerging markets. we have continued to increase

our spend on new product development. is it part of a long-term investment to reposition the business. under new leadership, that will give it a bit of extra stimulus as well. >> but it is not or sale. there were failed bids. did you talk to anyone else? >> we said in august that we were not actively seeking to sell the business. the approach did not come to anything. noting the results today, i would say that clearly approaches like that do cause a significant disruption and that is one of the reasons i think our performance in the first half was a bit weaker than otherwise might have been. >> give us a nice snapshot of the business. talk to me about the global economy. how concerned are you about china? if china growth is that 5% rather than 7.5%, it could drag the rest of the world with it. >> it is a issue.

it clearly sends warning bells and the extent to which the government in china control that and moderates that. the events we are seeing in crimea with russia have the potential to destabilize. still think it is uncertain. i have great confidence for recovery in the united states. >> are you exposed to russia? >> we have reasonable sales. >> are you concerned about how that will pan out? >> not particularly. clearly, we are watching. >> i am sure. >> thank you for your time today. these of the bloomberg top headlines. stock traders have doubled again some of the biggest chinese developers. there is a growth concern about

a weaker market. the yield's surged this week -- r the developer mark carney is shaking up the bank of england. monetaryegrating policy and financial stability. carney said that he will create one bank to avoid inefficiency. this comes after a strategy review by mckenzie that was reported by bloomberg. is having her first meeting at the fed chair. there are a range of economic indicators that convey forward guidance. janet yellen is scheduled to .ive a press conference at 6:30 vladimir putin has moved forward on annexing crimea. he called for the reunification

of crimea in a speech yesterday. i am joined by ryan chilcote. speedingemlin is forward with a plan to annex crimea. we heard from the speaker of the russian parliament that said that they may submit a bill and a treaty that allows for the annexation of the crimea today. we were not anticipating that until friday. there is no question they will approve it and there is no question that that will font european union leaders on thursday and friday to ratchet up sanctions. situation?the we've heard about various flags going up at naval bases. >> within the last couple of hours, a group of unarmed protesters stormed the headquarters of the ukrainian navy and the southern city.

that is where the russian blackfeet -- black fleet is located. they have poisoned a flag and the message to the ukrainian troops is, you must leave or defect to crimea. it is about to become part of russia. now, the situation is peaceful and they do not have arms. .his is a volatile situation we saw clashes and we had one ukrainian servicemen killed. we have servicemen standing their ground. the minister of the ukraine said these men are not going to leave. crimea has declared independence and what are they going to do? --l they be fished out pushed out? and to get bloody very quickly.

>> one thing to keep in mind is that the defense minister said that a truce had been reached with russian forces that would expire on friday. we have protesters now and militiamen moving around. we could see you russian forces involved in action in crimea on friday. >> thank you so much for the latest there on the ukraine crisis. we are turning over to retail. profit growth is at the slowest in years. our european business correspondent is here to break down the numbers. is a story. >> it is a story of currencies. stocks are the hottest trends. they have one of the hottest business models out there. it has made them the top clothing company because they can get fashion. we are starting to see the

european company hitting sales and profit growth. when you convert sales abroad and back into euros, it is slower. this is a company with big exposure to the markets. we have 52 numbers ill and almost 500 and china. when you convert it back into euros, you have less bang for your brush in -- your brazilian currency or rushing currency. -- russian currency. >> slow down. in light of investor is it at thiswhat point? >> there is a sigh of relief. shares climbed today.

the reason we are seeing such a selloff is because they are one of the worst performers year to date. shares slumped 14% and they are up 11% on trading. it is still growing and still expanding. there are 500 new openings that they planned. they are in greece, romania, mexico. this is a company that has exposure to markets and in the future, it is fundamentally stronger. they will go into china and brazil. certainly, this is why many -- that is why they continue to act. >> thank you. 3.1%. reached a $1.2 billion settlement in the investigation. we are joined and he covers this

from tokyo. how big of a number is this for toyota? >> the number is pretty similar to a settlement that toyota reached more than one year ago that was related to sudden unintended acceleration. this is in line with what they have already paid out and it is a pretty big fine. you do not often see settlements in the billions within the automotive industry. a rounding this is error. they will be fine. this sort of resolves the last toyotang big hurdle for to get past. >> what about the recent incidences in the auto industry.

>> and maybe no coincidence. when we hear the final word on the settlement and reaching its conclusion, we may have one of the first questions. whether this has any relation to regulators and if they are probing g.m.. -- if they are probing g.m. to 12 that'slinked -- deaths. that will be a question from regulators. >> thank you for that. the bloomberg auto reporter. coming up on the program, we go back to westminster. guy johnson talk to the secretary of the treasury. that is coming up on on the move.

london, this is on the move on bloomberg television and streaming live on any windows phone, as well.

will unveil a budget and he is expected to take on the labor artie over the claims that he is ignoring rising costs. guy johnson is at westminster and is standing by. yes. let's get a look at what we will see later on from george osborne. jameson.ed by kathy good morning to you. >> good morning to you. inflation is down and we will see wages rising. unemployment data is out. is roughly on track. >> we have seen some improvement. the reality is that people who .re finding the cost of living

if we look at the impact on families, they are worse off of the taxes. that is for this year only. there is much more being done for lower and middle incomes. >> the problem with the argument is that it works. case that thate is holding back the economy. now, doesn't work from an economic point of view? economics to connect with the experience of people in the real world. wouldare more that we like to see to boost exports and manufacturing. it will get people into employment. employmentding the

figures improving. is many people, that employment and it needs to be done. we would like to see more house building. have houses byto 2020. it would get people back to work and be good for the economy. >> in just a moment, let's talk about the fact that we are not out of the woods yet. he is going to say that today is a reminder that the austerity story is going to have to continue for time. place andry is taking it is fragile and cannot be .rusted >> the recovery is fragile and part of that is because the chancellor chopped up some of that recovery over the past

years. and a had a lot of pain lot of people across the country said that. in response to that, we said the kobe are to look at the figures and make sure that what we are seeing actually backs up. we have been responsible about it. >> you talked about building new homes. the problem with building new homes is that we have effectively put in planning controls down to the council levels. you look at london and you live across the country and it is difficult to force through large-scale housing schemes at the moment. how would you do it? how would you manage that process? >> it needs to be done. planning talking about issues and so on. .he government needed to look

we need to look at what assistance can be given and perhaps we have not done what we would like to in terms of affordable housing. we would like to ensure that we have a mix of affordable housing and private development. that is something that is important that the government actually get with local authorities to make sure that happens. the message to business ought to be that we will try to support the manufacturing sector and exports are important. i know that many of the small businesses that i speak to a cross-country feel that they could get more support in we willallowances and see if the government does anything more on that. happy with what is happening at the moment. there will be aggressive cuts and corporation tax. >> some of the troubles with the

cuts and corporation taxes do not help all businesses to export. i'll be looking for the chancellor to look at how to encourage businesses to invest and support exports across the board. >> thank you very much. us.y davison joined we have more coming up from westminster. back to you. >> thank you. i am looking forward to what else is coming up. the pulse is coming up. we will talk to the ceo, mcnulty, on the ip desk the alibaba ipo. that is why this could be one of the best. -- ill be talking to he runs a website and will share his unconventional language

tips. we have much more from guy johnson. he will speak to boris johnson's advisor. meantime, here's a company on the move. could go to -- and offer is known as ivr asked. it is part of the investment bank. toshiba plans to sign a partnership. it will manufacture lighting fixtures in europe. one of thebecoming biggest suppliers of leds. -- is poised to score a gain on investment on can be crushed. crush.y they could be worth more than

$3.5 billion. that theile says iphone subsidies and regulations are ahead of earnings reports tomorrow. hans nichols breaks down the challenges for the biggest carrier. is that all that is happening? >> no. francine, this is the flip side to the success story of companies like alibaba. for consumers out there in china that need to run this, they need a better network. china mobile has 772 million subscribers and they have a massive network. you have factors that they mention that could cost cut into profits by $1.85 billion. take a look at the income and messaging services. they are buying iphones at subsidized rates and there will be a new government tax.

ais is all the backdrop to $34 million -- 34 million yuan capital network. this is not just a network. they have big expenses ahead of them. >> they certainly do. how is the introduction going for china mobile. >> it is taking off. not as much as many expected. they had to subsidize it. you have big subsidies this year to subsidize the iphone and they have a market share. when their competitor had the iphone, they had a 70% market share. they have to subsidize the iphone and smartphones and it costs money. >> it certainly does. it always cost money. could we soon be seeing overlap? major trying to keep

the phone alive. stay with on the move.

>> welcome back. french product. it is fighting for its survival. could a return to fashion change

its fortunes? >> in the heart of the mountain region is the last major. the hat was invented by global shepherds. they have been making it since the 19th century. france tradition that an irish man is trying to keep alive. >> is from anywhere and you can see how it is made. joined a year ago and the company was nearly bankrupt. now, he is trying to turn it around. we have no limits to it. we hope that people come from

new york and see it. takes 2-3 days to make it. it starts with knitting will into a circle and then, they use water from a local river before it is shaped and shaped to create the highest quality. the majority of the product is made by hand hats are priced between 20-95 euros. they are targeting female customers. women represent one quarter of the business. and it will goed into the global side of things. of the to see what a brand could mosh -- homage.

>> tom gibson, bloomberg. but there's nothing like a good hat. time and where all the i feel like i should revive it. >> for a recap on the stories of the market movers, it is all about central bank. >> it is going to be the big theme coming into the report over the next couple. we have been talking about anybody with exposure to russia. they will get hit with record lows. do we expect from janet yellen. >> will it evolve heard of all? gdp is the forecast and around rates in the next couple of years. >> watch out for that.

stay with bloomberg tv. you can follow all of us on twitter. johnson.on is that guy

>> we are live as they focus on the recovery. overhauling as a fed chair. up two and a criminal investigation. end a criminal investigation. >> good morning to our of your is in europe. -- our viewers in europe. i am francine the clock.

it is all about the budget. guy johnson is in westminster on budget day. give us a flavor about what is going on. followed six is not about economics. we are going to see the chancellor laying out a narrative here in the united kingdom. the economy is on track at the moment and we have unemployment coming down to the 2000 date levels. we are seeing inflation starting and this could be the first year of wages growing. it is back down to target. there is not a lot of economics. it is probably net neutral. talking to the economic adviser to the mayor of london. frome going to hear

exports today. that is an area that the chancellor wants to focus on. we will be talking about a inpany that isn't exporter the united kingdom. that is coming up in the second half. >> i am looking forward to that. that is coming up. coststched mark carney speech last night -- mark carney's speech last night. he talked about the reforms of the bank of england and try to break out the structure in that organization. he has looked at what he needs to do and he is making changes. we have new faces coming in. and talking to deliver

macro credentials. time, is try to keep things lower. that is more significant. >> thank you so much. i'm looking forward to coverage coming throughout the day on the ground. we are getting breaking news from bmw. profits have risen significantly on new models. we will get more on this shortly. this is just crossing the bloomberg terminal. models because of new that they say would lift car sales. today, the f from oc meets c meets. on quality instead of quantity. >> absolutely. it is 10 billion every month.

this is what they are expecting. forward guidance is a known unknown. what are we going to do? no one really cares about it anymore. we have heard janet yellen speak over the last couple of months. she has notis that had a federal reserve meeting in the back. today is an opportunity to really put a stamp on things. >> i think if you want the engagement at the federal reserve's, we know that they can change tapering and will they change their outlook? for me, was interesting is a summary of economic projections and where they see rates going in the next couple of years. this all represents people at the fed and where they think rates are going to be in 2014. thinkeans that officials

that rates are going to rise this year and that will be a little bit more dovish. >> i bet there will be. that is the latest. doubled bearish bets because investors are concerned about the real estate market. robbery sales. for more, we're joined from hong kong. explain to us what is happening? ofwe have seen a doubling the of it in hong kong and concern is that as the government is taking steps we see price growth slowing in cities like beijing and shanghai. at the same time, we are seeing borrowing costs rising and they heard the profit margins. heard same time, we have

of a smaller developer. are having much higher bond yields. >> is a situation likely to improve for developers? and the cityy outlook for the smaller unlisted developers is going to come. cost increase and conversations intensified. there is an argument that for large developers, they may develop as industries consolidate. ricehave had heavy declines over the years and that is made things quite cheap. at the same time, most investors that we talked to say that it is not cheap enough for them and they are concerned about volatility and they plan to stay away.

>> thank you so much for all of that explanation there. china mobile could have a different earnings report tomorrow. their international correspondent breaks down the challenges for the biggest carrier. there is a sight the alibaba side to there is a alibaba story. >> companies like china mobile have had to upgrade infrastructure and they have 72 million -- 772 million subscribers. upgrade thening to network by subsidizing the iphone. expect the profits to decline by eight percent year over year.

they have a lot of cost. >> yes. speaking of challenges in the do they have reasons to be optimistic about the future? >> they are talking about growth in some sectors where they hope to expand in those categories. they need to hire international sales force to compete against it. this is all about the cloud and oracle is there. they are not a player and that cost money. they realize that. >> they do so much. they announced a $1.2 billion settlement yesterday. has reached a deal in this issue. and werg is reporting are joined now with more on the story. what is the significance of the

settlement for toyota? >> this is a move forward and a resolution of unintended issues. this is years in the making. recall when the issue flared up. it all began with an off-duty police officer who had a lexus that was out of control. a 911 tape really got this rolling. if blemished the reputation of toyota that was coming back a bit. is one that they have wanted to get past for some time now. >> what does this have to do with the more recent recalls that involved g.m.. tomorrow thatnow

the settlement has been finalized. people familiar with the settlement say that it has not been finalized. we should know that it has been finalized. one of the questions that will have to be asked is whether or the recallelated to of 1.6 million cars. that is related to an ignition switch that has been blamed for 12 deaths. this is getting a lot of attention among investigators and those investigators are going to be the people looking in to these issues. obviously, you have to move past one issue to move onto the next one. >> thank you so much. let's get back to the breaking david tweed is in berlin .ith the latest

>> there is a nice increase on the back of this. it is around three percent. the market is taking it on board. what happened is that the chief executive officer has been is forecasting 2014.icant increases for they had a profit of 7.91 billion euros. it is pretty significant for a carmaker like bmw. there are going to be thing striving this increase. bmw to come out with no less than 12 new car a new in 2014 and revamped model. we are looking at new or

revamped models and the second slowdown going to be a in capital investment. they spent a lot of money on this is withnd revenue on capital investment. that is the other driver. >> thank you. that is our europe editor, david tweed. here's what else we are watching. a missing malaysian airlines flight search has expanded and malaysia has asked for all to gather information along narrow corridors. vladimir putin is likely to submit the crimea annexation approval to parliament today.

they are going to discuss further sanctions against russia. historic change the u.k. currency is proposed in a budget today. -- s modeled on the old it will be a major overhaul. next, we will go and speak to boris johnson's top economic advisor. we go deep underwater to test out the latest technology.

>> good morning and welcome back. we are live from westminster today. this will be delivered by the chancellor at 12 clock london time. this is what we are going to learn today. mark carney last night. we are speaking to the chief economic advisor stop >> good morning. >> we have a governor of the bank of england speaking live. macrotalking about financial policy today. the numbers are fairly favorable and on track. we are seeing inflation coming down.

wages will rise faster than inflation. if you were to analyze the british economy right now, where does it live and what is important today? >> what comes up today is important. how to interact with monetary policy is the crux of the issue. monetary policy has done all the heavy lifting and the message that the message -- the message that will get out today is that they will respond strongly and alludes tovernor that there is recovery, he says there could be the wrong type of recovery. he did not use those words. there is a low rate and information that needs to work together to make sure that financial markets are priced

properly for risk. there are issues in the financial sector and economy. ,rom a political perspective yields the public believes that there on the right track and things get better. on the economic front,. he is that there is not much room for giveaways. painting of the chancellor gives away, you will have to take it back with the other. -- anything that the chancellor gives away, he will have to take it back with the other. view, they need to have stronger economic growth. interesting that you make that point. the chancellor talked about the economy recovering. that is great news. the case that he has to make is aat this is happened under

tory administration and we cannot trust the administration. there is a potential for stronger growth. problemnk part of the is the consensus always going with the economy at the moment continuing. think it is pretty pessimistic now. grew 1.8%. remember the chancellor one year ago. the economy was only going to grow 1.8%. getconomic side, you try to credit for a recovery. the trying to give impression that there is more to be done. the reality is that there is more to be done. best way to get deficits

under control is by stronger growth. it isnot the quantity, the quality. after a few years, they said the same things. we need to have more import and investments. >> let's talk about that. clearly, he has an ambitious target that doubles exports. , given achievable and where we are at the moment, how much more do they need? getting is no magic in the magics -- the numbers to pick up. continental europe is in recession right now and recovery is difficult for exports to grow strong. ago, it wasyears more. that is an issue. we are making inroads into emerging markets. i think we need to bring it back

impactss and how it consumer spending. defend -- depends on fundamentals. they are not great. the policy has not improved. on top of confidence, the chancellor made to ensure that this amounts to a private sector company. these companies have great balance sheet and need to invest. .here is little that you can do in terms of why the general public, the challenge goes back to the first question. sees housingublic as an issue. we knew to avoid it. , the costal question of living argument.

areargument is that wages going to stop rising. to what extent is the recovery being held back? >> is not the policies. inequality is a background issue. context explains this. in previous recessions, there was unemployment and this time, wages. andgy prices are very high the emerging economy is pushing that up. wages are being squeezed. that means that living standards are part of the recovery storage. inflation has to subside. year, the into next question is when interest rates go up. interest rates have to remain low to allow the recovery to gather momentum and i do not see that today.

indeed. you very much back to you. >> thank you so much. at 12:30, that there'll be the u.k. budget here on bloomberg television. trail that goes from farms to tables.

>> let's check in on markets. boring. it is moving today. one third of one percent. today, it is all brittania. unemployment is expected to stick. you will want to see wage growth and that is a focus right now. as of the day. this one has a good potential to move. 3:47. stay tuned. we will have those minutes and the search expands for the missing jet. it is about to begin. we will bring you the headlines as those come through. just a reminder that you can follow us on twitter.

, i will see you in just a couple of minutes. .

>> welcome back to "the pulse." we are just getting breaking news from the bank of england. the u.k. unemployment just came out. in terms of what the vote was, the non-purchase vote was 9-zero, interest rate was 9-0. he really seems that was a unanimous vote in terms of jobless claims. following from 34,600. let's get straight to my coanchor guy johnson who is live from westminster for budget day.

the contents is unanimous for both interest rates, but also bond purchases. >> one of the critical things at the moment is the monetary policy and fiscal policy work hand-in-hand. the boundaries have been bird ofnificantly of -- blurred late. the governor was talking about it last night. interest rates will stay low for quite some time, but he will start tinkering with the economy and what the bank early hasn't done in the past. you will start to see those lines being blurred. that will interact with what we are going to hear from the chancellor and the budget a little bit later on. monetary policy and fiscal policy very much working hand-in-hand. you can see with the appointments being made in the last 24 hours at the big bank of england. the following unemployment is another piece the chancellor will use today to talk about the fact his recovery is on track. one of the things we have seen

in the british economy has been his productivity puzzle that really has confused people. we're continuing to see unemployment come down. people thought you may not see that. it has continued to fall compared with communal europe, a relatively low levels here in the u.k., so that will be another piece the chancellor will point to today. i think the key thing at the moment is the monetary policy, fiscal policy, really, the lines very much being blurred at the moment. and we will see the chancellor and the governor working hand-in-hand. >> thank you so much. we will hear from guy johnson throughout the day on the unemployment. he decided to annex the crimean peninsula yesterday. western leaders decide further sanctions on russia ahead of tomorrow's meeting in brussels. we have the latest.

keep us up-to-date with the latest developments. today seems fairly quiet compared to news we had yesterday. tomorrow it will ratchet up again. >> it will in terms of the economic sanctions and the spat between russia and the west. what we have right now in russia is the process of speeding this through institutions of power. the treaty that will allow for the annexation of crimea has just been approved by the russian constitutional court. the russian armament said may be introduced today -- harlem and said it may be introduced today. whether it is today or friday, there's no question the russian parliament will approve that. this annexation is all but a done deal. when that you leaders gather on thursday evening in brussels, doubtlessly have to respond. they have said if russia goes ahead with annexing, they will ratchet up the sanctions. so far they're just freezing of assets and travel bans on 13 officials. they can expand the list.

is called stage two. they suspended, the trade talks are having with russia, and then slowed on the process of uses and then they came out with the, if you will, hit list of baddies of russian officials. they could expand that. the issue would be if they would impose economic sanctions. i don't think that is on the cards just yet. you're talking perhaps next week when the g-7 needs next week, without russia. >> have they are to been kicked out of the g-8 or not yet? >> it is a big mystery. the best way to read it, they are not invited to this meeting. they were supposed to host the meeting in june. work on that has been suspended. i think the russians pretty much understand they can kiss the idea of hosting a summit goodbye. we will see down the line. they haven't been officially kick out of the g8 just yet. >> what is the situation like in

crimea? >> it is tense. you have a bunch of servicemen int have found themselves what is calling itself an independent country and about to be part of russia. they have been holed up on these basis. with a group of protesters raise a russian flag and start play the russian national anthem. last night we had some gunfire more and some ukrainians servicemen who were killed. how do they get out of crimea without erupting into a series crash -- clash between the forces? the ukrainian defense minister is on his way now, trying to sort this out without it escalating. >> thank you so much of the latest on the situation in ukraine. as turned to some corporate news. growth.bottom-line caroline hyde joins us with all of the details. but start with the numbers and the affects that of her the company. owner inhitting the

tech. its home is in europe. the euro very strong against emerging markets and currencies. its growth in emerging markets is singing a slowdown in sales. profit of just one thing percent. that is about one third of where they were this time last year. it is all about converting themselves abroad back into their home currency. beenwner has really setting the trend for so many other clothing retailers. they were the ones i can get the the ones that can get the trends on the runway in a matter of weeks. we're seeing the strength of the euro crimping a bit on their sales. so it was a slowdown, but

still in line with investor expectations. our analysts and objectors -- investors worried? >> it doesn't seem so. they seem relieved at these fromrs were posted today the foyer for 2013, mainly, because of the bad news that our to been factored in. share price has slumped this year, one of the worst performers and retail stocks in europe because of the concern about its currency exposure, because of its inroads into china, brazil. it is also not continuing those inroads and looking to open in emerging markets. in the long run, this is a fundamentally good choice. yes, in the short run -- short run into your exposed to the weakness within brazil and russia, but in the longer term, this company is destined for growth resumes. that is why most analyst still say buy into tech stocks and we

said bounce today. it is able to set the trend for the rest of european retailers. they have a standout competitive advantage because they can get the trends to the shop floor so quickly. an expanded online so much faster than anyone else. >> they do so much, caroline hyde, and now from fashion the food, any food he will tell you a truffle and truffles are delicacies. they're costly to procure and highly pair shovel. europeans travel a long way from forms to a new york city table. it is the last leg of the track that is the most valuable and secretive. >> are you there? it is a very hectic state. this is the truffle lady speaking. coming tell them we are with the truffles?

this truffle camming yesterday night. the restaurant snow is in as they arrive, they want them. we have a very tight schedule. today we have several appointments. we need to move very fast. ok, the first up is the four seasons. ask, pasta.em on >> can you smell that? unbelievable. it fills the whole kitchen. quick thank you. bye-bye. >> the best part of being a truffle rep, they get to go to the main dining room because we want people to see them. we almost have a pounds worth of

troubles today, which will last us through the weekend, probably. quick thank you. -- >> enqueue. he said the same price for next week. >> they just walked in the front door one day and showed me what they had. we kind of just went from there. you.ank hello. >> how are you? she only brings really good stuff. >> of course we carry a big value. it is not a problem to carry around.

>> it is a never-ending job. >> what a great job. getting breaking news on the missing malaysia air jet. conference every morning around this time from the acting transport minister from malaysia. first of all, he seems to be giving us an update on what they know, but also trying to put certain press speculations down. he said the plane sighting in the maldives is not true. he is also saying there lee partners are increasingly taking a lead for the search. he has confirmed some data from flights he later has

been deleted. he is working with malaysia, a lot of the partners working on basically narrowing the search core doors to find better data and better radars. experts are now helping with the singer later investigation, and he says police are still going through some simulator data logs. we will keep an eye on this news conference going on. that is the acting transport minister from malaysia. we will keep you updated with any breaking news from that story and we'll be back in a couple of minutes. ♪

>> welcome back. chinese internet giant alibaba is the latest public offering to be making headlines. it could be the biggest since facebook. for more, we are joined by martin mcnulty. great to have you on the program. thank you for joining us. evaluations seem a bit frothy. alibaba, is this not somewhere where investors -- i'm sure there's a lot of potential, but it is so expensive. >> i don't think so at all. there are two things that drive valuation. i think there's the classic revenue and profit and growth, and then strategic interest. i think it is westernized and

sue this on paper appears crazy, but in reality, that was a strategic play. i think if you look at the growth potential of alibaba, to me, it feels like an eastern e-commerce business that can actually go west. i don't think an amazon or ebay or western business can go east quite so easily. i think it is pretty sound, actually. >> you look at china closely because her agency has a lot of -- a big presence there. we look at some of the chinese mobile makers, they've never been able to sell outside. so what does alibaba have that can translate into the western way of shopping? >> there are a number of things that people sometimes forget. the first thing is that the value of e-commerce in china today's actually bigger than the value of e-commerce in the west from the set to be 534 billion dollars by 2015. alibaba is already tapping into

a profitable base from the get-go. and they were second to market. they got to observe what ebay, what amazon, what paypal did right and did wrong. all are an aggregation of of those brands. i think they're significantly more resilient than any of those individual brands put together. i think they are already making all the right sounds to position themselves with -- or i think amazon has failed. >> is there something that needs to change? we still look at amazon -- i looked at alibaba.com and it is difficult for me to read, more so than ebay or amazon. >> english version? >> yes. it is much smaller, more difficult to find products. does that need to change? will it change? >> i think it will change, but i think the pace of user experience in the u.s. is such that i don't think it is difficult for alibaba to get that right. personally, i think it looks

like a good user experience when i look at it. really quality of the products they sell. but look what they're doing in the u.s. they're making great strides to sort of cleanup the tainted image around counterfeit goods, etc., etc. i think that we'll get there. >> do you think they want to rival ebay and amazon? >>. yes >> do they want to be number one in the market worldwide? >> i think amazon more so than ebay. if you look at ebay's core proposition, consumer to consumer, you need critical mass and it is difficult to position yourself against that. but if you look at amazon, where amazon is a really it user experience, but i think alibaba is well-positioned to challenge -- >> scale? amazon is thinking of doing fresh foods, right? that would be scalable and would be making a lot of money if it does it with the right strategy.

>> i'm not sure what your question is. >> you're saying alibaba is scalable, but amazon has potential to grow. >> i think alibaba as the same potential, but the differences, they made integration into the supply-side. what people know is alibaba.com, this marketplace where you can access eastern manufacturing. amazon doesn't have that. of theve the concept power seller. while amazon can augment its product set, i would argue alibaba is well placed to drive more efficiencies in that mark is on -- marketplace and amazon. alibaba could get into her fresh foods. they lack a credible western brand. but look at the u.s. ipo in the western brands they are acquiring. i think they will catch up. >> arjun, thank you so much for that. -- martin, thank you so much for that. we will stick with tech in the next half hour.

the submarine for your body will test out a high-tech suit that takes you deep diving in the search for undiscovered species. ♪

>> welcome back to "the pulse." what you need to know and watch for the rest of the trading day. we're joined by guy johnson in westminster. it is all about budget day here in the u k 12:30, the transfer will be delivering the budget about politics rather than economics. we have a general election in britain in 2015. we are 14 months away. that is the key number today. as a result of which, he's trying to set up a narrative in advance of that. he will point to a british economy that is certainly recovering. points to that.

the unemployment is coming down. inflation has also come down as well. that means for the first time, the wages will be rising faster than inflation, and that is going to be able to be something he will be able to talk about as a positive. the cost of living argument, something that has hurt the government over the last two years and the coalition is had to do with that. that story may be starting to change. this is about the 2015 election. this is going to be a neutral budget. >> think you. we're waiting to hear from the x trader who made a lot of headlines at the time. >> it was a long time ago, six years ago when it started and we made those traits. -- trades.

hear fromy, we will france's highest court. if they throw out his conviction, then he gets a retrial. >> remind everyone. he made improper trades. >> $50 billion position, 5 billion euros of trading losses. that is what they say it cost the bank. at the time, the biggest case of a rogue trader ever. he was convicted two years ago. as you know, the french system, they have three strikes and you're out, so he is on strike three. if they up old the lower court's decision, and they usually do that, by the way, then he goes to jail for three years. this is the 11th hour of his legal efforts. he could theoretically go to the european court for human rights will stop not sure he will. but this is the last leg of french justice on this one. >> the verdict is later this afternoon? >> probably after lunch. this is paris were talking

about. >> it is paris. in the missing malaysia and jet. no real news? >> another day, another press conference, not much news. 370, and is seating for 12 days, no sign of wreckage. i think now it is all about pushing rumors and trying to pinpoint how they can scale down on what is an enormous task. 2.25 million square nautical miles. that is what they're dealing with. they have got the northern and southern regions they're ofrching, china is in charge the northern zone. u.s. looking in the southern zone. saying all the potential sightings of a flight to the maldives, they say those rumors are not true. >> thank you, caroline hyde. we have plenty of things to watch out for the second hour of "the pulse." u.s. viewers,e

"surveillance" from new york. we will be talking to a techno man in the second hour of "the pulse." ♪

the alice is redrawn as putin will not back down. cameron of the united kingdom, "additional measures to punish

russia." janet yellen will hold a press conference. the shadow of steve jobs hangs over apple's haunted empire. good morning, this is "bloomberg surveillance." we're live from our world headquarters in new york. i am tom keene joined with scarlet fu and adam johnson. >> good morning. overnight, u.k. and a plummet rate held steady at 7.2%, reinforcing the bank of england's tryst rate to record low. -- interest rates at a record low. rough recovery ahead of a sales tax increase scheduled for april. in china, starting trading between the yuan new zealand dollar, currency and global trade is a big deal. they're trying to make the yuan a global currency. >> good luck. research shows it is a lot harder to do. >> easy to talk about, harder to get people to buy int.