>> facebook steps into virtual reality as it pays to billion dollars for oculus. >> a sweet debut for kings. $500 million in its ipo. >> the u.k. government fell more than 5 billion pounds. the second disposal in six welcome to "countdown." >> it has gone 6 a.m. in london. welcome to the program.

face it is making a bet that virtual reality is the next thing for computing. a $2 billion debt. the world's largest social buying oculus. it is the maker of the ski goggle like device they have rist. relate to the mobile technology party. facebook has made big acquisitions. the bought instagram in 2012. trying to get ahead of the curve, putting facebook into your home and tablet. we have one billion people using

our mobile apps. what is the next frontier, what is the next platform? billion thating $2 is virtual reality. it becomes part of our everyday lives. these are awesomely the most social platform ever. it seems pretty insular, being in a virtual reality. you can play games erie it maybe the future is playing games with other people. if you are watching a game of tennis. 23 .1 million facebook shares. this is ahead of the curve. and they are talking about the other applications. how is this going down with investors? >> shares lost on their value. 0.8% after 8 p.m. u.s. time. maybe questioning this deal more. they are paying $2 billion for

the team of 100 people. trying to get it the curve in terms of technology because they could not make it themselves. interestingly, the people who are really angry about this deal are the software developers for oculus. they raise money before and raced it on kick starter. either they are well ahead of

the curve or this is the wrong bet.

we are going toward hardware. google glasses that big deal we had, and ray-ban was getting into the glasses. we have technology on our watches. >> they still have $11 billion worth of cash and equivalents on their balance sheet. potential deals for their head. king digital entertainment, the maker of the smartphone game candy crèche raised $500 million in its ipo. it values the company over $7 billion. jon ferro is here. >> a huge buzz around this company and the ipo and the games they produced. terrifically popular. i will get the stats out of the way. look at some of these numbers. three of the top 10 apps come from king digital. 600 million installed on mobile devices. game plays.ion reality check, it is not the king digital ipo. it is candy crèche. three quarters of the money this company generates comes from one game. >> is this a one trick pony? to the translated business that has longevity. low there is significantly barriers to entry.

you can make game like angry birds for less than $150,000. compare that to the 200 million to make grand theft auto. a lot of new entries can come into this market. was raced athy it the midpoint of the range. >> it is priced cheaper than activision or zynga as well. >> on a projected sales basis when you look at some of the estimates it is 2.7 times sales. when they come up with the prices, looking back at zynga. >> what about the comparison of .oday's ipo to the tech ipo >> the bottom line is no matter what this was priced at less night everybody would be talking about the same thing this morning.

you cannot stop people getting nostalgic so i have done my bit. up -- ipo's then and now. the business week has in some great work. medium price to sales ratio was 30 times in 2000. 5.2 times on average. this is the raise in over $100 million in u.s. ipo's. the average hop on the first day, 65% in 2000. ipo's done by profitless companies, that might sound like a lot that 80% in 2000. i will say the year 2000 is hardly the greatest benchmark to draw comparisons with but things are little bit -- >> king is making money. it does have a profit margin. is the big difference. a lot of people are talking about this one particular fact. this company is valued at around 4 billion pounds. it is sterling. morrisonnd the same is

supermarkets. the real brick-and-mortar companies with a lot of properties around the u.k. that produces a game you cannot touch or feel. a is very hard to value company like this. candy has paid -- played crèche? >> i do not know what you were doing last year if you have not played a. -- played it. >> you have. ipo, stay withg bloomberg. later today on markets makers at 2:30 p.m. london time. thank you. obama continues the european tour that has been dominated by the crisis in ukraine. russian reaction. good morning. >> there is that no russian

reaction. president putin presided over an award ceremony for actors and artists. the day before he presented for -- over an award ceremony for people at the sochi games. the mo is it is business as usual. we have taken crimea. it is ours and he would be careful not to make any provocative comments. we have not seen any provocative action. the kremlin banking on the idea leaders with eu their individual economic interests when it comes to their relationship with russia is going to prevent them from unifying joining up with president obama and rationing up the sanctions. they're hoping this whole thing will just blow over. >> we are expecting the imf assessment to the ukrainian bailout request. tellis -- tell us what is at stake. >> we are expecting that

announcement today. we heard from the ukrainian finance minister saying that -- what is at stake. aey're trying to stave off default. the ukrainian economy is looking at the prospect of a third recession. the interesting thing here is the detail. the conditions of those imf loans are always very difficult. they're going to involve at least ukraine raising its natural gas prices. particularly in the east of the country where ukrainians tend to have less money. that would -- is what would be interesting. that imf loan will unlock a lot

more aid from the u.s. in terms of that loan guarantee and aid from the european union. >> thank you. have more from moscow with a guest who says the sanctions standoff will continue to hurt the russian market until 2015. ."ay with "countdown 10 minutes after six in london. ♪ >> time for today's company

news.

posting 2013 profits that beat analyst estimates. the chinese demand grows for liquid milk and milk averages. the stock surged the most intent months. they are winning back customers through or foreign partnerships. and returning to profit in 2013. spending cuts made up for a decline in advertising. richard branson spoke to emily chang after the screening of his documentary. thoughts oned his virgin galactic. >> we want to enable you and me in as many people as possible to the come astronauts, to have a -- to to marvel back it be able to go from one country to another at a fraction of the

time. we can't create massive arrays of satellites that can transform things.

>> welcome back. >> from the hague to brussels with a morning stop in the fields of flanders. president obama continues the european tour. our international correspondent joins us from brussels. what is next for obama? the takeaway was no new sanctions. unless there is a further incursion. you did have some fresh rhetoric. but great britain was acting out of weakness, not strength. they're preparing the of sanctions a fresh enter into more ukrainian territory. >> it has also been the european councils suggestion that should , sectoralfurther sanctions should be appropriate. it would be like energy or finance or arms sales. or trade that exists between europe and the united states and russia. >> it was not lost on any european leaders at the g-seven. economic sanctions could mean economic pain in home. i spoke to the danish prime minister he said it is the job

for local leaders to prepare their people for potential economic pain. >> it is not my assessment. >> it would have an impact and it is my belief as politicians .e have to go to our voters we want to adhere to basic principles because they are at stake that we have to do this. rex president obama will be touring the fields of flanders. the world war i site. a time to reflect on the challenges that lie ahead and the challenges that could be presenting itself with this ukrainian crisis. he will be meeting with nato's secretary-general. >> today was meant to be about trade between the u.s. and the eu. will that be tackled or will it be overlooked? >> yeah.

that will be on the agenda. no one at the hague disputed the fact that the official agenda was subsumed by the g-7 and the crisis in ukraine. that will translate to brussels. obama hinted at this yesterday. the idea of technical analysis on which industries would be hurt by additional sanctions. they're figuring out what sort of package to put together. if they do to sanctions, industries in europe, economies in europe will be heard. no one was is abused of that notion in the hague. there is more of that that will be going on. just figuring out where the pain would come domestically. >> the u.k. is set to put stake in the u.k. bank.

stay with us on "countdown." ♪

>> hello and welcome back. is 6:21ime in london a.m. inflation came out at the lowest level since 2009 but you would not think it if you had a full english lately. it is greasy and gorgeous. because of rising good prices it is getting more expensive. jonathan ferro explains how from his local greasy spoon.

can i get a black coffee? you might have heard that inflation was pretty low. what does that mean for you and i? the price of food has gone one way, up. brit,y self-respecting

this is breakfast. --staple of any full english. s [inaudible] later this year. the humble piece of toast is under pressure. drought and wheat prices are under pressure. then you have coffee. people call this an early morning drink. i call it a necessity. it is about one place, brazil. the biggest producer of the stuff in there is a drought in the country that is driving the price of this cup a lot higher. the next time they tell you that have you is low, thought of the humble british breakfast. >> the vegans are cringing at the site. can i raise one point of order. coffee, really, with a full english? it only comes with t. a. te time he saw carbs.

>> did he eat the toast? his local greasy spoon. in chelsea there are not too many greasy spoons. reality -- it is reality in chelsea. where was the black pudding? controversy. the u.k. government is selling more than a 4 billion pound stake in lloyds bank. this will be the second disposal since rescuing them under. minas cranny is here. talk to me about profit. >> technically. it is a profit. the government, there are two prices. the price at which the

government went into lloyds. the breakeven rises we talk about it bloomberg. 61 pence. that strips the insurance. they paid insurance on the toxic assets. even the price is 61 pence. the first town -- time around they made 67 pounds. market is the average price .nd that is 73.6 >> has been talk about whether your average joe is going to get a chance to buy into this company. >> this is the precursor. osbornestep two, george getting to walk away from lloyds. well they restart before the end of the year, that is the next step. it will be taken out to the man on the street. >> they will not allow it to pay a dividend. >> that was one of the most

important facts on this. i think we're getting closer to them. it is good news for the ceo and for the government. it is good news for us. we are the shareholders in this company. that is critically important. indicated, they will have to discount it from yesterday's closing prices. probably down three percent or 4%. >> see you later. >> we will have more on the game makers' ipo. ♪

>> welcome back. >> let's get over to jon ferro. >> we want to put the best major performing currency in. it is the aussie dollar. suggesting the economy may strengthen later this year. investors aret looking to unwind. you look at some of the data last week. large speculators cut net short. this one will go lower by the second largest amount on record. this one right here, the best-performing ager current see this month.

>> these are the bloomberg top headlines. assessmentl get an on the bailout request. ukraine's finance minister said he is completing talks with the imf for the 15 to $20 billion loan to avoid default. with 78 days to go before the opening game of the world cup, são paulo's corinthian arena remains a construction site. secretary general is holding a week of talks with local organizers and government officials. and cut their airways -- foll owing the deployment on london heathrow services. the business class service will

operate out of heathrow. we decided to have an aircraft that will be fitted by all business class into cabins which will operate. we will not be able to operate from london because the aircraft is a bit heavy. >> candy crash pulls a players emotional triggers. it seduces and frustrates and knows how to get you to keep on playing. rachel crane takes a look at why so many people spend their time with those winking jellybeans. >> five of them. so addictive?rush there is 97 million of us playing this game every day.

candy crush is the latest on are aine of games that minute to learn and a lifetime to master. players is that get an immediate sense of accomplished. -- competent. mastery of the game is elusive. it keeps people coming back for more. used up all of your lives, candy crush can prevent you from playing again for up to 24 hours. that lengthens their appeal. you cannot binge on it and get tired. there are always ways of lot -- around these limits. if you are seeking them you're probably already addicted. most games require both hands. which means you cannot do anything else. candy crush lets you multitask or you can eat while you play.

you can talk on the phone while you play. you can go to meetings and not pay attention while you play. king digital, why the makers of candy crush hope the game's success will lead to bigger prizes. the game industry is full of one-hit wonders. some thinking helps to avoid with newer titles that are in the works. after all, you cannot live on candy forever. king's ipo.on is kicker one trick jellybean? >> i think the point is made really well there. are full of these games. they're not really hard to copyright and very easy for people to copy. particularlyot dutiful.

withoes it go down aficionados? s and thesek at thing are very quick fix. very easy and very addictive. very solitary.

beenlot of capacity have with people like hasbro. games were about family and friends and playing together. the trend now is to play these things on your own. >> what is the effort is this model? wherethese pre-him games it is free to download and then you pay as you progress or you go down the angry birds route where it is a couple of dollars initially. what is the preferred route if the game'sg down producing road. >> they actually stopped all ads game last year. -- if you look at flappy birds which was an they were making $50,000 a day in ad revenue. the fact that king could pull , to stopat completely you waiting a day to play and to serve your addiction it does not -- >> king makes a profit. i must say something about their business model as opposed to the other apps makers waste have -- we have seen list that do not make it to profit. >> this is one model but constantly coming back to it and not purchasing is a very lucrative model. >> it has been lucrative for angry birds renting out into various merchandising roots. it wants to expand into an animated film. it is even talking to disney.

will we be buying our jellybean t-shirts? >> i do not think we have got a choice. there is lots of talk about king. you look at something like rubio -- rovio. ands cuddly toys merchandise. that managedrand to spread. >> it is all happening in finland. makesve got rovio that angry birds. march onas taken a

rovia. >> there are lots coming out in eastern europe. as we said it is easier to replicate. >> what about the future of gaming? it has implications beyond gaming. facebook buying oculus which is an eyewear maker. it makes the gadgets you wear on your head to play certain games. is that a bold move, is that a good move from facebook? rex bold for now. that will pay out for now. there ahead of that time. that they have played catch-up for so long. >> this is try to go beyond mobile. think we think about mobile to mobility. this is watches we wear and connected rings, earphones, glasses, whatever they might be. >> there is all sorts of wearable devices. you're going to be the winners in the wearable device market,

do you think? rex we think it is about [inaudible] fits together it it works well. amazon or samsung or facebook or apple. there are 10 or more layers that put things together. >> what do you think facebook will do next? it has made 40 accusations at 20 or so billion dollars. where next because it seems to be battling it out with the likes of google. >> they have to make these acquisitions work as well. if they situse

inside. perhaps it is sign for reflection and see how they will work with it. >> thank you very much. >> just a reminder. we will bring you an interview with the king chief executive officer later today on market makers. 2:30 p.m. london time. >> from music to travel. sir richard branson has used his business acumen to push his way across boundaries. his emerging galactic adventure. >> it would be -- i am terrified of giving specific months. things can get delayed. i would be bitterly disappointed if we are not up in space. >> how about this? what is your vision for the space, 5, 10, 20 are who now. what does look like a question mark >> tremendously exciting. areuse private companies running space trouble -- travel. we want to use as many people as possible to have a chance to to goback and to be able

from one country to another at a fraction of the time that currently takes. and also colonize other planets, to have hotels in space. ando wonderful things create massive arrays of satellites that can transform things for the better back here on earth. >> what is the last step to get to that first flight? >> we are putting the spaceship among the rockets together now. they have been tested. test will be a couple more flights in then we will be on our way. >> leaders from china and france are coming together in paris to andnt the deal between them the french government. we will take you live to paris next.

♪

the people consider themselves part of russia. oe have got to stop him now s he does not go any further into eastern crimea and that is where we need to draw the line. >> that was former u.s.

president to make carter on the charlie rose show. you can watch the entire interview tonight on bloomberg television. judge has thrown out a lawsuit by a new york man claimed he is entitled to a multimillion dollar share facebook. the judge endorsed an earlier ruling that found clear and convincing evidence that the man fabricated a contract with the founder mark zuckerberg. in ending a joint investment asia resource minerals. following the announcement rothchild took to twitter [inaudible] for buying the asset he described as worthless. may abandon efforts to acquire [inaudible] they have yet to acknowledge receipt.

"countdown."to >> the chinese president is in paris to complete the signing of

the deal between persia and the french government. president francois hollande will also be there. matthew rose. point?thsis a turning >> this is d-day. there hae been longer negotiations. get a new strategy. family will lose of the frenchor stage which will take a percentage of the company. and dongfeng which is controlled the chinese government. many questions remain whether it will be able to restructure further and to get act on its feet. >> what does it mean in terms of restructuring, is this an advantage or a drawback for peugeot? it needs to further restructure. -- if it needs to further restructure. theye french government, do not prevent the closure of this paris suburb factory that to show owned. peugeot. depend on how the family and dongfeng get on

together. >> what does this mean for investors? investors, i think they have open operations. l lose money.stil it will depend on how the european car market will recover and chinese markets will go on and how the relationship with dongfeng and other runners well isg gm workout as hoped. openf this will -- are questions. if you have been on the side of performance, then you have a lot to do. paris.k you, live from >> back in may 2011 investors

were giddy to buy a piece of renren. what happened to renren? this is a chinese social media website. networking website, high expectations investors had for it. certainly times have changed if you look at the stock valuation. the stock price these days. this could take you back to the.com boom days of the 2000s when we saw the internet double burst. take a look here. there was a huge disconnect between the share price and certainly the market expectations. the share price today over three dollars a share. when it market desk came to market with -- it was value did -- valued at $14. the stock is down 77%.

at the heart of their problems as the plunge in the number of people using the site. said its user base fell 20% in 2013. investors were counting on the company cashing in on a boom of userss the number to twice the u.s. population but by the end of last year china had a two customers up five percent from june. cell phone internet users rose 19% last year to 500 million. we chat is capitalizing on this now. 355 million active users and you to 45nren collapsed million. revenue is set to fall 45%. the dark storm clouds there. renren an example of the fact that not every internet stock, not every chinese internet stock is a sure bet.

market isike the changing. one final note. nt looks like $.10 -- tence making a big investment today. byording to netease, it will video company,a web video company similar to youtube. we will be following this deal to see how this investment pans out for tencent. >> coming up, are sunsets helping to track climate change? we will have more on "countdown ." ♪

>> welcome back. >> it is newspaper time. take it away, ryan. >> i have "the business daily." they produce more than 3 million barrels a day. the farld be sent to east. he happens to be one of the people that is being discussed as someone to add to that sanctions list but not talk about that in this article. it is business as usual in moscow. thinking about moving from the east.l to the far

the government plus plan is to develop the far east. they play -- pay close to $100 billion in the states coffers and that would be helpful in the regional coffers. moscow moves on. >> thank you. >> fascinating. apparently a scientist is studying old master paintings. you can see the paintings to the left of the article. and saying what the composition of the atmosphere was like. apparently these paintings were this eruption. they want to learn from theh colo -- from the colors that were used that about volcanic eruptions. of thes in the eyes

beholder. story thatabout a gripped social media. that is the no makeup selfie for charity. this is an article that says it it rased -- raised 8 million pounds for charity. talking about how the campaign was started by a teenage mum who cancer.amily member to >> gone in 43 seconds.

the manchester city scored after 43 seconds. to manchester season. the painful season continues. ♪ . .

>> facebook steps into virtual reality as it pays to billion dollars for oculus. >> the maker of candy crush raises $5 million in its ipo.

>> and breaking news from lloyd's of london. the new chief executive says she plans to change the insurance industry. >> we will be looking at all kinds of modernization. certainly, technology will be playing a big part. >> welcome to "countdown". i am mark barton. edwards.am anna let's get back to our top story. facebook is making a bet that virtual reality is the next big thing for computing. a $2 billion bet, to be exact. they are buying oculus, the the ski-like goggles called risk. themine hyde can describe much better than i can. she joins us now. what are they and why is facebook getting into virtual reality? >> many a question. are they ahead of the curve? is this in the right direction? let's answer why they are buying virtual reality first. when they moved into mobile, they suddenly had to make loads of acquisitions. they bought instagram, trying to catch up. >> and they have caught up,

haven't they? >> one billion people use their mobile applications. they are now saying, what is the next frontier? their bet is virtual reality. here are the goggles. there is someone wearing them. you are able to play games via these goggles. you are able to eventually feel as though you are courtside, watching a game. it is going to be interactive. mark zuckerberg says this will be the most sociable game. you may be able to play games with other people. >> and you could be a doctor -- >> taking online courses. to see the application of the technology well beyond gaming. this is all about wearable devices. >> and the actual goggles themselves, it will be software that facebook makes around it. it will be advertising that they

are able to leverage around the use of these goggles. they say they want to become you big witness. they want them ash ubiquitous. only buyment, you can them if you are a software developer and want to make games used on these goggles. eventually, they will be on the market. there are other companies doing hardware.

glassple call google augmented reality, whereas this is virtual reality. it is slightly different. >> but the trend is the same. immersive, virtual, reality. google is certainly in the game. samsung has smart watches and the like. we are going into devices and this is why software makers like microsoft and facebook want to start buying. >> our guest said that they thought facebook was ahead of the curve. lots of other businesses might feel this is the way they want to go. as you say, they had to play catch-up on the mobile story and now they are trying to get ahead of things. how has this gone down with investors? have they shared in that enthusiasm? >> a little bit washes. share -- a little bit cautious. price, certainly not the selloff that we saw after the $19 billion surge -- splurge. investors are a little bit cautious. largelyl is stock-based. more than 20 million in terms of shares. the rest of it being cash. people who are upset our developers. the people who had helped crowd

with, whos to begin have given them thousands or hundreds of thousands of dollars to start making these goggles. they raised money on kick starter. not of those said they did give you thousands to sell out to facebook. they might be smiling. the venture capitalists put in $90 million last year. it is now worth more than $300 million. $380 million to be exact. capitalists are happy. we look at the share price today, but facebook has people

feeling this is the right decision. >> thank you very much. we are getting some detail of shares in lloyds banking group. fi has priced the lloyds sale at 35.5 pence. nus has been telling us about this story. it broke yesterday after the market closed. it is confirming what we knew. the government share will be reduced by 23.8%. treasury now holds about 25% of it. >> that sets them up in terms of their ability to perhaps do a retail offering. later in the year, that is it they can restart the dividend. the price is important in terms of profit. is what we emphasize that bloomberg. we talk about the breakeven price. why do we talk about 61 pence? and sure their toxic assets at the time of the bailout. they paid insurers to cover those toxic assets.

this probably equates to a small discount to yesterday evening's closing price. a little more needs to be discounted. that they went for the first sale in september, well, we will work out the nuances later. >> we have other news on lloyds. lloyd's of london, the insurance market. >> the oldest insurance market in the world is a reinsurance market. over 300 years old. there is a new ceo. this is her first set of numbers. >> she is the first female ceo in their history. >> she is indeed. tol year, the profits rise just over 3 million pounds. a couple of key messages. season hasrricane been fairly benign. that has helped numbers. along with that, we have had u.k. flooding.

that has a huge impact. the likes of the main insurance companies you and i would go to have not come back to the marketplace to claim extra money. those two things are helping lloyd's of london. the reinsurance market. no significant exposure to the u.k. floods. we did have one of the first interviews with her. she discussed listening to marketplace and challenged capital. >> eddington of the markets and meeting the share holders, that is great ash getting to know the markets and meeting the shareholders, that is really important. i wanted get to know what is going on and respond appropriately. there are a lot of challenges. the capital is putting pressure on rising. you have ash on pricing. pricing. all of these factors are going to influence results in 2014.

>> a woman with a bit of knowledge. 30 years in the market. she was that kenobi us -- can opious group. she was the chief underwriting officer at zürich insurance. this is a woman with full pedigree knowledge. it is a tough act on that insurance market. >> you were there. >> there was a lovely piece with you when you walked up the escalator. the memory of a fish. >> and there are a lot of escalators. pop thatoing to go out. actually, that is my favorite piece. >> king, the maker of the smartphone game candy crush has raised $500 million in its initial public offering, a figure that values the company at just over $2 billion. if you have not played this, you

know what it looks like and you might even know the music. >> some great stats to go along with this company. and 3 of the top 10 apps come from king.

600 million installs. 1.4 billion daily game plays. let me start your head spinning with a little bit of a reality check. we call this the "candy crush" ipo because that is what it is. more than three quarters of the revenue this company generates is from one game. does the popularity mean you can't translate this into a company that has any kind of -- >> many will and many are. what are the comparisons and are they fair? >> zynga had a game and everyone used to play it. it used to pop up on your news feed and facebook. i do not see it there anymore because no one is playing anymore. a lot of people are -- are talking about this happening as well. there are significantly low barriers to entry. you can make a game like "angry $150,000. less than that means you will get new entries coming into the market. >> king manages to make money around "candy crush". it is different to zynga in that respect. it is also different to some ipo's we saw at the height of the.com boom -- the height of the dotcom boom. >> for good reason. whatever it was price that last night, everyone will talk about bubble and 2000. everyone gets nostalgic about the bubble and the year 2000. here is my then and now. the guys at "business week" did a great job at this a couple of

weeks ago. these of the company that went out and raised over $100 million. the profit sales ratio is much higher in 2013. >> so we have learned something. >> we seem to have learned something. 80% back in the year 2000. >> and king does make money. year 2000, hardly a great benchmark. this company was valued at the midpoint of the range. people are going to look at these companies and be a little bit more conservative. it is a massive difference between a company that produces a smartphone game and a company like google. >> are you addicted to "candy crush"? >> i was for a time in 2013. i have moved on. >> and you move to another game? >> i found better things to do.

>> beyond level 200, which is impressive. there are more than 500, but they keep adding more levels. thank you very much. for more on the king ipo, stay with bloomberg. we will bring you an interview with the ceo later today. >> just ahead, members of the federal reserve contradicting each other on right hikes. -- rate hikes. ♪

>> welcome back to "countdown". in london is 16 minutes past 7:00. last night, the federal reserve said he expects rate hikes in next year.half of those words are counter to janet yellen. here to talk to us is that -- is michael o'sullivan. are we getting contradictory messages from the fed? >> one thing that is interesting is that the number of words in the fed statements in the last inple of years has risen

tight correlation with the size of the fed balance sheet. they have embarked on new programs, new policies. they have tried harder to explain these. when very intelligent people try to explain very complicated things -- >> clarity is the victim. with saw that last week some of the plosser comments, where he corrected some of the forecast rates peaking at 4%. i think, janet yellen, having crafted the new communication policy of the fed, needs to get a firm hand on the communication, particularly as she is perceived by some people as having made a mistake last week. i am not sure she did. i think the market reacted more to the forecast by the fomc members. >> the result of all of that is that interest rate expectations are being brought forward.

what does that mean when we are allocating our assets? >> it means that we are now focused on the business cycle. effects.s., the weather will begin to drop out of the data. , the fiscalffects drag of the last couple of years will drop out of the data. confidence will slowly begin to suspend. end oftime we get to the this year, the recovery in the u.s. will be on much firmer footing. rate expectations will begin to slowly rise. the issue is where people position. they are not yet positioned out of the short end of the yield curve. the last nine months, people have been setting the long and. -- end. when we get to 300%, that will start to ease. >> give us insight into the market psychology at the moment. better does start to get , our investors going to see

that as good news or are they going to try to second-guess the fed and talk about the time it will take to get to rate hikes? are we in that kind of mindset? , we might get qe some of that. in the next one or two years, is the recovery good for equities and bonds. >> you have done an analysis about stages of the economy and when we see rallies. >> we have on back the last nine business cycles. in the recovery and the subsequent overheating phase of the business cycle, equities tend to beat bonds and rise after the first fed rate hike. i am not massively worried on a one or two-year basis. >> ukraine or russia, what is happening in crimea, stock markets in europe are down this month. the euro is holding up.

the dollar has not risen as much as many have anticipated. the ruble is down. we should bef what thinking from here on in. sanctions could escalate and tensions could increase. >> some people have compared this to the dr. strangelove film. that is not appropriate in some respects, but appropriate enough based on game theory. theoretic and both sides are beginning to understand each other's positioning. i do not see any incentives for a further escalation. i do not think we will solve the situation any time soon, but we will continue to see needling from the russian side and a slow escalation in the sanctions. in terms of geopolitical events, -- not see

>> where will that leave investors? >> if you look at russian assets, i think the ruble is probably bottoming out relative to the dollar. >> would you buy russian equities now? >> i am overweight russian equities at the moment. they are to byrd and the greek market was at the eurozone crisis. cheaper than the greek market was at the eurozone crisis. are not positioned in russia or they have sold their holdings. if you look at russia, it is more about -- it is more than just oil. retail companies, internet companies. growth will probably bottom out at about 4%. i expect the central bank to start raising rates. >> more money has come out of the russian bond and equity market this quarter than the entirety of 2013. are you saying that is as bad as it gets?

>> the russian stock market is not that big. it is about as big as the swedish stock market. it is bigger than the market cap of apple or exxon. in the scheme of things, it is not that big. in terms of what happens across europe, if i was really worried about the situation in ukraine in crimea, i would be thinking more about the risks to european equities rather than the russian equity market. >> are they in germany, poland, where are those? in some areas, gas imports, the baltic states are vulnerable. germany in terms of trade. this washes through the sanctions because you can put sanctions on another country, but the strength of the sanctions depends on your willingness and toughness to bear the consequence of that. that on theeeing european side at the moment. >> great to get your thoughts. thank you for joining us. >> coming up, trying to avoid

friends and coworkers. do not move. ♪

>> welcome back to "countdown". it is time for hotshots, a look at some of the the most compelling images of the day. there are some days when you want to be left alone. luckily, there is a new app for that called cloak.

it tracks your friends and acquaintances so that you can avoid them whenever you want to. it is the latest app in the antisocial network trend. california drew elite mountain bikers for round three of its competition. athletes covered 3.5 miles of rough terrain with steep uphill climbs and deep downhill plunges. this is the first race of its kind in u.s. mountain biking history. and a baby gorilla met its mother for the first time at a san diego zoo. the 12-year-old baby was born via a rare c-section delivery. mother and baby have been reunited and they are inseparable. eventually, they will be able to venture outside. mark. >> coming up, from the hague to brussels, obama continues his tour of europe. more on the visit. ♪

>> hello. welcome to "countdown". >> let's get to jonathan ferro for the fx check. >> a look at the biggest -performing major currencies this morning. glenn stevens, the chief of the australian central bank speaking this morning and he suggested the economy may well strengthen in the second half of this year. more signs that the easing by

the reserve bank of australia is over. you see them unwinding conditions. that means this one could go lower. this one is the best-performing major currency and thus far. >> these are the bloomberg top headlines today. ukraine will get an assessment from the imf today. ukraine's finance minister says he is completing talks with the imf on a $15 billion loan to avoid default. with just 78 days to go before the opening day of the world cup, the corinthian arena remains a construction site. fifa.ains a concern for holdingndary general is talks with organizers and government officials. chieftar airways executive says it will fly its second airbus a380 to paris. that follows a deployment on london. he also talked about the company's all business-class service that will operate out of heathrow. >> we see that there is a huge demand for travel which cannot

begin to be provided by the services we provide today. want all business-class which we will operate. unfortunately, we will not be able to operate from london because the aircraft is a bit heavy. >> from the hague to brussels, president obama continues the european tour that has been dominated by the crisis in ukraine. hans nichols joins us from brussels. what were the takeaways from the summit at the hague and what is next on the next age of the tour for president obama? >> good morning. from the hague, no new sanctions announced.

fresh and harsh rhetoric from president obama. he called russia on acting from a position of weakness and not strength and called them a regional power. obama said there are officials in brussels that he will be meeting with today. they are considering additional measures if russia escalates the situation. >> it has not just been my suggestion, but also the european council's suggestion ,hat should russia go further such sectoral sanctions would be appropriate. that would include areas like energy or finance or arm sales. or trade. that exists between europe and the united states and russia. >> on the sidelines of the conversations in the hague, much of the talk was about what sanctions would do and what effect it would have on

struggling european economies. it was not lost on any leaders that sanctions on russia would hurt them at home. when i spoke with the dutch prime minister, he said it was the opportunity and obligation for those politicians to prepare their public for potential

economic pain. >> it is my assessment that if we would have to impose sanctions, that the european economy would not be broken, but it would have an impact. it is my belief that these politicians have to go to our voters and tell them that, because of our basic principles, that we have to do this. >> ahead of the president meeting in brussels, he will be touring the fields of flanders. before the meetings, he sits down with the nato secretary-general. you do not have a good sense of what is on their agenda. whenever the president meets with the head of nato, you can have the assumption that military planning may be discussed. >> thank you very much. hans nichols reporting from brussels. >> ryan chilcote is in moscow. the morning, ryan. -- good morning, ryan. in thevery -- if anyone kremlin is worried about the united states, they are doing a good job pretending that they are not concerned. we saw putin preside over an award ceremony for actors. be strategy here appears to to turn a deaf ear to that pressure and go about business as usual. that is definitely what they are trying to do. i think the calculus inside the

kremlin is that those 28 european leaders with their individual economic interests and relationship with russia are unlikely to find a unified position because they make decisions by consensus that would lead to a ratcheting up of sanctions against russia. they are hoping that this is all going to blow over. imfe are also expecting the assessment of the ukrainian bailout request. tell us a little of what is at stake here. we are expecting that

announcement from the imf later today. we heard from the ukrainian finance minister yesterday, saying he thinks they will get between $15 billion-$20 billion. i just got off the phone with ukraine's economy minister. he told me that while negotiations were difficult, there was a lot of understanding from the imf about the dire situation and the first tranche needs to be a sizable one, not just because of all of that debt , but also because of the country's macroeconomic situation. they are looking at their third recession in five years, hoping to avoid that. obviously, this is important. is really at now the tipping point of a possible if the imf money does not come. that wemoney, the deal are expecting to be announced later today, would unlock more money for ukraine. it is critical for ukraine going forward. >> thank you. petroleum plans to sell a stake in its middle east business and it may be delayed because of a regional spat over qatar's support for the muslim brotherhood. this is the first sign that the brotherhood is hitting business in the middle east region, isn't it? >> it would certainly seem that way. they are the fourth biggest

recent weeks. remind us where this spat came from and how it could be resolved. >> they initially took a hit but recovered when many analysts started thinking -- it began at the beginning of the month. saudi arabia, bahrain, and the united arab emirates recalling their ambassadors from qatar. normally, when there are they do it behind closed doors. this was an unprecedented airing of dirty laundry. many expected qatar to say ok, we are going to tone down the comments by muslim brotherhood supporting clerics on al jazeera. in fact, they came out and said that foreign policy is not negotiable. it is not clear how much , andage they have on qatar

but certainly, this is not going to do much for investor sentiment. , a perfectly posh dinner party in the u.k. may make a bigger dent in your wallet. ♪

>> they consider crimea part of russia and most of the crimean people consider themselves a part of russia, i do not think we could have stopped it there. we have got to stop it now so it does not go any further. that is where we have to draw the line. >> former u.s. president jimmy carter on the charlie rose show. you can see that tonight on bloomberg television. time for today's company news. a u.s. judge has thrown out a lawsuit by a new york man claiming he is entitled to a multibillion dollar share of facebook. the judge endorsed an earlier ruling that found clear and convincing evidence that the man fabricated a contract with mark zuckerberg. the family completed a $500

million agreement with asia resource minerals. following the announcement, rothschild went to twitter to thank them for buying the assets he described as "worthless". safari.com says kenya communications authority has yet to acknowledge receiving the acquisition request a month after it was filed. welcome back to "countdown". we are 15 minutes away from the start of today's european equities session. >> we are. that means 15 minutes until the start of "on the move". francine lacqua joins us with a preview. happy wednesday. what do futures have in store? >> for the moment, equity futures are falling, but asian stocks are higher.

they are all gaining .4%. this is as we expect more evidence that the economy is strong. we have durable goods orders later today. that will give us an indication. >> good news is good news seems to be the mentality of the market at the moment. let's talk about lloyds banking group. the government selling another stake. the second stake sale since september of last year. >> this is part of our banking conversation that we will have. disposal that was announced today, the dispersal of more shares will be announced in the last -- in the next couple of months. banking in focus. lloyd's in focus. ceoslk about some of the you have on the program. >> we have two ceo's coming on "on the move". we have a ceo who came

out with figures last week. they are the guys trying to build out the panama canal and make it a gear. we will ask him about what it means for the company. have the ceo of an quest -- enquest. drill north of great britain. we will talk about scottish independence and what it means for his company. >> let's take a look at today's top corporate stories. lloyds banking group, we have the price. >> a discount. 75.5. if you were one of the asset managers and wanted to buy this andk, you put in your bid everyone who bid below was left out of the pack. take everything away and what does that really mean? the stock closed over 79 pence yesterday.

the government had to discount the offer to go to the institutions. you want some stock? i am going to discount it for you. i am going to offer it to you at a 4.5% discount. that is a bigger discount than the first time around in september. -- have the ukraine going on >> you should not read into that too much. >> the stock is about 2% lower. you have got to get the trenton away. -- the traunch away. especially when you have 25%. i would like the institutions to come forward because i do not want to be left with egg on my face. it is a second attempt at divestment. it is a bigger tranche for the first time. the key issue is, will they restart dividends?

possibly go and sell it to the retail investor? that would be the triumphant moment for george osborne and david cameron, going into an election and going, we might have a slight issue in that we have one nationalized bank. but look, we have got out of the other one. >> and with the money they have raised, possibly a giveaway ahead of next years election. >> they say there are no giveaways and that these are huge deficit issues. of course, elections, rules change. >> send him a note. >> in the last hour, we looked at how the full english is getting pricier than breakfast. caroline hyde takes us inside her kitchen to explain how higher prices are making it harder to host the perfect dinner party.

>> one of my favorite things has got to be getting all my friends over and feeding them. getting some of my best friends over, i want to feed the world. they are a little bit of a piggy bunch, so i am getting the nicest ingredients. go cheese, hot chocolate. prices for all three are going up. has become incredibly popular. it is in every restaurant and on many people's dinner party list. it is getting more expensive. goats milk is up in prices. always go big on starters. figs stuffed with goat cheese. olives, great as a starter or a snack. prices are going up. green types, there has

been a shortage in supply. greek, the green variety is set to jump some 50% next year. putting, -- pudding, whatever you call it, cocoa prices have been spiraling. they are producing less and less. you're chocolate brownies are much more expensive. -- your chocolate brownies are much more expensive. minimum.ontent to a there we have it. olives, check, goat cheese, check, chocolate, very much a check. now all i need are my guests. of a dream come true. i have always wanted to do a cooking program. was always my

favorite. >> where was our invitation? >> my new favorite. it used to be nigella. >> we are coming up ahead of the market open. find out why our next guest is betting on the duty william hill -- the boutique william hill. ♪

>> ahead of the market open,

let's see what stocks could be on the move. brendan kelly is with us. bp shares seven percent lower in the last month. is it warranted, that sort of decline? do you think it has found a bottom? >> i think it may have. it is above its 200-day moving average. a lot of the selloff has been overdone. confidencepects, improved in respect to russia. bp could be the one to watch. we have seen the ban lifted on its exploration within the gulf of mexico. it could be in a good position to undertake some sort of profitability from the u.s. shale market. it will be one for watch to me. it could be a good play with confidence returning to that sector. ,> we mentioned william hill the betting company.

talk to us about your views. some people have been worried about regulatory issues. think that has been reflected in the share price over the last six months. william hill is well below its precrisis highs. i do feel there has been a raft of downgrades. murderedt absolutely by the budget along with the insurance companies. in some respects, there will be a bit of opportunity for william hill. i do believe that some of the other betting stocks will be

introducing some changes in order to separate some of the gaming that would be subject to the 25% tax raised. we have already have this morning and we have already been flagged. obviously, it was worse than expected in terms of what george osborne did, but in some respects, there is still a little upside. >> thank you. brenda kelly. george osborne saying on twitter that they have sold those shares and the plan is to reduce national debt. >> "on the move" is next. ♪

>> welcome to "on the move". i am francine lacqua at bloomberg european headquarters in london. coming up, we will hear from the chief executive of enquest. first, we are moments away from the start of european trading and our markets team has everything covered. here with me now is menace cranny, jonathan ferro, and caroline hyde. manus, let's start with the share lloyds bank stake

-- stake sale. >> the second time they have sold stock. just under 25%. has been onor twitter saying they are going to use the proceeds to pay off the national debt. they will have to do it at a discount and a bigger discount than the first time. 75.5 pence. >> we will keep on top of that. jon, you are watching the maker of "candy crushed". "candy -- let's just call it the "candy crush" ipo. 75% of their business. >> i spoke to alex friedman earlier on. everyone around here is saying, why am i not working in tech? facebook is buying something se