miners. >> we had the same way to earthquake off chile. -- we had an 8.2 earthquake off chile. power is a critical issue when it comes to minors being able to continue their operations. they have evacuated in the north .f chile there are disaster zones that have been declared. so far it has not been impacted. >> thank you. >> it is hurting to different areas. the passengers. it's being described as the

worst strike in history. we had the company estimating it is likely to cost between $40 $50 million. that might make it hard to achieve their operating profit goal of 2.5 6 million in 2015. >> thank you. we will have more throughout the program. >> much concern about profitability suddenly in rooting as they invest far more and are exposed to currency weaknesses. very keen to shrug off the currency. are unveiling a new tactic, and they are going to be changing pricing to make it more local. we suddenly see the currency weakness. expectedoming far more for the australians to buy the

product? overall sales line-up 34%. profits down 22%. it's all about capacity. they are just opening 2.3% higher. atthe kremlin lashed out jpmorgan after the bank blocked the payment of $5,000 from the russian embassy to a russian insurer. it was like jpmorgan was just trying to comply with u.s. sanctions because the insurer this was going to look like it theat least partly owned by first and only russian bank ever to be sanctioned by the u.s. government. the fallout? we're going to look at it in this hour. >> there could be possibly more strong sanctions. i am watching the company saying they have more offers on the table. basically this is a takeover.

vivendi last month in talks to sell the unit. on, we arek earlier expecting a vote on these completing -- these competing offers in the next couple days. there is all this talk about l owflation and stead of deflation. >> it will last piece in the jigsaw in terms of low inflation. if your words come true, and european equity stay on the up today, that will be the seventh day in a row. we wait for manufacturing today. there is one number. adp. that is private payroll in the

u.s. european equity markets are opening. we keep an eye on the main market. we will get u.k. manufacturing data as well. let's have a look at some of the mining companies. we had this magnitude 8.2 earthquake off the coast of chile. very little impact. this market is being driven by the growth story, whether there is more stimulus to come from china. out of the europe is doldrums. we are also seeing a move here. a couple of backdrop issues. you have south africa going on strike again. you have the chile earthquake. cut the iron ore to $118. let's have a look at commodities. we had copper trading at a three-week high. aboutt often talk

soybeans. after the third day, a 10 month high because stockpiles are at the lowest in 10 months. copper is up up third of one percent. we had that earthquake off the coast of chile. are expected to rise. youe have the cardboard for ? bmw sales up eight percent. bmw, the owner of porsche, and mercedes numbers are up. the highest first quarter on record. >> thank you so much. joining us for more perspective on the market is the chief investment officer of capital than 30nt with more years of investment experience. good to have you on the program. give me a sense of what change.

.eflation the u.s. economy is on a good trend, but there are worries in europe. >> one of the key concerns has been around the u.s. economy. seen where it affected. it seems to have taken a dip, and we are now in a rebound. the question is how strong is the rebound and is the dip covering something that is a little bit duller than people thought? people had very high expectations for growth in the united states this year, and i think it's quite possible all low growth will be better this year than last year. it won't match expectations. >> what does it mean with your investment strategy? are you a little more cautious on equities in the u.s.? they are certainly valued much more expensively here. >> they are. that's right.

lookserican market comparatively expensive. on the other hand, american companies have been delivering better earnings growth than their counterparts in europe. there has not been quite as much expansion in the states as in europe. i think to be honest you need to take a balanced view towards western markets, but i think the key is not to have expectations for the sorts of gains we saw in 2012 and 2013. those i don't think will be repeated next year. >> your favorite, and we will take a break and find out why. >> i don't think anything really stand out in terms of sectors, but i would be looking now for the western investment cycle and exposure to that. >> they key so much for that. we will get, and more on his investment strategy. here is a look at what else is braces forlufthansa

massive strikes that could cost 10 million euros. and we sit down with the chief executive of the second-biggest bank. he joins us on the move.

>> i am francine lacqua.

lufthansa is bracing for a three-day pilot strike kicking off today. the airlines are calling it a most severe in its history. david joins us live. what kind of disruption is this walk out causing? >> it's really hitting on two areas. one is the area of operations. we are looking at reed thousand eight hundred flights canceled, and that is having an impact on 400 20,000 passengers. there is a huge amount of disruption on that side. -- for 20000 passengers. 000 passengers. you have an idea of what is going on. there are some flights coming in. that is a united flight. lufthansaa few

flights that will travel over the next three days or so. the other area the strike is hitting is left on the. hitting lufthansa. the cost could be between 40 million and 50 million euros, although they cannot make a final calculation until the strike is ended. the pilots are saying they are not aiming to disrupt the passengers. what they are really aiming to -- livet live tom the hansa's bottomt line. >> we want to strike against our employer. there is no other way than to strike inside the cockpit.

carrier.he low-cost that is going to make it difficult to move within germany. swissair -- some of the other subsidiaries, these aren't affected. are the pilots striking for? >> there are three issues being moment.d at the the first is pilots pay. the second is a transitional arrangement for those who want to retire early rather than going straight to the end of their careers. the issue of corporate pensions. the pilots have struck on a separate issue. it has to do with the arrangement for early pensions. if they were to have difficulty on negotiations with the other

two issues, there could be other strikes. one possibility is they reinstated the dividend for 2013 after having no dividend in 2012. they are saying, weren't you supposed to be spending the extra money on buying new planes ? why are we having to carry that when the investors are actually benefiting from the fact that these cost cuts all the people are having to cope with are ?eginning to kick in >> thank you so much. we will have an update through the day. chiefwith us is the investment officer of capital management. we talked a little bit about the environment. i guess there is a larger movement at hand. what do you think of transport? where do you see value?

isn't the companies that are reportedly emerging markets or the ones that are stronger? >> later this year we are looking towards emerging markets picking up a bit with activity improved. at the moment they seem to be pretty flat. we are maybe looking at better conditions to the second half of the year. it may be important to look at things like airlines at that stage. there is a gradual healing process in the west. that is critical, but it's not with the prospects we had prior to the recession. the world looks quite different. >> it seems the market is so convinced we are in a new phase that they are almost rushing off u.s., russia standoff. >> i think it's quite dangerous. there is this concept of returning to normal, and people think normal is prior to the recession. that was abnormal.

we saw abnormally fast growth in economies. that's why we had such a big recession. we have to continue to rebalance. that's going to be adult version of normal. >> should we be concerned about russia and ukraine? was blocking one of the payments done by the embassy and kazakh is stan. should we brush it off? >> these are difficult for think themarket. i most difficult thing is to react to information and you continue to offer late, and you don't have a full picture. what is happening between russia and the united states at the moment, the building of tensions and sanctions being stepped up further, those things could be very disruptive to the world economy. that is the case. we assume the politicians won't take us to the brink. itcreates uncertainty, and

could be a threat. >> stay with us. we want to talk a little bit about retail. shares are rising after the online fashion retailer reported they beat estimates. >> the disruptor of the fashion online fashion retailer, the biggest in the united kingdom focuses purely on online deliveries and calming fears. growth is still very much there if you are looking at sales. sales up 34%, slightly higher than estimates. what they are banking on his short-term pain for long-term gain. profit before tax was actually down. it fell 22%. the reason, they are investing. we are seeing them looking to expand further into the u.k., germany, the u.s., china. they are ramping up their

storage facilities to make it quicker to get your delivery, tracking the driver, also getting a name of the driver when it is about to be delivered to you. they are investing a lot. they are saying our capacity will be two and a half times where it stands now. two and a half billion pounds in .ales per year is the aim that did wobble in terms of investor concerns. they did see the selloff in the coming months on the back of slowing growth. they seem to be calming the investors fear with sales still up and profit being sacrificed for longer-term sales growth capacity. where we saw a real ignoring of problem was foreign-currency. they really brush that under the carpet. remember the concerns about emerging-market, about russia and australia. the chief executive did not want to be budged, saying, that is

less relevant at the moment. to focus wasnted growth opportunities, particularly in china, and an interesting tactic being deployed for the future. they are saying in australia and china they are going to be able to deploy local currency changes. they are going to be able to price specific to the country. not only will it be one-size-fits-all on the website. run all be able to promotion in australia, run a promotion at a different time in germany, making it global. investors are buying it. shares up. >> inc. you, caroline. final thoughts with richard jeffrey of capital management. when you look at some of these stocks, is it a retailer, is it a technology stock? one thing that's certain is there are a lot more disruptors that will be enabled by the way we use mobile

s. >> that's right, but it is a retailer. although it has that technology angle that makes it a little more sexy. this is an environment, when you look at retail, you need to be much more discriminating. there was a time when you said, we just want exposure to retail. at the moment we have to be more discriminating. growth is there, but it is dovish. there is plenty of room for a retailer to get it right, but there is also room to get it wrong. we have to be much more select it in our approach to the sector. >> do you like any of the european banks? >> i think the overall banking environment within europe is improving. -- it has improved a lot in the united states. it is improving in europe. it is an increasingly interesting area.

as growth except, as balance sheets improved, they begin to look more attractive. >> thank you, richard. coming up, jpmorgan enters an international crisis. blockl explain how the payments have enraged russia's foreign ministry and what it could signal for sanctions. that is coming up next.

>> welcome back. i am francine

lacqua. here are some companies on the move. bmw posts its best sales for the month. the german automaker sold 19% more vehicles last month than in the previous year. volkswagen has applied to set up its first car plant in thailand withlp narrow the gap toyota in southeast asia. the carmaker predicts annual above average. philippines at some of the smaller countries in the area as well. vivendi can choose between its two offers for the company's unit. one company offered more than 11 billion euros in cash and a 43% stake in the company and one offer. one is more than $13 billion --

13 billion euros in cash and a 25% offer. >> you have three options. illegal. that is what jpmorgan is that -- that is what russia is going jpmorgan's decision to block a transaction. ryan, talk through what happened. >> jpmorgan blocked a payment from a russian embassy to a russian insurance company. $5,000 isn't a lot of money, but the foreign ministry says this is a legal, this is absurd. this runs counter to international law, and it's a hostile action. the foreign ministry appears to be threatening countermeasures that would he threatening the united states mission. i don't know whether they are talking about a financial sense

of the united states mission in russia. >> it's actually quite telling. it's how you interpret it. understand whether this means people ratchet up sanctions. >> we don't know just yet. jpmorgan has said they are a financial institution. they are subject to regulation. they clearly think they weren't allowed to carry out the transaction. so they are at least a partial stakeholder. this is the only russian bank ever to be sanctioned by the u.s. government. the question they were asking themselves is at what point does or the property become subject to sanctions? things are pretty clear. if you have more than a 50% itself is also

sanctioned. >> that is a fascinating story. they queue. up next, we sit down with the chief executive of spain's biggest bank. ♪ ♪ .

>> welcome back to "on the move ." i am francine lacqua at bloomberg european headquarters in london. we are 30 minutes into the trading day. that see how the markets are shaping up. most of these european stocks have been climbing. they were climbing two minutes ago. now a lot of those have seen a reversal. the ftse is down, the cac 40 is down. investors await reports from the u.s. that may signal that economic recovery is gathering pace. that is what investors want to know. we will get on to that very

shortly. let's dig a little deeper into the main stock movers. manus cranny is at the touchscreen which your top three stocks. >> let's have a quick look at some of the geography. over in chile, this is the area where you have the 812 magnitude earthquake. -- 8.2 magnitude earthquake. north of the country, that has let'sact in terms of -- have a look at some of the movers. copper is up. minors are rising. belize, this is the biggest producer. copper is hitting a three-week high. those are the three movers. you are also seeing strikes taken in south africa. you have seen this earth impact in chile. it could be a squeeze across the spectrum. cranny with, manus the main stock movers we are

watching. these are the bloomberg top headlines. u.k. home prices rose for a 15th straight month in march according to nationwide. london property values climbed to more than double the national average and were 20% higher at the end of the first quarter. show that japan's inflation rate will be 1.5% in one year and rise to 1.7% in three years. that is according to a new bank of japan survey. the central bank may fall short of its 2% target. the readings show that prime minister abe's success is fueling inflation expectations. the foreign ministry of russia is calling a move by jpmorgan a legal and absurd. the bank block payment from the russian embassy in kazakhstan to an insurance company. says it is seeking guidance from the u.s. government about processing future transactions. a strong bank ready for growth. that is the key message between

-- behind carlo messina's plan for intesa sanpaolo. he is with me now for an exclusive interview to tell us more about his mission. great to have you on the program. thank you so much for joining us. last week you presented a plan that follows some of your rivals , shoring up the balance sheet, getting ready for the asset quality review. that was well received by investors. >> the point of the plan is that we wanted to focus investors that we are the strongest bank in europe today. , being thean bank strongest bank in europe, stronger than french, german, havesh banks because we capital of 8 billion euros. we have strength in capital. >> we still talk about the italian discount. because of the politics. control,elds are under

but there is a possible danger. what are investors asking you? it is possible to see a recovery in the economy. there is a reason why intesa sanpaolo shares have increased in the last two or three months. the view is positive on the country. >> you said you are the strongest european bank now. investors are taking that message on board? ask -- >> they are following the messages that we are the strongest bank in europe and we have an option for growth. in banking, asset management and insurance businesses. >> the share price has already gained so much. how do you explain to shareholders where you're going to get more value in terms of

shares? .> there is a proposition for our target dividends, 10 billion euros in the next year. we are well above 12%. our other option is to give extraordinary dividends as soon as the targets for capital are set. it could be another 8 billion euros. >> tell me about your nonperforming loans. we understand that you are in negotiations to sell part of your nonperforming loans to certain entities. give us a flavor of who you are negotiating with. >> in the bank we decided to create three banks in won. one is for the new growth, the other for core growth and the third is to dispose assets. if there is one i consider less -- on this part

of the balance sheet, we are negotiating with some other parties. u.s. investors that are interested in italian assets. >> this means that you are on top of everything. if you manage to sell these nonperforming loans, the bank can really move ahead. make extrae also to recovery. nonperforming loans could be also a source of making higher returns. consideringecide, that we are recovering. outast week, when you came with a plan, a lot of investors say it was a great plan but it is also quite conservative when you look at your estimates for the economic recovery. is that your feeling as well? could you do much better than what you put on the table? >> there is a conservative

assumption in gdp and interest rates. it is so that we have extra revenues embedded in our business plan. i wanted to create a plan that motivated people to deliver action. if you give extra environment of assumption, you would have from the action of the people. the plan is a bottom-up plan. >> we had a conversation in favos -- davos about this. how do you motivate people? how do you make sure the whole bank is behind you? have you seen the fruits of this? result of the the process of the business plan. giving each person a portion of the business plan, a mobilization of people within the organization. i am seeing a very good result in motivational people within

the organization. i consider people as key strategic assets. either the u.s. is not going to buy as much as we think, europe possibly being again at the bank of looking up -- at the brink of blowing up. the measuresnsider for my business plan. motivated, i think they will deliver the business plan. the environment could be another important sector in improving the plan. >> nothing about currencies? betweenelation euro/dollar is critical. forex now a very conservative approach.

have higher gdp growth in europe and italy. >> the link is so difficult to understand. we speak to foreign exchange specialists every day on the program. a lot of them don't understand why the euro is still so high. is as the ecb acts, there danger it will remain at this level. >> it is important for the ecb to move toward a policy in which it is possible to diffuse the impact on forex exchange. the real crucial point is more important than quantitative easing. you.also want to ask this is a discussion that has baffled us a little bit. jpmorgan and russia. payment from the kazakhstan embassy of russia because it was meant to involve

a subsidiary of bank rossiya. do you have to deal with anything like this? to consider that sanctions are coming from u.s. and european authorities. my bank is not involved. with theseaccounts individuals. hope this does not become a war in the transactions field. this would be a problem for the transactione economy. >> you have a team working on it? >> there is a team. , it is aortant european role so we have to respect the rule.

>> carlo messina, thank you so much for now. we will be talking about italy next. the ceo of intel the sun, stays with us. on one of we focus italy's most famous exports, fashion. we hit the red carpet to talk business with some of the runway's top designers including valentino. details are next. ♪

>> welcome back. i am francine lacqua and london. ons is "on the move" bloomberg television, streaming live on bloomberg.com, your tablet, phone and any windows phone as well. carlo messina is chief executive of italy's second-largest bank intesa sanpaolo. let's stay with italian businesses but take another angle. fashion is one of the biggest exports. our european business correspondent was on the red carpet. i guess it was fun. you also spoke to some of the top designers and models. >> it is big business. the glamour of italy came to the london streets last night.

we had all the designers, poultry and got on a -- dolce a valentino. really trying to pinpoint italy's prominence in the fashion world. ever since world war ii, elizabeth hurley, audrey hepburn wearing salvador ferragamo shoes. those are the things that brought italy into focus. many still feel that it is one of the top places to go for fashion. there has been concern that it is losing its weight to london and paris. milan is still front and center. elizabeth hurley, the british fashion icon who wore that dress sace, she is still a big lover of italian fashion. >> i think we all associate fabulous dresses with italy. designers here

tonight are among my favorites. >> she was in, late last night. cavalli last- in night. >> talk to us about dolce and gabbana. >> i was surprised by this. many have been concerned about andy lee losing its weight. maybe not the known new talent. gabbana himself, what is more glamorous? london or italy? >> the fashion in london is more glamour then italy. london is an inspiration for us for a long time. we take inspiration from italy and mostly the south of italy. it is very popular.

who discover the south of italy a long time ago? it was the english. >> the british discover the south of italy. how dare he say such a thing? him who he would most like to dress in the world. he was saying, i don't want celebrities. they just want the money. i just want the people on the street to where my clothes. being a little unpatriotic. >> they are great to talk to. scandals andt of there was talk at some point of them possibly moving to london. maybe they are trying to woo the british public. thank you. caroline hyde with the latest on this fashion event. carlo messina still with us for some final thoughts. there is a lot of strength that italy has. over the last maybe two years, it was completely forgotten because the political situation was so unstable.

now even if we don't have government for five months it seems investors are cool with the idea that italy will sort itself out. is this your stance as well? you talk about investors being relaxed. renzi as a good leader for italy. track on delivering. ecb action is considered very important. we are seeing signals of recovery not only in the export related or luxury and other fields but also in the internal demand. we have 8 billion euros of savings from italians. it is something like 50% of gdp in our accounts. we are seeing a signal of coming back to consumption. 500 basis points to

200 basis points, people are feeling richer. the are also confident on recovery. >> how concerned are you about the specter of deflation? probably the most dangerous thing for any business. possibleould be a difficult situation. way to can have some reduce these risks. youarlo messina, you say are the strongest bank in italy. >> in europe. >> absolutely. i speak to a lot of investors. the europeank at spectrum, they want to invest in a lot of european peripheral countries such as italy and spain. do you think 2014 will be the year of intesa sanpaolo and an italian banks? >> we will come out from the asset quality review.

i am sure that intesa sanpaolo, this will be a great year. >> thank you so much for joining us, carlo messina, ceo of intesa sanpaolo. "the pulse" is coming up in less than 15 minutes. i am joined by guy johnson. we will be talking tech, lufthansa, a packed two hours ahead. >> we will also carry on with this conversation that you have been having their. bruno is joining us from portugal, the secretary of state there. that is more of a bureaucratic role within the portuguese set up. interesting that this country is about to exit its bailout. we will talk about the prospects of that, whether or not the country needs some additional financing guarantees to keep the ship even. we will talk all about that. we will talk a lot about europe. the french story is very interesting. we need to talk about lufthansa.

400,000 passengers being affected by a three day pilot strike. it tells us a lot about whether this european story is. a lot of people having big problems trying to fly with lufthansa. does it points to the fact that the locals are going to have a huge advantage moving forward? plus we are going to talk about the conference in san francisco. plus amazon, big announcement later on this evening. >> looking forward to it. guy johnson with "the pulse" coming up in about nine minutes. it is a bird, it is a plane, it is a superfast train. we will tell you what superman 3 can tell us about high-frequency trading next. ♪

eight high-frequency trader has delayed its ipo in response to scrutiny on the business after the release of a michael lewis book. charlie roseo about alleged rigging in the stock market. >> i don't understand how you have a group of people operating by different rules than the rest of the economy. people could think it was right to organize the stocks as a kind of two-tiered thing with some people having special access and advanced word of prices and everybody else just taking it. it is shocking.

>> you can watch his full interview on "sure the rose" tonight at 10:00 p.m. -- "charlie rose" tonight at 10:00 p.m. london time. high-frequency trading is a complex system. it is a copy of a notoriously bad movie, superman 3. >> michael lewis's latest book sets its sights on the world of high-frequency trading. the kraft only performed by the most sophisticated investors armed with the most powerful computers. it isn't all that complex at all. it was a major plot point of superman 3. remember, that crappy with richard pryor in it. he engages in a little malfeasance known as salami slicing. >> how did you do that? i don't know. wasn employee's paycheck always rounded down to the nearest full sent, which raises

the question, where do all those fractional cents go? priors character takes all those little fractional cents and deposits them into his own secret account. , the individual theft is very small. in the aggregate, it nets him a ton of cash. in many ways, this is a lot like what high-frequency traders do. they buy stocks just before other people do and resell them at a small increase, pocketing the tidy profit. eachpryor's paycheck, transaction is so small that no one would notice or care what was going on. over thousands or millions of trade, it begins to add up. all you need is a high-speed data connection and a computer. just like richard pryor. >> stay with bloomberg tv.

guy johnson and i are back with "the pulse" coming up next. in the meantime, you can follow us on twitter. i will see you shortly. we are waiting on u.s. data early on. ♪

>> grounded. 400,000 lufthansa passengers are left stranded as pilots start a three-day strike. we are live at the airline's main hub in frankfurt. >> a powerful earthquake rocked chile. the event left five dead. we look at the impact. >> microsoft takes on seery as amazon gets set to unveil a new device. good m