sixth week of gains? 6/10 on theout week. we are not talking big gains, just grinding higher. >> ryan chilcote, you have the -- zeb eckert, you have the story on thailand's coup. the former prime minister being deposed by the military. the question now, what is the future of thailand? the military is in charge. i will have the latest. let's let's get to st. petersburg, to the international economic forum. good morning. president putin will address these attendees later today. is right. the russian president president will address investors 3.5 hours am now ahead of the presidential election in ukraine on sunday and the prospect of more sanctions next week from the eu and you knighted states. we will ask and the united

-- and the united states. we will talk to a man who has been sanctioned by the united states. >> what else are we watching? >> germany in about an hour's time. that's get a first look at these equity markets for you. futures are a little bit lower through the morning. five weeks of gains we have had. would we make it a sixth? everything is pretty much flat. look at the fx market. euro-dollar continues to grind lower. about .1%. a flurry of german data through the morning, but everyone is talking about france, contracting pmi. the big one today is german business confidence. we are expecting that to be a little bit lower as well. >> let's pick up on some of the top market news today.

james bevins is the cio at ccla investment management. good morning. are you worried that the german economy is chugging along nicely, spain is picking up, france is not, and neither is italy. >> not desperately. disappointing, but in the context of what we have zone, i thinkro we will see a sustained pickup in growth in the second part of the year. i think we should absolutely say , anda second quarter acceleration is in the cards. >> you are overweight equities and underweight fixed-income. fixed-income has been the place to be so far in 2014. why is it going to change from here? whyirst of all, think about is it that fixed-income has done so well? i think the growth will disappoint again in the second

quarter. is that markets are still below rates of inflation. investors are simply burning money by playing the asset card. i do think that there are deflation risks in the global economy. the real returns are absolutely up for grabs in the equity markets, where free cash flow is simply extravagant. >> and on the matter of deflation. the inflation very fears -- s are going toear push the ecb into action in a few weeks time. what is the minimum we can expect and what is the most? >> the minimum is just more talk from mr. draghi. he is the master of making statements without doing anything. he began the premise that he would do whatever is necessary. he has yet to get his check book out and write a single euro for the party. what we will see is a much more concerted program of cutting money rates. i do believe that we will see

quantitative easing. >> we have seen yields continue to push to record lows in the periphery. today, standard & poor's raising spain's rating for the first time since it started the rating slashing process. how low can you go within the goriphery -- can yields within the periphery? >> i do think that yields are at levels that are unsustainably low now. we worry about the italian economy. you and jonathan were talking about the nature of the numbers. i am very positive for italian equities. there is significant upside the -- upside. lower levels mean better buying opportunities. buy when prices are rich.

one has to wait until the short-term noise is over. >> your big theme is looking at the dynamics within the u.s. economy as growth accelerates and the fed has to move from its easing bias to a tightening bias. amidst that changeover, how should one be positioned with regard to asset allocation? >> i do think that solid growth companies in the states are unsustainably high valuations. investors are having to pay too much for the solid names. i think we should be looking for companies that have real long-term growth credentials but are cheap on the basis of free cash flow. google is a name that should be must have. our attention to a boost in confidence to the eurozone recovery. standard & poor's raised spain's credit rating one level, the

first time they have increased spain score since stripping the nation of its aaa grade in 2009. joined by standard & poor's head of sovereign rating. good morning to you. thank you for joining us today. >> good morning to you. >> is the worst over for spain? this is the first time you have raised it since the cutting process again in 2009. is the worst over for the spanish economy? >> well, in general, in the euro zone and the periphery, ratings have been stable for the last two or three years. that has to do with finding a bottom. it also has to do with the policy initiatives to address the bottom that become more address -- more robust. it is the first upgrade since the crisis did begin. in a way, this is a turning point. we should remember that the rating is still at bbb. that is way below where the waiting -- where the rating was when the crisis started. there is still significant risks

going forward. which are mostly related to the extraordinarily high level of leverage in the economy. not only the government, but the private sector has only gone so far in reducing its debt load. >> what important reforms are left for spain to implement? we are talking about the structural side. >> spain has done a lot. the upgrade today is based on our revising the growth of -- the growth prospects upwards for the next two or three years. we believe this is a reflection of the progress that has been made in reforming the economy, particularly the labor market. clearly, if you look at the labor market, the unemployment rate is still extremely high. there is still risk going forward, if it were to continue at that level, that the social fabric would, under increasing strain. now, inbelieve right

the market rates are low, and you just discussed it on your program, there is a little pressure coming from the bond market. at the same time, the frustration of the domestic population, this is an environment where the risk of policy backsliding or complacency rising, so we expressed with the up rate that we have confidence that it will continue. but the jury, of course, is still out. we are entering an election year next year. as we all know, this might change the calculus for governments and all sorts of democracies. >> the ratings company behind the bond market, the level of yield in these countries, the spain cup -- the spains, the greeces, and they say the likes of you, standard & poor's, are

behind them. is that fair? what do you say to your critics that you are late to the party in upgrading these countries? times,ve said plenty of including this program, it was standard & poor's that was the first one to bring the ratings down a decade ago on the periphery. this is when the markets continued for two or three or four years, in some cases. the ratings have been holding relatively steady. we have lowered the rating multiple times, but it was called -- it was always kept at investor grade. if you look at what has gone on in the market during the height of the crisis, what you would see is that the rates went down to a level that would signal that there is a real default prospect. tendencyrkets have a to over and under should -- undershoot. whereas the ratings have been holding steadily. we have seen an approach to the

fundamental values. one thing to keep in mind, the nominal yields are very low. if you look at the real yields, they have come down as well, but not as much because of the deflationary pressure that we see in parts of the periphery. that makes deleveraging much more difficult. some higher nominal growth because of high and inflation. >> how much do the yields across the eurozone reflect the fundamentals within these economies? you touched on spain and the rhetoric of the ecb and its president, mario draghi. >> well, it is obvious to see that the ecb has greatly contributed over the last two years in bringing the rates down from the precarious levels we had at the height of the crisis. omt, of course, is the key

acronym to mention here. not solved this crisis. the ecb can provide liquidity, the foundations to gradually overcome the financial markets in the euro area. the heavy lifting has to be done by the national society. there, it is right to step back what has beene achieved, especially on the budget side. if you look at the adjustment across the periphery, it is without precedent in oecd history. that has been undertaken in the most affable circumstance of prolonged recession, high unemployment. some respect and credit where it is due. >> good to chat to you. thank you for joining us today after you announce an upgrade in spain, the first since you started the cutting process many years ago. the head of sovereign ratings at

s&p. today's news on top market themes, james bevan, chief investment officer at ccla. there is only so much the ecb can do. >> quite right. the markets will do a lot. , it isn of liquidity interesting. spain has a huge unemployment program -- problem. the number of young people who do not have jobs is very hot. >> it is very true. it is a problem for the whole eurozone. let's dig down. you have said that you like the cyclicals. you have said you will be whenioned for the upturn it emerges. digging down to the sectors, within cyclicals, how do we best position ourselves? >> i think you look at companies who understand how to extract free cash flow and set prices.

within europe, i think we should be looking at the auto companies, daimler is a name. some of the airlines, lufthansa. >> and the rotation that we lastssed to lead into the few years are the laggards. i.t., the materials, the energy. >> i do worry about pharmaceuticals. all stocks are being rated on the back of the pfizer-astrazeneca storyboard. there is an expectation that a lot of these will end up being on the receiving end of mna -- m &a. the value creation is a lot less than the current share price. pharmaceuticals have been great friends, but i think they are due for a -- >> you mentioned the pfizer-astrazeneca deal.

they have got to have some sort of resolution or pfizer is going to walk away. is it dead in the water or will a miracle happened over the weekend? revived deal get a on monday. that does not mean it is dead in the water. pfizer, having split into three divisions, having this offshore cash pile that it needs to spend, wanting the beneficial tax terms that are available within the u.k., wanting extra stuff in immunology, astrazeneca is a clear fit. ien if they did not buy now, would not be surprised if they came back at a higher number. >> so do you think now is the time to buy astrazeneca shares? >> i would leave you with the idea that there is roughly 40 pounds of value on the back books. the big issue is, what for?

10 pounds would equate to around $28 billion of sales in 10 years time. the company itself has $45 billion. >> so you would equate half of that for the value of the shares. of expectation in the community of analysts say $28 billion per annum. the company said, no, you underestimate us. $45 billion. the key for me -- >> so buy astra? >> on a long-term basis, i think astrazeneca is excellent value. i am not sure we are going to see any fireworks near term. the rest of the sector are concerned about stretch valuations. >> thank you for putting that into context. james bevan is going to come back. i want to get to one of our top european stories. general electric agreed to give stom time to

consider its bid. how much more time? >> three weeks. june 23, two days after the longest day of the year. that is not really relevant, but we always like talking about the summer solstice. here is the issue. as it gives siemens more time to put together their own bid and take a close look at alstom's books? alstom has agreed to this request by the french deadline to extend the deadline. we are hearing a great deal of confidence from ge's ceo. listen to what he had to say on wednesday. actually, read what he had to say. "you have to trust us a little bit that we know what we are doing." the french prime minister has signed a degree -- a decree. ge has sweetened their deal ever so slightly.

they are talking about an asset swap in the rail signal business. they do not want to give up their locomotive industry. mueller that what ge really gass from alstom, it is turbines, that part of the energy sector. they are willing to live without the nuclear aspect of it, which is so crucial to national security in the french state. >> still with us, final thoughts, james bevan. the meddling of governments. >> very worrying. i do not like it at all. it is interesting. we talk about the astrazeneca as the pinnacle of u.k. technical knowledge. it bought itself from the united states. and the british car industry, absolute success story. largely driven off of tata investment. >> should the government stay out of it? is it right to worry about jobs? >> of course it is right to worry about rmb -- r&d and jobs.

it has nothing to do with who owns the company's shares. tata has made a fantastic investment in u.k. education, people. not by a british company. >> do you think they will eventually strike a deal? is it more likely than alstom-siemens. french government are extremely difficult. people who look at france as an investment area have to know that the government are capable of shooting themselves commercially in the foot. i think alstom will remain in play. very capablew, is of sweetening the story to make sure that they get delivery. vastly-experienced enterprise with a global understanding of the political challenges. >> how do we take it manage of this upturn in m&a.

lotnd i think we will see a more of it. we have 2.3 trillion dollars of spending power coming to take their leverage back. $5.2 trillion of private equity money yet to be deployed. we need to look at companies with solid foundations, good balance sheets that can be leveraged, and commercial logic. i would be looking across a range of injuries. >> always good to be with you. james bevan, chief investment officer at ccla investment management. coming up, the latest on the u.k. ipo to come in at the bottom of its price range. ♪

>> welcome back. this is "on the move." have a look at one stock on the move. not one we talk about often, a big mover on the stoxx 600. it's system received clearance for treatment of pulmonary embolism in the united states. a big mover today, up by over 5%. here are some of the companies on the move today. credit suisse sold $5 billion worth of bonds in its first offering since its bank unit

pleaded guilty to help americans cheat on their taxes. the sale shows that credit suisse is not being punished in the bond market even after moody's downgraded its outlook. -- is gearing back to a single model. it will be sold only in italy. that is according to a person familiar with the plan. last year, models like the spider were featured alongside brigitte bardot in iconic films. ,00will reduce 11,000 to 16 16,000 more jobs. another country -- another

company we are looking at is saga. david is here with more. take to itsnvestors sales pitch? >> let's just say that they were not that impressed. some of it was a case of mistaken identity or a question of saga saying, treat us like a retailer. they were looking at one of the big ipos last year that did really well and said we want to have similar comparables. investors were not as convinced. the ipo is priced at the bottom of the range. it is trading slightly up. 1.85.7 from it is a slight increase. because it was price low, you may have expected it to go a little bit higher. >> the fact that it was priced at the bottom of the range, it is interesting. we had an investor who invests only in stocks, they said they

are not buying this. i think that is telling. we have a company that says are the greyhound. we are reaching out to the market. >> it is a big market. it is a great market. >> it is a big market. the question right now is, are these valuations really fair? i think investors might have a different view from what the company and private equity owners do. pulling their offering. what is going on? >> it seems like everybody is rushing to get out the door. this week was the busiest in london for ipos. nine announcements. and then you had retailers pulling the deal. you are probably going to see more of that weakness. that earningsse growth is not as strong as they expected. money, why wouldn't

they just put it into all of these companies? >> if you look at the performance of companies that have sold shares this year in the u.k., on average, they are down a little bit. >> yes. we are looking at ipo performance. london, they in were up about 24% on average. this quarter, it is 4%. if you are an investor and crunching the same numbers that we are, you might be thinking, why should i put my money into an ipo right now? >> and you expect that kind of environment to continue? >> or to price at the bottom of the range. be a deal it would about double the size. none of the private equity owners are selling. usually, this is a great chance for them to exit. >> thanks a lot. more on saga a little bit later. coming up the takeover in thailand.

national television is being pulled off air. a curfew is in place as the military ruled the nation. we will introduce you to the army chief in charge. that is next. ♪

>> welcome back to "on the move ." i am mark barton at bloomberg european headquarters in london. we are 30 minutes into the trading day. let's see how things are shaping up so far. europe on track to break six consecutive weeks of gains. declines across the board today. spain with its first upgrade from standard & poor's since the downgrading process began in 2009. jon ferro is at the touch with some stocks to watch. >> to stocks and one story.

here they are. the expanded rail franchise, an estimated 200 million passengers a year. go-ahead up seven percent. first group is the company that missed out on this deal. >> these are the bloomberg top headlines today. two troubled eurozone countries have been upgraded as their economies improve. fitch increased the debt level to b and standard & poor's raised spain's credit rating one level to bbb. hasence in eastern ukraine severely increased ahead of this weekend's presidential election. an attack left 15 ukrainian soldiers dead. it was the worst loss in battle with separatists since the crisis began in march. accusesrnment from kiev russia of trying to destabilize

the nation before sunday's ballots. fell after a military coup was announced in the nation. closed the national tv station and a nationwide curfew is in place overnight. for more on this situation, let's ring in zeb eckert from hong kong. just bring us up to speed on why thailand's government reached the point of a coup. remember, it has been months in the making. the protracted negotiations ,etween both political camps deeply divided over the future of their country. the military, apparently, yesterday, decided to move in and seize control. it took the military just minutes to do what the protesters have been calling for months, which is the government to be thrown out. that is what we have now. he army chief staging this to -- coup and in charge.

you see these images from the high army club as this unfolded. it was dramatic in terms of its scope. people flooding the subways and buses to get home in time for a 10:00 p.m. curfew last night. that will remain in effect for the time being across the entire nation. until 5:00 a.m. tomorrow morning. it was business as usual somewhat today in bangkok. no reports of violence or shots fired. troops did remain in the streets. oh testers were told to disband and go home. the military provided dozens of buses to ship them out and send them back to the countryside from whence they came. today, 114 members of the government, the x government -- summoned.ent was seen minister leaving their headquarters accompanied by soldiers who it

is unclear whether she has been detained or where she has been taken. there are many uncertainties now and the only information we are getting is coming from the official statements on the have takencause they control of all television channel and turned off the international broadcast networks . even bloomberg's signal into thailand is not broadcasting today. us some color on the military general who seized power. who is he? what is he like? >> we are talking about a general who is a longtime member of the military there. theas been commander of armed forces since 2010. he is seen as staunchly loyal to the monarchy, especially the queen. in fact, he served in the queen's regimental division in the army. certainly loyal to her and the monarchy itself. remember, this is a conflict that has pitted the rural poor with the bangkok elite, against

the bangkok elite. both sides are very entrenched in their views. we are watching how the foreign community reacts. the united states responded with dismay, calling on thailand to restore its democratic government. australia has responded and its neighbor, indonesia, also commenting this afternoon. militarytood that the sent foreign diplomats today on the way forward for thailand. this is a story we will continue to follow. >> zeb eckert in hong kong. germany's most-watched measure of confidence is released in less than 30 minutes. while germany has seen some positive economic signs, our next guest says the next reading might not be so bright. alexander shuman joins us from berlin. thank you for joining us today. >> good morning. >> when you look at the data, the latest gdp data from germany

, which confirms growth of .8%, it is heavily reliant on domestic demand. is that necessarily a bad thing? >> no, it is not. if you have a look behind me, you can see we have nice weather here in berlin. i think this is a good picture for the growth situation you have here in germany. we are still in good weather. maybe some cloudy days are to come. , the look at our figures risks are in the details and we have political measures that could make the growth here in germany cloudier than it is at the moment. >> talk to me about the political issues. >> yes, of course. we have some pension plans that will rise costs for labor. also, the minimum wage is on the

way to be endorsed very soon. these are measures that are not made to increase the competitiveness of our economy. at the moment, the growth situation is good. what it will be harder for the withny's to keep pace competitors in europe and outside the world. >> that is reflected in the trade figures. external trade actually subtracted .9% from growth in the first quarter. what is the outlook for trade in the coming quarters? figures are still fine, but they are weaker than we expected at the beginning of the year. this is because of the russia-ukrainian druthers that we have and also the pace in the united states is ok, but it is not overwhelming. markets are still struggling

with structural problems. that also means that they will not import as much as they did in the past. >> the euro has come off its highs. is there a sense, a hope now that, with the ecb said to do something in just a few weeks, we have seen the highs of the euro for now? germany, access to finance, that means the interest rate is not a risk. we have the lowest rate of no access to finance for the companies we asked. that means it is no problem. we have strong competition in thesegment of loans to small and medium-size enterprises. of coarse, in other countries, it is a bigger problem. will cope with this problem with interest rate cuts. for my point of view, interest

rates are not the main sector. it is more the business cycle and it is bettering the rest of europe. for is the main driver credit and loans and supply of access to finance. >> thank you for joining us. chiefder schumann, economist of the german chambers of industry and commerce. we will bring the latest ifo ratings at the top of the next hour. we will hear from the ifo president, his first interview of the day just after the report is released. in russia, the st. petersburg international economic forum is in full swing with president them said to address later. ryan chilcote joins us from st. petersburg and he is standing by with a special guest. good morning to you. >> that is exactly right. we have the ceo of russian railways with us, a man who has been shanking -- sanctioned by

the u.s. government, caught up recently in this conflict between russia, the united states, and the geopolitical situation. thank you for joining us. let's talk about the elephant in the room. the fact that you have been personally sanctioned by the united states. you cannot travel there. you do not have any money there, so that does not matter. otherwise, that would be frozen. how does it affect russian railways? >> from the point of view of russian railways, you are journalists and you know that even bad information is good advertising. this point, my modest personality is just jumping. from the point of actual business development, it is not good. there are the speculations and fall seconds asians -- false

accusations. the atmosphere and the environment is going to be deteriorating. >> give me a concrete example of how you have been sanctioned and, in general, this climate of sanctions have affected russian railways. ceos have talked about borrowing costs going up. your rating at russian well is obviously fell. people have talked about the reluctance for their foreign partners to get involved. you work with siemens and alstom. give me some specifics. >> from this point of view, i cannot count any actual result of the sanctions which is helpful to russian railways so far. russia's largest borrower, one of the largest corporate borrowers. have you seen a rise in your borrowing costs? >> this is one of the largest

companies in the world, not only in russia. haveurse, our developments influenced the development of russian economists. we did not see any harm, so far, done by those sanctions. it is not very good from the point of view of eurasians with the business community. for those people, we have long-standing conflicts. it is not accepted. those people would like to continue. they would like to develop. that it is ang one-sided decision. toi suppose it is helpful political atmosphere, . this is not good for russia, america, or europe. >> you mentioned a word

personally. how has the fact that you have been personally sanctioned, banned from traveling to the u.s., any money that you had there would be frozen. you have a son in london that manages money. you yourself work in the united states. what has this meant for you personally? that, atld admit first, i was surprised. of course, to such a person on the ground, that he is a threat , ineems to be a threat diplomatic vocabulary, you would not find something like this. that is very personal to hurt the feelings. as you know, the relationship between states and states and citizens, that is not an appropriate level of discussion.

secondly, from the personal point of view, yes, i am sanctioned. i cannot travel to the united states of america. but i do not have a lot of business there. actually, i do not have business at all except for some excellent companies with whom we are working. so it is not helpful. of pure point of view , i can feel that if i am sanctioned in such a way, then possibly i do something appropriate to the interests of my country, my society. why? because now somebody in washington is trying to say, interests of russian people or , interests ofies

the global society in the first ways, the united states of america. >> i have a bunch more questions. the u.s. says you are a crony of the russian president and that, by sanctioning you, they can influence the russian president's behavior, change the way he is acting in ukraine. andyou call president putin making changes behavior? >> i cannot talk on behalf of the president. >> do you have that kind of relationship? >> no, no, no. we met many years ago and i hope i can consider that he considers me as a friend. the president of the great country, as a businessman, it is very difficult to expect that i will say, listen, yes. this is not true. those sanctions, if they hit their target to influence him

, because his people have been hurt by sanctions, means that they do not understand the person. they do not understand the position of the president of great country. very long kind of consideration. >> there is a school of thought in russia that the role of the u.s. actions is not to change president putin's behavior in ukraine, but that the u.s. wants a regime change. they have decided that the sanctions against yourself and a lot of other people around the russian president are designed to try to eventually lead to that. and that president putin has decided also that that is the goal. when you just went to shanghai and did this gas deal, what we saw was a real pivot to the east. ,ussia has decided, the kremlin

that russia's real partners have to be in the east because it is over in terms of relations with the west because these sanctions, like the ones , areduced against yourself going to be around for decades. what do you think about that? suppose, in the first part, your statement is absolutely correct. in russian society, i do not know about president, but in russian society, those sanctions and the policy of the united states of america are just they want to change the regime. this is my personal opinion. i completely agree with you. i completely disagree with this line because it is not appropriate. we are living in a global world. poweris not any source of who can assume the right to say this regime is good, this regime

is bad. this regime, i am changing. we saw that in some declarations of american administrations. >> this strain in russian-american relations, it is around for a long time. >> yes. >> thank you very much. a very frank interview with the ceo of russian railways, employers of 100,000 people in speaking aboutd the fact that he has been personally sanctioned and his thoughts about that. thank you very much. >> rate interview. we will see you later. ryan chilcote at the saint petersburg economic forum. we are back in two. ♪

>> "the pulse" is coming up in about nine minutes time. olivia will be there. i will be there. we are continuing this conversation. >> we are going right back out to the st. petersburg international forum. ryan chilcote has a host of interviews to bring us, including one with the deputy finance minister. it will be interesting to get his perspective read the economy minister said the threat of more sanctions is just like the threat of using nuclear weapons. it is a deterrent and he thinks the u.s. would never actually use them. a big then we have interview just after. >> a big interview with the head of the ifo. we will get his take on what is driving german growth and

whether or not he is seeing a divergence from before as we saw the disappointing numbers out of france yesterday. >> i hear you are good with code. >> as of today, i am good with code. i have a surprise for you in the next hour. we will speak to the ceo of code academy. >> and someone has set up a website, i am hearing. >> everybody in the world is going to learn code. you'd investors like richard branson. you are going to want to watch it. >> and powdered out of all? -- powdered alcohol? >> it does exist. vice magazine did a big article. gdpoming up, this year, will be helped by cocaine and prostitution. yes, i am not lying. more on that next. ♪

>> italy's gdp is getting a little boost from cocaine. yes, coke sale, prostitution, and smuggling will be calculated in the calculation. this is not april fools. >> it might sound like a joke on the surface of things, but it is going to happen. one of the big reasons is that drugs and the consumption of such drugs is not illegal. prostitution in

some countries around europe. how can you compare these countries when you have one that accounts for those activities and one that does not? to includeeople these things. it is good for italy because you have these things called a budget deficit as a percentage of gdp and the target for them, they want to get it down to well below 3%. the target for every one is 3%. it will boost gdp. >> do we know how big this portion of the economy is? >> it could range from anywhere up to 20% or the likes of italy and spain, could be as low as 10%. what how do you calculate this? that is another part of the problem. how do you included as gdp when it is not a legal activity and it is not -- and it is very hard to cap delay. -- to calculate. you are not going to see a surge in gdp in italy for this because

they will do it for the previous year as well. what you will see is the target reached a little bit easier. >> great story. "the pulse" is next. lots to come. we will get back to the st. petersburg forum. ♪

businesscourts the community. he gets ready to speak in st. petersburg. we are live with one of his key political allies. >> breaking live, german business data. the president of the ifo joins us with his first interview of the day. >> and france asks ge to extend by threer alstmom weeks. welcome to "the pulse," live from bloomberg's european headquarters i