lender. their profits down 17%. it is an indication that the first-quarter economy in russia has slowed down. toss it over to caroline. >> my focus is fitness. so is reeboks. they have launched a new immersive concept. they claim it will revolutionize the fitness business. i will bring you an interview with the reebok president. >> looking forward to that. that is what we are watching this morning. european markets -- it is a sentient day. ascension day. markets will see light volumes today. the major markets are open. they are beginning to open up. let's figure out what is happening. our markets editor, manus cranny. >> welcome back.

equity markets are going to digest every nuance that comes through. mr. constancio is saying that that biggest concern is inflation. the money data was tragic yesterday. it heaps more pressure on the european central bank. the united kingdom talking about what the market needs to do in terms of rates and in moving that a little bit higher in taking baby steps. u.s. gdp. on a quarterly basis you will see, an analyze basis you will see a number over 3%. on the quarter a contraction. volumea, the flow of will be lower because of ascension day. ,etlet's have a look. kingfisher misses. sales rose to like

by 11%. not enough to save the day for kingfisher. tesco signing off on their joint venture in china. that was seen as good news for china resources. tate & lyle missed. the conversation that martin will brought out in the equities talking about the need for baby steps, as we look at some of the u.k. exposure sales. -- barratts up 1/3 of one percent. 6721. is cable 1. it is hardly had a major impact in terms of the moving in dollar-sterling. dolalr, even though business investment is declining, the ability to invest is rising. gary: at goldman sachs,

volatility is 40%. 10 year notes have never traded in this narrow range in 35 years. it is get ready for a big pop or a quiet second half of the year. >> thank you. talking of central banks, let's get back to the ecb. they meet one week from today in front for. we caught up with president mario draghi's right-hand man vice president constancio. what is he saying? >> he is not dispelling the charge of action for next week. and expectations are somewhere up there. cb member that speaks adds fuel to the fire for the expectation of action. listen to what he said yesterday. a subtle clue about what the big problem is. >> the greatest concern we now the central bank.

i understand. is indeed the possibility, the risk that prolonged period of low growth and low inflation will create all sorts of risks. >> stating the obvious -- inflation too low perhaps? >> he pointed very clearly toward some sort of action at the meeting that we have next week in frankfurt. what form will that take? rate cuts? a more correlated action? >> if there is not a rate cut next week, the market is going to be incredibly disappointed. 5% expectsurvey, -- 9 a rate cut. that mario draghi speech from monday and the clues are there. he is concerned about small and

medium-sized enterprises. portugal, and spain who are financially constrained. they are unable to get credit. or later this year, will be unable to get credit. if we get anything above and beyond a rate cut, it could be a long-termtro, the refinancing operation. the big question. are they going to want to deliver next week? they have put themselves in a corner. >> they have. promised a lot. will they deliver? it up with the chief investment officer at state street global advisors where he oversees $3 trillion of assets. good morning. non-euron- -- i am a denominated investor, do i want to buy euros? >> you cannot have the timing that precise, but we would

advocate going in the equity space. investors have to be more cautious because on the periphery, there is a lot of good news priced in. for equity investors, europe is much more attractive. >> european equity fund an incredibly good run. has all the low hanging fruit gone? >> i think you have to look forward rather than backwards. if you look at our value-based stockpicking team, they are finding more value in europe here they are focused on price. than in the u.s. there are still eclectic companies. they are not all of the periphery, but they're interesting companies in industrials away from the overvalued areas of consumer staples that we are finding. >> is that finding it harder? two years ago, very easy. now? >> everything is got harder in terms of value-based stockpicking, but it is a relative gain. you are looking for things that are attractive. two years ago the risks were different as well. so i think there is no doubt

there are credit constraints in the periphery. credit growth has been negative. orese were much mjor severe constraints couple years ago. >> say we were to see a 20% appreciation in the euro, how would that change the game? >> that is an extreme prediction that we do not hold. the euro is high to us. the dollar is a good bet. there have been periods where that has been wrong. the euro can see some weakness. it is not all about q.e. you need to see more aggressive action taken by the central bank. >> stay with us. got lots more to talk about. one to talk about some of the rotations and where we should put our money. joining us from state street. what else have we got coming up on "on the move"? rebrand and reboot. that is the goal of reebok. the company is better positioned

to compete. that is a question we will try to answer. el's biggest bruss bank report. the crisis in ukraine continues. refill on hold. -- brazil on hold. ♪

>> good morning, everybody. this is "on the move." i am guy johnson. we are streaming online or on your apple tv. let's talk abouyt stocks.

kingfisher. diy or brick and mortar> diy in the uk doing very well right now. the better weather is helping out the story. elsewhere, more difficult. france in particular. the french are not in the mood to diy. the numbers are suffering. a little bit of consolidation. a special dividend. the stock is down. let's move from do-it-yourself to the banking sector. first quarter. profits missed estimates this is russia's biggest banks an economy slowing and hit by sanctions. let's find out more details about the tough times it has had with hans nichols. atguy, we will take a look the numbers in the second. we will pretend to be able to do

-dollarle-euro translations. this is bad. it is not a surprise why. the economy in russia. this bank is a barometer for the broader russian economy. it's bad. one of their big loss provisions with doubling provisions for future loans souring. so yes, looking backwards in the first quarter, profits were down. 17%. and of that is crimea ukraine. a lot of the sanctions did not hit until the second quarter. if you think this is a reflection of the geopolitical ank could evenrb have a more challenging quarter this quarter in three months. let's take a look at the actual numbers. net income fell to 73 billion rubles, $2.1 billion. that was less than 82 billion estimated. a miss. an interesting point. provisions for bad loans more

than double to 77 billion rubles. nonperforming loans rose. the shares were down .9%, close to 1%. no surprise why. a barometer, an indicator for what is happening in the russian economy, an economy the imf says is in recession. guy? >> hans, thank you very much, indeed. our international correspondent bringing of the latest on sberbank. let's get the view of the chief investment officer at state street global advisors. the emerging markets. where, how are positioned in emerging markets right now? do you see it changing? when you year hans talking about rising, does that make you nervous? >> we are not nervous but we are underweight in emerging markets.

the value on average, the average disguises the companies in russia. around a bubble consumers in emerging markets that has driven p ratios to extraordinary levels. you have to be selective. i would be surprised if he got to the end of year and we were still in the same position with emerging markets. think about where we will be with china, brazil, whether india really drives reform. there will be more clarity by the end of the year. because markets are cheap that will drive into the consciousness of investors. >> where do you -- where is the money going to come out of? >> those are more mature in the cycle. it is hard to know what valuations will be. the u.s. is a long way to the recovery cycle. europe is in the middle, it is

just beginning. it has a lot of margin-expansion potential. it is going to come out of those more mature stories. where fundamentals are unstable in emerging markets. >> the back end of the year. get through the summer. >> i think the sequencing is as follows. k premieris year, ris will start to decrease in emerging markets as people get clarity about economic reform, whether china is going to have a hard landing. but it will not affect heart -- affect ethe cash flows. given that investors look for in a couple years, you will see a change in tone by the end of the year. >> if you take money out of european markets, where would you take money from? in terms of fixed income, which has done incredibly well, and on the equity side. >> it's very premature to talk

about taking money away from europe because the potential for multiple expansion's still there but the earning story has a long way to go. if we see q.e., i think that will be a very strong earning story in europe. the periphery bond markets may be a place where there is not more to go. if you are thinking across asset classes he would say, there is not much to go for their. -- go for there. >> ok. again, as i look at the sequencing on that, bonds come off first. both in terms of treasuries and europe, that is where you start the process. i'm trying to think of how i work my way through the summer. >> the safe haven at the moment is the u.s., from a company earnings perspective and from fixed-income. there's amazing demand for duration. we have been talking about move index. it's more it's the lowest it's been since 1988.

investors are confident about treasury yields. it is not going to last. reallyg short, timing is difficult in these scenarios. volatility is very low. being short fixed income at the long end of the curve has to be incredibly painful trade. it has to be quite determined to start putting that trade on. what will be the key indicators he would look for? you talked about the fact that china data showed signs of stabilization. is there anything out there that i can confidently talk about getting short? >> the long end is not all about the short end. we are not looking at three months timing of short-term interest rate increases. is about what other asset classes are able to deliver in terms of investor capital, the yield on property. when that becomes attractive,

longer yields becomes diminished. it's a long yield inot more -- into more attractive payoffs. that trade is there now. >> ok. when you look at the emerging markets, we talk about the nervousness there has been surrounding africa, brazil, russia. those are the economies that therefore have the biggest potential further down the road. again, when you look at kind of risk versus reward, where do they stack up versus some of the more -- >> we are happy to be a little bit late. from an asset allocation perspective, we look at timing right. it is unrealistic. in emerging markets, we do not mind being late, because there will be plenty of return. processes, investors get

very excited about it. look at infdia. the stock market is anticipating changes the modi will make that will liberate business. i think they're going to happen. we will have to wait longer. we have to see the reality of this changes. same with brazil. price controls, the battle with inflation. we are happy to wait longer. we want to earn that risk premium. >> what you say to people in the markets? again, this is coming back from the timing story. in there signs of froth assets? guys are beginning to tell me they are getting nervous about some of the stuff going out the door. some of the guys in credit markets, off the record, they will tell you they are beginning to see similarities to 2006, 2007, 2008. are we in certain asset classes beginning to feel that forth agai -- that froth again?

>> at the margin, yes. if you look at the total amount of money being put into those things that might be marginal of forthy, it's small. whereas if you go back to the vastbubble era, there were quantities of money so people were being squeezed in. it was ruling markets. haveat the margin, you people being squeezed into fixed. but the absolute quantity of money going in is not large. >> right. rick, nice to see you. thank you very much, indeed. ok, coming up, the return of reebok. we look at the turnaround helping reebok pump up its profits. caroline hyde next. ♪

>> minutes pass the23 hours. welcome back. i'm guy johnson in london. some of the companies on the move. kinko's first quarter profits has missed estimates. retail profits missed estimates and the u.k. and france. sales up 11% in russia. postedwater -- provider million pounds.

it expects consumption to be lower for the year. tate & lyle sees profits lower than last. iner european sugar prices the second half. the company missed estimates of sales and profits today. after years of sluggish sales, reebok is seeing its bet on fitness sprint ahead. millionsny has earned through sponsoring events such as the crossfit games. new workoutunch a concept that it says will revolutionize the fitness business. our european business correspondence caroline hye will tell us about the turnaround. revolutionary? >> it was fun. i am not sure how revolutionary. it is technology beats sweat.

>> really unpleasant. >> i went to tower bridge yesterday. you go into this black room with a leader at the front, surrounded by a club. or a music festival. you do a particular workout theme which is called body jam. routine.itness here i was, doing my dancing. gernally -- generally, the yoga was great. and you are suddenly surrounded by new zealand sunsets and birds flying. they did get you into the zone is what reebok hopes. the main target is going back to its roots. fitness first. this is a company, in 1890 that first developed spikes on trainers. it has always been rooted in running.

it's realizing not to tackle adidas or nike when it comes to basketball or the football. focus on fitness. they are spending hundreds of millions and certainly that is what the president of reebok is saying about how much this can drive the business. >> how optimistic are they? put together all our marketing efforts. we are talking about hundreds of millions of dollars being spent every year in activating this new form of fitness. really physical for the consumer. >> hundreds of millions of dollars they are spending. anming up with spartan race, obstacle course we get electrocuted. half a million people do it. and sponsoring the crossfit games, finding the fittest person in the world. it is a british woman.

not me, sadly. >> thank you very much, indeed. central bank. ended its longest streak in policy guiding is this a puause? we discussed that when we come back. ♪

>> you are watching "on the move ." i'm guy johnson in london. 30 minutes into the trading day. how are things shaping up? let's find out. european markets. it's ascension day. people will take today off and possibly tomorrow as well, making a four-day weekend. that means we will end up with a slightly longer weekend and lower volumes. in terms of the way the mere - the european markets are faring, not a great deal of movement. barelyo stoxx 600 budget. light volume will run through

those continental markets. let's talk about some of the stocks. with manus cranny. over to you. >> diy. kingfisher. they have got the brand in france. russia is doing nicely. the french businesses pulling the stock price donw. . first quarter missed estimates profit missed estimates. the special dividend is not doing enough to raise the stock. the biggest quarterly loss since september, 2011. volumes are 50% of an average day's volumes. when it comes to orthopedics, smith & nephew could be in play. striker corporation could be evaluating potential buys. look, therebank, are a couple of big things going

on out there in terms of banking. we got a note out today on commerzbank. they cut it to neutral from outperform. the big issue is all about n all about the volatility in the market in the second quarter. bank of america missed the 40% up oside on the day. >> manus, thank you very much. let's talk about top headlines. the former nsa agent edward snowden says that america's government's efforts to label him as a low system administrator are misleading. he leaked thousands of surveillance documents. it is no secret that the u.s. tends to get more and better intelligence on of computers

nowadays than they do out of people. i was trained as a spy in the traditional sense of the word. i lived and worked undercover overseas, pretending to work in a job i am not. and evenb being assigned a name that was not mine. >> edward snowden. retail sales dropped at the slowest pace since 1997. held back consumer spending. the drop off follows a splurgein spending. forrussia is callingt unspecified " emergency measures" to halt the violence in eastern ukraine. dozens of militants were killed in a government operations retake of the regional airport. thes stsay on t -- stay on ukrainian story.

terse and tough is the tone of the german chancellor when it comes to the russian leadership. angela merkel said she would not mince words in discussions with vladimir putin. this as she warns of the stabilization in moldova. that eastern european country should not be rced to choose between a relationship with russia and the eu. what was the occasion for these comments? >> angela merkel invited the prime ministers of ukraine, georgia, and moldova to berlin. ahead of the meeting, moldova at the end of next month, and georgia will be signing these association agreements with the eu. this means those countries are looking to the west towards europe and not the east. merkel is trying to prepare, if not the international community, russia for the idea that these countries may be inching towards

europe. she wants to make it clear that this is not an either/or proposition. there was a conciliatory language to russia. but eachno either/or country is able to choose its own path." at the same time, as you mentioned, pretty terse when she talks about not mincing words and not going any further. she wants to send a clear message to putin that is what is happening now, russian troops moving away from the border, is something to be encouraged. there should not be any further incursions. she was to speak as part of the one solidified voice. there is a recognition in her government that europe will be much stronger if they speak in a unified voice. the eu has to figure out who its new leader is going to be in the next 2, 3, 4 weeks. it looks like that will go on to late june. >> leader probably is pushing

the point. but yeah. we are talking about the new president. look, sorry. >> the books person, but you are right. this is the fundamental challenge of brusslels in general. the the president of european commission speed in a voice that is more unified and louder then what the constituent states do? roso's, and more punishing to the ruble than merkel? when angela merkel announce angels, and -- announced sanctions, the ruble died. when barroso did the same thing, it was not the same. >> let's stay with a theme. em's. brazil's central bank maintained its interest rate and 11%. the country struggles to

maintain inflation without jeopardizing growth. it this of course as prepares to stage the world cup. we hope it will stage the world cup. jon ferro has the details. >> if you follow the bank of england, you will be used to the phrase rates on hold. the central bank is hihgh by 375 basis points. infaltion -- inflation is too high. there is also a political aspect to this as well. the president faces an election in october. the of god inflation and growth heading south. that is not a good message into elections. and this little thing called world cup. >> in terms of the world cup -- and i know you are looking forward to it a great deal -- talk to me about whether or not this will be a solution to some of the problems because if you listen and read reporting in brazil, they are getting hacked

off about this. they see this that is highlighting the difference between the rich and poor. they talk about the fact is not generating the jobs they hoped it would. how much of a solution is this? >> the price tag is $11 billion. we've done work on this. we found a piece of graffiti that tells us "taurus to not get sick. -- tourists don't get sick. we do not have stadiums, we have hospitals." the brazlian people are asking, what's in it for us? going forward, the big challenge for this country this summer, i think you know in this country, for england, germany, italy, spain, they go to the world cup and there's a lot of pressure. brazil needing to win this world cup. not just for football reasons but for stability.

because let's be honest, you could see some serious riots if they weren't successful the summer and they spent that much money. >> serious cash being put down is going to be a good investment. jonathan ferro on the story out of brazil. recovered russia and ukraine and brazil. let's tie the stories together. we have the chief investment of -- advance emerging capital. with two decades of investment experience. good morning. >> good morning. >> russia, brazil. earlier onuest on who says he thinks the investment case surrounding emerging markets will turn later this year. inertheless, where are we the investment cycle vis-à-vis emerging markets? are we getting close to a tipping point? what is the story? >> hopefully. this is what we do. we are in the emerging and

frontier markets. it is not just running a hedge fund or you can benefit by being short. a challenginge environment for emerging markets for last couple years. politics have been part of the action out there. from a cyclical point of view, the biggest issue from our view is the fed and the monetary policy in the developed world. that remains the biggest overhanging cloud. we're seeing signs of what could happen when interest rates start rising in the developed world. in 2013. we talk about tapering and the next thing you know you have currencies in india and indonesia collapsing. the fragile five becomes a big theme. where are we with interest-rate movements in the developed world and the fed? we are 12, 18 months away. >> you're talking about the end of this year?

>> timing is impossible. we are investors. >> if you look at a 12 month window. >> yeah. >> you still think, you'll be more cautious in the 12 month window than the six months following the? >> cautious in terms of that speed bump that is likely to happen when the fed starts hikin g. unwinding q.e. is an ongoing process. if that first rate hike, there is a speed bump. we have seen it before in 2003 and 2004. until then you will not see a long queue of people piling up on em. 've just started to see outflows. it is probably contrary in. people are trying to get their toe. oryou are an endowment

pension, you take a 10 or 15 year view. get in now or six-month time, you will not make a huge difference to you. but if you time it more perfect way, i would give it another six months until we get more visibility on what goes on with the fed. interest ratethe hike until the end of next year, it would be too early in the next few months. >> are you a football fan? >> huge football fan. have, does the world cup have a meaningful impact on the investor in brazil? >> we have seen it in south africa. these things have some kind of impact but it is not huge. we are talking about a $2 trillion economy, but when we are talking $11 billion, it is not much. >> you long and short these things. you look at the buzz it generates. >> like the olympics.

comes august -- september, all of that buzz will be gone. as we speak now, the next few weeks, we will have a lot of people in there visiting the country. there is a bit of investment. so come the end of the year, the effects will be different. therefore, i do not see sustainable effects on the world cup. there is a lot of hype with qatar and russia organizing the next couple rounds. you heard the reports earlier. a divide also. more fundamental structural issues that brazil needs. the feel-good factor, we cannot dismiss it. if brazil wins -- part of me. they always have a good team. that could have a positive impact on sentiment. and sentiment drives markets. paperd a piece in the that says that the americans want a slice of the african

economy. >> the americans? the chinese. >> what is the spread between the chinese and the americans. >> the americans are catching up. place.e all over the they look at libya and everywhere. we have been investing in africa 10 years. the front year, pioneers. we always like africa, the middle east. but africa, for me personally, next 10-20 years, that is the best investment story. >> any asset class, anywhere, africa. >> that is we have the biggest growth. growth is important. you talk about the population doubling over the next several decades. and as you see that, and when you start off low, the upside is huge. we're talking about 5% gdp annualized growth. in the next couple decades. you cannot get that in many places except china, if they keep 7%.

but you cannot give 5% annualized. this is a problem for russia and brazil. they cannot get that growth rate. that is what you need. africa has got it because it is a low base. and people talk about africa, the think nigerian. it is a big continent. 54 countries. a huge risk, but the payoff is -- i do not want to put all my eggs in one basket. africa is the place to be. >> nice to see you. e chief investment officer at advanced emerging capital. we are back in two couple minutes. ♪

" is coming uplse at the top of the hour. olivia, what have we got? >> we have got a great show. we will be speaking to martin wheatly. there is a man who has his hands full. he would talk about the latest going on in the investigation into live oil riggings and gold rigging. we will get his thoughts on the u.k. housing market, what impace newt n-- impact might mortgage rules have on lending there.

you will speak at the head economist at deutsche bank. you will get his thoughts on what mario draghi might do at the ecb meeting next week. how and to what extent have expectations already been baked in. there are questions running around. high.the runup too we'll be talking fitness because it is summer. caroline hyde will talk about reebok's new fitness regimen. coming up on "the pulse." >> it does not look like summer outside to me. "the pulse" coming up very shortly. $ next, would you pay billion for a car that looks like this? a company is betting that you will. we will tell you why next. ♪

>> welcome back. you are watching "on the move." i'm guy johnson. for the design minded car buyer who longs for the style of the 1950's, a company called icon cars can meet your needs. the upgrades on the inside of that car will let them charge up to $1 million. we spoke to the ceo. starts]ine >> a 1952 chrysler town &

country station wagon. car basically inspired me to do the build. apir ---eap repair it. we are an alternative transportation company. the idea is to take modern technology and integrate that with more storied athletics, back -- aesthetics. back to when cars were more of the design product. automobiles and desing are -- passion.re my main i want something that behaves like a new car that is a lot more -- active projects

currently from aston martins to lincoln zephyrs and everything in between. we have grown every year for 18 years. a big problem for us, it is tremendously time-consuming to do what we do. ly diversech a wild customer base. the one consistent is it's all guys. andelps them shed work city life. icon is the unique opportunity to be and something that is distinct, unique. but it's not hi, look at me. aren't i special? sitting herei are struggling about why you would not actually paint the outside. i know they are pretty in there pared down version. paint probably would not go amiss. >> i have the feeling if you

spent all that money. at the end of the day, look, i got a shiny new car. you drove a maserati. what was the last when you drove? >> a lamborghini. they are not mine. we digress. >> markets are closed. that's the tag line. the money supply numbers -- you have come back into focus. the money supply numbers for tragic. lending is tremendous again. when you look at the big move. how are we positioned in terms of the ecb my conversations is that it will be a step-by-step process. over the next couple months, you will get a little bit of action next thursday. cuts. ofp two will be at the end the summer and step three could be the whole new world which is

credit easing, not quantitative easing. those of the conversations i'm having on the sidelines with people who are smarter than me. >> let's talk a little bit about the data story is. >> you have gross domestic product in the u.s. coming out later on today. that consensus is that you will see a negative number on the corner. we have talked till we are blue of theface in terms weather. you will still see growth around 3%. the question is what happens with the housing market. the nice thing is that rates, interest rates have been coming down. that should be -- should put a nice floor on housing numbers. gary cohen. investment bank numbers in the second quarter. volatility is 40% below historical averages. the 10-year notes, the narrowest trading band in 35 years.

that blows my mind. that is the sad thing about my mind. >> that wraps up "on the move." "the pulse" is coming up next. back with that in a few minutes time. ♪ . .

>> clues. the ecb vice president shoots it out be highly anticipated rate decision. >> the financial watchdog. he says that the industry has seen enough scandals. >> the biggest by. for $3h giant is up billion. good morning. welcome. we are live from the european headquartrs