hans nichols is our international correspondent. we head over to him in brussels. >> thank you. we are here where the dinner concluded with a warning for russia. there is no unified stance on what the triggers would be for a third round of sanctions. today, the topic is the economy and everyone is off to paris to prepare for the anniversary of the normandy invasion. >> thank you very much. thank you to you. that is a geopolitical backdrop and the european markets are opening up. let's check in with caroline hyde. she has the touchscreen in hand. the details on how the market is performing. >> all of the eyes are on the european central bank and the bank of england is going to get the ball rolling at midday. becourse, it is expected to

the ecb and what they unveil, of course. andee the benchmark rates the negative deposit rates that has been outlined all morning. it has been charging back to money and it is all about getting lending going to small business. 1.36 and it is trading a little high. put it in context for how much it is. it has fallen two percent. the expected rate cuts are coming. how the stocks are trading. they are generally in the red and flat. into thepain inching green. italy is up about .10%. withe basically concerned the unveiling of the ecb. data and weng the

are focusing on key things. mergers andsh of acquisitions coming out and another consolidation in the united states. sprint is looking at t-mobile. let's keep a look at ing. they might be selling shares in the insurance unit. remi did worse than expected. we are looking at the ftse as one of the key movers. will it be the likes of them? keep in ion that. also keep an eye on a key united kingdom stock. it was a company that was very thesed on online sales and u.k. sales are up 43%. the profit margin concerns about profitability. we would like to see and are you in a 4.5% going forward. and, indeed, on promotional

activities. there are a lot of stocks to be looking at this morning. generally, pretty flat. as i said, it is all going to be looking at the ecb coming out a little later at 12:45, london time. >> thank you. in the caroline later on program. back to the top story, what will mario deliver? a major central bank will take rates negative today. the ecb president hinted that a cut may be on. see thented to projections that will come out in early june. are in frankfurt and mario draghi will deliver the central bank possibly just interest-rate decisions. looking into the crystal ball, what will he decide? >> well, we have been hearing

from the central bank that something is going to happen today. the question is, what? cuts are first on the agenda. we'll see a negative deposit rate and the bank is going to be charging commercial institutions and that has been a negative deposit rate. it has never really been that way at a central bank. it is a dipping of the toe in the water. a small deposit cut to see what is happening to the markets. these commercial institutions -- all of that is something we can expect. interestinginto territories. what will we see with credit easing? longe likely to get a more term liquidity operation to flush money into the system. thank you try to preserve capital and do not want to lend. they have enough liquidity. maybe the bank of england, which

has a funding ofor lending scheme. you may see something like that. he also may see the way things have happened get downgraded. then, we get onto the interesting story, which is the asset purchasing. the infrastructure is not in place at the moment. they are buying unbilled -- bundled loans and recycling the money back. that is not in place yet. dr. carney and mario draghi have imposing for that -- have been pushing for that. jim o'neill told me that he knows this guy and this guy deals in surprises. look for those surprises. short the euro going into the meeting.

will drop the deliver enough of a surprise to keep the euro going down? rally, it could trigger a and bring it back up to 1.40. >> thank you. we saw it surprised back in italy. let's pick up on the top story desk,with our markets richard jeffrey, he is the chief investment officer. talking's start by about the ecb. what do you think the market really wants to hear? we know that we have surveyed economists that say that rate cuts are priced in and our financing rate cuts. something -- some say it is the deposit rate cut. what will get investors saying that he has really got their backs? always wantts everything and are not going to get everything. there is plenty of room for disappointment. i think that there is immediate disappointment and i think there is room later when people think through the implications of what

is being sad. i do not think the ecb can make huge monetary changes. i do think it is unlikely that they will announce quantitative easing. i think they will look towards the bank of england and they carried out quantitative easing. they got locked into a monetary system that did not stimulate growth. i think they are looking for measures to stimulate growth. is not monetary policy. it is the constraint imposed by the euro. >> and, the value of the euro that they should be focusing on. we have projections around inflation that suggests it will be the primary focus. >> we would like to see a more competitive euro that was trading lower. they may be able to achieve that through a market policy temporarily. i am not convinced. a lower euro would help stimulate growth. >> richard jeffrey of capital management. here is a look at other things

we are watching. mario draghi and his decision with the macro and perspectives on in the program. you can follow me on twitter.

>> welcome back. here are stocks on the move. we have a big move coming. the stock price is down 36%. the company says that the margin

they make at that level on the 6.5%,s is not going to be as they previously thought. it is going to be 4.5% and the tweet to the numbers results in a big decline in the share price today. there is also an online clothing retailer under pressure today. let's move onto geopolitics. no new sanctions for now. the g7 leaders met in brussels and warned russia that they could face another round of sanctions if they do not agree -- but, they did not agree on any specific trigger. we have the latest. of a trigger and what the trigger should be for a third round of sanctions was a source of disagreement last night when they had dinner. today, the conversation will focus and shift on the global economy. then, everyone is off to paris to prepare for the anniversary of the normandy invasion.

frenchrview was given to television and here is what he had to say. he accused the united states of being a big aggressor. the mostuntry with aggressive international policy to protect their interests is the united states. russia has almost no military presence abroad. there are american bases everywhere. wherever they go, they decide the fate of others, far from their borders. exploiting putin is differences within the group of seven. they came out with a warning and not much more. vladimir putin has meetings planned with david cameron, angela merkel and francois hollande. the plan to isolate vladimir putin appears to be not working. >> what we know about how much time resident obama vladimir itin have spent together? as

understand, they will attend a lunch tomorrow. whether they actually me, just the two of them -- according to francois hollande. inhe just stopped by brussels and said that it is up to president obama and vladimir putin. we know that they will be within those proximity. whether or not they pull each other aside for a formal meeting is the question at this point. yes, they are going to talk. shooting daggers across the lunchroom table -- that does not understand how some its work. president obama will be speaking later today after he speaks with david cameron. one other point on that is that he warned, as he continues to warn, of the damage caused to the european economy by a potential sanction for bnb.

top of hisy on the mind. thank you very much. stay with us for his reaction to the top markets. richard jeffrey. let's go back to politics in a moment, if we could. i want to get your reaction to what was a profit warning coming down the, who brought expectations on their margins. the thing at the overall retail sector and the united kingdom and international, because this is international business, is there anything going on that justifies a big move in the share price? is this something around markets reevaluating the stocks? what i think it is both, isn't it? if you have a premium rate and you do anything to disappoint or undermine confidence, then, you will get a significant reaction. at the same time, look at the background and it is

competitive. the internet increases competition within retailing. it does not reduce it. there is always pressure on margins. it is surprising to see a premium drop in rates like this. people are getting suspicions that growth is going to change. but let's go back to local politics. yet fascinating conversations about the ukraine and a number of other issues. transatlantic relations. relationships between france and the u.s.. of these tensions, mostly around the ukraine, the markets do not seem to be moved. it bounce back a little bit. do you think investors are complacent about geopolitics at the moment? but if you want proof that people are complacent -- >> if you want proof that people are complacent, we do not know. what we can say is that commodity markets have had a

surprising little reaction to the ukraine and elsewhere. that if you take a step back from this and you asked yourself the question why, the underlying reason is that we are seeing an ongoing recovery in the world economy and it is slow and stuttering in europe. it is still a recovery. there is liquidity that has been injected into the united states economy through quantitative easing that is looking for returns and a market-based return. that is really supporting markets and taking investors through the crisis -- many-crisis that we are seeing on the political front. what is there too much faith in central banks doing what it takes to support the investment? do you think they need to have more faith? >> given the fact that central banks have managed 10-15onomy over the last

years, you might think it is weird that they would play so much faith in them. you have to trust them doing the right thing. >> how little volatility there is. they have been talking about complacency and markets. -- >> itrries the worries the federal reserve that there is a lack of volatility. i think it is going to be quite difficult while there is so much liquidity in the system. if they start to withdraw the liquidity or hint that they are going to withdraw liquidity, that would introduce some volatility. all we are doing at the moment is tapering and the federal reserve is buying a big proportion of bonds. >> thank you for buying -- joining us today. richard jeffrey. we had to break with the stocks that are on the move. asos and -- details of these.

next.

>> welcome back. here are stocks that are on the move this morning. we have all these details on this story and i am joined by a bloomberg news reporter. and by an industry analyst. let's start with this. we have 37% at this point in the trading day. you are helping me put this into an important contact. up by 70 pounds earlier

this year and it has fallen quite away. >> they were perceived as being the ultimate growth story. i think that, along with a lot of internet companies, there was an assumption that there was not any costs associated with that growth. s is about is the costs and the margins not being as high as people thought. down fromgins are 6.5% to 4.5% and they produce a shock and all reaction in the markets. is it strange that it is being revisited in a few days? what's the point is that the background story is that the margins and duct getting higher for bricks and mortar retailers lower than h&m. business that has a

significantly lower margin than other stores in the mix. >> do you think it would make any difference if it was on the ftse 100? they could have qualified. >> maybe. i'm not sure. they may have had a longer-term investor who would not have sold as quickly. >> let's go to you on the stories that we are covering. let's start with the stock moving higher this morning and we heard that medtronic is evaluating a bit. -- bid. why do they want to get involved? >> there are key things. medical device companies are going together. we saw medtronic and johnson and johnson talk about this.

they are dealing with the ramifications of the affordable care act and hospital cutbacks. they need to do that. there are costs that we have seen. taxes and -- >> it is as simple as that, really. you can reverse yourself into a u.k. business and give yourself a u.k. tax rate so that there is more money for shareholders at the end of the day. >> that is possibly what they are going to look at doing, as well. they are entering in and we may see the u.k. taxes. if you look at the 14 billion they have, it is outside the u.s. because they do not want to get it in there and pay taxes. >> it is sounding a lot like the m&a stories that we are hearing. we have not seen the particular bid yet. we have heard quite a few of

these deals that are potentially driven by tax, certainly astrazeneca putting up the defense. >> no, they have not said anything. they are open to the idea and the investors seem to like it, given that the shares are up. today, they are up five percent, i think. but it is more than six percent -- >> it is more than six checked the last time i . are we going to see a bidding war taking place? >> that would make life a lot easier. our understanding is that they would. see somethingy from medtronic if they,. >> ing is the other store you are focusing on today. and are going to an ipo this is not entirely under their control, is it?

they had to do this at some point. >> definitely. they had listed a unit last year and that was more than 80%. this is clearly a story that investors are fond of. they're going to look at listing more than half by the end of 2015. we think they may look at appraising up to 2 billion euros and make it the largest ipo this year. >> we spoke to someone earlier said the board there who that the appetite and i am paraphrasing, the appetite was ripe for this sort of thing. think that they are going to have a smooth ipo? they are priced at the bottom of the range. i think it is a case of mistaken identity. they are an insurer and most of

their revenue comes from the insurance. they want to be a retail company. there is an appetite for a company with a good story. there are so many. in london, we have seen companies this year across europe and the volumes are up. not everybody can get out the door and ing may not have that problem. >> thank you very much. charles allen, thank you, as well. we're going to take a short break. we are a few short hours away from one of the most highly anticipated decisions from mario draghi that we have seen in a long time. we will debate strategy with ricardo and michael. that conversation is coming up after a short break. it is a: 26 in london. stay with us.

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>> welcome back to "on the move." i'm anna edwards at bloomberg's european headquarters in london. we're 30 minutes into the trading day. let's see how things are shaping up. here is the picture for the market. we have a number of very interesting individual stories to dig into but let's have a look at how the overall markets are performing. let's start with ryan chilcote. >> let's kick it off with asos. the u.k.'s largest internet only fashion retailer that opened this morning 44% down. its biggest drop since its i.p.o. in 2001. it clawed back a little bit of that but still a massive hit. almost $3 billion wiped off its

vowel this morning. that is off the back of a profit forecast. the company obviously increasingly dependent on the united kingdom, europe, the united states. also spending heavily on infrastructure and promotion. interesting. smith & nephew up. of course they are the object possibly of a takeover battle between two u.s. companies. it will be interesting to see if that is about them trying to domicile themselves in the united kingdom as we have seen in the past. deutsche telekom, the owner of t mobile. t mobile is in talks with sprint to be aquared. deutsche telekom looking for $40 per share for its stake. we understand it may get something very close to that. the stock is up a little bit on that news. anna? >> thank you very much for that. these are the bloomberg top

headlines. g-7 leaders spared russ cra from further sanctions in favor -- russia from further sanctions. leaders urged russia to completely pull troops from ukraine's eastern border and warned that they stand ready to intensify sanctions if there is no peaceful settlement. francois hollande said the potential u.s. sign against b.n.p. paribas could impact the stability of european banks. they are seeking $10 billion to settle allegations that b.n.p. paribas transferred funds for clients. hollande plans to trays issue when he meets with president bama in paris tonight. sprint said to be nearing an agreement with t-mobile. sprint will offer about 50% stock and 50% cash for t-mobile.

the deal would combine the third and fourth largest wireless carriers in the united states. so let's get back to our top story. that of course the e.c.b. and their meeting today. what will draghi deliver? that is the question on the minds of many investors today it is a e.c.b. may be the first major central bank to take rates negative later on today. last month the e.c.b. president hinted that today a cut may be on the cards. >> comfortable with acting next time. before we want to see the staff projections that will come out in the early june. >> bloomberg's guy johnson is in frankfurt where draghi will be delivering the central bank's latest decision. he is eagerly awaiting the projections and is going to tell us what is expected from the e.c.b. today. guy? >> well, the projections are

going to be interesting. they will tell us about projected c.p.i. moving forward from here. inflation is acting as the catalyst at the moment. the low growth environment is the catalyst to get the e.c.b. moving. the bank will be charged to part money overnight at the e.c.b.. this is a big move not to be underestimate. probably the market is anticipating. then we might get credit easing, some kind of funding for lending scheme. and we may -- just may get some announcement related to the asset purchase scheme. this could be q.e. ala e.c.b.. we'll see what format it takes at the moment. they are not really able to be purchase by the central bank. we need to get it in place. one and two, probably

anticipating three would be very nice. are we waiting is there going to be a surprise? that is the big question. >> are investors going to be surprised? how are investors positioned? how is the market going into this? >> socgen said the markets is short going into this of euros. it is going to be interesting to see what happens on the back of this. if the market is short and you don't get a surprise, you may get a pop up towards 140. we would come back down from that kind of level. that sound bite, kicked around the 136 level. we may get back up to that kind of level again. i have to say, though, jim o'neill, ex-goldman sachs, mario draghi, ex-goldman sachs. the two men know each other. i talked to jim and he said that draghi could deliver today. >> i think this meeting on thursday is going to be interesting and i would imagine at the margin, i don't know there might be a bit further of

a surprise from the e.c.b. because they see kind of operator that has proven by what he said in this building two years ago. >> anna, draghi has delivered a lot with words. the question is does he now have to deliver some actions? he hinted at some action today. the big question is will he go far enough? a, to get the euro a little bit lower and b, to get lending to smaller to medium sized companies going again. they provided 80% of the jobs in europe. we have an unemployment problem. we need to get these companies going again. we need to get the banks lending to them. that is probably a really big job now for draghi and the rest f the governing council. >> thank you. let's continue this conversation about what the e.c.b. will do with the chief european conomist at mizz ewello.

-- if i could start with you, what are you expecting? most economists seem to be expecting rate cuts of some form. give us the detail about what you think will be delivered? >> we have all converges very similar expectations over the past few days. unlike what we had a month ago or so. so i personally complete that they will be capped at a negative level. i'm looking for minus 0.1. i think a larger cut would make some members of the -- uncomfortable. they want to test how the money markets responds to this breakup before doing more perhaps in the future. secondly there is a forward guidance. if they cut very aggressively, it is more difficult to say that the e.c.b. is prepared to do more. over the coming months.

if inflation stays close to zero of goes further down. i think the refinancing rate will be cut to 0.1%. so the bank will narrow a little bit. i think this would be important in keeping rates very close to zero. >> that is all about rates. are you expecting anything outside of the rates? as guy was saying, most people ave already pressed that in. expectations are high. world nk the whole thought the e.c.b. was telegraphing q.e. g.t.o. bonds. i don't think that is case. obviously it is still an option. if unemployment in six months time is still very high and inflation is at zero or negative obviously the e.c.b. will have to consider any options. at this stage they are focusing on more loans to small and medium firms in two ways. bring back the market.

and extending loans to banks. to this turn lend more to the economy. >> something what the bank of london did. >> now the question is obviously at the same time, they are doing review to banking system. the banks need to raise capital. banking analysts think that the main reason why banks are not lending enough is they don't have enough capital. there are too many loans in the periphery of europe. we need to fix that problem as well. the e.c.b. is in the process of doing so . but it took almost a year to deliver the results. we know this will come in october/november. >> are you expecting something -- a similar picture to the one that ricardo said? >> yeah. wrnk it is fair to say that the e.c.b. quite well -- it is not surprising that market participants are along similar

sideline lines. i would say minus 10 basis points negative deposit rate is something i would go as well. i'm not 100% sure if they will indeed reduce the corridor so i could see a cut to 15 basis points and remain refinancing rate. that is possible. also create that q.e. is more something they have on the card for the future and i think in economic policy, it is almost always important that you have a weapon for the future. >> what he does, what he signals is to come in the future, would be very important. with that in mind, it is unlikely that draghi would say something as simple to understand as we are planning to do quantitative easing, even the central banks that have done it have rarely sometimes not used that term. what is the terminology that we're looking for as we watch this press conference to try to work out whether we have quantitative easing coming now or later?

>> yeah, in term turnovers language so far, he always said they would have options open, traditional measures and nontraditional measures, i think nontraditional measures is something which their language includes a european version of q.e. . >> it might include so. other things that he will do today. >> definitely. i think he will make it quite clear that it is quite clear and he spoke in the past about basically three different purposes in which -- different tools for which purpose and he was quite clear that q.e. would be the strongest tool he would use if inflation expectations would drift even further. i think he was relatively clear what would be the variable. >> we're going to hear more about their expectations. that is quite important in in the sound bite we played earlier on, he said we stand ready to move. we want to see the projections first. we're expecting their projections on inflation to

becoming lower. >> absolutely. i think there are two aspects to it. the first one is the focus to this year is way too high. i think the average for this year will be kept to 0.7. perhaps even less. it all depends on whether they make a last-minute adjustment to their projections. i'm sure this week's number came in below their expectations. at 0.5% once again. and then the second point which is perhaps more important from mark's point of view is what they say about 2015, 2016. the excuse for not cutting rates last time was that inflation was expected to rise over 2016, particularly in second half of the year. we know that the horizon for the policys is two years. that was in a sense irrelevant but still used as an argument. i think this time around, even 15-16 will be lower.

the slope of their projection will be a bit flatter and that will give them a reason to cut rates. >> we had jim earlier describing draghi as a operator. he is quite good in these situations. he has shocked the market in the past, comments that he made a couple of years ago and then just last year when he cut rates and markets were not expecting it. what would be a shock today? >> the shock would be either to do q.e. today or that during the press conference, is very clear out the fact that there is more coming. not a conditional statement. >> would that be the shock for you mike snr shake the markets a little bit? -- michael? shake the markets a little bit? >> still not expecting it bu. i would agree with jim o'neill. i think it is very unlikely that draghi disappointed today given what has been discussed this week.

a lot of things have been mentioned. i would not exclude. it will not deliver on each of those ideas. i think they will deliver on the negative deposit rate. especially for the fix income markets, that will be quite powerful. >> gentlemen, thank you very much. ank you to you and ricardo from mizz ho international. coming up, we focus on the bank of england. governor carney's comments on the u.k. housing market will come under close scrutiny in the coming weeks. we'll have details next.

>> welcome back. i'm anna edwards in london. this is move move. investors distract bid that e.c.b. decision. let's not forget the other bank in meets today is the bank of england. we have an analysis what we might hear from the central ank. economists are not expecting a change in interest rates, are they? >> absolutely no change. >> that is essentially all we're going to hear, probably.

what would a stronger pound suggest about the interest rate outlook? >> that is what economists are looking for as far as the impact on the b.o.e. what that tends to do is suggest that is going to keep a lid on imported inflation pressures on the economy. that just alleviates some of the pressure on the bank of england to move sooner for its first interest rate increase. >> this is significant because it perhaps makes life a little bit easier for somebody who wants to not hike rates in the short-term. as opposed to the group within the bank of england to avoid moving towards hiking rates? >> that's right. if you're on the side that is concerned about the slack of the labor market that cease there is a bigger share of slack than perhaps other members of the o.m.c., any inflation isn't going to start running a way from you. it keeps rates at an emergency setting. >> it is interesting. we talk about the role of the

pound. people can spin a strong sterling story any number of ways. we talked about the positives of having a stronger pound because it might reduce imported inflation. if it gets too strong, the exporters start to skeel. >> that's right. that puts a roadblock into the project of rebalancing the u.k. economy away consume spending and towards exports. we have strong growth in u.k. the question is how will that momentum be sustained? there are a lot of consumers dipping into savings. a stronger pound may not be something you necessarily want to see. >> let's talk about the housing margaret. there has been plenty of evidence to say that the housing market is in very strong form. let's put it that way. not strong enough to warrant any action from the bank of england just yet, do you snip >> they commit themselves to interesting rates being the last line of defense. we're dealing with any risk to financial stability in the housing market.

all eyes are on it to see what tools they will use. >> are markets expecting some action from them? they meet later the this months don't they? >> there is a lot of pressure to do something. they will say they have already taken some measures . they have cut back benefits. they have said they are looking at affordability criteria. there is that argument. also they will say what they look at is the whole economy. not just the london housing market. >> thank you very much for joining us. what to watch out for from the bank of england later today and later this month and later this morning, "the pulse" will be here. that is coming up at the top of the hour. olivia sterns joins us now from the news room with a look at the lineup from the program. >> we have a great show coming up today. i know i say that a lot. i really meanette. it is decision time at the european central bank. we will be breaking that down with various economists across the two hours. it is day two to have g-7.

ryan chilcote will be walking us through what that means. plus we have a host of exclusive guests coming up at 9:00, we have the president coming up. he will be talking about that potential $10 billion record fine for b.n.p. paribas. we also have the central bank deputy governor of russia talking about what the sanction means for the russian economy and what prospects are for the russian economy to grow now. plus an exclues wive the legendary fund manager, bill miller. he will be joining us. he runs legg mason opportunity fund. he will tell us why he is still bullish on equities. what he thinks draghi has to do to get going again. >> as when he had to break, the councel countdown is on for the biggest sporting event on earth. we are one week away from the start of the world cup. check out bloomberg's tournament predictions and results.

it provides match analysis for each game. you'll find that on our website at bloomberg.com. ♪

>> welcome back to "on the move." sprint is closing in on a deal with t mobile that could be worth about $31 billion, half in stock and half in cash.

here are deutsche telekom -- t-mobile u.s. as well. this is a lot of money. $31 billion. they have been at each other trying to negotiate a price. of course deutsche telekom, the owner of t-mobile wanted to squeeze as much as possible out f the likes of sprint. they would keep 15% to have entirety of sprint and tmp-mobile u.s. combined. they keep skin in the game in the united states and also getting a big chunk of cash. half of this would be in cash and the other half in stock overall. we don't know about what sort of fees termination fees would be there if the deal fell apart. deutsche telekom wanting more than sprint would like to give. i think what is decided is investors like to combination. they want to see scale in united states.

hen it comes to mobile and telephone, you need money to throw at the investment. this is why -- this is why the owner in particular of t -- of sprint, which is held by -- bank of jab japan, is really trying to woo reag lators saying look, combining number three and four in the u.s., i'm actually upping it. >> regulators have a lot of consolidation to think about. it is not the only asset that deutsche telekom might sell. >> it is not. we're looking at e.u. joint venture between orange and france. deutsche telekom in germany. maybe we'll see a share sale after the summer break. they are analyzing once again what to do with it. >> thank you very much. caroline hyde with the latest on the tell come stays in the u.s. that will do it for "on the move." stay with us. olivia sterns and ryan chilcote

will be back. a few hours away from draghi's interest rate decision over at the euro-zone central bank frankfurt. much more to come on that during "the pulse". stay with us. ♪.

>> draghi's time to deliver. the e.c.b. may be the first major central bank to take rates negative. we're live at its headquarters in frankfurt. >> another warning for russia. g-7 leaders threaten to impose further sanctions over its action in ukraine. >> another dark day for asos. he stock plummets. welcome to "the pulse" live from bloomberg's european headq