>> 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 headquarters in london. i'm ryan chilcote.

>> i'm so thrilled to get a chance to do "the pulse" with you. >> this is fantastic. we have you today on such a big day for the show. it is decision day for the bank. you'll be breaking down what the g-7 means. we have a rash of exclusive guests. >> we have the c.e.o. of the institute of international finance. he is going to be joining us shortly. >> another live exclusive coming up with ryan. first let's get straight to our top story. the world is watching the e.c.b.. in a few hours draghi will deliver run of the most highly anticipated policy decisions in recent times. he ma i may become the first central banker to take rates negative. last month he hinted that the cut may be on the cards. >> comfortable acting next time. but before we want to see the staff projections that will come out in the early june. >> for more, let's get out to guy johnson, "the pulse" anchor

live outside the e.c.b.'s headquarters in frankfurt. good morning, guy. >> good morning to you, olivia. yes. expectations incredibly high in advance of this meeting of the e.c.b. in the building behind me. we get the announcements and then the press conference. what are we going to find out? let's get the view of barclays. we're joined by a senior european economist there. expectations are high. let's break it down a bit. let's start off with rates. the expectations are we are going to see rate cuts. the main benchmark rate cut. we're going to see a negative deposit rate. how paying risks is this for the e.c.b.? >> i think the e.c.b. has been discussing a negative deposit rate for sometime. also with banks, with -- with the other national central banks. i think the risk at this stage probably legitimated. we also don't expect the e.c.b. to move the deposit rate too deeply into negative territory.

>> they are going to dip their toe in the water here. i guess one of the reason as far as that is they don't understand how the money market is going to react. another reason potentially is the banks presumably will at some stage have to pass this on to their customers. if they don't pass its on, that is going to hit their profitability. banks are short of capital now. you don't want to hit the capital. i guess that is a risk as well. >> that is true. first of all, you can't go too negative. then banks and other customers are store the cash in their basement. unless you tack it. the negative -- tax it. the negative can't become too negative. banks can't pass on those costs. it is probably going to hit the profit margins, particularly in germany. they would charge a little bit more. then they would shift out of the euro into other currencies.

i think that is what the e.c.b. is after. >> a cheaper euro could be what they are going for here. let's talk a little bit about the other options on the table. some sort of liquidity measure. crediting as it is known. we've seen ltro's which is flushing money into the system. liquidity into the system. banks are not short of liquidity. they are short of capital now. rates are so low, maybe so small it doesn't matter. credit easing, will it have any impact whatsoever? >> the impact will be on the argin. again, i think what is important is to offer the banks some other incentive. you can for a long-term -- that would reduce the maturity mismatch for banks. the funding for lending scheme doesn't help so much here

because the official rate will be very close to zero. there is a little bit of subsidy. >> the big story. q.e. or asset purchase program. let's go over asset purchases. as we have seen from carney and draghi. we can't buy huveragee tranches of loans. that is simply not available ght now the problem is s.m.e.'s generate 80% of the jobs in europe. the problem is they have not got the capital they need to invest and create those jobs. how on earth do we get in the situation where banks start lending to these companies again? is it buy buying tranches of assets down the road or is it by saying you guys are going to have to raise capital? you guys are going to have to be better capitalized. you guys are going to have to consolidate. get the banks to fix themselves. >> there are efforts to evitalize the markets.

in the long-term projects, it is very important in the meantime to eally be very strict force banks to raise capital. at this end, -- to extend loans to small companies. >> we're going the wrap it up a at that point. thank you very much for sharing your views. thank you for joining us from barclays. ryan? olivia, we'll be back with more on what we're going to hear from e.c.b.. now back over to you. >> thanks so much, guy. please be sure to stay tuned to bloomberg throughout the day for full coverage of the e.c.b. press conference and the rate decision coming up at 12:45 u.k. time. >> no new sanctions at least for

now. g-7 leaders warned russia it could face another round but didn't g.e.d. agree on a trigger. hans nichols joins us from brussels with the latest. what did the leaders have to say when they came out of their meeting? >> well, angela merkel gave perhaps the clearest statement. one you need to keep talking with russia and putin. she also went the furthest in that she said if russia continues to destabilize in ukraine, that would warrant level three sanctions. she is on the far end of that. she is on the line with president obama there. on the other side, you the french. they would only call for additional sanctions if there is a further incursion into ukrainian territory. the communique is written is there will be additional sanctions if events so warrant or change underground. a lot can be read out of that. it is a fairly strong statement. one note about the dinner, president obama was the first to

leap. after he leapt, they continued to talk there for another few minutes. unclear how much substance you can get done in a g-7 meeting when the president of the united states is out of the room. in fairness, he probably has a little bit of jet lag. the question everybody wants to know the answer to, hans, is will putin and obama have their own separate meeting here? >> president hollande came by and briefed reporters here and said they are going to be at the same lunch. there is opportunity for them to meet. yesterday on the plane from poland to brussels, the white house official were saying nothing is on the schedule. anything can be read into that. there are a whole host of things not on my schedule this afternoon that i suspect could happen. the question is how long the meeting is going to be. we get into this question. i'll let you two american co-

anchors discuss. >> i think it is a meeting if it takes at least two or three minutes to happen. >> is that the watermark? >> if it is just 15-20 seconds. >> i think it has to do with the intentions going into it. >> all right, hans. keep watching brussels for us. >> online retailer asos keeps adding users and driving up sales. today a profit warning has sent shares tumbling. caroline, last time i checked, shares down 40%. why the score? >> i know. 1 billion pounds wiped from the foundation. this is a company that is expanding. well, if you're going to be growing, you're going to be investing and you to sacrifice some profit there. they are saying our margins' measure o profitability will no longer be 6.5% as previously estimated. if you look at the reasons it is the pound's strength in particular when you're selling in europe, this is a company

that sells in china, russia, germany. when you bring that home and the spround strong, there is profitability there. promotions have having to sell some stock aletively cheaply. also there is a bit less of advantageous sales mix. you get less bang for your buck. that is investing. perhaps we shouldn't be all that shocked. when you look at the -- of their share price, it is shocking. this is a company that was once more than 70 pounds a share. it is now less than 30 pounds a share. interest february, we have lost more than half of its market value. >> wow. this is a company i know you have covered extensively that has been a stock market darling. if you they can't evaluation and here it has run up in the past 10 years. it was always going to be vulnerable to any kind of news. >> the higher that soared. 170 times price. if price was 170 times earnings,

that is very heady. this is a technology company. his is a company that is a phenomenon. it is a paradigm shift. it is not an apparel merchant. this is an excitement that was created about this stock. it is a company about warehouses and infrastructure and getting good. >> they are not saying they are going to stop spending. they are going to continue spending. is that a red flag for investors that even given message that we're sending them today, they are going to go forward with their spending plan? >> perhaps it should be something they are more relaxed about. yes, if you're a bit of an -- kind of investors maybe you're worried that you're not going to get so much heady evaluations going forward. when they are stand big their proms to triple sales, it still says we will be the number one

online retailer. this is the company that has to analyze a chinese buyer. how they like to shop. they want to see six different parts of the -- they have to -- six different ways to model twears clothing. in the u.k., you just want to have two different angles. when you're having to be that succinct. each and every market. this is a company that is just pushing boundary. it has 75,000 items of clothing. >> even something for me. >> even something for you. >> it makes me think of amazon. investors keep giving amazon a pass because they are spending so much money on those warehouses. they are treating it like a tech company. not a retail company. >> at lot of people on 2013 saying he is a phenomenal entrepreneur. >> the good news for all of us is that ryan you are not the targeted market. it is really the 18-34.

>> thank you, caroline hyde. our european business correspondent. >> here is what else is on our radar. sprint is said to be nearing an agreement on acquisition of t-mobile. they will offer about 50% stock and 50% cash for t-mobile and leaves deutsche telekom with a roughly 15% stake in companies. it would combine the third and fourth largest wireless carriers in u.s. ink confirms its intention to list n.n. as an insurance unit. it will sell a stake before 2016 and the remarnede before the start of 2017 and plans to have a dividend. more coming up later on in the hour. >> the chief executive says there is no overmay have in asia's hotel market. >> the world's best kept secret.

we have been growing in the pacific. one hotel every five days in the last year. we'll continue doing it that way. >> coming up, bloomberg's exclusive top bankers and policy makers. we'll be live with the i.i.f. chief tim adams coming up after the break. find out what he thinks about the potential $10 fine facing b.n.p. paribas. ♪.

>> now for a bloomberg exclusive, some of the world's leading bankers are in london today for the annual spring meeting for the institute of international finance. the i.i.f. is the industry's leading lobbying group led by tim adams. tim, thanks for joining us. discussing art by the talk to have $10 billion fine against b.n.p. is that reasonable? >> well, i'm going to leave that up to the parties in question. we're here focused on the future. in transition. changing financial services. we're very forward looking. we're at a different phase in the regulatory psych. >> leaving that to them to comment on it. just give us a sense of if it was a multibillion dollar fine,

what kind of effect and i know ou don't want to speak too specifically, what effect would that have on other banks? >> it is another cost. it is a burden on the balance sheets and operations of this and other firms. it is very difficult for institutions to provision for operational risks going forward. but you know, we have been through industry has been through quite a bit over the last few years making enormous changes. more capital. more liquidity. putting in place for the regimes. tackling too big to fail. with all of that in place, with the g-20 agenda, we're really focused top future, providing better services at new markets. >> one more question about the fine. if it goes through, if we see something towards 10 billion, something we have been talking about here at bloomberg, do you see banks pulling out of new york as a result of it?

>> well, i think you're seeing banks, business models changing ll around the world. anking trice being -- ties are being severed around the world. they have to zice which jurisdictions they want to operate. with respect to regulation, global harm onizeation. it was the spirit to have pittsburgh summit. we're seeing the vulcanizeation. rotting off in a capricious fashion. that hurts globally important universal institutions. yes, i'm sure they will have to rethink where they do business not only in the u.s. but globally. >> i'm glad you mellingsed that. i'm sure that is a concern here over this fine or the potential fine. we heard the french president francois hollande saying he wants to speak to president obama about this.

are you seeing an increasingly unlevel playing field throughout in terms of global regulation? i think that you have a number of jurisdictions that have run counterer to the spirit if not the letter of the g-20 approach. a globally harmonized approach. it is up to the g-20 leaders. them be back in brisbane. the australians have done a great job chairing the g-20 this year. i'm in the sure everyone got the memo. you have certain jurisdiction who is decided to kind of ride off and do their own thing. i think it is important for the global leadership to take a harmonized approach. >> thank you, tim adams. president and c.e.o. to have institute -- of the institute for international finance. we'll be back in two minutes. ♪

>> welcome back to "the pulse." it is time for today's hot shots. obama is in europe this week meeting with world leaders across the continents ahead of the g-7 meeting. he found time to hit the gym in

poland. intimidation factor? maybe. security breach? definitely. employees claim it is impossible they are taking the video from outside of the gym. meaning someone was working out alongside the president and wearing a hidden camera. what do you think? i think he is in pretty good shape. >> he looks like he is in good shape. watch as he attempts to navigate he mountains in purr -- peru. he can't always beat the elements. >> on the lighter side of things, summer is of course wedding season. i know it well. i have three in june. every bride dreams of their perfect day. this wedding party may have one too many advertisers at the reception. is anyone else thinking this wedding is going down? >> i think obama still takes the cake with the workout.

check s see your asset with caroline hyde. >> it is e.c.b. day. we have said it until we're blue in the face. what will we come up with? what will draghi unleash? euro currently basically flat against the dollar. 1.36. let's put this in perspective for you. this goes over the past month. it really has lost value against the dollar. why because down go the interests. the benchmark rate lower as well as a negative deposit rate. actually charging banks to put their money with the e.c.b.. euro currently basically nat against the dollar. stocks basically flat as well. we're seeing caution going into today's unveiling of the bank of england and the e.c.b. u.k. off by .2%. everywhere else, look at spain. flat as a pancake. italy on the rise a little bit. generally a lot of caution going into stock market trading this

morning on the back of all of these key decisions coming out from central banks looking at the stocks 600, flat. utilities and healthcare as well. miners.ower side, let's dig into some of the key stock movers this morning. it is the tech darling. not so much about retail. really this is a company that delivered. it is all about infrastructure. it is all about getting product out to you quickly by the internet. it is all about aceos. it is the biggest drop for this stock on record. since it first listed on aim. it is trading up in the united kingdom. up by 30%. another profit warning. another warning. if you're going to get growth, if you're going to get $2.5 billion pounds in terms of sales, you're going to get profitability fall. we'll be back with more. >> up next, g-7 leaders are

prepared to impose further sanctions over its actions in ukraine. we'll have an exclusive interview right here on bloomberg television. ♪

.

>> welcome back to "the pulse." francois hollande says the fine against bnp paribas, u.s. authorities are seeking $10 billion to settle allegations that they transferred funds for clients and violations of trade sanctions. he plans to raise the issue when he meets with president obama tonight in paris. >> the ecb is -- is expected to deliver rate cuts today.

according to two european central bankers, mario draghi will reiterate his pledge to keep borrowing costs low. leaders are sparing russia from further sanctions in favor of a diplomatic solution to the crisis in ukraine. they want they stand ready to intensify sanctions if there is no peaceful settlement. >> time for a bloomberg exclusive. we are joined by the first deputy governor of the central bank of russia and she joins us from the institute of international finance conference in london today, which brings together the world leading influencers. thank you for joining us. i want to ask you about the g7. it is taking place without russia today. we have heard a lot from the

white house about the effects, the consequences of the sanctions against russia, and the threats of more sanctions hurting the russian economy and the ruble. nobody knows better than you about the real effects. give us a sense of how the sanctions and the threat of more sanctions has affected capital flows. and your policies? so far, let me give you the perspective. the sanctions have been in place it produces a lot of our instability and uncertainty. what we are trying to do, we are trying to [inaudible]

environment which returns the currency to the financial markets. this is why we changed our policy in the beginning of march. -- we will increase our interest rate to fight inflation and to preserve financial stability and we believe this policy worked because we see that right now, the ruble is more stable and financial markets calm down quite a lot and we think that with the measures we have in our hand, we will be able to stabilize the

financial markets. also have the ecb today and mario draghi has a very different set of problems and everyone is expecting that he will cut rates while you are hiking rates. you think the hikes that you have had thus far have been effective in strengthening the ruble? we think -- the russian system is not very different from the system of the emerging markets. last year, many of the emerging markets currency receded. declined -- the -- we were ones

of the last. different from the emerging markets central banks. there are changes in the monetary policy of the bond markets. >> i want to ask you about crimea. we got the inflation number for all of russia, 7.6% for the month of may. i know will not be a huge factor in influencing inflation, but the bill for the annexation of upmea, it just keeps going and that means more spending and more money in the economy and that means more higher inflation, right? really.

this is a very small part of the russian budget. do have this challenge of rising inflation for the moment. it is related to two things. some of the facts on a specific markets for consumer products. for example, some of the food , so theynt up globally are moving up domestically.

>> talk to me about how you balance the two things you are looking to do, stem inflation by strengthening the ruble so that you get less inflation and trying to foster growth, which is not really happening right now. how do you balance those two priorities? make clear one thing. is central bank of russia moving the inflationary target. we will use interest rates as our major policy tool. we are going slowly -- growing slowly to a much more flexible exchange rate. this is our goal. we will continue along this goal. we do not have any specific goals regarding the exchange ofes or any specific level

the exchange rates. we had to change our policy because we thought there may be some [inaudible] , but that is it. as long as there is financial stability. as inflation versus , it is a dilemma for many of the emerging markets as well. they face rising inflation and very low unemployment rates. this is a challenge for russia. -- it means the structural changes are needed in bring back growth to

the economy. policy, we are setting our interest rates. i also think that confidence -- >> we are running out of time, thank you very much. continue the to conversation, but we have to move on. thank you so much. first deputy governor of the central bank of russia. she just joined us for that exclusive interview. is it is a big day, -- >> it a big day, all eyes on the ecb. it is decision day at the bank of england.

jennifer ryan, thank you for coming back on today. pressure is growing on mark carney to tighten. it is all but a foregone conclusion that mario draghi will cut rates. what does a stronger pound mean for the outlook of interest rates? >> that eases the pressure of the bank of england. he keeps a lid on inflation pressures. >> low rates for longer? >> there are some divisions occurring within the committee. any signal that inflation pressures are not going to be running away gives them a little bit more confidence that there -- that risks are not getting out of control. >> if that's what the bank of england wants to see? >> there is another issue going on and that is the balance of how growth place out.

consumer lot of spending lifting the housing market and there is a push to move away from that. it undermines or puts roadblocks in front of the project. the housing market is a big source of concern. it could be the biggest threat to growth because it is too hot. the housing market today is enough to prompt a rate increase? >> the bank is committed to the view that monetary policy is the last line of defense. i was at an event last night with richard sharp, a member of the financial policy committee. we look at the housing market across the u.k. economy. it is not just cash buyers in london. it is not necessarily something we can tackle on. >> what other measures?

>> they can do things such as affordability criteria and they can look at what kind of questions thanks ask people looking for mortgages and the kind of capital the banks need to set aside. ryanank you to jennifer covering the bank of england for us. >> ing's big plan, the dutch company is taking into -- it's european insurance public. if the timing right? ♪

>> back in the day, scoring luxury box seats for a big game was all it took to impress a client. now enter this sporting event, where tickets to the game are just part of the experience. scarlet fu has more. curating been five-star sports packages for almost 20 years. a trip to the london olympics for wealthy businessman and his family. price tag -- $350,000. which includes the 18% commission that his company pocketed.

i have my basic wish list. prime seats, hanging out with some of the champs from the 94 rangers team. 15,000-20,000 dollars per person. can i go on to the locker room? can i ride on a zamboni? >> is it going to happen right before the game? probably not before the stanley cup, but if you want to do it .he next day, definitely >> he stumbled on this business two years out of college. he relies these extras were all that mattered. the easiest part of his job is getting tickets. even with the best access, it turns out some things are just off-limits. probably not.

that is a difficult one. he has his routine. his ultimate goal is to win the stanley cup. >> what is up with scarlet fu asking if her ticket will allow her to get into the locker room? >> she asked a lot more pg questions. when you love to get your kids a hockey lesson? that is pretty cool. looks that one for 300 -- >> that one for $350,000 seems a little pricey. looks good luck to the rangers. ing has confirmed an ipo for one of its ventures. they plan to sell shares of its european insurance unit.

this could be the biggest ipo in europe this year. euros.uch as 2 billion >> that does not sound very big. >> compared to the u.s., definitely. >> we are waiting for alibaba. i think it is definitely -- it will be the largest. they want to list at least half the company by 2015. between 6.5 and 8 billion euros. investors seem to like the numbers. a list of their u.s. insurance unit last year. investorsone way for -- different ipo market in the u.s. that?t do you know about

looks shares are up a lot -- >> shares are up a lot today because of that deal. space,medical device they are looking at consolidating and looking at more acquisitions outside the u.s. --they will be paying the u.k. corporate tax rate, which is 21% compared to the u.s., which is 35%. smith and nephew, the shares went up like crazy. they're up around 6.5% again. that -- itcredible tax -- iterson excise is a two percent excise tax.

if the regional investors? who may be likely to buy into these ipos? both investor and retail appetite right now and i think the good thing for ing, it is one of the companies where you have seen their insurance unit do well. .t is not like the retailers down about 20%-- this year. >> questionable what the market will be. it should be treated as a different sector. >> we need to invert our tax status. >> haven't you already done that? the battle for your home, your

smart home. we discussed apples push into the internet of things. ♪

>> apple's highly anticipated developers conference unveiled a new direction for the company, digitizing your home. it will allow you to manage your in-home systems from your iphone or ipod, but will they succeed?

right? interesting, is this apple trying to get into energy? >> this is big news in the connected home world. this is apple trying to own the ecosystem in the home. what apple is trying to do is own little ecosystem and that includes things like security, lighting, and energy as well. >> what are the implications for companies like next? see google make a competitive play. >> rival operating systems for the home? >> what does it mean for energy suppliers? this is an area you might not think, but energy suppliers have

been trying to push into services for the home. providing things that are just selling you electricity. the revenues are falling on the wholesale markets. they are looking for new areas to make money. they will try to compete for this as well. the energy suppliers trying to differentiate themselves, it makes that market a little bit more crowded. >> instead of trying to sell you you aas, they will sell product that will help you manage the gas. >> i was speaking to one of the senior managers at a large energy supplier and one of the things they said, we are trying all sorts of stuff within the home. they will continue to do that. there will be a real battle.

companies like apple and google will compete for that relationship. >> interesting stuff. >> i have one of those moments as i was trying to leave the house, which lights do turn off when he ran out? >> for those listening on bloomberg radio, "first word" is coming up next. guy johnson is that ecb headquarters. mario draghi -- what will we actually see? ?s he going to walk the walk how much further do we go beyond that? that is the big question the market wants answered. it.ill cover

we will bring you the buildup and we will bring you the announcement and the press conference. we will take a break. ♪

>> mario draghi's time to deliver. the ecb may be the first major central bank to take rates negative. threaten further sanctions against russia for its actions in ukraine. >> good morning. welcome to those just waking up in the united states. >> this is "the pulse."

we have an exclusive interview with bill miller. we will get his take on what to expect from the ecb as investors eye the central bank. on our top story. what will mario draghi deliver? the ecb may be the first major central bank to take rates negative later today. the ecb president hinted that a cut may be on the cards. before, we want to see the staff projections that will come out in early june. >> guy johnson is in frankfurt leading the coverage. --re will draghi deliver where drunk he will deliver the central-bank decision -- draghi will deliver the central-bank decision. options asthe

positives and potential negatives attached. let's talk about the deposit rate. cutting the deposit rate may have a negative effect on the euro. that is good news. let's deal with the negative negatives. if you cut the positive right and you charge banks to deposit money with the ecb, they may pass that on to the customers. they may also not pass it on to the customers and that means it would hit profitability. it could also upset the money markets. the ecb is likely to make the cuts to the deposit rate very, very small. let's talk about the liquidity side. banks do not have a liquidity problem right now. they have a capital problem. see sloshing money into

the system, hoping that banks will lend it out to smaller, medium-sized companies. it may do if funding for lending scheme. then there is a problem. with interest rates so low, there is not much of an incentive you can offer banks to , medium-sizedr companies. five basis point is not going to do it. we are expecting something on both of those options. the big question comes along the lines of qe. will we see fallout qe? unlikely at this stage. or are we going to see girardi buyinghi talking about smaller or medium sized loans so the banks could use money to recycle back and the economy. the infrastructure is not in place at this time and there is no commonality as to what that would look like.

there are plenty of things that the ecb can do. there are caveats with all of them. >> expectations are just built up so high. we all think we are going to see rate cuts and liquidity injections. there is talk of asset purchases. this is a little unfair to ask you, how is the market position going into the meeting? i had to read a few things. one note came out last night talking about that the market is moderately short the euro going into this meeting. you could see a short covering rally if we see disappointment that mario draghi does not deliver enough. those that know him know that he is capable of delivering surprises. you can forget the, i'll do whatever it takes speech. one guy that knows him quite

well is jim o'neill. he thinks that mario draghi may go the extra step. >> thanks to guy johnson, live for us in frankfurt. sure tot to --be stay tuned to bloomberg for mario draghi's position. the bank of england is conflicted between mark carney's view and those who favor higher borrowing costs. stay tuned for all of our coverage. the bank of england rate decision is followed by the ecb decision. then we will bring you mario draghi's news conference live and in full at 1:30. >> no new sanctions, at least for now. theyaders warned russia

could introduce more sanctions, but not for now. what did leaders say coming out of the meeting? >> angela merkel called for more diplomacy, more talking with putin. she is on the far end of the spectrum as far as what a trigger should be. if russia continues to meddle a triggerit, should that a third round of sanctions? the view from the french is that it should not. what you have here is an attempt at goldilocks diplomacy. want to give the russians and offramp from this crisis. at the same time, they want the threat of sanctions to encourage positive behavior by the russians and help de-escalate the situation. this entire confab gets transferred to paris later today.

there will be a series of meetings. with the lawing and -- hollande and merkel. they will all be together for the normandy celebration off the coast of france. >> this question keeps dogging us. they will be at the same lunch in paris and then they will be in normandy. are they going to have any substantive conversation or does president obama feel that that is a bad idea because maybe he does not know what president boudin -- putin is going to do next? >> president obama has dropped in on meetings. there was a climate change meeting in 2010, a summit like this, obama announced himself and said, i am friends with mr. silva.

he pulled up his sleeves and rolled up -- and got to work. but the last few conversations between obama and putin have been one-way conversations. it has been a lecture from one side followed by translation, followed by another lecture. how productive would an actual meeting be? all that said, i suspect they will have at least a handshake. whether or not it is more than that, we will have to wait for the readouts after the fact. >> are thanks to hans nichols live in brussels. keeps on adding users and driving up sales, but a profit warning has shannon -- sent shares tumbling. here with morris caroline hyde. -- more is caroline hyde. i have spoken with investor

relations. it is a phenomenal company. today, more than one billion pounds wiped off the market capitalization. all because of this profit warning. the company is going to be increasing sales and increasing in scale. the key concern was this margin. the cut the margin outlook. why pound strengthening? they are getting more of their sales in the u.k., in europe, there is less margin their overall. they are continuing to invest. even though they keep on giving us sales, up 43% in the united kingdom, they were hurt internationally a little bit. 30%. users up

there is a concern that profit is not where it used to be. the chief executive himself admitted it is not what i want to see it. >> how concerned should investors be that the company is going to spending? >> i think if you are a long-term holder, you should be pleased. they have planned to triple sales. but this is all about scale come all about where houses, infrastructure. it is about cap building -- app building. it is about being able to preempt 20 something buyers. it is about investing in that technology. >> it reminds me so much of amazon. this was a darling of the stock market. it had a huge rise. it isre still saying

going to be up 25%, but you see the stock tank. >> at one point, they were being valued at 170 times. now it has valued at 62%. their half of what they were in february, in terms of price. the higher they soar, the quicker the fall. today it is a bit of a selloff. everyone is saying that the chief executive knows what he is doing. he's a serial entrepreneur. he is a very successful one. >> it had to be vulnerable. it had grown up so high. withg up, we will be live bill miller. we will get his outlook for u.s. equities. that is coming up. ♪

>> let's check in on the currency markets with a look at the euro. euro-dollar is at just right around 1.36. it has not gone an awful lot today. everyone is waiting for the ecb decision, which we will get a 12:45 london time. we will hear from mario draghi himself at 1:30. guy johnson will be following all of that on the ground. i'm sure he will ask a question to mr. draghi.

we will bring the entire press conference to you live. >> for more on the ecb, we are joined by stephen gallo. stephen, good morning. there is talk over rate cuts. that looks like a foregone conclusion. you are talking about liquidity injections, asset purchases. what would you like to see mario draghi and outs? >> -- and outs? announce? >> if he can walk away with disappointing with the markets are looking for, having cap the , i thinkapped the euro that would be a job well done. from headingtop it back to 1.37, he would have to follow up a rate cut with something regarding non-sterilization of balance

sheet expansion. that would be the best way to try to cap it there. or he can continue to try to use rhetoric. but the timeline is slim as far as how far that can get him at this stage. >> you don't want him to go beyond the 10-15 basis points in terms of cuts to the rates. >> it is not that i don't want him to do it. it is a difficult situation. the more they stimulate, the more likely they are to see inflows, which causes more stimulus as those flows going to various asset markets. >> there is a risk the negative rates could backfire. >> not necessarily negative rates, but rhetoric or quantitative easing could backfire. that is what the evidence shows. eurozone is one of the only major developed currencies,

economies that is running a huge talents surplus to rid -- balance surplus. we need to think about the credit cycle. at things ing discrete terms. with the credit cycle, central banks need to be on top of that in continuous time frame. the need to monitor it continuously over time. the amount of private sector flows into bond markets and other asset classes and other assets, that is already providing a significant degree of stimulus for growth. >> the lending is already happening. >> the liquidity without the lending. >> not so much the lending, but the growth and asset price, asset appreciation. it may be another complicating factor for them. that may be one of the things causing disinflation forces.

you are extending liquidity to the banking sector and it is being used to purchase existing real and financial assets, that is disinflation area -- disinflationary. if you want to growth, you need to get that inflation into the economy. then you get your higher growth and high inflation. obviously is what he wants to do. he wants to get banks lending again. so far, it looks like it is only raising asset prices. i have a question. exporters would like to see the euro go lower so that they can be more competitive. how can mario draghi actually devalue the euro when he has said he will do whatever it takes? eurozone, it is more difficult than a smaller economy like canada. in europe, most of the exports

are invoiced in euros. over time, if the euro continues to weaken, you may see demand for euro area exports slowly adjust and you may see the boost come to european exporters that way. but it takes a very long time. in the near-term, i think all that they can try to do is cap it. is to keep it relatively weak. that would be their main goal. persistently forcing the euro lower will do a number of negative things, but most importantly, it may cause them to use more policy stimulus, which aggravates the credit cycle, makes their job more difficult than the longer term. it could also spark unrest or tensions within the g20. where would the euro have to be to see that large pickup in demand for euro area exports? you would have to see it persistently weaker on a weekly,

monthly, quarterly basis. >> what is your year end target? >> we think the euro will remain firm. bank'sks feel -- view is that we see dollar callbacks later on losses. based on the near-term and things regarding credit cycles and the various difficulties regarding that -- we think it is going back to 37, 38, even if it weakens today on a deposit rate cut. >> that really is very little movement. what about the bank of england? also a rate day for them. there does seem to be this divergence. butu.k. economy is growing, there are concerns about the recovery on the continent. what is your forecast on the pound? >> in the near-term, very firm.

divergence,k at the what you have to ask yourself, what will rate hikes and monetary tightening due to that outperformance? one of the thing that monetary policy stimulus has done is potentially aggravate some of that credit cycle. if policymakers are too aggressive with rate hikes, even what is already priced into the curve in 2015, they may cause a puffing of the end to that credit cycle or a popping of the bubble too soon, which would be complicating. it is going to flirt with 1.70 for the near-term. the data don't show any sign of weakening substantially. near-term, june, july, august, of course we have the inflation report in august -- in june and july, the minutes may show that one or more members voted for a hike.

that is a relatively small risk. but it is not a zero probability risk that you start to see more people getting worried that rates are too low. >> what is your favorite currency trader at the moment? >> we think that ultimately the ecb will end up disappointing today. the market is short of euros already. we think there is more upside for euro canada. >> interesting. stephen gallo joining us from the bank of montréal. stay tuned for full coverage of the ecb decision. us.tay with we will be talking to the legendary mutual fund manager bill miller. ♪

>> welcome back to "the pulse." streaming on the ipad and bloomberg.com. first-ever open its national energy auction for solar projects and october. -- in october. brazil had previously allowed solar projects in its energy auction.

kkb is aiming to raise more than $96 million in a share sale so that it can buy more projects in europe. about 300 is to own megawatts in projects by 2020. bet onbuffett's powerplant transmission lines and windfarms is poised to pay off. the energy unit of berkshire is designed to handle sudden swings in demand. officers still manually balance their territories on an hourly basis. let's go over to you, ryan. >> obama is in europe meeting with europe -- world leaders had of the g7 meeting. he did find time to hit the gym. is president putin intimidated?

is impossibleit to have taken the video from outside the gym. workingsomeone was alongside the president and wearing a hidden camera. we will be back in just two minutes. ♪

>> welcome back to "the pulse." live from london. i'm olivia sterns. >> i'm ryan chilcote. thefrench president says potential u.s. fine against bnp could hit europe. the french president plans to raise the issue when he meets with president obama tonight at dinner in paris. it is decision day for the bank of england.

the monetary policy committee will announce its rate decision at noon u.k. time. the committee is decided between mark carney's view and a view from others that favors higher borrowing costs. the ecb is expected to deliver rate cuts today. economists plan for mario draghi to cut the main benchmark rate. they also expect a negative depository rate. according to two ecb officials, druggy -- draghi will keep borrowing costs low. guy johnson is live in frankfurt. this is one of the most anticipated rate decisions in recent history. what can we expect? well, i think we can expect something, ryan. mario draghi made a very clear last month that the governing council was comfortable taking action. the question is, what form of that action take?

some sort of rate cut is likely. the question is, how far will they go with the deposit rates? it is likely to be pushed into negative territory, but how far? if they push it too far, it could have unintended consequences. they have to be consequence -- cautious with that one. we are likely to see liquidity measures, probably designed to support sme's. there are problems due to the nature of the low rates at the moment. if he were to do a funding for lending scheme, you have a bit of a problem. the rates are so low that you cannot offer much of an incentive for the banks to lend to medium-size companies. maybe that will not be on the table. maybe we will just see a very long-term refinancing operation with even more liquidity being pushed into the system. the problem is that liquidity is not the problem. the problem is that we have a

capital problem in europe. that is a very big p at the moment. they need more capital. this is where we may start to hear mario draghi talking about buying assets, may be small to medium-sized loans. we need to see that happen before that takes place. you may hear some hints about that. back to you. >> thanks, guy. bloomberg for the latest decisions from the ecb and the bank of england. we kick off with the bank of england at midday, followed by the ecb and we will bring you mario draghi's news conference live and in full at 1:30 london time. "surveillance," tom keene joins us live with a preview. >> it is a very strong 48 hours for us. the european central bank decision with guy johnson and frank for. -- in frank for.

-- frankfurt. we will talk about why the ecb decision matters for those in the united states. for -- dan elkfort will join us. we will talk about the ramifications of what mario draghi does and does not say. then we have the jobs report tomorrow in the united states. >> everyone's expecting a negative deposit rate. will he do something more radical? >> i agree with that. i think the real nuance here --ng into this decision three experts pushed back from the drama of this meeting. they all thought that mr. draghi will be a little light, a little timid. martin feldstein of harvard felt that mr. draghi will disappoint.

we will have to see in the 7:00 hour in new york. >> we just had a guest on his said the exact same thing. he thinks expectations have built up so much that mr. draghi will end up disappointing. i'm sitting next to bill miller. he will be joining us. do watch "surveillance" coming up. >> very good. >> let's take a look at how european markets are trading ahead of the ecb decision. ,> head of the boe decision u.k. trading is lower, generally. we are pretty lackluster. we are pretty flat. spain is trading higher. the uk's trading lower. all eyes in trepidation waiting for the ecb decision. and, indeed, the bank of england a little bit earlier. some changing

sentiment ahead of the european ecb decision. many people have been short, betting that the euro will fall. it is a tiny bit up against the dollar. if you are looking at a monthly basis, you can see how the value of the euro has eroded by basically close to 2% over the last 30 days as this expectation is that we will see a cut in the general benchmark rate, but also negative rates for the deposit rate. banks will have to pay for the privilege of putting their money with the ecb. lula, much being factored in. , muchaiting -- clearly being factored in. much waiting and analyzing. flat as a pancake for stocks. no movement. utilities are up by 0.4%. we are getting a quick look at a particular couple of stocks.

a width of more profit warnings in the air. asos down by close to 30%. they have lost more than one billion pounds in market value today. this is a company that has to invest. smith and nephew is up. eyes it up. u.s. companies wanting to park u.k. n the could smith and nephew be snapped up? deutsche telekom trading higher. could it be getting a windfall? we are expecting a bit of a deal. sprint is eyeing up the fourth biggest player in the usa, t-mobile. georgia telecom owns -- deutsche telekom owns part of t-mobile. >> let's bring in bill miller.

bill, thank you for joining us. let's start with what you like to see mario draghi do. it looks like a rate cut is a foregone conclusion. do you want to see something more radical? >> i would be surprised if he surprised people. they are trying to walk a fine line and try to bring the economy back. longer-term, he would like a lower euro, stronger growth. he can clearly get a lower euro if he wants it. it is a question of bringing it about. >> do you think he is too late? >> they are probably a little behind the curve. i don't think that is so bad. one of the problems is if they get too far ahead of the curve. i think he has managed it very well. >> talk to me about the ukraine crisis. how did your bets play out? >> we have a high income fund.

ofy take advantage dislocation in fixed income markets. the ukraine bonds that were due to a 40% yielded to maturity, even though the imf was clear that they would provide a bridge package to meet the liquidity. it has worked out well. >> how well? >> they are pricing about and they will make the payment. the gap is closed. >> what is your outlook on the market in russia? >> we actually bought some russian equities. >> which ones? >> right in the middle of this dislocation. that is for the income fund. we bought kiwi. it is up 50% in the past month and a half. >> do expect this to be a long-term play? >> we are long-term investors. the question is all about price and value. >> what is your outlook more

generally? >> we are not invested that much in europe. we are mainly a u.s. equity investor. most of the assets are in the u.s. we are looking at targets of opportunity in europe. we bought fiat late last fall. that is working out well. we have a company here in the u k that is a mobile payments company. hear.id is good to more about fiat. it has done well since when you bought an. -- in. more recently, the stock slumped. do you still think the ceo has what it takes? there was a lot of talk that he is a finance guy, but not necessarily a car guy and that he does not necessarily have the right mix of cars to deliver on the profit targets. >> he has done a great job at fiat. they will be transitioning to a new ceo.

i think the plans are ambitious, especially the plans for alfa romeo in the u.s.. a think the plans for maserati are solid. the chrysler jeep sales have been continuing to surprise on the upside. cash will flip positive and a half or two years. they do not really need to meet the five-year targets for the stock to do well. >> one of my favorite parts of the puzzle is with fiat because they bought chrysler, that means they will be making cheap. they have a plant in russia. >> you will see an italian ceo running ia a company producing former military u.s. vehicles and russia. that gives me a lot of humor. the company is changing its business model. the co-ceo came over from visa.

you can monetize it. in subscriber base they are targeting about 200 million subscribers. the company is worth about 50% more than where it is trading. >> the former head of the said that there is a divergence where is the u.s. economy is growing. the recovery seems to be stalling out a bit and i could create volatility. are you concerned about that? are you looking to play it? >> it is really interesting that you mentioned that. the residual he felt low volatility leads to high volatility. that happens to be not true, as a matter of them." record. -- as a matter of them."

empirical record. volatility leads to high volatility. even though people find that hard to accept. people are saying the last time we had volatility this low was before the crisis. glad to hear you are bullish on that. stay with us. ♪

>> u.s. markets are trading near a record high. the s&p closed at its highest ever wednesday. will stocks keep going higher or are we hitting a top? we are back with bill miller, a fund manager who beat the s&p 500 for 15 years. thanks for staying with us. a great year last year. ais year, even though we had record high, stocks are stagnant. why do you think there is more room for equities to rise?

rest on threes foundations. liquidity, growth, valuation. when all of those are positive, you always have a bull market. liquidity is positive. growth is positive. the earnings growth will be better than last year. high single digits. valuation is nowhere near as attractive as it was five years -- at 16it is 16 times times, it is a little rich compared to history. my view on the market is that the path of least resistance is higher. bullish --h lee bullish that we could get into a vulnerable position. the rally in treasuries has caught the market off guard. what does that tell you?

>> that has been good for the market. it has held it back. the market has risen. when the 10 year has fallen, the market has fallen. meane have taken that to that there is a problem with growth and the market is worried about growth. there are a variety of technical factors that have bought the -- brought the 10 year back. that is good, because that has held the stock market back. there are a lot of reasons by the 10 year yield would be lower and there are a lot of reasons why could be higher. it is a coin toss, i think. >> you have placed big bets on the housing market. u.s. mortgage lending detracted to the lowest level in 17 years in the first quarter. why are the housing skeptics wrong? >> it is fascinating. gundlach is a --

great manager. every argument that he makes about housing, about why he is bearish on housing come every one of those points is correct. housing affordability is not what it was. mortgage purchase apps are down. people want to rent rather than buy. is that in his thinking those are bearish arguments. those are bullish arguments. companies are miles off the highs reached in 2006. that group has been up one year in eight years. that was 2012. none of theatio -- major builders traded a premium to this year's market. the growth rate of earnings for those companies come even in a sluggish environment, would be

25% in the next couple years. if you want to see bearish arguments, look at the headlines in 2006. record home sales, homeownership at record levels, affordability at low levels. when you get bullish, you can have cheap stocks are good news, but not both. you have bad near term news, but very cheap stocks. >> there is a lot more upside. >> huge upside. , whichates do rise probably we would expect them to if the fed continues to taper, couldn't that cut the legs off a recovery in the housing market? >> if they rise too much. year from thelast spring until the early fall. that very rapid rise in rates combined with the rise in home prices really cut the knees out from under affordability in the short run. on a longer-term basis, mortgage rates at 4% are hardly demanding

. people are getting adjusted to that. >> are you still bullish on bitcoin? >> yes. as i have said, bitcoin could be a zero. it is a really interesting intellectual and technological experiment. my average cost in bitcoin is around $500. it has been rising. after the collapse, figuring that would scare off all of the week holders. it got as low as around $400. i think it is around $650. part of what has helped bitcoin is that you can get a quote on bitcoin. xbt. >> you are still bullish. good to hear. thank you for your time. >> thank you. >> stay tuned. draghi's decision day. the ecb is expected to make an unprecedented move.

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set theche bank has subscription price at 22 euros $.50 -- 22.50 euros. the shares did get a little bit of a bump on the news of the pricing. 22.5 euros per share.

this is as torture bank 62 -- deutsche bank seeks to boost its capital levels. we are waiting for the ecb decision and mario draghi. it has just not moved very much today. 1.36. that is as everybody anticipates that decision from mario draghi at 12:30 london time. ,nd then just after that, 12:45 1:30, we will hear from the man himself, mario draghi. >> a look at what we are watching. let's get out to guy johnson. awaiting the ecb decision. guy. >> will draghi deliver? we are expecting rate cuts. he give us the wrong this tends ever it that he will do that at the last meeting. then where will we go> ?

does he deliver some sort of liquidity options or credit easing? that is probably the central case scenario at the moment. if you want to go to the right of the bell curve, there are other options on the table. will he start talking about some sort of asset purchase program? picking up small or medium-sized loans from the banks? recycling that money into the banks? we will get the projections as well. what will it tell us about cpi? an awful lot happening here in frankfurt. >> thanks, guy. cost to boost cash flow by an extra $5 billion by 2020. il is norway's biggest oil company. this is unexpected. it will be interested to see what the shares will do. >> interesting that they are

upping their cost-cutting targets. what happens to shares on the back of this. it is it for "the pulse." stay tuned to bloomberg tv. "surveillance" is coming up now. ♪

>> this is bloomberg "surveillance." >> actions speak louder than words. this morning mario draghi and the ecb attempt to fight off inflation. -- to fight off deflation.

is a sleep supplies "surveillance -- it is a sleep theived "surveillance" as rangers draw first blood. i am tom keene. joining me, scarlet fu and adam johnson joining us as well. start of the game? >> start of the game, girl hangman, but the rangers did not do it. >> starting overnight with -- the biggest plunge in more than a year, perhaps it signals that growth is still on track for europe, the largest economy. economic data in the u.s., eight: 30 we have initial jobless claims. 9:45, the bloomberg consumer comfort index, at 12:00 we have the change in household net worth. do you feel wealthier? >> like