>> imposing penalties on russia. >> actions in ukraine have consequences. cease-fire. hamas and israel say they will observe a five-hour truce. daimler doubles its lineup of compact cars with a larger model. sap is raking now. the chief executive joins us for an exclusive interview.

♪ what are we covering? >> is janet yellen going to be trumped in terms of what is happening with russia question mark we saw a -- russia? -- we will talk more in a moment. >> i am looking at the eu and the u.s.. both of ratcheted up sanctions against russia. ofwas the sanction individuals and a handful of companies, and has gotten much broader. we're talking about a lot of companies, some of them very big. one of those companies that has been sanctioned is the world's largest publicly traded

producer. >> web some breaking news for you. sap biggest business software company in the world saying that operating profit was 1.2 4 billion euros, shy of analyst estimates. this is a company that is trying to change itself around with getting a reorganization. they are trying to focus in on the cloud. saying second-quarter software and services revenue [inaudible] we have operating margin ahead of our missed estimates.

where speaking to the chief executive of how much they can push the cloud. we were talking about a team of between apple and ibm. this is about getting people out from the high and their desk am a working from their mobile's and tablets. the software to businesses. >> we keep talking about it but the old model of how these companies made money is clear. we had oracle give us some transparency he for this. thedo you -- how does business model work? >> a business model is about growth in terms of cloud subscription. beene moment -- it had about building software you could access on your premises.

>> what sap is offering is a business solution versus what we need. has the market got that point yet? rex that is interesting. i will be tentative. -- they will be tentative. vast quantities of data and working out what your pmi is looking like. this is something that sap has to be cautious about. move over theto customer base. they are driving clouds up to 2 billion euros. 2.2 5 billion by 2017. executive joining us in an hour for an exclusive conversation. >> european leaders met last night in brussels.

top of the agenda was the unrest in ukraine. and sanctions. the eu agreedid on? >> good morning. this goes a bit beyond individual sanctions. not sure what they call level three which would include broader sectors of the economy. to cut off public europeanrom the investment bank. something that is easy to do because the government owns this bank. the governor -- governments are shareholders. they also said they will use their influence to try and cut off funding from the european banks and development. something they cannot do directly because they need it to agree. this is mostly a symbolic noture because russia does

rely much on the funding. the financing is between 300 million and 500 million euros. >> where we in terms of the blacklist, the sanctioning of individuals and companies? >> before the eu was mostly targeting individuals. 72 with travel bans and asset freezes and only two companies. they're mentioning entities. russian companies. notke the u.s. they are specifying which russian companies. the spotving that to -- diplomacy to come up with a list of russian companies. they are ready to target in the inner circle of president putin. angela merkel said this last night. >> we regret that the new

measures have to be taken with regard to russia but it is fair to say that since the visit to the council and with regard to , nothing much has happened. >> some eastern european countries wanted to go further. possible arms embargo but that is not on the table for eu leaders at the moment. >> that is the story from brussels. true to form at the same time the u.s. announced its own sanctions. madebefore eu leaders had up their own minds. have a listen. the assets ofzing several russian defense companies and we are blocking new financing of some of russia's most important banks and energy companies.

the sanctions are significant but they are targeted. designed to have the maximum while limitinga any spillover effects on american companies or those of our allies. clinton -- putin has responded and he said there will be retaliation saying that u.s. energy companies will suffer. what is interesting is one of the companies that has been sanctioned is the world's largest publicly traded crude producer. another company. they are set to develop what many people call the most important well of the year up in the arctic. one wonders what this means for the relationship --ween exxon and resident

arrosneft. the largest independent gas producer. it is interesting the u.s. novatek.to sanction not gazprom. >> we get a third of our gas not sing soondo -- sanction them yet. there have -- we have lenders lender.third largest big banks. so these companies are effectively going to be denied access, locked out of u.s. debt and equity markets. said this would

affect u.s. banks. debt, almostlot of $14 billion. rex the only thing that rosneft can say. they have these big chinese oil sale deals. they are selling the chinese oil and the chinese are giving them money up front to finance the exploration. they do not need western banks as much as you might think. >> it will have an effect. especially as they get lots out of debt markets. >> let's get you some more breaking news. novartis earnings breaking. second quarter core earnings share, just shy of estimates. the net income figure also

missing estimates. a bit of a concern. vaccine sales fall 13%. consumer health, this is a company that has been organizing. they have a joint venture going forward now with glaxo in terms of consumer. 5%. have seen sales rise a bit of a disappointing picture with some of the headlines we have got. maintainedey have strong innovation momentum. an amazing set of deals that happened. >> the most recent was just the other day. it blows your mind about where they have -- where and how far they have come with tech. fix it is radical. contact lenses are not really cheap to begin with so what happens when they have all these google functions in them? >> and a come with prototypes. five years, these things can be on the market.

divisionehind google x which has been pushing the google glass and contact ounces, they just lost one of the key members. the guy behind google glasses has been moved to amazon, jumped ship. said where does that take futures, it is all about talent and coming up with these amazing ideas. >> a lot of people say that is the point about apple. [inaudible]with we have more with novartis. we have delivered an awesome amount of information. the eu are preparing a new round of sanctions on russia in addition to the u.s.. just what with the impact of that be and europe? we speak to morgan stanley last chief goebel economist. stay with us. ♪

>> welcome back. .umping ahead moscow is facing more sanctions. we have been discussing that. after ignoring an automated from the eu to de-escalate the

tensions in the ukraine. the u.s. and europe will limit russia's access to financing but russia being the eu's heard largest trading partner, that could have a negative consequence for new europe -- for europe. with us this you morning. this is a new step. the u.s. trying to block russia out of financial markets. the eu responding, big corporate names in play here in the sanctions list. how much of an impact might this have for europe? >> it is an important step for europe because we are already seeing the european economy decelerating after that pickup we had. piercing the confidence indicators, business surveys, even consumer confidence being a bit toppish. this is an additional step that could lead to a further slowdown in the european economy.

>> is it confidence, is that how it works? >> it irks your confidence or oil prices. so oil market has been home confidence is the key. >> as tough as the sanctions are a could have been a lot tougher and one of the reasons they are not is countries like italy have objected to ratcheting up the sanctions, going for those so-called sectoral sanctions. is the apprehension of countries like italy, they do not say this publicly, they expressed concern for their that means own countries in terms of retaliation from russia and getting locked out of losing trading. is that apprehension well justified? >> i think it is justified because europe, many countries in europe are exposed to the russian economy. we have to strike a very fine line here. ans is why you will not see

aggressive response. we will not get a diplomatic solution by ratcheting up making them targeted. russia is teetering on the brink of recession does this put russia into recession? >> there has been a fairly sharp slowdown but if anything the first half data we have received , we are a little bit better than expected. there is a slowdown. russia has been affected. i do not think the recession is in the cards. investoris a poll on sentiment and we have some key data coming out about inflation. 0.5% is well below target and clearly the survey respondents are saying we are worried about disinflation than we are about inflation. are we going to see a turnaround, will we see prices rising or is this a relative

normal? >> we are in the new normal for the area. the area is on the road to japanification. the economy has decelerated and credit is still contracting. inks are is a shrinking balance -- banks are shrinking balance sheets. >> do you not -- it is an attempt to counter these things but it is a small step. the main issue is credit demand which is not there because households are deleveraging. this is tinkering at the edges. the only thing that would help to address the deflation is broad based qa and we will not get that anytime soon because of the political hurdles. >> have we misinterpreted, i was reading through notes and just because mario draghi said in front of parliament qa sits in our mandate, you say do not presume that you will get it. that is quite a substantial

call. >> the hurdle is very high. the main issue is the political assistance you have in germany. the ecb'sly within mandate but they will not use it anytime soon. they would rather risk the euro area slipping into deflation. >> day with us because we have more of the world to cover. stay with us. the chief public on a missed from morgan stanley. we will talk china and the changing complexion of mr. cameron's posse in europe.

>> welcome back. we will continue our conversation with joachim fels. this poll came out this morning. man as fari is the as the investors we pulled are concerned. they are more confident in draghi than carney or yellen. yourit comes to allocating money less than one out of four investor said europe is the place to put it which is the same of the number of people who said india is the place to put your money.

peoplee bit more preferring the u.s. what does that sentiment say? >> mario draghi thing does not surprise me. he single-handedly saved the euro two years ago. i can understand that. on the sentiment on -- investor sentiment that echoes what i hear from investors when i talk to them. after your go europe look more attractive because yields were higher. hadave seen compressing, we spanish on yields falling and so no surprise that foreign investors say i do not get bad return and i would rather have to look elsewhere whether it is india or the u.s. >> we had yellen speaking trying to tackle her perception of where asset markets are in the u.s. they were saying certain asset classes were stretched. but now she is saying summer on the high side but generally

valuations are not out of line with historical norms. do you agree the u.s. is still -- investors feel there is [inaudible] questionto the u.s. mark >> the u.s. has the best earth outlook create yellen is -- growth outlook. even u.s. bonds, u.s. treasury bonds are high-yielding bonds. compared to europe or japan. >> let's turn to asia. -- china. you questioned the validity of the data. we have and get 7.5% growth but you are skeptical. ofthey have a growth target seven point -- 7.5%. i think if you look at the underlying data there is a stabilization in the chinese economy but the data they stronged imply a very

sequential improvement between first quarter, second quarter that we do not see in other data. china is stabilizing and we will get more easing. they will cut reserve requirements and make sure that the economy it's going. is the amount of credit that is being given to governments, local governments. this is a big risk. >> they face a difficult task. they have to do leverage. there is too much out there. at the same time they have to make sure that growth does not fall too much. they have injected some more credit recently but i think the medium-term story is multi-leveraging and a more balanced economy. >> will have to leave it there. thank you. >> we will be delving into google x files.

they teamed up with novartis. we look at the future of wearable electronics. after the break. ♪

>> welcome back. let's give you a quick check on some of the foreign exchange markets as london picks up. just off four-week highs. more dovish.ther we get housing starts and that will dictate some of the momentum you see there. let's have a look at dollar-yen. to by hsbc as the

most boring currency in the world. the yen gaining and we have equity futures declining. begin toe u.s. futures accept and understand what is going on with u.s. sanctions on russia, playing into more of a haven trade. those of the currency -- those are the currencies. let's give you headlines. present -- president obama and the eu impose more sanctions on russia. this time targeting tanks and defense firms in the latest -- and banks and defense firms and the attempt to punish russia. >> where blocking new financing of some of russia's most important banks and energy companies. these are significant but they're also targeted, designed to have the maximum impact on russia while limiting spillover effects on american companies or those of our allies.

>> israel has agreed a five-hour truce at the rate quest of the u.n.. the temporary cease-fire would allow civilians time to supply. as the israeli army prepares its troops were possible ground invasion. janet yellen finished her second day of her biannual testimony to congress. they have hurdles to overcome but told legislators she is optimistic about the state of recovery. >> growth is picking up and we have sufficient gross to support continued improvement in the labor market. >> that is janet yellen. let's get you some of the breaking news. -- e have

>> i had a tough moment there. e's biggest retailer, second quarter numbers coming up. they seem to have done pretty well in terms of sales. 20.5 billion euros. organic sales up 5%. france. 2.1% and excluding fuel. merging -- emerging markets down 4%. this is the issue that many of these retailers are having. foreign currency headwinds are coming our way. brazil andbut belgium up and spain. italy is a standout, up 3%. recovery. european

i know people will say what is 12% unemployment mean and the eurozone? this is a manifestation of what it is and those peripheral countries, it is still tough in the periphery. of whata manifestation a little piece of recovery looks like in retail. >> and in france as well. they got him to -- bumped up from under way to neutral. there rivaledause came out previously with numbers and they have the best sales performance in france and more than two years. they had double-digit growth. starting to see a turnaround in france. >> that five-hour cease-fire between israel and militants in gaza is due to come into effect in an hour and a half but the fighting which has left more dead maypalestinians

escalate as israel is thinking about a ground invasion possibly after that cease-fire and. our middle east editor is live in tel aviv. is there any chance that this five-hour cease-fire could become more permanent? chance thatalways a cooler heads will prevail during this five-hour low but there is an even greater possibility that fighting will resume as it has done for the past 10 days. israel is still keeping the option of a ground invasion on the table according to an unidentified senior official. the respect is very high. israel has called up 21,000 reservists and has approval to call up 8000. israel knows that a ground invasion would lead to higher casualty numbers especially among civilians. there is 212 palestinians killed already in the last 10 days of fighting. the u.n. says half of those are

civilians in the latest incident, an israeli airstrike killed four children playing on a gaza beach in gaza city last night. theyli authorities saying are looking into that incident to see exactly what happened. >> thanks. stay safe. >> let's look at novartis. announcing income in the second quarter. it just missed estimates up three percent. a boostings could get from products straight from the pages of science fiction. they're teaming up with google to create a smart contact lens with embedded electronics. let's see what it could do for us. for joining us. pretty phenomenal what has been nowed by the x labs, teaming up with the world's biggest drugmaker. goings something that is

to enter everyday lives, will everyone be wearing these? -- mans $6 million stuff stuff right now. whether it gets adopted or picked up emma that will be based on early adoption. saw google glasses getting a push back because it was literally in your face. when you have a contact lens in nobody knows. >> you do not think it was the issue of having to see and read through these electronics. the issue was i do not want these glasses. >> it was a fashion statement. it was the utility of what does it do that my phone does not do? it is like having a smart phone strap to your face. what we're looking at with the contact lens is something that has utility, that measures the glucose in your tears. which smartphone cannot do.

-- i know thering app that you use. >> there is a sleeping app and a running app. >> are we decimated or is it a generally -- a generational an app to doant everything with their lifestyle? mark --is that western what is that? >> it will tell me how much i move income -- and how good my sleep is. >> what would you want with that? >> i am fascinated with information about myself. get --ed to try and second-guess what we would do by our search terms and play us back to us in smart ways. it hit that uncanny valley where

it comes in almost a little creepy of how good they are in playing that information back to you. they are asking these questions to play that information back to us. with this it is more unobtrusive and passive. you do not need to tell it. winner ins the money this? we understand that it is not so much the data that they want to collect, it is what they want to do with the data afterwards. they already track the england rugby team and the player who might become injured. they can collate the data, i know insurance companies could use it. what is in it for novartis and google to monitor the glucose levels in your body? >> apple are the packaging people. apple will aggregate that data. google want to be the people who provide the data.

what we have done with smart objects is both on old technology onto new technology so everything will -- has a screen that is connected to the web. we are taking the brain and putting it into the cloud. they're extending the nervous system into things like to send into our eyes. they want to own that. the landgrab is for owning that. >> to sell us what? >> drugs. for diabetes. that is a huge market. they can get in first in that and on that technology and that first to know stuff. there is a vanity here. the actual utility will be watching what people use it for. patentingre we with in this is this at the moment, is it going through the roof? look at disruption in terms of the pharmaceutical industry. then 10 years of r&d and

you patented and then you will do something again. that is what people think of when they think of pharma. we have these tech firms coming in and creating a different model of patents and new technology and what we saying is you're going into a store in something like this will not be in the technology section, it will be in health and fitness. that is what we're seeing now. people are buying stuff because they want the use of it. we will give you this. it is not a gimmick or a concept car. it will be incredibly powerful. >> thank you. where we are with wearable contact kansas. >> stay with us. we will have or this morning. daimler's a bet on small cars. coming up after the break. ♪ >> welcome back to "countdown."

daimler is going big with the world's smallest car known as the smart. the company has doubled down on its lineup and is unveiling two new smart models.

it did that last night in berlin. the taller individuals i know was there. tell us about the car. used the termou car and not off cart. they want these things to be remarkably small. it is not so much about driving but parking and it is an urban bet on big cities zipping around town and being able to park in a safeway. you want to get a sense of how big they are, you can light up a small version. you could lineup small of them between you and the goal on penalty shots. that is 2.69 meters. we caught up with the ceo of daimler. we asked about all this currency talk. you heard a lot from airbus's tooon the euro being strong. he said daimler can compete under any environment. have a listen. >> we need a strong economy

based on efficiency and not supported by a week currently. i think it is fair and -- fine where we are. not need toghi does do more. >> not for daimler. >> the growth of the small car to 7.2 million vehicles. i do not know what it is like parking in london. in berlin we ride bikes. if parking is a concern one of these autos might he right for you. -- be right for you. >> i have three kids. i do not know if they could fit. >> what about the roof? isi am guessing that he chuffed about how the german national team did. did he mention how they can monetize that? >> he did. i asked him about whether or not

the investment they made sponsoring the team had paid off . here is what he had to say. >> there is nothing that would top the german national team. we are with the best. they will sell them in the states when they can figure out the automatic transmission. have0 euros and you can one. >> enjoy your bicycle. good luck with that. talk more about cars. uber is making further inroads into asia. they launched the service in hong kong for customers. david england is in hong kong with the details. the ceo of uber. he sat down with you earlier. what was the story? t story, isn't it?

>> the question is what they can do here in hong kong to do the same things they have done overall the cities. other places in asia. they are launching their business. he spoke with us earlier this morning. overnight for you guys. how does the city fit in, what are the characteristics of hong kong that make it [inaudible] for them. >> hong kong is a stylish city. people express themselves through fashion, they go to nice restaurants but ultimately they have choice and all most everything they do in the city. and transportation you can go to mcdonald's or have your own private chef. in between.y little over is looking for that sort of fairway in the middle and we think that is the largest part of the market.

>> maybe to give you some context of what gets in between here. you take a taxi here, the flag down rate is 22 hong kong dollars. one pound 60, 1 pound 72 flag down. awaye three kilometers from the office. it costs two pounds to get from my apartment to write here. is 1.5 to two times. we will see how the market reacts but every city is different. in hong kong it could work when you have these typhoons. it is hard to flag a cab down. heading inave one this direction. it should be here by tonight. >> thanks for that roundup. >> let's talk six decades.

about chancellor angela merkel. her goldenbrating birthday with 1000 thousand people. next.l have that ♪

x welcome back. hans nichols joining us in berlin. it is someone's special birthday. cricket is angela merkel's 60th birthday. readers tohas asked draw her picture. ande is usually some nudity this is on page three. a rather low-cut dress. it is page 3. it is "bild." >> racy, i must say. let's talk more female power. known for my deep contribution to the newspaper segment. thor is getting a sex change.

we have not talked about it and it is riveting. this is the thor you know and this is what thor is to become in october. thor is getting a remake. well i thought of him as a great warrior with a hammer and a man. will transform into a woman's body. there is some debate about whether he should become thora. there is a late actress who was popular who was thora. people thought that this was inappropriate. one of these androgynous names and that is what it is going to be. some axt to see wielding by more females.

>> i am not going to dress up. if you want to understand -- when you own a newspaper why not announce what it is you're hoping to do? this is rupert murdoch, 83. obviously changing up the guard within his structure but the big news is it was announced yesterday that they had been in about a time warner possible merger with fox. >> they claim they are fair and -- >> cnn would be sold off.

>> there are many suitors out there. >> anybody who does not know the that rupert murdoch owns the paper that has the front page story. the front page. >> they may consider raising the bid. go as high asld 520. this is the daily telegraph. we have the commonwealth games coming up. the team are a bit worried they might get booed. the english, players will get as good a welcoming as the scottish.

still to come as sap reports profit that trails estimates, we speak exclusively to bill mcdermott in the next hour of "countdown." do stay with us. ♪

>> imposing the most aggressive penalties to date on russian business. >> we're expecting the russian leadership will see once again that its actions in ukraine have consequences. >> gaza cease-fire. , sent israel say they will observe a five-hour truce. smart move. its lineup ofs compact cars with a larger model. we speak to the chief executive. online software boost sales. the chief executive joins us for an exclusive interview.

♪ welcome to "countdown." mannus cranny and ryan chilcote join me. we get the latest from sap when we talked exclusively to the chief executive bill mcdermott. let's get to the breaking numbers first of all. what are you getting? >> we have one of the largest retailers in the u.k. and the largest sports retailer just meeting expectations for revenue coming in at over 2.7 billion pounds. the expectation was that would be under 2.7 million pounds and on the dividend a little bit of a beat. 32.1 p were expecting

[inaudible] the owner declined to take up bonus. -- a bonus. very controversial. worth about 6 billion. he is a massive character. fabulously wealthy. thanks to his company which has grown phenomenally. >> he does not take a salary from sports direct and he is mutual honor. >> the dividend will be good news for him because the larger the dividend, he on something like 58%. like 58%.mething we should give credit where credit is due. if shareholders -- shareholders approved by a narrow margin, close to 60% on the big pay package. there was -- there were many investors who were not happy so he declined and we have some

other news. global, john malone is buying a stake in itv. 60% stake.king a 41 million pounds it will be paying. bskyb will be putting it up for general purposes. they say they do not intend to make an offer to buy itv. itv, there has been speculation as to whether it would be a target. >> john will -- malone picking up bskyb, it is another step. just another move i him in terms of acquiring content. >> he has been piling into the actual providers, did --

distributors. there has been a massive amount of communications deals. time warner is not going to be accepting the current offer. to how hot theks media space is. we are getting this with the -- that murdoch fox, time warner, comcast. the regulation and legislation in the u.s. and john malone is doing things that taken in a direction. most active m&a area, communication. the amount of deals done and 500 $40 billion of the two point $5 trillion m&a that has gone on. it is about content is king and cable companies are consolidating but they dohat 6% in itv,

not intend to make that offer. >> think about something -- some of the stuff that they have in their stable. abbey." >> european car sales rise by 4.3%. where are the drivers? renault up and vw, their brand up 13%. that is bmw. german delivery sales dropped by 1.9%. if you go to the subset of the announcement, the brand that you are saying in a moment that is doing quite well. is 25% off -- germany the region. bmw the badgef

itself did quite nicely. by 6.9%.dropped vw saw their brand go up. that is the state of play on those. >> car sales doing well. keep your eyeo on, the russian stock market. down as much as 3%. the most it has been down in three months in part of the reason is what european leaders were doing last night in brussels. they met their and top of the agenda was the unrest in ukraine. russia's involvement in it and of course sanctions. what exactly did

the ee leaders agree on? -- eu leaders agree on? >> they approved a new set of measures that includes putting russian companies on a blacklist . one of the symbolic things they'd decided is to cut off public funding to russia from the european investment bank. that is something leaders can decide on because they are shareholders of these public -- that this public lender. they would restrict funding from the ebrd. the european bank for reconstruction and development. not rely much on eu funding. eib says financing is usually between 300 million and 500 million euros. >> they have a blacklist of

something like 72 russian individuals, some companies, where is that right now, are they going to expand it? >> they are. they're going to expand it so as you were mentioning so far they are targeting 72 individuals with travel bans and asset freezes. for the first time they mentioned the word entities in their statement meaning they want to target russian companies . they say they're ready to target some oligarchs in the inner circle of president putin. they have not specified which companies are going to be targeted by these new sanctions. they're going to leave this to their diplomats. for foreign ministers to come up with a list by the end of this month. i talked to the french foreign minister yesterday on the sidelines of the eu summit and he says an arms embargo is not on the table right now.

have a listen. what we're planning is to increase the sanctions but not going to what we call level three. because we need to be firm but also maintain the dialogue. cease-fire.chieve a for that we need to gather the different parties and protect the borders. on the borders there is some progress. we are still unable to get the ukrainians by the separatists, and other parties together. >> of course a stern european countries wanted to go further than this. mentioned an arms embargo but that is not something easy to do especially with the interest of france at stake is france sold two warships to russia. that is something that the eu will have to look at later. >> iq.

the u.s. also introduced some sanctions, perhaps to nudge the europeans long even as the europeans were discussing bears and before they had announced them and that is one of the reasons why we're seeing the movement we are seeing in the russian stock market. it was down as much as 3%. the u.s. coming out with some pretty serious sanctions owing after specific companies. i will give you three of them. crude producer and bank. from -- gazprom bank the state development area defense companies. you have a mixture, novatek, biggest independent gas producer. they did not go after gazprom, which provides one third of our energy even here in the u k. we understand that this could

hurt significantly if we start clamping down. >> this is a continuing, not sanctioning gazprom makes it easier for the europeans because they rely on gazprom but your -- perhaps more importantly it used card in the deck of sanctions for another day. if there is no de-escalation, president obama said there will be more. me about the european reaction. put the thing in context for me. you have lived and breathed russia. the european bank of redevelopment. this is the european financial reaction. the u.s. are going for closing markets.nd financial european reaction, how do you look at that? >> the european reaction is a little bit of a slap on the hand. not much more. funding and some

agreed to expand their sanctions list. they are not telling us the names but they are working on that and will get back to us. the u.s. has been more aggressive. we -- he putin said things talking about like retaliation. he said this is a dead-end for u.s.-russian relations and called this aggressive healthy. -- policy. freezing these countries out of the u.s. debt and equity markets. all these companies worth watching today. that is a big deal. >> $17 million worth of debt. >> 74 overall. a quick check on what is happening with equity markets. the russian stock market is 2%. we will see how the ruble trades. also indicating quite a bit

lower this morning. let's have a look at those. we're seeing a move on european equity futures. and .48.ris the markets are beginning to react but the stock of the day is -- >> sap. we will be talking to the chief executive, bill mcdermott. an exclusive conversation on "countdown." all things cloud. we did see sales up 32% but licenses ruled the roost and they are falling. will cloud be enough to pick up the pieces? we will talk to bill mcdermott next. ♪

>> welcome back. i am caroline hyde. in the last hour we had the largest maker of business management software revealing sales rose 4%. operating profit came in at 1.2 4 billion euros. basically in line. the chief executive bill mcdermott joins us now live from

waldorf in germany. thank you very much for joining us. first, your big push has been about the clouded how sap is moving to provide business software online. sales up more than 30% in that area. you are the old guard of licenses. how did you get investors to get excited about the clouded not worry that your license revenue is falling slightly? >> we have a vision to run simple and that asian helps companies radically simplify -- vision helps companies radically simplify the way they run enterprises and cloud is the logical step in simplifying your business. that is why it grew 39% and we raised our guidance for the cloud for the year. one very important point for investors is our core business, the traditional software and greware related services

eight percent in constant currency. so the core is still growing and it is holding solid while the cloud is really taking off. about thetioned foreign currency concerns. you have said it hit by about two percentage points. what are the biggest currencies you are feeling the biggest exposure to? would you like the euro to become weaker? >> i would, actually. but the fact of the matter is when you look at our business and the investors judge our business, the tendency is to look at things in constant currency because that is what we can operationally control. right now, we are running a very profitable business. we have made the transition to the cloud. we have 38 million users in the cloud and we are the fastest-growing cloud company at scale in the world. at the same time, the core is

solid. i think with -- what the investors are seeing out there now is we have moved the company to the cloud company powered by hanna. the german national football and obviously ran sap hanna considers it to be the 12th man in the pitch. if you could have this real-time inside radically simplify the way you run your company and have a combination of assets whether they are on premise or in the cloud, and all of that is beautifully integrated, you can really win some things sewed the german national football team proved that at the player and the team level but companies are proving that the world over. i am confident, i have never seen more tailwind behind sap' business model. >> a world quite -- cup winner as well. what are your customers saying, are you seeing an increase in investment? morgan stanley surveyed 150

chief investment officers who say they will be upping their spend. how much will you benefit? >> i feel really good right now about the investment case most companies are making. i see an increase in our pipeline and the momentum of the business since may when we had our sapphire meeting in orlando with 25,000 of our closest friends around the world. it is picking up. in actions -- action will be cloud. we look -- go to market and we sports and media and health care as an example. we try to diversify and focus on where the investments are going and because we have such a rod portfolio we know where they're going and frankly i feel that it has picked up in the last 60 days more so than it had in the prior four months. i like what i see.

>> what do you see with the ibm empire? be in theou wanted to ios. what is it for your business? are the number one mobile business software company in the world and that is because we have a platform that is agnostic to all of the hardware providers. whether it is some song or android or apple, we are -- have great partnerships with all of them. we have built hundreds of applications with all of them and all of the industries we serve. ibm said they will build 100 applications, we have built 300. we have been at this for a long time and others are catching up or tying to which is good. the more innovation for the customer the better. you mentioned salesforce. i see a big trend in this will

be a huge growth area. we grew 158% over -- year-over-year in something called omni-channel e-commerce and cloud for customer. here's what ceos want to do. they want to connect with the consumer no matter what channel their consumers doing business with them whether it is on the web, and a retail wholesale, or in some other way where they're coming into someone else's social network, they want to know that customer. they want to make them a real-time offer to upsell and cross sell and keep them happy and fulfilled there'd need to in the supply chain. sap is the only company that does this in the world. this happens to be the hottest area in i.t.. we do this in the cloud which is why commodity companies like internale that do sales are becoming faster commodities and we are going after the high-value things to help companies run simple and run better.

you're on track for 100% renewable energy by the end of the year? >> absolutely. if you look at our cloud i had the opportunity to be in germany mostrday. our cloud is the pristine renewable cloud in the world. 100% or noble energy and this is our vision for all 21 clouds that we have worldwide. we have made a commitment that by the year 2020 we will run on the same energy level as the company that we did in 2008. you're looking at a company that is getting much bigger and stronger and that is much more sustainable than ever before. we have applications, we have our employees sharing cars on sapway to work. using an application to keep everything more sustainable for the planet. >> it has been wonderful speaking to you.

the chief executive of sap. we will be back after the break. ♪

>> a comeback. car sales were up 5%, the 10th month in a row they have risen and it is the biggest expansion and the longest expansion we have seen in four years. good news for the european car market. car sales rise for the longest period in four years.

more after the break. ♪

>> welcome back to "countdown." go after the dollar two days of testimony from janet yellen? still the obsession with potential volatility that janet yellen introduced to the market. starts rising by 1.9%. that is the state of play.

have a look at the yen and on the euro yen. u.s. equity futures are going lower and european equity futures going lower. you have the money going into yen. the news on sanctions from russia is what is driving all sentiment across markets. russia's trumping anything to do this morning. >> these are the bloomberg top headlines. president and the european union impose more sanctions on russia. this time targeting banks, energy companies, and defense firms in their latest attempt to punish the company -- country over ukraine create >> we're expecting the russian leadership will see that its actions have consequences. >> israel has agreed to a five-hour truce at the request of the u.n., allowing civilians to resupply and the israeli army

repairs it's troops for possible ground invasion. janet yellen has finished the second day of her biannual testimony. there are still hurdles to overcome. she said she was optimistic about the state of the recovery. >> i think the economy is recovering and the growth is picking up and we have sufficient growth to support continued improvement in the labor market. overropean car sales rose 4%. the longest stretch of monthly delivery gains in over four years. we are joined by martin briggs. good news in general. 10 months of expansion. particularly dynamic growth for rent now which is on the lower -- their model is on the lower end of the market. >> a set a trend where is the

brands are bringing out lower cost models. that is targeted toward city cars but with a batch of brands they have been successful in revouching some of the vehicles. the european market we have seen the struggles of decline in car sales and this is a good way of people being led with more confidence of buying cheaper cars now that things are starting to recover. >> you talked about city cars wanting smaller cars. a 19 six -- a 19% decrease. they launched bigger models, is this going to be the turnaround? >> hopefully so. -- they moved the smart before. that vehiclehed in and they do believe that both

can have a role to play. they have reduced the operating cost by their partnership with renault. the benefits this rings to the daimler brand goes somewhat just selling the city cars. they have a lot of different models in which they use their vehicles. the most exciting is the car that ismodels. something they're looking to expand. desire bys this millenials to no longer look at transport singularly. solution.k at it as a the nextout generation, you are the next generation. for the transport needs and that erodes fundamentally the car

market. tentatively have you looked at it, do you agree or disagree? >> i agree. they have launched a service called moogle. they plan your transportation needs. mapper.ke a city this is a direction that a lot of car companies are looking into. they have recommending stuff -- recognized the mega trends. they're moving toward more multimodal solutions. >> do think the car industry is underestimating that sort of trend? i pointed it out and he said they do that and then they have children in they get a car. both have a role to play. car sales are going up 4% globally.

if you look at the urban areas it is the younger drivers that are the next generation. these are the people they need to target to be drivers of tomorrow. while car sales rise and target the older generation it is that older generation they are trying to tempt. >> they have the money and they have the capacity. >> what about the luxury cars, they should not be hit. >> it is perhaps a bit more polarized. you have the mass market manufacturers being squeezed because the anger generation want the lower-cost cars but you have these premium segments that have been growing. it is the middle that is getting squeezed. >> we had these new sanctions from the u.s. and russia. car market that was

bigger than germany at one point. we have seen a bit of a contraction in the russian car market. how big a deal is this for the carmakers? >> it has a lot more potential to grow. the challenges they have had with some of the imports and being able to grow sustainably -- it is noty there one core focus. that may change going forward. about china, the u.s., and the markets that they are growing effectively and being able to put new factories into the future. >> join us again. >> thank you. coming up, novartis' profit missed estimates that does a venture with google offer hope? and those novartis connected contact lenses. ♪

>> time for today's company news. came in over analyst estimates.

paymurdoch is willing to more than $7 million for time warner. the bid was rejected yesterday. itsis willing to raise offer. malone's liberty global has acquired a 6.4% stake in itv for 481 million pounds. the company does not plan to make an offer for itv but reserves the right to make an offer in the next six months. welcome back. news,ve had those company focusing on liberty global owned by john malone. it has acquired 6.4% stake. it is all about change. here for more about the deal is roger perry.

arthur's.an of msq john malone buys the stake in itv, a shrewd move, what does it mean for itv? >> fascinatingly it is a rerun of what happened in 2006 when virgin at that point looked like it might be going to buy itv because it would give it access to content to drive subscriptions on virgin. to be as felt by sky real threat and james murdoch had carried out this incredibly bold and ibaka nearing move where he bought a huge stake in itv from fidelity. the fund manager. at the time it was locking it. virgin is that to square one in buying that stake. skys it good news for because as we speak they're trying to put the various parts

together. is this a cash opportunity for sky? >> i think it is very good news sensible move. they no longer need this small state. share prices have gone up and sky will make a profit. the cash they bring in from this will be extremely helpful in helping them by the stakes that they are looking to buy in sky tell you and sky germany. it is a logical move because it is part of consolidating their european footprint. >> i know you are sitting there at the end of the phone, do you believe that when you see john i do notmalone saying intend to make an offer. >> trying to read him is like trying to read this banks on a foggy day. he can probably get what he wants out of itv without owning

the company. he is looking for some relationship with itv. to use its content in -- to drive virgin subscriptions. he can get that without owning it. >> he is going after time warner. you think that deal will get done? this would be the vainglorious deal to end all deals. >> it would be the ultimate deal. it would be the seal on quite an extraordinary career. history suggests that what he wants, he gets. this is a matter of price and putting more cash into the deal and less shares. the thing not to forget about this is a lot of the shareholders who own fox also own a stake in time warner. for a lot of institutional shareholders they could find this quite attractive because they are on all sides of the equation. >> regulatory issues, comcast has managed to get their way. there would not be much regulation in the way of this. >> i think probably not.

it would be hard to imagine that one company could own cnn and fox news. you would expect the disposal there. channels to sit together. we will have to leave it there. parry at msq partners. thank you. , novartis turned in results that were shy of analyst estimates. this was based on reciprocal company reported -- sales slightly below. let's talk about connected contact lenses. us through the numbers because it was not mr. but only just. this is a company that is undergoing a lot of strategic change, focusing on three core arengths, i care, -- eye care

nd branded deals and drugs. >> deals that were done for solid, strategic reasons. sales missed but there are a lot of moving parts here. currency has been a big shift all of the place. a bit of dollar weakness and they had a bit of a hit on this drug. it launched generic versions on july 7. wholesalers wanted to reduce their inventory so they got some hit. some of the miss is due to that. what they have done is if you look at the details of the guidance and you work it back bettere revenue, it is than what consensus is forecasting. >> for the ongoing businesses.

>> for the whole thing. nothing happens until next year. they are splitting them out because they have to. i am looking at the full numbers rather than the continuing operations. >> what do you make of it when you see [inaudible] coming out with these innovative deals? it is a rather dynamic presentation, we will do a deal with google and pop these lenses in your eyes that will monitor your diabetes. innovate.eeds to it is a consumer focused business, some of it. you're constantly having to move and keep changing. here is an animation that could be interesting. it has big headlines, google, novartis, clever contact lenses, you have to get something that people need, otherwise, why would they want to wear it? it does make sense. >> dozen that open up pandora's box about government?

government planned better if the data is connected. >> there are a lot of moving parts that have to yet fall into place but it is an innovative deal. it fits into what alcon needs to do and is doing. a boy who has contact lenses and if you're buying contact lenses every day they are not cheap when you added up. -- add it up. for a sophisticated technology it sounds expensive. produce how to mass this, will this be out there is something that maybe a few people have and takes a long time to penetrate the broader market? >> let's not get too excited about what this can or cannot do. one of the things they have highlighted is for diabetics. diabetics today, the majority measure their lead glucose on an ad hoc basis.

once or twice or three times a day. you havear that if continuous monitoring of your glucose it is a great thing to be able to know. it is like it is part of your body. this is where it could fit nicely for that purpose. other uses, if you look at one gethe other -- when we older and we cannot read so well anymore. that is another indication they talk about but it is for the int ra-ocular lens. >> we will have to leave it there. thank you for being with us. still to come. this is a live view of london where it is warm and sunny. not the case on the equity markets. bright,down on a

thames.l london on the ♪

>> welcome back. time for a quick look at what is going to kick off the european trading day. equity futures are indicated lower. analyst.t in a senior

great to have you with us this morning. futures are lower and a lot of big themes are vying for position. janet yellen was the boost here but it looks like russia introducing -- the u.s. is ringing in these additional .anctions trumping sentiment european futures are lower on the open. >> there has been concern and risk assets of recent. it is not just developed markets, it is the emerging market story as well. if janet yellen is becoming more hawkish in saying that we are in 2015 fromten the middle toward the end. what we do know is they will stop there tapering at the end of this year. 3 we will see tightening. >> one thing is some of these

russian names that are trading lower. these are some of the names that are on the move. you can read us through the board. >> the largest lender was not sanctioned. it is down. and not gazprom. and btb. companies have been close that --capital markets in the close out of capital markets in the u.s. breakingare some headlines. will sanctions have --

impact thousands of people, impacting global finances. that was the ceo. >> talk to us about geopolitical risk. we have russia and concerns about israel and gaza. we have a temporary cease-fire. how much are geopolitical risks playingnto sentiment -- into sentiment? there is concern about stimulus coming off the plate. what about these risks? >> investors have to factor them in. you have issues with ukraine as well. the middle east issue is not going away. on oil having an effect prices which remained stubbornly high. the sanctions against russian companies will affect rosneft. so that's going to cause the

one 100, not bridging that -- all-time high. >> thinking -- thank you. we are watching novartis as well. stay with us. ♪

>> welcome to "on the move." we are just moments away from the start of european equity trading. investors digest intensified sanctions against russia. the agenda.on with me is ryan chilcote, caroline hyde, and hans nichols. >> the eu and u.s. ratcheting up those sanctions against russia. this time going after some of the country's biggest companies. we will dig into this much more deeply later in the show. >> i'm talking tv. i-tv to be precise because shares are set to rise.

the maker of the hits like "x factor." a steak was bought by liberty global from b-sky-b. warnntury foxx eyeing time er. m&a is really hot. will be talking mercedes and their pet to bet on cities and doubling down on small cars. they have reintroduced their smart bread, a four-door and the two-door model. they are small, sleek, and fast. anna, you get to pick the color. >> hans, thank you very much. that is what we are watching this morning. a little bit of geopolitical risk. and plenty of m&a to talk about. let's see how all of that is panning out with manus cranny. >> thank you. we saw