beating here in europe as well. >> i am looking at that titans. microsoft reported. apple showing its iphone is still a key product. growth in china sustaining growth that the biggest company. all eyes remain on the new product expected for september. meanwhile persuading investors he can take tough cost cuts needed to focus on growth and cloud commuting. thell be back at more of tech earnings. >> how will this be at the open? if you look at futures we are down. mark carney and another man, manus cranny just as important. >> you are too kind. two days away. let's look at these equities markets. core markets coming under a little pressure. what will the result be in terms of the response of mr. putin.

globally investors have withdrawn nearly $200 million from the bond and equity markets in russia. in 9:30.es will come carney speaks. and a voice from the european aboutl bank will talk lithuania. you have got a slight drop in markets. you have alcatel down. vivendi on the upside. three companies very much on our radar this morning. we have a little bit of mining, a little bit of autos. when it comes to bhp billiton bucking the trend they are actually up a half a percent. booming away in terms of production, up nearly 20%. 57 million tons. that's more or less what a produced. the estimate was just under 49. copper also rising. bhp billiton looking to sell

assets. look, we aresaying selling every ton we take out of the ground. the wall street journal also carrying an article on the yogurt maker. that's what they are most famously known for. a straight -- a strategic review the ceo asked, how do you expand the business? and a big strategic review to come through. a takeover target seems to be the view. -- dollar, they want to trump the vw brand. daimler doing quite nicely. when it comes to currency

inflation. have had just under three percent in australia. the highest in almost four years. pare back their bets and perspective in terms of rate cuts by the aussies when you're faced with inflation like that. otherare uncle -- countries that get a taste of inflation. could that be enough to drive the hawks into dissent? could it be the wages? our wages are rising, but inflation is not. could that be it holds anonymity for another day? >> inflation, what a novelty. begins yesterday. let's get some perspective from the man himself. he is head of equity trading strategy. i want to gauge what on earth is happening.

not the market today but the market yesterday. for me it is one of two things. hopefully you can get an answer. either we don't care about political risk are we due care and we don't think politicians will do much about it with regard to sanctions. >> can i go for a third one? we do care about geopolitical risk. most likely we will stay localized. it is bad news for russia. it's bad news for ukraine. they most likely will need more sanctions. as long as it does not deteriorate it will not globalize itself. as you look at equity markets on a global basis you have got to go back to earnings. earnings are doing well. 73%, and thebout european one is 63%, which compares very well to previous was moreere europe 50-50. it's a bit of push and pull.

as long as it doesn't get worse fast micro can expect itself rather than macro. >> when we look at the u.s. for since europe there has been an underperformance in european equities nurses u.s. equities. are we starting to see that come through? >> we think it is going to close. we expect more in europe than we do in the u.s. the performance was driven by two factors primarily. europe to thee of u.s. is highly correlated to relative pmi's. the ukraine russian situation is not helping as well. the dax has been the head of choice for ukraine and russia. given the close links on the energy side between germany and this point ofm view, ukraine has reduced some

of the risk appetite. we expect the spread to close. it will be easier to close faster if europeans show the recent low does not last too long. >> your best case is the spread narrows. what is your biggest risk that doesn't play out? >> the earnings. as you look at equity, global basis and you look at china, which is chief -- cheap, the rest are not cheap anymore. we are still relatively cheap, but to be able to continue to justify and grow further we need leadership. that's why we take a lot of confidence. we are going to need to see that pursue itself. we normally need news to be able to contemplate higher. >> it think you have painted a bullish picture on the european equities side.

is there a risk we are being complacent? is there a risk sanctions escalate, russia retaliates, and it becomes a european wide story and not a localized phenomenon? iti guess the good news is is still pretty low. the price of protection, which means for it to be unhedged does make a lot of sense. we are not discarding or ignoring what is happening. we are saying be long and be hedge. >> that is his message. here is a look at what else is coming up. apple tells investors just hang in there. the long wait may soon be over. a regulatory review makes waves at deutsche bank. shares fall. the scottish minister fights for the pound. he says sterling does not belong to george osborne.

we will bring you that later this hour. follow me on twitter. we will be back on the move in two-minute time.

>> welcome back. i am jonathan ferro. we are streaming live on your , apple tv, absolutely

everything. deutsche bank is down. just off the lows of today. inaccurate, unreliable. those are the words being used by overseers in new york. the man watching closely is hans nichols. he has got the details from berlin. abouts the bank saying this? what is their response to these allegations? >> when the story leaked the bank's response was essentially, we are following through with our practice. we are working diligently. we are trying to fix these problems. the problem is at the time the they had numerous irregularities. they knew about them, and they failed to fix them. it's a failure to fix. then the letter is released in july. we don't know what side the letter comes from. a can assume it comes from

new york regulator. here is what it says. the size and breadth of error strongly suggest -- when the regulator says you need to take remedial action, the general thinking is you should switch into high gear and take care of that. the concern is nothing has happened in the last six or seven months. we are seeing the stock way down. it was down 2.6 at the open. i believe it was 1.9 now. the question is how does deutsche bank fix this. >> let's talk about the timing more. coming to light six or seven months later -- how does the bank react, and how does this play out? do they know they have to fix these problems? do the issues still remain, or

is this just an old story? >> when the regulator wants to issue a letter like this they can do it private. they canceled the bank publicly or issue a letter privately and later make it public. if that is what happened it may be an indication they don't think the problems have been fixed. the next step they can do is ask which bank to restate some of their earnings. the asked deutsche bank -- next step they can do is ask deutsche bank to restate some of these earnings. maybe these changes in january weren't enough for the regulators at the federal reserve bank in new york. >> fascinating story. we are going to get more from the global head of equity trading strategy at citigroup. i want to talk about the sector. regulators versus banks. it has got to be the biggest headwind. if you are trading banks, how do

you play this? >> we are bullish on banks in general. we see qe will be possible and will provide a push to asset prices. in the short term a few worries. we mentioned pmi in europe a little earlier. pmi correlates to value. there are a bit of headwinds valuationm pmi's on a point of view. as we look at 2014 what was step one.was just step two is more purchases. we expect by the end of the year we will get a lot more asset purchases. goodis going to have to be for the bank as well. >> are you bullish banks because fundamentally they are in europe or because the ecb is going to do something and we know what happens next time?

>> to bring you back on regulatory risk regulatory risk is something we have to learn to live with as an industry. as much as downside reaction on day one, it tends to be seen as more of a one-off which is repeatable. the positioning of the banks has a lot to do with the price action we are seeing. a bit ofs year excitement when pmi started in january. a huge amount going into the banks. of it was neutralization of positioning. we found them safe and sound. the earnings stories should be there. qe should help. it will remain volatile and would likely see a pickup on the economy to be more bullish on the banks just yet. >> we will get more later. we are going to talk about tech. apple posted growth and sales

for the iphone the jewel in its crown. up for investors seem optimistic about microsoft, hopeful the new ceo is making some necessary cost cuts and re-orienting this business. here is our european business correspondence. growth continuing to be the story. >> it was pretty phenomenal. we saw profit up and sales up. their sales are in excess of $37 billion. that is more than the whole country of jordan in the country bahrain will:- annually. iphone is up 30% in sales. also max are up. well in india,ry

selling very well in china. china up 28% in terms of sales. even tim cook said, i am surprised. baked in?sm already 18% growth year to date. this is a company that is the most valuable in the world. many have expected this sort of growth. >> that is the geography story. i want to talk about the product. if the iphone the only thing i can get excited about for apple this year? >> it seems everybody is ready for this iphone. said we areelf going to be really busy. are we going to see more smart ?atches, smart jewelry we want more hardware. that is currently being hinted at. that is where the next numbers are going to come from. next quarter, which

is their fourth quarter, might not be that good. we are going to see a little uptick in sales. everyone is going to hold on until after september when the flurry of new products is going to come to the market. >> i am be sensitized. i am over it. let's talk about microsoft. profit down. this is a long-term story. is a bet on cloud computing. it's a bet on the man who used to helm the cloud computing area for microsoft, and the way to the business. we have heard how he is doing that i cutting jobs. 18,000 slashed last week. it seems investors are optimistic about the direction he is taking. profit fell seven percent. it missed estimates. shares rose in the after-hours. what he is promising is more

cost cuts. areas.izing the core it is cloud computing for businesses making them able to access work technology. we don't need to be glued to our desk anymore using old windows run out. we could be out and about getting it from the cloud. that makes us more flexible. that is the way the companies are investing. they did do well in pcs. windows xp came off the market. many businesses are updating with the new microsoft product. from pc.bit of whimsy it generally is about focusing on cloud. optimism abounds in investments. >> inks very much.

let's talk about tech. we know the numbers are always amazing for apple. you have a federal reserve that has put out of monetary report and said certain sectors of valuations are looking stretched. a lot of people are talking about that. what is your view on valuations? >> we cut in three sectors. hypergrowth, some of the internet names, the names which got huge pressure in march because the price momentum had been so strong. there is the bottom bucket with a -- which is all about the microsoft of this world. good cash flow. here the story is about capital returns, dividends, and maybe trying to refocus. the bit we are most excited about is in the middle. the thing is the bricks and , toar in the industry

continue growing they need some of the pieces that come in this middle. the valuation is clearly not a stretch. outperformingen last year. that is where we would tend to focus. even in hypergrowth it was two things. positioning was too extreme. as growth picked up in the u.s. you don't need to pay as much premium of valuation for growth if growth becomes plenty. part of what we saw in march was probably driven by the fact the economy is doing better. positive on tech. >> you heard the man. the head of equities strategy at citigroup.

we will be back in two minutes time. coming up later.

>> welcome back. earnings out this morning. glaxosmithkline reports later. joining us is sam. welcome back. you and i have been talking about this. this is about guidance.

that's going to be the big one. >> i think everyone is going to be looking at the events of the last few months in terms of the strength of the sterling. the issues with regards to the launch of their new products and how quickly they have been able to bring back consumer products, how that might push them in terms of providing their guidance. >> on consolidation side we had a lot of consolidation. premium formassive the company. are we to see more consolidation in the sector? doesn't mean they are going to have to pay bigger prices to do it? >> excellent question. at the end of the day this seems to be the time a lot of companies are getting involved. a lot of them are driven by tax issues. we have even had a little deal that involved a swiss-based

company. the reality is companies are continuing to look at assets that can plug into their pipelines. there was one specifically for that reason. that seems to have been driven can really that they do this at the time. there are few of those cases. i think we will continue to see this. hot thedepend on how asset is. >> very quickly, the issue with china and the company, does it continue to be something they can leave behind? what is your take? >> it's difficult to tell. we are looking at a case that will undoubtedly involve the company. what they have to do is play the best they can to clear their prove to thefully world it wasn't driven by the top management and then we can move on.

>> a fantastic summary of what is going on. here is the european research direct your. thanks for joining us. i will be back in about two minutes time. ♪

>> welcome back to "on the move ," i am jonathan ferro. trading,s into equity we are off session lows and pushing higher here in europe. the big focus in the u.k. is bank of england minutes. the big one, governor mark carney will speak. look out for that. now, manus cranny is that the touchscreen. of a focus onore results rather than geopolitics. we are getting back to facts and figures. er, when it comes to the mercedes-benz brands, driving the profitability higher. 13 new models coming on board.

none, all about the strategy for yogurt. said to be asking senior managers to put together plans create what should we do to expand the company? how do you not become the next takeover target? a lot of speculation that pepsi and nestle might be interested. abb, when it comes to matters of grave importance like power are reallye guys trying to turn around that industrial beast. abb has missed their earnings per share for the third consecutive quarter. not my research, bloomberg industries. the order book is turning around. it is up by some 13%.

but they miss on their topline profits. at the end of the day, when you beat, the market typically rewards you. abb is underperforming this morning. >> manus cranny gets excited about power grids. there you go. the bank of england releases minutes am its july meeting in one hours time. investors looking for any signs the central bank is ready to raise interest rates. the u.s. and the u.k. has seen accelerated growth. would that mean higher rates by 2015? governor mark carney speaks today in class cap -- in glasgow. the eu threatening to restrict capital access to eu markets and defense technologies, deciding to blacklist russian businesspeople and companies for the first time. the widest sanctions list potentially do tomorrow. russia's ambassador to the eu is

warning leaders against damaging their own economies. >> the impact on european ,usiness, the banking community will not be less than that on the russian business. regulators ordered domestic airlines to suspend flights to israel as palestinian rockets fired from militants in the area around tel aviv's main airport. european carriers also canceled services. israel's transport minister says the airport is safe and that a a prize fors terror. elliott gotkine joins us from the phone in tel aviv. ring us up to speed. is it escalating, is is stabilizing? what is the picture? >> i can see the gaza strip from where i am right now and i can hear it israeli artillery being

fired. i have not heard any sirens in the particular area where i have been all morning, but the fighting is continuing. the casualty count, unfortunately, is continuing to rise as well. is beginningrael to feel a pinch following the cancellations from those airlines. >> this is clearly feeding into airline companies' stock prices as well. what is the outlook? do we have any gauge for the time horizon here? >> for now, this is kind of an automatic, 24-hour ban on flights after a rocket hit a place about one mile, 1.5 kilometers north of the airport. this is far and away the most important airport. all the main u.s. airlines are not flying right now.

shares up sharply today, their biggest rise since april. they must take the view that they will plug the gap left by some airlines who are not flying here right now. >> thank you so much. great perspective from the ground from israel. the eu is stepping up sanctions against russia. it is not sure of economic and trade sanctions as they met in brussels this week. walk us through what these expanded sanctions entail. >> it was supposed to be this big moment of truth, a test of european power. in fact, they met for about seven hours and what happened? well, the dutch foreign minister -- do we have the dutch foreign minister? we have the dutch foreign minister. he is going to lay it out for us. >> we have decided today that the list of persons on the sanctions will be announced and

a list will be submitted by thursday. we have also decided that the commission will be tasked to look at a number of potential measures in a number of fields, , high-techefense goods, including in the energy sector, and financial services. >> so he says financial services. what they are talking about is restricting russian companies' access to european capital markets. we saw the exact same thing in the united states. the u.s. with some sanctions last week said that it would restrict four companies, to be exact, their access to u.s. capital markets. what does that do? effectively, that shuts them out of the market and makes it more difficult for them to raise money. that raises the cost of raising money. effectively, that makes those

companies less profitable, smaller dividends, less revenue into the government and a poor economy. it also could have an effect on the city of london. that is something we will have to watch for. the other issues that they were discussing, you mentioned defense, is an arms embargo. that is something that would directly affect france because france is right in the middle of trying to sell two warships to russia. it has built one of them. the russians have paid for it. they are training on it and it is to be delivered in october. the french resident has indicated that, if he has to, will give up the sale of the second if there is a weapons embargo. if france goes for that, that for its disadvantageous economy. the only other thing that they really agreed on, what we can expect tomorrow, is that list of sanctioned companies and

individuals. this is not actually something that they came up with yesterday. they started on the list last week. they said that they would publish the names on the blacklist of russian companies and russian individuals i the end of the month. toterday, they decided reveal that list tomorrow, thursday. it is going to be bigger than we anticipated. i would like to say they did absolutely nothing, but in high eu fashion, they have done just enough to preclude me from saying that. >> thank you for that. looking at the impact in russian equities, and resting. higher by 1%. thinkells you what they of these possible sanctions that will come out of the eu. the other thing that we are watching is a focus on sterling. investors watching this trade this morning i had of banking inland -- bank of england minutes. crucial part of the scottish independence campaign. scottish national

party leader. she joins us for details. has a lot guy always to say. what did he tell you? >> sticks to his guns ahead of the september 18 referendum. they will get a chance to decide yes or no for independence. no small question because this brings to an end recent three -- this brings to an end three centuries of union. the pound is at the center of the debate here. i asked him if he is committed to keep the pound despite the sources haveious told him he cannot have it. >> we are keeping the pound. we have laid out the reasons why it was in the best interest of scotland and the rest of the united kingdom to keep selling. otherare a range of options, some of which are

viable. but we are keeping the pound. e, and f when, plan a is the best proposition. >> george osborne have said that would not happen. the scottish affairs select committee has said that there are no deals over the currency. >> these are the same able. the scottish select committee on p's.r and these -- labour m they are unionists and gangs saying the same thing to each other. the u.k. government minister said of course there will be a deal on sterling. this is just a campaign tactic. we are just doing what alastair asked us to do. affairs to midi, george osborne, people of scotland know that we will keep

sterling because it is in the best interest of scotland and the rest of the united kingdom. our position is we are very happy to take a share of the liabilities, the debts that have been built us by people like alistair darling and george osborne. of course, we need a proper share of the assets. our responsible position, it depends on having a share of the assets. assets, the bank of england and sterling. the bank of england holds one third of u.k. gilts. not belong tooes george osborne. therefore, we are keeping the pound. >> despite westminster, the chancellor of the exchequer telling him that he will not be able to keep the pound, he says that does not matter. if there were to be a yes for andpendence, all the assets

liabilities of the u.k. would be up for negotiation. he puts the pound and the bank of england and the nuclear program that the u.k. has and all of these other assets and liabilities all into a basket and he says all of that will be decided by negotiation after the vote. still a lot of questions. >> i find it remarkable. we are going to keep the pound. we are going to stay in the eu. rajoya rajoy -- mariano saying there is an interest in catalonia. everyone else saying you are not going to keep the pound as well. , thereou are voting here are a lot of questions that you will have going into this. a lot of areas where even the saying are basically these things will be decided after the vote. >> fascinating. great topic. something we will be talking about in london for at least the rest of the year, especially if they do vote to do something crazy.

i will not tell you what i think crazy is. still ahead, running through the earnings of the giants of tech. we look forward to another highly-anticipated report later today from facebook to stay with us. ♪

>> welcome back to "on the move ." we are going to talk about tech now. microsoft's turkish -- purchase of nokia wade on profits.

apple was one of the big winners yesterday. huge numbers from the comedy. we are going to talk about it now with jason, head of trends for global web index. they cover 32 markets, 89% of the global internet audience. welcome to the show. >> thanks. >> let's talk about apple. huge numbers yesterday. 35 million, north of that number, that is how many iphones they sold in the quarter. i am desensitized by these numbers. they are always big. get me excited about the company for the rest of the year. >> i will do my best. we always expect good iphone figures and they delivered as usual. the tablet figures are less exciting. we were expecting that. where we are keeping an eye out something much more ofthe phablet type

territory. apple has been losing out to samsung in that space. we think apple needs to be in that tablet space to keep its strong presence in the sector. about ae talking 5.5-inch iphone. is that the most innovative thing that is going to come for the smart phone market this year? is that really what we are expecting? >> when you put it like that, it does not seem so exciting. what we have seen is slowing of usage of tablets. it is clear that mobile is winning the competition. this is where absolutely apple has to be going. and the iwatch will probably make an appearance sometime this year. >> i want to talk about this company in total. acquisitions and it has been about talent. should we look at apple as a

retailer first and a tech company second? it performs very strongly on both fronts. it has never been just about the product. it has been about the experience of having an iphone. that is why we are doing well in the big markets like the u.s., the u.k., canada. much stronger figures there. >> talk about facebook. it is a product, a platform that myself i use less and less. i cannot tell you the last post i put on there. that is not just me now. more people are using whatsapp. when that acquisition happened, abel said that was top he -- people said that was toppy. andit looks smarter smarter. >> the fastest-growing network is now instagram. the number one messaging app is whatsapp. you cannot bet against the acquisitions that they are making.

if you look at the figures, it is growing in almost every country the global web index tracks. it is doing very well in demographics across the board and giving facebook coverage in countries they traditionally have not had the strongest of footprints, places like latin america. really promising sign for facebook. >> what does this company looked like in the next five or 10 years? , instagram, it is not just a social media platform anymore. what is it about in five years? >> facebook will continue making acquisitions. in five years time, it is much more about a space where you go for your general web experience. people -- facebook does not want to decide -- to define itself as a social network anymore. >> thank you very much for joining us today. the head of trends at global web index.

"the pulse" is coming up next. guy johnson will be joining you. what are you looking at? >> what am i looking at? in 40 minutes time? minutes. >> oh, that. >> and do not tell me you are not excited. >> of course i am excited. big deal. >> we have some great guests coming up to talk about that. gazprom is the elephant in the room right now. everybody is talking about what we are going to do with sanctions. issia, the situation europe paying a great deal attention to. gazprom remains one of the big stories that we need to focus on. nobody is willing to talk about gazprom at the moment. if we target gazprom, what does that mean? what are the ramifications? we are going to talk about that. so a big focus on that story. the big thing running through

the morning is what is happening with the airlines around the world. yesterday, of mh17, what does this mean for the world's airlines? we are going to go to tel aviv and try to figure that one out. we all get on airplanes on a fairly regular basis. should we be worried? there are apps tracking aircrafts around the world that are really jumping to the top of some of the download list on itunes at the moment. it is a big business story as well. everyone is watching it. we are going to talk about it. 9:30 is a big deal for me and you as well. i am looking at these markets and i am seeing gains. i am saying, you know what? i do not think anyone is expecting sanctions to escalate. >> why buck the trend? buy the dip. markets are asleep. central banks have anesthetized them. we will get a take on disinflation. buy the dip.

that is the trade, isn't it? >> it has worked so far and it is because of using central-bank policy. a rate hike, could that come sooner than the markets expect? those are the words that mark carney offered just a few months ago. we will know more from the bank of england today. guy is excited about it. i am and manus is as well. we will discuss it next. ♪

>> welcome back to "on the move

." i am jonathan ferro in london with a very special guest. it is markets editor manus cranny. >> elevated guest? employee. >> bank of england minutes, it is a big one, right? >> a couple of analysts have said when dissent comes, if it comes, when it comes, internal dissent with members of the bank on theand versus those external side. what is the policy of the monetary committee? members coming on board. what is the policy of defense according to -- >> bnp, give it to me. >> you have got to tune in for this. >> it is interesting. ory just want to capitulate do we get a slow drip of dissent that builds up?

given that we have had such smooth guidance over the last five years, to all of a sudden not have that -- >> that is the point of what carney is doing in terms of introducing volatility into the markets. you have short-term interest rates and longer term interest rates so that when you do get the first moments of dissent, it will be -- it will not be that much of a shock and you will be guided towards the first hike. i think it is still finely-balanced. you look at inflation, there is a lovely line this morning to keep the hawks twitching. and you have line disinflation. and there is a lack of wage growth in the united kingdom. are.e, that is where we 12 meetings in a row, no dissent. mark carney is the man who drives --

>> stay with us. guy johnson is back with "the pulse" next. follow me on twitter. ♪

>> grounded. suspend flights to israel in the wake of a rocket attack close to tel aviv's main airport. inaccurate and unreliable. that is what a report from the new york fed said about deutsche bank's u.s. operations. installing on sanctions. the eu delays tougher sections against moscow. we will assess the risk to russia's energy giants. ♪ >> good morning, everybody. you are watching "the pulse."