>> it looks as if 21st century fox has more swag in the bag. over $7 billion is what they will receive as b-sky-b gets their hands on sky italia, sky deutschland. the question for the market is, good value or not? >> six years after the financial crash, are we back to where we started? we are going to get u.k. gdp figures expected to show 0.8% growth quarter on quarter. that comes out at 9:30 a.m. arguably one of the key projects helping fuel that growth is right here. the biggest european infrastructure project. tens of thousands of people. it comes at a cost of 15 billion pounds but they say they are going to return that threefold back to the taxpayer. i will be entering --

interviewing the chief executive. u.s. is making its first public accusation of russia fighting on behalf of separatists. it is accusing russia of firing artillery over the border into ukraine. preparing to sanction russia's most senior spies and security officials. more on both developments. back to you. >> thank you very much indeed. we will have u.k. gdp. isn't it ironic that caroline is covering u.k. gdp? a great story standing in a very big hole. you can enjoy that one. markets are just opening. manus is going to walk me through the start of the trading. >> you are seeing equity markets a little bit lower this morning. the s&p 500 on record high yesterday evening. china, europe, manufacturing blowing out. u.s. disappointed. 10 year government bond yields

up about 2.5%. jobless claims coming in lower. versus people not buying new homes. european equities are opening lower. do they like the deal or not in terms of b-sky-b getting their hands on sky italia and sky deutschland? did they overpay for sky italia? 2.4 5 billion pounds. penetration, germany and italy. down 3%, trying to convert the uncomfortable. that is a question you have to ask yourself. equity markets are lower as i said. louis vuitton, if you want to understand the reality of what happens when you miss your estimates, this is it. stock down nearly 5%. japan is beginning to bite on the luxury market. joe maddon -- japan missed

second-quarter numbers. the louis vuitton dropped by 11%. that is the reality of taxation in the luxury market. most of the divisions missed. fashion and leather grew but missed by nearly 30%. watches and jewelry missed. cognac sales, do you get the point, missed. foreign exchange cost this company 235 billion. not that i round up by 15 but that is nearly a quarter of a billion. let's see how rbs is opening. it is like a whole other world in terms of sentiment. everybody that i speak to -- i will leave that to your mind. let's see how it goes. they guided a little bit higher. first-half operating numbers should be better than anticipated. 2.60 5 billion pounds. no one should get ahead of

themselves is the message from management. they provision. impairments dropped by 1.88 billion pounds. a little bit of a red flag. significant conduct litigation issues. yes, they affect banking. that could affect profit. they have wiped out jobs. contractors are being slashed as we speak. it is rbs. a contractor at rbs gives you a whole new understanding. back to you. >> thanks very much indeed. the market is open. that's talk about one of our top corporate stories. anglo american's profits rose in the first half of the year. the mining giant is boosting outward and significantly it is lowering production costs. let's talk about the company. let's talk to the ceo in his

first interview of the day. mark joins us now from the london stock exchange. good morning to you. congratulations. what everybody wants to know about your business relates to the disposal program and what assets are going to be put on the block. you said this morning that you onen't made the final calls which assets you are going to be selling. how close is that final call? how close is the final list on what we are going to be looking at here? >> the most important point to make is we have already made decisions on selling assets. tarmac and the six platinum shops. we finished our review. we have a number of assets that we said we would consider and we are looking at the price, the market, the circumstances, the times. those poorer performing parts of the business, we are turning them around.

some will likely not stay in the portfolio. we will make those decisions at the right time over the next year or two. we are not putting any dates or hard numbers on those decisions. we will take the opportunity at the time have we have done with tarmac. >> so no hard information. can you describe the level of interest in the assets that are going to be on the block? have you had any conversations with potential purchasers? >> we are receiving expressions of interest on a weekly basis. there is lots of interest for assets. from our point of view, we are in good shape. operating earnings are improving. the balance sheet are in good shape. while we are still making capital investments, we are increasing the debt. but we expect that to be in the

range of 10 billion to 12 billion by 2016. no major problems there. ok, is it too early to say that negotiations have started on any of the assets? you have expressions of interest, have negotiations started? >> we are in different stages on a range of things. i will leave it at that. >> any idea on the numbers you are looking at pricewise? have you got a figure in mind you are looking at here? >> we have got a range of figures that we are working through. the most important one for us is to make sure that we fill the balance sheet in good shape. operating cash flows are helping us there. our target is somewhere between 10 to 12. that puts us in fighting shape. that will be the thing i focus on most importantly. >> you say you are in good shape to reach your target of 15% by

2016. you sound pretty confident. do you think it is going to be more than that? >> i am not forecasting anything more than that at this stage. our operations performance is actually a ahead of our targets so we are pleased with the way things are going. our key projects are all on track. in terms of all the things we can control, we are on track to hit the numbers. any of us get ahead of ourselves in predicting more than that but we believe we are in good shape. everything we can do is being done. metals prices starting to recover a little bit. you see that carrying on? what i am seeing in the market is miners selling forward. nevertheless, can you give us what you think the market is going to look like moving forward? >> we are starting to see a bit more interest for a number of products. we are lucky.

we already have products like nickel and platinum starting to recover. we have debeers doing extremely well. we have a great suite of assets. we are hopeful that the second half will be stronger than the first. >> i was interested to read yesterday about the fact that he was looking maybe at secret ballots when it comes to mines in south africa with the possibility of strike action. the you get any sense at this stage that you are going to find life easier with the new government in south africa, that there is the possibility of management gaining a stronger position in that country? i think one has to reflect on what we have seen in the last six months. the government has been very supportive of businesses that are trying to do the right thing. we were trying to do the right thing through the platinum strike.

they have been very supporting. the idea of secret ballots is a good one. or more of to 70% our employees wanting to come to work. intimidation and bullying made it very difficult for them. they didn't feel safe. i think cyril is on the right track. the government is taking a broad view and they want to see the country through. they don't want to see bullies keeping people from work. certainly we are in the same place. i think it is good news. >> do you think we are past the low point in the south african strike action? >> i would hope so. i think it was the longest strike in history and everybody is reflecting on what we can all do better. that is a good thing for south africa. it is about making it a better country. >> can i get your take on how you see the world right now?

it is very easy to get a glass half empty view of what is happening. we have a very difficult situation here in europe with ukraine and russia. we have an ongoing conflict in iraq. we have a situation in gaza. you can take your pick. there are so many negatives at the moment. how do you see the global economy? how do you see some of the conflict they are talking about here? >> i am an optimist long-term. the growth of the middle class in terms of rates at the moment is nothing like we have seen across the world. 2010-2015, the growth of the middle class in china will double. for me, the world has never seen growth like that. if you are a supplier of commodities, it is a great place

to be. i think we are going through a rough patch. we have all been and seen these situations before. i believe things will settle. in terms of communication, connectedness, understand the importance of keeping things moving. ultimately i think we will be in a good place. the world needs and still wants to grow and improve. being a commodity supplier, we will be there. >> one final question. russia is a resource economy. if it were to be isolated from the global economy, how does that change your business? >> it certainly improves prospects in terms of us applying in the markets. i wouldn't assume that would be the case. it is an important economy. one would hope we can find a resolution.

certainly that is what i would like to see. >> it has been a pleasure speaking with you. thank you very much indeed. mark cutifani, ceo of anglo american. right. that was one of the companies we are watching this morning. let me bring you up to speed. is forming the you k's biggest builder with a market valuation of around 3 billion pounds. balfour has struggled since the recession with a lack of building work in the u.k. and australia. thane sales rose less analysts predicted for the second quarter. the company cited spending on fresh dairy products due to price increases. cuttingany announced 325 jobs across europe. says second-quarter operating profit tripled.

they announced another five-year plan to draw down expenses. air france is reviewing its unprofitable cargo business and short-haul flights. morning, we will bring you our exclusive conversation with air france's chief executive. looking forward to that conversation later. so much happening in the aviation sector. another company we need to talk about is b-sky-b. it has reported earnings along with a plan to buy europe tv assets. 5.5% as customers look at tv, phone and internet services together. the real story is the m&a. markets editor manus cranny is here. the stock is down. >> stock is down. , sky italia,e u.k.

sky deutschland, does the deal make sense? what are we buying into? you are buying into a commitment by b-sky-b to issue shares to fund a deal along with debt on the hope and on the marketing expectation that sky deutschland will triple the number of people that pay for tv, that in italy they will rocket higher in terms of their penetration. the italians are having a tough time. will the germans and the italians pay for tv more than they currently are doing and funding this proposition? b-sky-b in the u.k. are issuing stock. hecaught up with the cfo and was focused on synergy. >> ultimately, there is more headroom available to germany and italy.

at number of tv customers is a lower level than in the u.k. something like seven out of 10 homes have yet to make the switch. we expect those markets to see good growth and stronger growth over time. there is also synergy. pending money more wisely in a large group. we expect in the near term to realize about 200 million of synergies. that will continue to grow. >> sounds quite appealing. >> is in it? stock is down. beingt is just you and i slightly skeptical on a friday morning. >> i think there are reasons to be skeptical here. this is a company that has a bigger story. i think that is making no n-majority shareholders skeptical of what is going on here. does it actually makes sense to do this deal? you are potentially bidding on

the premier league here in the u k you wonder if this is serving a higher power or your best interest. >> call me old-fashioned but i think what this is is b-sky-b creating this pan-european vehicle. don't forget the last time. that was murdoch for b-sky-b. murdoch has a few more dollars in his bank. >> do you think that murdoch's reputation will have improved significantly to do that? >> we are elephants. markets and people in a really forget. generally forget. >> it is the politicians i am worried about. thertheless, the public and politicians are going to remember what happened. >> on a mize is -- on a line is,

fox is funding this. the italians and the germans pay more for football than they currently do. that is it. >> manus, that is it as well. thank you very much. we are going to ask the chief executive of crossrail whether his business io back onain it s tracks -- is back on track. ♪

>> welcome back. let's talk about some of the stocks that are on the move this morning. balfour beatty and rbs. rbs, look at that jump this morning. ready and present. balfour on the back of this murder story. you would have -- merger story. you would have thought the u.k. economy is powering ahead. these two companies will have no problem developing an off work. they are getting together and the market likes it. we have been focusing on that story. the u.k. economy is powering ahead. we are going to get the second quarter readings in the next hour. the imf focusing on what is happening within britain. let's talk about it in real terms. let's talk about the biggest infrastructure project in europe. let's go to crossrail where we

find caroline hyde. over to you. >> thank you very much indeed. i am pleased to say that i am joined by the chief executive of crossrail. we are talking about of course -- we have got growth in the u.k. and you say this project, the biggest infrastructure project in europe, can add to the economy. how is it adding to growth? >> good morning. this is one of eight new stations that forms crossrail. 120 kilometers. this is a phenomenal program from london. it will bring 10% extra rail capacity when we open. 1.5 million people will be within 40 minutes of those key districts of london.

you can break that down in a number of ways. the extra capacity reduces theestion, improves possibility of business in london. there have been just 30 applications for major development. almost 3000 new homes. this is typical of the confidence that is bought by well funded infrastructure projects. >> the things that you have learned, you had to avoid ancient burial site, you had to tunnel underneath us while being less than a meter from the northern line. are these technical skills that you build up something that we can export to other countries? of course we have done a lot of work to make sure that we weave our tunnels between the

infrastructure and utilities. ,he equities we built up here the supply chain that is built up, you can get around the world and you wouldn't be surprised to see u.k. there. this is a fantastic crossrail story emerging. whether it is business growth, whether it is providing three out of five contracts outside of , the outside of london 55,000 jobs. the whole of the u.k. benefits. people.entices, 6000 we need a pipeline of infrastructure programs. rail that willed link london to the north, is

that where you employed a lot of the workers? you say 55,000 jobs have been created. >> i think you have a pipeline of national infrastructure projects. they are ready to take on that next project, wherever it is. they are all being talked about. if we demonstrate we can build this on-time, on budget, that gives the confidence to support the u.k. in delivering these programs. >> how much do you think the fact that you are on budget has been helped by the lagging growth in wages? we have seen the u.k. economy rebound but wages are not rebounding with that growth. has that helped you keep on track and on budget? say, ie workers start to am looking for more?

>> they will always look for more money and that is natural. in three years, the u.k. saw a slowing down. today the ecb figures show continual growth. with that growth will come expectations. i am not anticipating major inflation in terms of wage increases. there may be some concerns around material costs. is at the heart of stimulating growth. not just in construction but in london and the whole of the u.k. >> last night when you said balfour beatty might be combining with caribbean, you take on more construction companies. is it good to see consolidation? those two companies are fantastic, reputable companies. , whether thatrge

does provide the right opportunity, it will be one of biggest infrastructure and construction companies. that must be good. >> it has been wonderful speaking to you today. ♪

>> welcome back. we are 30 minutes into the trading day. i am guy johnson. we are here in london. it has been a fascinating session so far. let me show you the broad picture of the european indices. the ftse is down but not as much as some of its partners. the cac and the dax both down. the ibex is up by 0.2%. key stories, rbs storming ahead. trading higher. lvmh is under pressure, as is sky. we talk about those stories in more detail. let me show you what is

happening with the top headlines. lloyds confirming discussions with the government over libor. lloyd's says the settlements have not been agreed upon and it will update the markets as appropriate. palestinian officials say 16 people were killed in a shelter run by the u.n. in northern gaza. the shelter served as a school. seven children among the dead. efforts have intensified to end the fighting. johnsecretary of state kerry in the region trying to broker a truce. made its first public allegations that russia is participating in fighting on behalf of separatists in east ukraine. a spokeswoman for the state department offered no evidence other than information from intelligence friends. >> we have new evidence that the russians intended to deliver happier and more powerful rocket launchers to separatist forces in ukraine and have evidence

that russia is firing artillery to attack ukrainian military positions. aiding theas denied pro-russian rebels fighting the ukrainian government in eastern ukraine. let's get more details on what is happening. ryan chilcote joins us for that. the drumroll from the u.s. is getting louder. what they are not doing is using what i am sure are some sophisticated intelligence gathering information that they can show us. we are talking about sanctions. where are we from an investor point of view? >> we always talk about whether we think sanctions are coming, where they are in terms of sanctions, but perhaps the most interesting question is what investors do. we asked that question of investors in two ways. introducingu.s. sanctions against russia? the answer to that this month

was, yes. 79% of investors we surveyed say they do think the u.s. will introduce sanctions that will hit russian industry. that number is up from 17%. one out of five investors last month saw that coming. we asked whether they thought the european union would introduce sanctions. now i can tell you, last month only 4% of them thought the eu would introduce sanctions against russia. this month, that number stands at 48%. nearly half of investors now think the eu is going to act. what that tells us is that flight mh 17 really changed everything. risk it wouldthat appear is now priced in. >> let's talk about what happened over the last 24 hours.

the ukrainian prime minister has resigned. has the resignation been accepted yet? what does it mean for the country? >> it has not been officially accepted yet. there will have to be an early parliamentary election. there are different ways to read it. that election will have to happen at least 90 days from now. not exactly tomorrow. no one really saw it coming yesterday. it is not entirely surprising. the prime minister was speaking before parliament, said he is resigning. one, because he can't get the legislation he wanted to get through. two, because the coalition had broken down. when i met arseny yatsenyuk a few months back, he had just become prime minister. he told me, i will be this country's most hated prime minister. he is the man to cut a $17 billion a deal with the imf. he has been trying to push

reforms including hiking things up like utility fees and gas prices are consumers while cutting benefits. i am not sure he is the most hated guy just yet but he was on his way. this is not necessarily a negative in terms of uncertainty. one analyst did point out that this country needs parliamentary elections this year like a hole in its head. having said that, this does give the government an opportunity to consolidate the power base. we had a presidential election as a result of that revolution. we didn't have parliamentary elections. this is the other shoe dropping. it allows him an opportunity to get similarly minded people in power. that might mean more trouble for the russians. as this work continues, anti-russian sentiment is growing. >> thank you very much indeed. ryan chilcote covering the russian story for us.

he will be back later. but was talking about it, let's get an investor's perspective on what we are seeing in the world. good morning to you. i just want to pick up on where we are in the world right now. we have the situation in ukraine, russia, iraq, syria, all kinds of difficult situations around the world. clearly a period of uncertainty coming up with the fed. how we manage this transition, the beginning of the rate hike cycle, mixed data coming out of europe, yet stocks keep making fresh highs. draw a line between the two. will probably finish at 1984 or something. stocks have much to go.

the fed are thinking they need to tighten but they have not said they are going to tighten anymore. if you see where the gdp growth is coming from, you have the pmi numbers yesterday which were very good. you had the pmi number in china which was very good. in europe, you have the ecb with the ltro and other options. to me, the market is still very positive on equities. what happens in the september fomc which i think would be more hawkish than the market is the last, if you see two times, the market sold off after qe came to an end. my concern will be around september-october. >> that is not far away. it is kind of tomorrow from an investment point of view. this is tactical. coming up.ig change how much volatility are we going to see? than -- historic.

you have not seen this since 1995. it shows you how historically low volatility has been. let's look at it one by one. u.k. gdp numbers at 9:30. 0.6, probably going to be 0.7. we get the u.s. gdp number next week and inflation number and nonfarm payrolls. this is a very important week. when we heard the yellen testimony in the senate, the feeling was that it is getting better. if the data is getting better, then if there is any equity correction -- >> you would be happy to have a little bit of cash on the sidelines right now. put that money to work as the market dips on a little bit of uncertainty. i will continue for at least

a month and a half and use the opportunity to buy more. >> when you look at the volatility story, when you try to get your head around the volatility story, central banks are clearly the major force in that. how should i think about the relationship between central banks, volatility and the marketss over the nextd two or three years? >> if you look at the bond in the 1940's and 1950's the rates were very low. the bond market didn't do very well. we are in a loaded environment. the money that has gone into the bond market over the last decade is going to find a new home. this is where equity is going to see a flow coming in. what you have seen in the last two years and equity markets is

the first phase of the bull market rally. then you get the earnings. >> i am glad you pointed that out. if i look at the eps numbers and start to strip out the buybacks and everything else, the corporate growth story is not there yet. a lot of money sitting on the balance sheet is not being invested into infrastructure, people, whatever they want to invest in. when does it become real? equity investor point of view, i am glad. if you are doing buy back or making new investments, for me, the credit is not real yet. if you look at europe, it is still sub 1% gdp growth. from 2009 and 2013, the capital investment in the eurozone rose to 2.1% gdp. that is a problem going forward.

europe has much more to do. you are clearly seeing a breakaway between the u.s. doing better, the u.k. doing well, emerging markets doing well, combined with china. -- you have at very high stock yield in china. they have other problems. >> do you think european equities are going to continue to underperform? i am looking at the euro charts telling me that maybe the flow started. has disappointed for the first half. i am expecting they will do better. i do still think that europe has a disinflation problem. i think inflation could get stuck at 1%. that they are going to help. i am not going to play the ftse

100. ewus is what i like. i am not going to pick winners in a small cap index. for the same measure in emerging inkets, we have been emerging markets since the beginning of the year. the trade has done very well. >> always nice to see you. thank you for your time. coming up, we are going to turn to the skies with three fatal airline crashes in one week. this is shaping to be the worst year in almost a decade. we are going to check on how the world's biggest carriers are reacting. we are going to talk to air france. less our exclusive interview will be giving us more details about where that business is going. it is going to be a fascinating conversation. lots of angles to pursue with the ceo of europe biggest

carrier. ♪

>> welcome back. you are watching "the pulse." air france -- "on the move." air france, bloomberg spoke to its ceo, carillion -- alexandre de juniac in an exclusive interview. he also addressed the biggest concerns of travelers, security. you have had three different

crashes in the last few days. a lot to think about for the traveling public. listen to what he had to say. week fora black, black air transport. these three catastrophes are totally different. different companies, different origins, different environment, different aircraft. you cannot draw a general conclusion that the air or shouldis less safe be avoided. i can understand that passengers can be worried. of course, that is perfectly understandable. >> we are going to have more from that interview later on. let's focus on this broad theme that needs to be captivating

everybody right now, the issue of aviation security. terry lundgren joins us to talk about all this. as he says, very different events. nevertheless, you have this sense that the aviation industry must be thinking about what is happening, drawing a few lines. certainly the traveling public doesn't think about different planes, different places, different problems. >> it is telling that the international transport association put out a statement last night saying how sorry they were and how -- what also pointing out that 3 billion people flew last year. 100,000 planes land every single day. it is a safe industry. if you look at the safety stats over the last few years, even in africa, it is becoming a safer industry. this is very tragic.

the number of people killed this year is more than the past three years. each of these incidents will be something that airlines will -- learn and draw some from and proceed. >> bring us up to speed with the latest on the algerian flight. they discovered where the crash site is. >> there was a french military drone that found it plays last night. confirmeder went and that that was the plane. it is a very desolate area. about 100 french soldiers and 30 vehicles. they are going out and they will try to find the black boxes. it will be interesting to see whether they can find it. the feeling is that there were no survivors. with air france, you can understand the special sensitivity there. there were almost 50 french citizens on board.

we will be definitely hearing more about the french government today. >> historically, when we get a spate of accidents like this, this particular aircraft was 18 , the old -- that tells you company hasn't been around for quite some time. do you get a dip in people flying? statistically, is there any evidence to suggest that people say, i am going to put off trips? >> from what i understand, there isn't really. i was speaking to a woman last night who was planning to go to las vegas. she grimaced a little bit but was still getting on her plane. it will be interesting to see what pans out in the coming weeks. a series of incidents this dramatic is may be something that will have people step back a little bit. it becomes so integral to how we live and work.

>> that is why i asked the question. the global economy relies on this industry to deliver. was thought toe be a huge aviation reaction to reagan's -- reaction. because of the disparate nature of what we are seeing here and the fact that one plane is being attack,down by rocket the series of accidents unrelated, maybe we get the same effect. >> they are very different incidents. in africa there is a general sense that maybe the african aviation sector needs to improve. attack or the incident in ukraine, it was i think startling everybody. the situation in africa and also the situation in taiwan, the plane --

>> we haven't talked about tel aviv either. >> both those incidents were may be linked to whether. there was some suggestion that the plane yesterday called in and said, we need to change our route because of the weather. maybe there will be some more questions about that, about choices that pilots are making. there were definitely other incidents in the past when the airlines have come away and asked questions about the hierarchy of decision-making in the cockpit. the quality of the aircraft maintenance, all those things. >> thank you very much indeed. we will have more from our air france interview later on. "the pulse" is coming up at the top of the hour. we are going to learn much more about what air france is doing purely get we will talk about the strategy as well. we will talk safety and

strategy. alexandre de juniac, we are going to hear more from him. thus, we are going to stay with the earning story. the chief executive of lafarge is joining us. plus, at 9:30 we get u.k. gdp. we are back to pre-recession levels. rob wood is going to join us with the numbers and we are going to figure out what they mean for britain. back in a couple of minutes. ♪

of the world's biggest distillers. hans nichols. >> there is really only one way to clean it. with more vodka. >> it is made on local ingredients and we make really good vodka here in downtown berlin. >> but it is not also innocent. in a bid for local street grade, the world's second-biggest distiller converted this old garage and financed the project. >> they came up with the idea to build ike road distilleries around the world and have -- theo-distilleries around world and have local people running them. >> before it gets bubble, it needs to be tested for taste and

alcohol content. some drinkers have a vodka problem. but vodka has a drinkers problem. there are not enough of them. this delivery's like this one are trying to reverse that trend. >> it is not quite bathtub vodka but its operators know the local market. >> we provide the water and the ethanol. responsible only how to sell ourselves. >> the contribution from her know, the recipe, the yeast. to break even, they need to sell about 6000 bottles. suggested retail, 13 euros. this vodka is the newest addition to berlin's drink seen. >> treatable at room temperature. >> hans nichols, bloomberg.

>> hans nichols having fun. stay with bloomberg television. i will be back with "the pulse" in a couple minutes time. we will take that break. back with "the pulse" in a few minutes time. ♪ .

>> a black week for the airline industry after three fatal plane crashes. we speak with the c.e.o. of air france about the lessons to be learned. the sky is the limit. .upert murdoch sold tv stakes giving him funds for a takeover t time warner. r.b.s. shares double.