>> russia rising. the west has hit moscow with the strongest penalties since the cold war but russian stocks are rising on the news. european fall -- european firms vote, sound the alarm about sanctions. billions in russian energy projects could be at risk. and barclays shares rally as the bank returned to profited the investment banking arm is down by 50%. good morning, everybody. you are watching "the pulse." live from bloomberg's

european headquarters in london. we have a great show for you coming up. we are going to be talking about stunt driving. we are going to meet a youtube fameturning his online into hard cash. withe are going to be live the ceo later on "the pulse." we will be talking how sanctions impact a business like bayer. that brings us to our top story. will talk story we about later. plenty of other european companies are being affected by sanctions that have now been imposed by europe on russia. the coordinated sanctions with the u.s. and europe are increasing pressure on written -- on putin and his country's role in ukraine. there is some and the duty surrounding the sanctions. what do we know and what do we not know?

sanctionst important that the european union and the u.s. introduced yesterday involved in the financial sector. that is the first point. the second point is the eu is effectively going to ban russian state-back banks from issuing new bonds and shares in european capital markets. there was also a little bit of a blacklist introduced from the u.s. side where they said they would blacklist the country's second-largest bank. the ambiguity comes from the said that theyu were going to restrict the tote-backed banks, access european capital markets. they did not actually name the banks. it could be more confusing than you think. is the largest bank in the country and is actually controlled by the central bank --

>> which is nominally independent. that banksay maybe will not lose its access to european capital markets. we shall see. the european union is going to come out with heavier, more on what it has decided to do later in the day. btb seemed to be hit a little bit more and that is perhaps because, despite the ambiguity, at least it was put on the u.s. blacklist. it is clear that is a negative mark. the day, a lot of the stuff was priced in any way going into today. some people in the market saying people have shorted these stocks going in and covering their positions. long-term, this is good for -- >> this morning, russian equities are rallying. considering what we have seen, not a bad response.

that could be the shorts buying back stock to cover those shorts or it could be priced in, onto the next phase. we do not know. >> which is why what we saw this morning is not necessarily what we will see nader today. the is the russian side of fence. let's talk about the european side of the fence. yesterday, bp made it clear there could be a material impact on its business as a result of what we are seeing in russia. >> total announced earnings at 7:00 this morning. it was a missed. -- it was a miss. the big issue was what the cfo had to say about their exposure to russia. total, europe's third-largest 18% in the, owns largest independent gas producer in russia, called nova tech --

novotek. in russia, they have more gas than anybody in the world. they have this master plan to grow their exposure from their fourth largest supplier of oil and gas to their largest by the end of the decade. that.be on that -- beyond it was all great until one of the biggest shareholders of novatek was sanctioned by the united states and novatek itself was barred access to international markets. funding istheir getting squeezed. some of their owners are getting squeezed. >> but is it getting real? will it see a meaningful impact? >> today, the very first corporate reaction we have heard. there is what we're doing in response to the crisis. the cfo came out and said on the day that mh17 has down, we

stopped increasing our stake in our russian partner. at the end of june, they had about 17%. they were going to take that closer to 20%. they have stopped at 18%. they have an enormous project which they are finding it difficult to raise money for a long with their russian partners because of the squeeze on funding. they are saying, you know what? we are going to meet with our russian partners at the end of august and discussed that too. the cfo said the uncertainties are massive. try toare going to paraphrase those uncertainties as we move through the news this morning. bigs talk about another subject we are focusing on this morning. the clock is very much ticking for argentina. the nation is now hours away from potentially defaulting on $29 billion of debt. country officials finally sat down with investors. these are the holdouts. that meeting in new york. hans nichols joins us now.

does the clock go? how close do we get? when do we get past the deadline? >> it depends if they have conversations this morning. they went late into the night last night, the first time they have sat down. it depends on whether or not you think a frank and robust exchange of views, which is apparently what they had yesterday, means that they were yelling at each other or past each other. if they are yelling at each other, you can maybe see how they can get to a resolution. it is a complicated story. it's try to walk through here. after argentina defaulted on $95 billion in debt 12 years ago, 93% of bondholders agreed to the dollar in0 on restructuring. the rest held out, including hedge fund titan holsinger and elliott management. he is demanding to be paid the full amount. in his case, it is $1.6 billion. .n court, he has won these are u.s. courts all the

way up to the supreme court. equal treatment caused means that it could not pay one set of bondholders and not the other. that is the crux of argentina's argument, if they pay the singer they calltures, as them, they may have to pay up to $120 billion. in june, argentina tried to pay some of the money to make an interest payment to the restructured group. the u.s. judge in charge of the case said hey everyone or pay no one. if he ordered that the bank of to send the cash back. that began a 30-day grace. before-day grace period an all-out assault. argentinaon is, can not pay these creditors? can they have some sort of default and transfer jurisdiction of these bonds from u.s. court to argentina court?

so that you have a payout in argentina and do not have a default. if they say they paid their money to the clearing bank. it is the judge holding it up. is that technically it's -- technically a default? the guysk we will see who decide on this have a look at it a little bit later. they have got the money though. that is the interesting thing. >> here is what they say. they have quite a bit in foreign exchange reserves. the question is, if they trigger this one amount, does it trigger other causes. if only it were so easy. let's take a look at some of the complicated aspects of this. if they do pay some of that, it would violate the right upon future offers that says if argentina makes a voluntarily new deal with anyone before december 31 of this year, it has to pay everyone the same thing, the holdouts and the restructured bondholders would get. that could be $120 billion or

more. >> so they do not have the money, as it turns out. thank you very much indeed. we will have the money for later if it gets bigger. hans nichols joining us out of berlin. barclays shares up today. the bank turned a profit in the second quarter. manus cranny joins us from zürich. provisions are down. big numbers in these numbers that are particularly palatable. nevertheless, the overall picture is more audited. >> looking for a reason why a , the obsession with down 24%. the bad levels are improving. it is amazing how they move from what is going on at the investment bank to equity trading down.

you tie a couple of pieces together, deutsche ubs, anddit suisse, now barclays. underwriting fees rise in this set of numbers. you are seeing fee income rise. in deutsche bank, ubs, credit suisse. there is an element to be tied up. payment protection insurance and the other big number -- >> the massive number. i am surprised this is still going on. you still getting phone calls? >> you have an opportunity to sue your bank. >> the number this time around is big. >> 900 million pounds. people say that is a big improvement from 3.5 billion this time last year. it is still a billion pounds.

>> and we have litigation charges on top of this. pounds is indeed ber, i have just rounded up. pretax profit dropped by nearly 50%. not you have here is guidance on how to set a foreign exchange. they still do not know. i read a note from number of -- from nomura saying litigation could cost up to 7 billion pounds. there is a civil case involved. there is litigation with the lx dark pool in the united states. pool which dark purportedly misrepresented themselves to investors. >> not positioning for this means they do not have their arms around it yet. >> it is another major litigation process.

.hese are the questions how is anthony jenkins doing? you have to say this man is playing whack-a-mole. he is in charge of trying to restructure the investment bank. from the investor call this morning, saying we are well ahead on headcount reduction and building their capital. is tier one capital. barclays is anything but straightforward. >> we cannot lay that at his door. >> you wonder how long he has longer investors will give jenkins. you look at tesco and these examples. when these things happen, they happen quickly. how long has jenkins got? we just do not know.

>> i do not think anyone has the answer to that. there is something coming up at 10:00. >> this is the investment banking -- >> part of the issue is whether you are paid a bonus. if you have done wrong or had an error of judgment, how far back in time could the bank come back and pick up the money that they paid you? a little bit later on, we are going to get news on that. a number of news sources overnight saying it would be six years. we understand that might change. said he believes that banks have to regulate themselves and that is why culture is so important. that banks do the right business in the right way. there is no doubt about it. jenkins is a ceo who has made all the right noises. although he did up his bonus

pool to retain staff versus dividends to investors. it is a hard one. >> thank you very much indeed. coming up, more pressure on moscow. on theussed the impact investment community. that story up next. ♪

>> good morning, everybody. welcome back. you are watching "the pulse."

a fresh round of sanctions against russia will deepen its economic pain. after an initial dip, russian shares are rising today. our next guest leaves these sanctions are manageable for russia. manager.is a or folio .- a portfolio manager good morning to you. >> good morning. >> equities rallying in moscow this morning. is that the rational response? fact and in a lot of once you get that fact, you have a clearer picture and you can start buying again. >> the rumors were out quite early. a lot of people had time to position themselves. a lot of people have been selling already for the last 3 to 6 months. the americans have been told to sell. there is not that much money left to sell really. we are getting close to the selling pressure easing off. it does not take much to revert this fall.

the stocks are down 10%. bottom or is the there more to come? ? i think this is a short-term bottom. if the escalation starts, there are rumors of support for peace negotiations being brokered by belarus. if it did happen, we could start to see a de-escalation. as the sanctions are today, it looks like these sanctions are manageable for russia. they have enough money to cope with it. they are not as suffocating as the sanctions against iran. it is not going to choke the economy. it is going to slow it down to zero, but it is not going to start a major recession. >> the reservists are interesting. how do you think the capital starvation argument that the eu is pushing will change the viewpoint in moscow? how will it work?

it is going to be a very slow process. >> correct. >> how long before we see a meaningful impact work its way through into the economy? >> i think we are starting to see some. for interest -- for example, the interest rates have been increased. that makes capital more expensive. that does not come into play for a year or two. the other way is simply the shortage of loans available. when the banks cannot raise money as they did before, they will also put a cap on the amount of money they lend out to different people. thethat is going to reduce growth potential of the economy. after that, the technology transfer restrictions damper the long-term growth potential of russia. >> european companies are clearly already in the process of scaling back their involvement in russia. how much damage do you think there is to the long-term relationship that exists? is verynk putin

rational. he sees that he needs to change the stage in order to fix the economy. he has local people saying he must act to save the fellow russians in ukraine. if anybody can balance the two, it is putin. merkel has put into the documents that every three months, these sanctions will be reviewed. is a clear indication that these things can be de-escalated quickly if the direct support or the rebels is reduced eliminated by the russians. >> you see him being irrational actor and he will change his waypoint, not go the other and try to defend his high rating at home and make sure that the situation continues as is. is quitek putin concerned about his long-term legacy. he cannot lose ukraine. i think crimea is what he wanted

and he got that. i think the economy is the other side. he came in when the russian economy was a total disaster. he cannot leave it in a total mess again. he would not accept that as his left legacy. >> how much money have you got invested now and have you scaled it back? >> we have been underinvested pretty much all of the year. we started buying in the last week. around 30% of our portfolio is in russia. >> which areas are you looking at? resume believe that less presumably the-- less targeted areas. >> there are some companies which are state related which are looking ridiculously cheap. you can buy for less than the cash value in its portfolio and you get a dividend yield of 9%. >> nice to see you.

come back and see us again. thank you for your analysis this morning. we will take a break and we are back in a couple of minutes. ♪

>> good morning, everybody. welcome back. you are watching "the pulse." interesting market action this morning. let's walk you through it. jonathan ferro joins us with the details. >> maybe it is interesting because of what has not happened.

markets are down by .1% in the ftsejust .1% on 100. everybody is talking about sanctions. the biggest sanctions since the cold war. yes, they stop some russian banks from raising money in europe. what have they not done? very calculated measures out of the eu. and on the gas sector in russia. on militaryre bans exports. the french can still deliver their warship. the eu has not capitulated. the bottom line is the economy still matters and they have not shot themselves in the foot. if the details of those reactsns are how russia and whether it escalates, that is what really matters. nobody talking about the fed decision. itnish inflation or lack of in focus. >> we will be talking about that very shortly. still to come as well, a stunt

driving sensation. how one viral video star is turning an online face into hard cash. we will take a break and continue in a few minutes. ♪

>> good morning. welcome back. we are live from the european head porters and these are the headlines. the west is increasing pressure to get vladimir putin to back down and the u.s. and europe have targeted banking, energy, and defense and -- industry. the japanese industrial output has fallen the most since the earthquake and it highlights the widening impact of the sales tax increase. in the mediaopped

forecast and investors are awaiting the latest policy decisions from the federal reserve today. purchases from 35 billion last month. the lawmakerstold that the rate increases may come .ooner and more rapidly right. let us continue with company news. the shares are rising and. we spoke to the ceo and asked supply or the lack of it was the problem. >> we can see the social, political, and economic impacts. it has been a problem and what has changed is more people recognizing that. is it a government problem? yes. it is something the industry has a part in moving towards. we are increasing the number of that theree believe

is a sustainable level of growth. they will try to get the problem solved and the short term to not tend to last. it is something the industry is involved in. >> you are seeing price rises and does that make you confident to build? are you saying that you have seen the movie and you do not like the ending? >> we say that 10% a year is an issue and it is a boom condition that does not tend to last. back ofne year on the stagnation and a price fall is not a concern and we have seen in the last couple of months the rates are-- starting to slow to a more normal level over the last 12 months and we have seen it balance out. it is not quite a level of

growth that compensates from lower levels of growth. it is a healthy level of growth if thatare seeing and becomes established, it is because of the actions of the mortgage market review. we want to see a more city 1:00 a.m. we are seeing signs of it today. aboutot of people talk the quality of the growth of that not being underpinned and there is a concern. for many, it is underpinned by cheap credit. look at the rates this year and next year. how resilient you think the market will be in the u.k. towards the rate hike? rate risesee these that are stable and significant but low?

the housing market can absorb those and it probably will impact in a healthy way that means that the growth is limited and not negative. >> let's talk about airbus. they reported profits today and it rose in the first half of the year. the commercial unit delivered more aircraft and had reiterated that they expect to see a modest return and sales growth and to deliver the wide-body that 787 and theh the aircraft. there also awaiting made thetion and they an oldn to go with airframe and they are going to excel very well. it is a cheap aircraft and they

could potentially take the margin story down. the interesting problem lies with the 380 right now. saidrk back out and they that the large aircraft market is weak and engine there is no reason to reach re-engine the 380. it is one of the biggest buyers of the frame and they have a lot of sway. good numbers and issues to resolve with that. it is theey do question that needs to be answered. >> let's go from airplanes to automobiles. surging profits and that is good news. caroline hyde is here with the story.

a lot of bad news. >> years of bad news and this is the first time in years that they are back in the black. ask yourself a question. eurosring in 27 billion and how are they not profitable? are showing that they are. this is a boost to credibility in the turnaround and why were they not profitable before? that is because the liver it was slowing and many cars were waiting in the dealership. >> yes. inventory. >> it was huge and now, they say they have control. they have cut the cars out there and theyalership closed factories. they slashed the workforce and they said they did not need to make as many models. they used to make 45 vehicles and they say they will have to

that. they will make 26 models. they will be more luxurious and charge more for them. and theyt of a unit have to cozy up with china and get in with the chinese manufacturer to stop being so focused on europe and expand to diversify. in will see all of this three years of pain. you are going to see a turnaround and operating income. cost is looking better and cuts are coming through to have an effect. that all sounds great and the emerging markets story does have a few wrinkles and it. >> this is where we have to look for the future. uncertainty is what is being painted at the moment and they are saying that they are going to see a decline in sales.

they say that latin america is falling about 7%. add to that the foreign currency concerns and they remain high. you are exposed to the emerging markets and it means that the is not goingu draw to have as much bang on the bottom line. the have concerns about the first half and it was not quite as much had it been a little bit weaker. the turnaround story is starting to reap rewards and they could help offset the rest of the emerging market growth. >> thank you. we will stay with the car theme. the youtube sensation from hosting stent -- stunt driving videos. product plugs and can turn the viral fame into cold hard cash.

♪ i run then block and division and i started racing in 2005. i loved it. done a lot ofhave racing videos. it is quite a surprise and the general public views them. i had no idea that it would get the views that they got. >> i did not want something that looks like it is going to be in a movie and i wanted to look as real as possible. it can be nerve-racking because of the pressure to get it done so quick and well.

the production schedule can stay four guys over two days. over $1 million or something like that to produce. i cannot tell you how many times i have been signing autographs and you have a dad with a son who says that they have watched so many videos on youtube and follow me to instagram and facebook. that is a change from 10 years ago. we adjust the content delivery and product delivery. it is based on the feedback of who we interact with and i get in these cars to drive them as fast as i can.

it is one of the best things i have ever done in my life. >> amazing pictures in that is a fast focus. these guys are making serious money and social landscape changes the story. the economic growth is up and the consumer prices are down. that is the story we talk about and the bond market is a fascinating place right now. we will discuss all of this when we come back. we will see you in a moment.

>> good morning and welcome back. we have the latest economic nature and the growth has come and. the consumer prices are falling and there is a risk of deflation. she would be worried about it? -- should we be worried about it? now.e joined spanish inflation and deflation. good? bad? is the number something to worry about or to hope for? at economicooking adjustment and you have large amounts in the economy. you are trying to reprice the sector and that is what you get

eventually. the ecb worries about general decline in consumer prices and they look at the data. if that turns negative, they are worried and they are trying to do the best they can. >> spanish growth and spanish unemployment and inflation are all telling us the same thing. thestory feeds into arguments we are seeing. that hangs together. >> it is a success story and they have done even more. they are getting out of it. the numbers are not as good as spain and italy has different issues. sectors that with cannot be fixed or adjust by reducing cost.

renzi is lagging on scheduled reforms and monetary policy is not going through. there is a problem in political stability in daily. nott is not that they are doing what spain is doing and that is a bad thing. >> it is a different model and it is more reliant on enterprises. that is the problem. market.uropean bond what is it signaling right now? the netherlands are trading at a low and you have spain and italy with a similar story. what is the signal i should get from that? >> it is distorted and when there is direct intervention mechanism, it is

on the verge of doing that and i think it is difficult to read what the bond market is really telling us. stockn say to look at the market and it is saying everything is positive. i think there is a definite case for intervention like the bank of japan and the bank of england. the interventions into the asset markets tend to distort the signaling and -- >> the signal to noise ratio is the moment. something has to come out of this. >> and is a function of the data. you will have the ecb going into will be as and this pricing mechanism. >> what you think about russia playing in the story?

they say it will be a problem. >> so far, i have seen no problem at all for the race and i do- rate markets not think that we have any pricing of russia and european markets. factored in at this stage and if there is a material impact with european growth, that is not priced in. >> there is no impact in energy prices and we have not seen that in inflation markets. >> that will be significant. >> it depends on which way it comes. you can say it is higher inflation in the future. >> it is love growth. >> exactly. couple of days, i am intrigued to hear you say that.

if you would see a slowdown in german growth, say it is off of gdp, how do they respond to that and that changes the dynamic significantly. the european story is up and it is slowing. how does that change the reaction. not haveo interruptions apart from buying bonds and assets. and have run out of steam options. they have run out of tools. >> they could change the inflation argument. >> they could. the fed is coming up later on today. do you keep trading the spread and is a keep hitting wider over the 10 years and the 2% record lows? does that keep getting bigger and bigger?

how do you feel investors will feel about that? will.ay that others >> i think there are holdouts in investor types and regions around the world who have not come back to a european bond location. there is definitely some demand out there and it is waiting to materialize. along a theme. look at the spread in the gdp market and treasuries. there is a complete correlation between the markets. this will not happen in this cycle. mini-cycle to go into that. but, eventually. >> we will leave it on that interesting note. nice to see you. we will take a break and new drug sales are boosting. what about russia? we will talk about his business

and the geopolitical story later on in the program.

-- >> welcome back. you are watching the polls. -- the pulse.

a profit of $375 million. joining us is john. thank you for taking the time to come in and see us. can i talk to you a little bit about the water business? is it a tough business. do you get the sense that it is turning the corner or is this something you can sustain? well, it is driven not by an increase in volume. and youns market share and it isivision

driven by individuals. it is much more stable. is the see in europe lowest part of the economic cycle. can we speak about it today? .he answer is no >> how do you grow the business? organically or -- >> we have done nice acquisitions and we have announced the signature of a big agreement with a group. a spanish and savings ain't. we will buy from them the and the second largest shareholder. andill be a mix of organic mna.

and it be a growth depends on macroeconomic development and much more outside of europe and the middle east of asia. it should grow. >> you just talked about the story. let's talk about all of the executives coming on. how do you manage your business in the environment of sanctions? well, we do not have business in the ukraine and this question is not so valid in our environment. we have an operation in the the politicald unrest is something that is theitive in areas where

environmental resources are key political issues. >> thank you. we will take a break and see you in a few minutes.

>> pressure arising and the west hits moscow with penalties. the plans to invest billions in russian energy projects could be at risk. the black and the shares rally. the investment banking is down. >> good morning to our viewers in europe and those in asia. i am guy johnson and this is the

polls. and wehere in london have some breaking news expected. i cannot see it yet. let me tell you about what we have coming up. hours away from defaulting on debt and new drug sales. with the ceove later this hour. so, we are getting it, as we anticipated. statement oned a banker bonuses and clawbacks. the statement is the news and manus cranny has the news. >> that statement is one line -- >> we call that a hospital pass. >> the bank of england wants to be the strictest in the world. if you missed traded, they can

look back in the bonus record. >> there you go. it was going to be nine years. the industry said that was aggressive. they came up with seven years. still the most aggressive regime and the world. >> it is. it shows you that the regulatory authority was within that and they are furious about changing how they think and act. and it means any bonus that you receive. you undertake a form of misconduct in achieving that and participation or anything that

is not exactly the letter of the law. the bank of england can go back and take the bonus, even if you have spent it. and putting them the names or divorcing person would be hard to avoid. for imposing this -- you are looking at me skeptically. >> i am curious where you are going. >> narrowed the grounds of the clawbacks and that confirms it. this is the uk's setting it up and a domain of good governance. was well listened to on the bbc and he said that he

have to that banks regulate themselves. interesting. business do the right in the right way. -- i thinkthat is that is a little hard. i am not trying to defend. i think his background and everything that everybody tells ,e about him and where he came i know the projects he is involved in and is background is different to other people in the city. we have been in a long time. my impression is that he is someone who came in with a view to change. bankers.vestment >> it is hard. >> it is revealing how hard it is.

>> investment banking revenue is down and market business is down. the holy grail is fixed income and the u.s. peers and core horowitz -- and cohorts. it is tough. the only one silver lining in any of this is that the feed and the investment banker fees for advisory and capital markets are at 35%. that is the only redeeming feature and it was the same and deutsche bank. i leave it there. >> thank you very much indeed. the u.s. has joined europe and imposing tougher economic sanctions. it is aimed at increasing pressure on vladimir putin and his country's role in the ukraine. we are joined now by ryan chilcote.

this morning, let's figure out where we are with the sanctions. is still surprising ambiguity. >> i am happy you are keeping the bonuses. >> me, too. >> clarity. restricted the banks and the access to the capital markets. that is where the lack of ambiguity exists and there are a and thes in russia biggest of them is directly controlled by the central bank of russia. and the independent idea is that it is. we're waiting to hear clarification from the european union and they are going to come out with what that means. the companies and their access.

there will come out with a black list that names companies. and thethe big issue other stuff is straightforward. the weapons embargo is not retroactive and the french can sell the warships to the russians. it will not allow sales of technology to the oil industry. we have seen the russian stocks do better than expected and the reason for that is because most was goingught that it to be worse than they are. addition, there is confusion as to what they mean for the individual companies. >> an interesting piece put out this morning and the talk about the inversion. how about that signaling problems that are coming for russia. it is problems for european companies. >> yes.

it is interesting that this is an example of a company that has large exposure to russia and they have signaled that they are doing something about it. they got the second quarter earnings and they missed expectations. $3.25ts are looking for billion. the big story was with the cfo had to say in the conference call. he said, the day that mh 17 was down, we stop buying shares in our partner and the russian partner is the largest independent gas producer. -- help me of the out here -- the master plan to make the largest supply of russia fossil oil and gas and get added. one of the shareholders is close to the russian president, as far

as the west is concerned and he has been sanctioned by the united states. the company has been sanctioned and they have been locked out of access to capital markets. it is difficult to get funding to do things like they would with nova tech. wear them say they're going to put a freeze on the cooperation and root view the project. they're going to meet up with the partners to decide if they're going to go forward. that is pretty interesting and they said that, when it was down, it introduced to much uncertainty. >> preemptive action. thank you very much indeed. the russia story and the performance. the clock is ticking for argentina. they are away from defaulting on

billions. investors they call vultures. call themk, others holdouts. where are we? >> we had a frank exchange of views last night that meant that they were yelling at each other, according to the mediator. mediating -- interpreting. let us walk through what could happen. argentina defaulted on 95 billion and 93% of the bondholders agreed to take $.30 on the dollar in the restructuring. the rest held out, including singer and management, who demand to be paid the full amount. hasourt after court, singer one and there is an equal argentinianws in

bonds. they cannot pay one set of bondholders and not the other. that is the crux of the argument. or 1.62 the the 1.5 crowd, they will be on the hook. some ofa tried to pay the money to make interest payments to the restructured group. of the case said to pay everyone or no one. thebank of new york and clearing bank was ordered to send the cash back. frameegan a grace time and it was time to negotiate holdout creditors. name was thomas and he argentina --r and in argentina. >> i imagine that is the case and i assume that they have the money to pay. it triggers all these clauses. >> that is what works.

that is the argument from argentina and why they say they cannot pay. they say it would violate the laws that is based on future offerings. they say that if argentina makes a new deal with anyone before the end of this year, it has to pay everyone the same thing that the holdouts get. costtina says that could 120 billion dollars or more and some of the estimates could be on the high side. triggered, it is they do not have the cash reserves. >> thank you for covering what is happening in argentina and new york. thenumbers are out and stock looks like it is trading down. we are going to talk about tapering and job gains. all of the issues that the fed has to think about at the moment.

we will get the results. what can we recent -- what can we expect? we will talk about it.

>> good morning. you are watching the polls. you are seeing positive trends and look at the gap that we have seen. the thing that i would like to mention is what you are seeing

on the front end of the curve. it is up and around five years concern withals what is happening in russia. they tell you about the short-term risk. this morning, some losses. you can see the gap back here and it is the dollar gaining. talk about the dollar and the investors are waiting for the end of a meeting from the fed and there is a lot of data to deal with this week. looking at the current trajectory. gasquet the head of global research. good morning to you. is awe have seen thus far continuation of the 10 billion

and we will wrap it up in a little while. >> we are not getting any surprises from today and we will get a forecast from the feds. what will be interesting and what we will see over the next months is how they message the language around an exit strategy. that is what they are focusing on at the moment. janetyour assessment that yellen will have to become more hawkish? you can see a big market >> she has been on the dovish side and it will take be pusheda for her to to think about an accelerated pace of policy tightening. what the markets are focusing on our a terminal rate and expectations that have been

lower than before. caution in the language about the pace of rate hikes. >> the pace of rate hikes that we will get will not take place until next year. the problem that they have is and the problem is in the next couple of years. and therehe expansion is a point where economies go through these cycles. they want to be ahead of that the point where the economy starts slowing down. >> there is the policy that is going to grow and it is finally going to become a reality. is there a danger that the market is getting ahead of itself? >> what is happening is

fragmentation and risk with added issues of problems in the ukraine and it goes back. we know that the european policy setting is keeping anna, newsstands and the underlying risk in europe is why you see that spread in the rate market. question ina final europe and elsewhere. seriously thinks about the global economy and they have made it clear that they set policy for the united states. issuey set policy and the that you see now, if we see a bigger slowdown on the back of what is happening, that clearly presents a risk for the fed and we know that in broad terms. it remains significant going into next year and we have the

bank of japan. there are plenty out there, even if the fed does start policy. >> we will leave it there. us withu for joining what is coming. would have second-quarter earnings falling short of estimates and i drugs were not enough. are joined by the ceo of the business who joins us from the company headquarters. good morning to you. the questionwith that we are trying to get arms around at the moment. andrun a global business how do you view the sanctions and the story related to russia. does it have an impact? thatwould say that we hope

, like every business leader, for a diplomatic solution in this sort of conflict because business leaders want escalationity and is, for us, the best solution to these issues. , russia is ahat good growth country for us in health care and it is only 2% of the total revenue. and not sotant important that it could not take us off the track of overall growth. >> do you think that you will be less inclined to invest in business moving forward from here? do you think it will grow? track,ss things go off

we will grow. we had double-digit growth in the second quarter and we are investing and expecting to get that growth. continue to invest and we want to reach the russian patients that need the innovative medicines. youoesn't make it harder if are someone like that. there is a more clinical business related to what is happening in the markets. does it make it more or less exposed? we see emerging markets and

fantastic growth is this because people are inventing and finding of self medication, to some extent. it was not always available. in china and brazil and russia and many areas, over-the-counter drugs become more and more popular. i would say that, for russia in particular, there is a large self-medication market in russia that is attractive. >> this is a broad question and if you do not want to give a strong answer, i understand. people talk about german business being the most exposed. you look around. there are groups running businesses.

are you concerned that the german economy will feel the pain and how significant do you think it will be? >> we have strong ties with russia and from an energy supply. supplied from is russia, to give you an example and there are important ties there. there are ceos in germany to think -- you think the way i explained it to you. to go through these issues. we want more infrastructure roger explained russia. there, of coarse, is the biggest

danger. that would be better for german business. it is case of buyers, about health care and nutrition. russian citizens use our products every day and i think that those businesses that are focused on the russian citizen are less affected. you mentioned the euros and what is your assessment of what happened next with the single currency? there is anticipation that it weakens from here. what do you think?

>> i am not a traitor. i am a ceo of a company in germany. i will tell you that i was in 1.3 four seems rich, if you look at the purchasing power of the dollar for the euro. you get to buy in both countries and i would say there was a ways to go to be weaker than today. that is my personal. >> are you planning for it to be weaker? wanted it toe become weaker have been disappointed. >> no. we look at it and there is deafening you can do about it. we do not let it influence the strategy. we are always looking at what we did organically. you know? make the decisions based on

the basis of how well they make it organically and there is an exchange in effect and we have to deal with it. part is thatrtant we get organic topline growth that begins to translate into real earnings and cash flow. that is why i am saying that i am happy with the second quarter and the organic topline growth for the company over in annual sales. it is a good number. >> a nice point. consider what is going to happen with the leadership of the business. he ise stepping down and taking over. you are pretty happy leaving the business. he isu comfortable that the right man for the job and why is he the right man for the job? >> i'm sorry. i do not know where you have the information from. my successor has not been decided and will be decided in the middle of 2016.

i just extended my contract for the another two years. there is no decision on succession and i am still there for two more years. my notes andading i apologize. they are in my hastily-scrawled handwriting. way i wrote ithe down. i apologize. is he the first guy in line to replace you? speculatet going to on that and it is a decision that will be made in the middle board6 by the supervisory and that is all i can say or am willing to say about it. it is quite a ways away, as well. >> i apologize for my poor handwriting and getting ahead of

ourselves. ceo.eo and the ongoing thank you for your time. ok. what's bring you top headlines this morning. investors are waiting decisions today. economists expect the central bank to reduce purchases from last year. lawmakers thatld rate in creases may come sooner and more rapid the. that is the quote. newbank of england unveiled powers to clawback bonuses and that was after they were paid. the contracts say that there are ander bonuses from workers financial conduct rules. all right.

to the markets. >> it should be a little bit more grateful than that. a lot of people talking about this, giving you some pain. you need something to happen with the fed. nobody is talking about the fed today. two more meetings where they end q.e.-. but what next? what are you going to do with rate hikes? the statement today could be key. going to take it over to the bond market now, all the talk about record low, 10-year german bonds. yes, it's a record low but look at italy on the 10 year. 2.63%. they auctioned five and 10-year debt at record lows. record lows. and i think you should also look at spain as well. 2.46% negative inflation, call

it deflation, negative 0.3%. you get the eurozone tomorrow. yields are falling. they're saying the euro crisis, whatever you think of the fundamentals of those stories. and everybody talking about sanctions. dead flat on the cac and ftse 100, higher. the sanctions on russian banks, they're important. they can't raise equity funding or debt funding here in europe. but when you look at it and break it down, it was calculated. it was calculated to minimize the impact on the eurozone economy. they haven't sanctioned the russian gas sector because they depend for a third of their total import. and the french, they got what they wanted. they are allowed to deliver that warship. these slow burning sanctions. if you want a warship that takes

10, 15 years of planning, that's not something you decide next month. what does it mean for the marks? is it still an isolated event? many telling me that's what it is. how russia retaliates if they do react, that's your curveball. ftse in positive territory. a miss from fiat. >> we're going to talk about that right now. take a look at 5% on the russian curve. big miss on the bottom line. >> fiat not revving up as its sales are up 5%. they wanted a 10% increase in sales. europe is flat if you look at the numbers. the really weak point is latin america being echoed by russia.

latin america is where we're seeing weakness in terms of currency and growth. but overall, their concerning their fiat. they're half of where many have been targeting. this is a company that transforms itself. it wants to challenge g.m. it wants to challenge volkswagen and toyota. >> have they got the money to do it? >> you're selling off facets and trying to raise debt funding to be able to woo the u.s. investors. north america does as well. sales up 10%. asia, very strong, up 40%. ut latin america, very weak.

>> there's been a lot of bad news but signs life. >> there are. three years we've waited for a profit. 3308 hatch-back delivery rising for persia. and they're basically managing their inventory. they're making sure that they're not reproducing. they had to close down plants because europe became stagnate. there were cars that were not being sold. now they're going to reduce their cars on the d-list by 30,000. what an phenomenal amount of excess. >> that's an awful lot of capital just sitting there and doing nothing. >> yeah, and getting old and aging. >> yeah. >> remind ourselves at the numbers. persia makes 27 billion euros in sales.

that is more than estonia make in a year in their entire economy. 27 billion means you can sell. and everyone in milan can buy a 308 hatch-back. >> i like the fact that you're comparing milan and burma. but overall, these are phenomenal numbers. >> this is an incredible amount of sales. finally, they're stopping that. they're managing to reduce their cash by slashing their workforce by 17%. they're getting cover by what models they're going to make, making them more premium. fiat's been doing more than that. >> i was born in birmingham. i'm not sure if they have it. beside make cars. anyway, we'll leave that one firmly there.

caroline hyde, making all kinds of interesting connections this morning. fiat and peugeot, two of the big stories. airbus reporting results. profit rose 10% as its commercial paying units delivered more. the company reiterated that it expects to see more modest concerns in sales growth in 014. that's the airframe you're looking at there. at farmer, they did very well with the 330. that is the previous incarnation the 350 twin engine sort of aircraft that fits into the middle of the wide body lineup. but they're now reengineering the 330, which is the older plane and that could sell very well.

it's going to sell at a very low cost. and that could have a meaningful impact on what happens over boeing with the 747, a much more expensive plane but is it going to be worth the same amount of money that delivers decent performance? the 380 is the biggest challenge. let's stay with the earnings story. let's go to taylor. shares rising today. we spoke to a c.e.o. earlier today. we started by asking him if how supply or the lack of it was the problem. >> we see the social, the political, the economic impacts of it. i've been in this industry for 15 years and it's been a problem through all of that time. i think what's changed is that more people recognize that. is it a political government problem if yes. but is it something the industry has the power to move towards? absolutely. we have increased the number of

homes we built by about 10%. we believe there's a sustainable level of crisis that was healthy. short-term solutions don't tend to last but it's the industry's involvement. >> how confident are you? you see price rises at 10% in the u.k. does that make you confident to build? >> 10% a year for three or four years is an issue. that is a condition that doesn't seem to last, 10% in one year off the back of four or five years of price stagnation isn't in itself a concern. and we've seen over the last couple of months that rate of price growth start to slow, which i think is very healthy. healthy. and we've also seen it balance

out, not quite such a big level of growth in the london as it was in the southeast. it's a healthier level of growth tan we've seen over the last 12. and if that becomes an , that's a patent healthy place to be. we would like to see a more stable healthy market and we've seen some signs of that today. >> but a lot of people are talking about the quality of that growth and it's not being underpinned by rising wages. that's a big concern that we aven't had that wage growth. when the bank of england raises it, how resilient do you think the housing market to a rate hike? >> if you see the sort of rate that are forecasted, significant to individual consumers but low,

i think the housing market can absorb those and it probably will impact on growth. but as i say, in a healthy way, meaning that growth in a healthy way, not negative. , now, still to come "sharknado 2." it storms on tv screens tonight. details after the break.

>> welcome back. you're watching "the pulse." i'm told the tv movie "sharknado," yes, it really exists, attracted an enthusiastic following online and became actually a surprise hit for the sci-fi network. tonight is the premiere of the sequel. it's also the debut of a new home theater technology developed by sci-fi. here's more. >> obviously, there were so many unanswered questions to last year's sleeper hit "sharknado" that the sci-fi network decided to release the sequel, "sharknado 2," and this time, they're bringing that great white hot action not just to your screen, but to your lamps. perhaps i should explain.

this here is a plips q light bulb and there are three interesting things about it. it's an l.e.d. bulb and it can generate anything you want it and has built-in wi-fi. so what if does this have to do with all this? the network has taken advantage to coordinate the light in your room to the action that's occurring in the movie. sci-fi sync can listen to audio cues in the movie and then send instructions to the bulbs in your house so for example, your room may be cast in a nice blue light when you're out in the water but then turns in a shade of crimson red when some sucker gets chopped up. like anything that involves "sharknado," this is all a bit silly. ok. more than a bit. but the implications are more interesting than just creating a lighting scheme for the latest

ian ziering-tara reid vehicle. light basically turned off and on. but if you make life smart and colorful, different apps can control them in different ways. your lights can turn on automatically when you wake up because the fitbit syncs to when you are moving. right now, a huge starter kit costs around $200 and individual bulbs run around 60. so plain lighting doesn't come cheap but two things are certain. the price will come down over time. and there will most definitely e a "sharknado" 3. >> ok. i can wait for one of those, but not necessarily either one of those. "sharknado," something to look forward to particularly the sequel. let's move on. let's talk about some of the

ompany news out there. mediaset swings to a loss in the second quarter. mediaset may face stronger competition after a competitor bought its stake on it last week. and twitter shares soaring in markets. sales more than doubled. the company's net loss widens more than $140 million but its sales forecast this quarter beat estimates. tokyo and toyota held on its goebel sales. -- global sales. volkswagen posted sales decline and is slow to introduce a

midsized s.u.v. in 2016. ken block has become a huge youtube sensation by posting his videos on line. he racked up more than 160 million sbrutes by integrated product plugs, he is able to turn his viral fame into cold hard cash. >> hi, i'm ken block, race car driver of the hooligan racing division. i started racing in 2005 and absolutely loved it. but since then, i've done a lot of racing in videos. it's quite a surprise how the

general public has really viewed those. and i had no idea when we put it up on the internet that it would get the views that we got. i don't want something that looks like it would be in a movie. they have to fake so many things. i wanted to look as real as possible because everything you see in those videos, i've done. it can be kind of nerve-racking because of the pressure to get it done so quick. -- and so well so that production schedules can stay on time the first budget of the first one was only like $30,000. it was four guys in two days and it was practically nothing. and i know those videos are upwards of $1 million or something like that to produce owadays. i can't tell you how many times i've been signing autographs and

you got a dad with like a 10-year-old son and they say we've watched so many of your videos on youtube and we follow you through your instagram and facebook and that today is just such a change from 10 years ago. we actually adjust kind of our content delivery, product delivery, even deliveries that go on the cars based on the feedback of the kids that we interact with. for me to get in these cars and drive them as fast as i can, it's one of the things -- it's the best things i've ever done in my life. >> pretty amazing what you can do with a ford focus but the ole adage, don't tries the at home definitely applies here. decision day for the federal reserve. details are coming up next. and this is a reminder. we're going to have special coverage of the first on bottom line. 7:00 p.m. london time.

that's where the decision comes on bloomberg television.

>> welcome back. let's take a quick look at the currency market. this chart tells you initially this morning when we got here in london, we actually saw the dollar strengthen.

but since then, it has come down a little bit. i think that's significant in itself. i wouldn't read too much into it because the longer trend is 31 negative for the ruble. this significant steeping of the front end of the russian curve to the five. the market has some short term risk into the russian economy. just pay attention for that. and there's a positive market trend you could argue in the ruble. but it's this five to 10 inversion is pretty significant. let's talk about what else we're watching for the rest of the day. we're joined by u.s. economic analyst mike mckee. mike, it isn't often a fed policy meeting takes a back seat but with g.d.p. with a little bit later, back here with the case. >> indeet.

as long as the american economy is meeting their expectations, fed officials are not going to do anything different. the second quarter g.d.p. suggesting growth has returned after its winter slump. we hate 3% annual growth rate after 3% contraction in the first quarter. but there is an extremely wide range to the forecast and no consensus on how much consumers and companies spent whether inventories are up or not and how international tensions have affected fraud. -- afraid. -- trade. the jobs report continues to show strength in the labor market. the payroll processor will find another 230 private sector jobs. so combine progress on both should keep the fed on track for its $10 billion taper this month and the q.e.-program on track to

end as scheduled in october. >> so do we get any real news going to be coming out here? >> no. this fed meeting is the old story about the duck placiding on the surface but paddling underneath. they will be talking about change. once the q.e.-program ends, investors are going to start anticipating higher rates and policymakers have to figure out a plan for doing that. they want it by their september meetings so markets want to know how the exits will happen on their list. and shrinking the balance sheet, which and when are going to be key questions and what their new forward guy dance will be. we're not going to learn any of that. we're going to have to wait for the minutes to be released. any real news will be next week about august 20. >> we certainly will be. let's go to elliott and tel aviv. elliott, what is the latest on

the increase on fighting? >> guy, i want to tell you that i will be keeping an eye for any progress for the cease-fire but the reverse seems to be fighting. israeli force is pushing deeper into gaza. in an incident this morning, tank shells, shells presumably coming from the israeli side hits a u.n.-run school in which more than 3,000 palestinians were seeking shelter. some 20 killed and more than 50 injured in that incident. the death toll around 1,300 palestinians and 56 israelis. you may recall if you cast your mind back to 2009 when there was a major ground operation by veilian -- israeliian side of aza.

>> thank you. that is it for "the pulse." we will have special coverage of the fed decision at 2:00 p.m. eastern. we'll see you tomorrow.

captioned by the national captioning institute --www.ncicap.org-- >> the stocks sores. europe joins america in toughness sanctions against

vladimir putin. russia's oil future is threatened. in bunes areas, we have a problem. argentina confronts default. >> argentina's debt talks collapsed. they're going to resume today and this is the deadline to avoid default. so this is a big deal. spain up .6%. that was the ugly duckling and spain is back a little less ugly. we're going to get our own read on gun point. -- g.d.p. >> deutsche bank staking out that. we'll talk more about that. >> and a.d.p.