in crimea, in the annexed territory for a second straight day as the u.s. tightens its rule one sanctions. ukraine may open its door. the country would allow russian enters filled with aid to the country if they are delivered by the red cross. we get second quarter gdp figures from part of the region's biggest economy, france is up, in 30 minutes. hello, welcome to "countdown." barton, joined by manus

cranny. ukraine, pro-russian separatists continue to battle government troops in donetsk. at the same time, a convoy of almost 300 russian trucks carrying humanitarian aid travel from moscow towards ukraine. here with the details, where it is -- >> should we call it convoy-gate? the convoy, according to russian the importanton, thing to know about the city where it is, it is quite a ways from the ukrainian border. it's a good couple hundred miles. the geopolitical meltdown we may or may not have is at least several hours away. it would appear it will not happen at all because the ukrainians have said that they trucks fromhose 280 the russian emergency ministry into the ukraine. there are two caveats.

one is they get to inspect it first. we have yet to hear with the russians have to say to that. the ukrainians have said they think there might be weapons in there in addition to the humanitarian aid. the russians have said it is laughable. in addition, they say when the aid gets to the city, if he goes as far as donetsk, the aid must be distributed not by the russians themselves but by the international committee. >> are these impositions, theoretical impositions the ukrainians are putting on these in terms of we will not know until they open the back of the trucks and get on there and do it? >> i think he between these trucks sitting in russia and luhansk, there is a lot of time for disagreement. whether they get through the border, whether there is a problem at the border, whether it iset to luhansk,

fraught with problems, the whole journey. having said that, it looks like the ukrainians just yesterday the interior minister said president putin can take their 30 tons of salt in those trucks and he can put it where the sun don't shine. yes. yes. and then the prime minister, after that, said, you know what, the russians should send a truck empty and take all the fighters they sent over the border and send them home instead. >> are they focused on the humanitarian side? >> the last word on the matter yesterday, although i am sure there will be plenty because they are just waking up, ukraine will allow the trucks in because it wants to avoid a russian invasion. >> talk to us about new sanctions. the u.s. tightens sanctions. this is individuals that are sanctioned that hold more than 50% of companies, but it is confined to one company right now? rule.t is right, the 50%

it used to be if one individual or entity owned more than 50% of another entity and they were sanctioned, that entity was also sanctioned. makes sense, right? time, four months ago, a russian insurance company , which appeared to be which in turn, was mostly owned by a gentleman who i believe we have some pictures of, he is on the right-hand screen, when we finally do it? there he has come the larger shareholder. so we thought this insurance company four months ago might and up getting sanctioned. shareholder appeared to own more than 51%. we learned the next day the russians had divested just enough of their stake it is not 50%, so they no longer -- that

company would no longer be sentient. the treasury has gone back and change the rules. they say, you know, it is also 12.5 percent owned by another such individual, so we are changing the rules. any combination of sanctioned individuals. >> the markets rising again yesterday? >> it is up a fourth day in a row 1.8%, up on the day, fourth day a row, the biggest streak since june. and the ruble is up as well, half a percent, 35.9 percent. they are not too concerned about that. >> thanks, ryan, see you later. a little later today, 10 a.m. u.k. time, we will get a windup of the european gdp expected to show a decline in the last three months through june. we are looking at .1 percent, compared with .2% in the first quarter. he began to understand, mark, the minutia, the tiny details. when we are talking about gross isestic product, for me it

the fluctuation data, the consumer price index. one is the reality, the reality of a slowdown. >> the economy is barely growing. >> stagnation, in other words. and you have the policy data, the cpi. spain, fourth consecutive quarter of growth improving. >> it will outgrow germany for the first time in more than five years. i do say stark contrast between south and northern europe. >> it is, but they still have 25% unemployment. put this in context, it is an improvement. german factory orders are down. poland, the contagion effect is not in the european numbers, but poland will slow down more than 15%. in the next 30 minutes we get france. we saw some of the cpi data, the for your note, unemployment. -- the four-year note. >> does this play into the doves

on the ecb who will be willing for the central bank to implement further monetary measures rather than waiting for these targeted, long-term refinancing operations to kick into place in september with negligible growth? you wonder if it plays into their hands. >> i think it quite possibly does. you look at spain, the unemployment rate is 24.5%. deflation, at right deflation -- outright deflation and span. and in france -- >> the approval rating is 16%? >> when you look the landscape of what is happening in europe, the policy will be driven by the inflation numbers. virtual stagnation in terms of the european growth will feed the dogs. then something else caught my eye. you had the same piece? >> you do it. >> he doesn't share, you know.

>> i will do torture goal, you do greece. >> will it or wanted exit recession. 24 straight contractions. we are just enough where we are contracting. >> slowest pace in almost six years. >> almost six years, be precise, and they will lose 200,000 fewer russian forests as a result of what is going on. trading partner, mainly the trade it does with russia is oil and gas. , 9:30 they release gdp. we should see growth, .5%. is it sustainable? the reason we saw a contraction of the first quarter was because of exports? >> yes. >> the economist we have surveyed say the adjustment will persist as the recovery picks up speed. we will have to wait and see. it should be growth. portugal growing,

but it seems as if the lack of growth is spreading to northern europe. >> it is an inversion of the north -- south divide in terms of financing. -- it is an inversion of the north-south vied in terms of financing. >> talking about rwe, the german utility. yesterday they beat earning estimates. the biggest increase in a year. income ist-half net simple. it is the measure used to calculate dividends, the key metric. 49 million euros, estimating 790 million from analyst. what is good here if you one rwe investor, they have maintained their full year forecast of 1.2 billion euros. what is happening in germany

right now is the country is shifting towards subsidized renewables and away from nuclear , leading to a surge in wind and solar generation. as a result it has cut power prices, already weakened by the slowdown in european growth. this is the environment, the likes of rwe and others have to work in. >> there has been a decommissioning of power stations. taking that power station off the grid, it is eating into all of them. they say they will never decline, the earnings from power generation, operating down 40%. the outlook from a 2014 confirmed. i will take us to germany. in just under an hour, it is germany's chance to deliver their growth numbers. herbs largest economy is expected to contract in the second quarter -- europe's largest economy is expected to contract in the second quarter. hans nichols come he travels, he is standing by.

hans? >> manus, good morning. i am here at the court of duisburg, the largest port in the world. we want to take the temperature of the german export economy. this port last year had a 16% increase, remarkable story of growth, over 3 million standard containers. behind me, there is a container crane. it may be moving some containers made report. the important thing is is the port continuing to grow? economy isany's export-related. when you look at manufacturing, clearly germany is the strongest manufacturing economy in the eu. francis about 10%. is about manufacturing 15%. germany is close to 22%.

you take all of that and overlay what is happening in the global economy, the potential slowdown in china, sanctions and russia, just focus on sanctions and russia. look at the effect between january and may of this year. german exports to russia down 15%. 20-year, 20 five year decline could mean the gdp declines a quarter of a percent in germany. estimates all of european trade with russia if it continues to slow, .3% shaved off gdp. it is not all negative news. there could be a positive story. they will start shipping fully w's toed audis and vo china. manus, i think you are more of a volvo man, guys? >> hans, thanks for that. towe are live in moscow

discuss what could happen if russia is hit by further sanctions. ♪

>> first. bloomberg. >> welcome back. i'm mark barton.

our next guest says the current round of sanctions and russia have been priced into this year. now the concern is what happens next. joining us now from moscow is the directingor of prosperity management. >> good morning. >> do you really believe it has been priced in? what will happen if russia invades ukraine? what are the implications of that eventuality -- what are the implications if that eventuality happens? >> it is a very distant prospect, in my mind. i should qualify this statement. i think russia has been pushing for a political resolution to this conflict. you cannot win this conflict militarily. invasion of another country will destroy this process.

this is why i think the market will benefit in the absence of further escalation. why do youhink an -- will an apolitical phase happen when so far it is debatable that approach has worked? is in its ownne political cycle. you have parliamentary elections , and working with the enemy in this situation is not going to happen, simply. conflict, while it still lingers, actually prevents political solutions to the problem. more publicmay need opinion support in order to conduct these negotiations.

right now, international public opinion does not enable international politicians to support the political process, really. events like the current offense going on in russia -- the current events going on in russia, transporting military it will ukraine, improve russia's standings in terms of public opinion. obviously, very definitely domestically wherever he went consolidates in support of the government. moving in tanks would be completely different, possibly very polarizing issue for the domestic public opinion. then the international public opinion also takes notice. also, russia is probably somewhat calculating that it can

expected, but the ukrainian government may be meddling with acceptance of the military aid, -- the humanitarian aid, which also improves russia standing in the public opinion war. ryan here. i know you think it is highly unlikely there could be a russian invasion. nonetheless, you have done the math. what would it mean for the russian stock market? wouldny percentage points it decline by if we saw a russian troops openly acting in eastern ukraine? well, it is a difficult mathematical equation, but i would say if you want to know the direction, right now the market expectation is somewhere in the middle, between nothing happens and escalation continues at whatever pace.

and the disaster scenario when russia moves the army in, the international accord, and isolation of russia continues on a much grander scale than we have seen before. market will obviously drop off quite dramatically from the current levels. on the other hand, the likelihood is nothing of this sort will happen and the markets will continue a modest recovery which it has seen in recent days , and there is quite a big upside. >> ivan, we have to take a commercial break. we'll have more firm prosperity capital's ivan after the break. keep it right here on "countdown ." ♪ >> we are back with ivan, the

fanaging director o prosperity capital management. your best casey area was no invasion, um no massive unwind scenariour best case is no invasion, no massive unwinding. what percentage liquidation have you seen in the past three months? give us a sense of whether it is escalating week by week. >> i have not seen any

escalation in clients retreating from the market. i think there have been several bouts of fears, but the market actuallyation will over dramatize the actual movement of the underlying funds . i think people who have invested have made it with very long-term calculations in mind. popularas not been very for a very long time already. if you have that much of a trough, it would be very volatile and it would come and go as the change in sentiment. i think we have a stable base. >> ivan, the worst performing emerging market economy is the

russian ruble, down 9.9% so far this year, one of the most volatile. we have seen some small buying. does that continue if there is no invasion, as your best case area suggests? do we come back from the levels we are at at the moment? the russian ruble is a very strong currency. the trade policies of the country has always been very consistent. it is the sentiment-driven capital which pushed ruble under. with the change in sentiment, we will see the ruble gaining strength against other currencies quite quickly. it all comes and goes on the sentiment, really. >> ivan, for investors with a strong constitution, where is the value, what would you buy? guys have like a gasp

in the past, very much in focus with all of the gass talks. where do you see opportunity? >> there is a whole suite of opportunities. there are different price levels and levels of risk. at or below three times earnings. it is actually quite cheap. i don't think you should expect any immediate improvement in gazprom as a given, but for the pace asked acid-base it has and the ability of the russian government to improve the country, it is an interesting long-term investment. on the other hand, the privatized companies, the truly private capital in russia has been very efficient if we look at the oil and gas.

we have always liked private companies. >> ivan, we have to interrupt you. thank you for joining us, ivan mazalov. coming up, good news or bad news for france? ♪ >> welcome back to "countdown."

a quick foreign-exchange check, some movement of the korean banks. 2.25orean ruan rallied to %, well flagged by the marketplace. hsbc says it is a one-off. flat reading quarter on quarter.

france bails to growth, flatline, 0.0%. yes mitt was to eat got a gain of .1%. fx traders only typically sit down at the desk in london. francois hollande with his ratings at a level of 16%. in london, the french economy stagnated in the second quarter, did not grow in the first quarter either. let's check on the market reaction. b.f. joins us. the figures have not gotten off to the best of starts. thece, according to economist we surveyed, would grow .1%. they did not grow at all, the second guessing it of quarter. does this bode badly for germany and the eurozone later this morning? >> yes, the focus is definitely

on germany. i think that is where people expect as much. muche have not expected from france, so i don't think that alone is enough to make much difference. seenny, of course, has russian sentiment. >> and the contraction is down be the firstill time it has underperformed in five years. is it a one-quarter thing? thele are putting it to mild weather, the bundesbank saying they will grow 1.1% this year. it is a one-quarter phenomenon or not? >> i would think so, unless the whole russian situation escalates a lot further. i don't take it is that sensitive for this region. as long as the global situation continues to do well. the problem in germany has been investment has been extraordinary low quite some time. it look like they had been

roaring, and suddenly we get this. it has been quite disappointing all along. >> it has been a big shift in the past 24 hours, from what i'm reading, in terms of the fed will be on hold longer than we thought, we sell mark kearney indicating lower for longer. would you agree we are shifting into again an extension of lower rates which ultimately drives your business? business would certainly love it if there was more volatility, if there was more action on the monetary policy side. if it was not the glacial pace of movement which you always cannot see because you are not sure it is actually there. i thought the stanley fischer speech earlier this week was very important. i think basically what he said is there is a lot of stuff we don't know, a lot of uncertainty. as long as that is the case, let's stay on the cautious side, the dovish side.

a similar message yesterday from carney -- from our carney as well. >> your perspective on the market? checks, the market is so sure, so sure, then pimco, the market is so sure of the euro will reverse. here we are, still have not broken 133, 21 billion of short positions in the market, are we so short as the worst is baked in? on whetherit depends overall people are willing to get engaged more. overall engagement is very low. >> the euro-dollar, the euro-yen? funds,s say the hedge the speculative money, they may be 20% invested, 30% invested in terms of risks. which means if that figure stays the same, then we are very short. but of course they could suddenly come in and do 100%

risk and we could go a lot lower. i think that depends on the central banks. i don'tdoes not change, think risk-taking will increase a lot. inflationrterly report yesterday, sterling at a four-month low, the dollar, many have said the market misinterpreted him, he move the goalposts again. wages is clear that the key piece of data? they have cut their wage forecast for this year. are we pushing back our rate expectations until next year after yesterday or not? >> i think the goalposts thing certainly has some merit. [laughter] >> it is a nice way of putting it. >> ultimately it is inflation that matters. we started from far away. we have been looking at input inflation. initially, the labor market focuses on unemployment.

now we come further and we say, well, wage growth. but of course there are other ingredients to inflation. it's quite possible if inflation were to go up, suddenly the focus will move away from wages again. inflation may go up without wage growth. >> is it time to just back off the sterling over the year, or is it still the number one performing currency out of the top 10? what is your stance on the sterling right now? >> no, i would not give up now. , the datae really situation has been solid. with the bank of england is saying, we don't understand why wages are not going up, what them not understanding really means they could be surprised to the upside, which i would say has a quite high likelihood, and did the whole thing will come back. gilbert, verbatim, said "wages are not a policy

instrument." >> you know -- >> that was a heavy sigh from the expert. [laughter] >> i think it is fair to say we are not entirely sure what is the big focus. as i said, ultimately, it is inflation. there are a number of things that go into that. itinflation were to go up, does not really matter what wages go up. just going to move on, worried about emerging markets. we talked a little about it, we have had news in terms of turkey. the ruble is the most underperforming currency. where are we? we had a miniature run in terms of the gas markets in emerging markets at the start of all this. what is your perspective? how do you look at that at the moment? >> i think we come back to what you said about the central banks and they're not moving and so on. >> that's a positive? >> that is a positive

environment. the fundamentals on the emerging markets side are not typically negative, so it is a but if it's true the fed is hyper cautious and the other central banks are hyper cautious, we will continue to see carry trades, and that will support e.m.'s. >> and the euro funding currency, we had a guest about the euro -- why isn't it? >> funding currency, typically it has an interest rate. there is quite a lot. if it was that everyone else had high interest rates, yes, but i don't think that is really the case. >> how are you constructing your carry trade at ubs? what is the majority of the base carry? >> i think the dollar is still more of a funding currency dan the euro because typically people look at things via the

dollar. so naturally, that is the funding currency, unless you have good reason not to have it. but that is the default. the dollar is the default funding currency. >> and the turning point for the secular dollar rally, we are not there yet? >> not in my back yard a no. i mean, the market -- not in my view, no. one thing happens the whole of the year, what we have seen this kind of repeated disappointment. we haveuro, admittedly, seen a move and gone quite a bit lower, but still, it has been disappointing for the dollar bulls. .> a glacial pace with that in mind, quickly, are you changing your view on when rate hikes come in the united states of america? >> i don't think we need to change the view yet because they are far enough away.

it is probably middle of next year. it is so far away, it doesn't really matter. >> bank of england first come out of the central banks? >> yes. do you really think so? i don't know. >> bank of england first, get ready to pay more on that mortgage, mark. t, fx strategist at ubs. iraq's headlines -- pride minister has lost the support of his own party. the group is urging its members to abandon her reality -- to alikion nouri al-m for the one who was elected. but he says it's in constitutional. >> it is a conspiracy. we cannot surrender to such a constitutional breach. opened the door to compromise over humanitarian aid. they say they are ready to

accept a russian shipment of aid bound for two cities. but ukraine insists it will inspect the humanitarian aid first, and it will be delivered by the international red cross. are urgingd e.u. russia not to use the aid for a pretext of a russian invasion. a top presidential candidate in brazil has been killed in a plane crash. he died when his plane went down in bad weather. index swungck between losses and gains on the news. investors are trying to respect the death and figure out what it means for the october polls. petty crime is on the rise in the french capital city of paris. is being hittaurus especially hard. we more on that story after the break. -- one group of tourists is being hit especially hard. we have more on that story after the break. ♪

>> first. bloomberg. time for today's company news. some of your it's -- some of europe's biggest companies are among the bidders for the american biotech company intermedia.

targetingmakers are biotech companies -- and large drugmakers are targeting biotech companies as they build up your pipelines. of 5.2 6 has a value billion. china mobile's profit fell for the fourth straight quarter as costs for enhancing its 4g network climbed. they spent more on promoting, including subsidies for the iphone that makes the handset cheaper for consumers. business hasric sweden's interest of interlocks. the companies are in talks to buy the appliance division which may fetch about $2 billion in a sale. >> paris is the favorite destination of chinese tourists. they often idealize the city.

as petty crime increases, city officials and travel agents are concerned about the slowing growth of chinese visitors. another day at the eiffel tower, with people snapping away. and a group of girls collecting spare change for a good cause. >> spare change for the handicapped? >> no change, no euros. >> no problem. >> but this is far more sinister. the petition is a diversion. while you help, they are helping themselves to your wallet. they increasingly target the most vulnerable, chinese holidaymakers who often carry a lot of cash. >> they have the money, so we run away. >> nearly one million chinese tourists visited paris last

year. but their number is not growing as fast as before. agencyecialized travel say they have lost at least 3000 chinese clients. >> i think it happens every day. really, you can react quickly. >> the problem was so big, the louvre went on strike to demand more security near the museum. now you can find mobile police stations across the street. placeed and put in intelligent security by targeting the most visited places. we have increased the number of policemen, with foreign police officers present during the summer. >> the french police launched a new two-week plan last year. there was a police officer and a new team for the chop easily see -- for the champs elysees.

it is vital ford taurus and to make the memories happy ones. as it is vital for tourism to make the memories happy ones. >> let's talk about the growth in the country or the lack thereof. second-quarter gdp missed, flatline economy, but the minister on the take said, look, the economy will grow about half 4, but it will01 be capped out at 1% growth. it is amazing how they are scrapping over, like, virtually no growth. here we are in the u.k. with 3%, the u.s. at 4%, whether that is achievable going into it. etc., allal, spain, racing ahead in terms of performance. so they grow half a percent, topping out at 1%, not much

above, but they won't meet their deficit target. shock, breaking news from france, they will not meet their deficit target. that is not going to make analysts happy. >> they had an extension from the european union. i don't get be a huge surprise to many. it was not a huge surprise to beat. he said today is all about germany, which could contract .1% because of russia. >> first time contracting, underperforming in five years. where did i get that fact from? >> i don't know, was it me. >> i think it might have been mark barton. >> the bundesbank has expected the german economy to rebound in the second half, but anything can happen. germany and russia, they are the e.u.raders within the >> they are, they have the most relationship. i think avoiding the deficit is important because they were

speculating this morning that francois hollande would scrap the deficit targets. i think what you've got here is a reaffirmation. and go toe snore sleep, the deficit targets, the bottom line is there is a route, you have to have not anymore debt on your books and the a mystic product has to be 3%. everybody agreed to play by the rules and there is no way the feds will realize -- >> in recent years -- >> they have to be. that is the state. >> coming up, how one couple's weeklong getaway in spain turned into a 16-year voyage. that is next. ♪

>> welcome back. i'm mark barton. newspaper time. manus, the daily picture? >> what's up with that? don't work with -- >> animals. >> this is the front page of "the independent." i think this is one of those moments, this is a picture of in the story, but the

title of the story is "reduce troops on their way to iraq." obviously, these are not , but this iss about humanitarian assistance rather than military. what, this is very, very prophetic moment. this is everything that obama ameron and virtually every western government did not want. >> yeah, but you have this humanitarian crisis and would be a crime, perhaps, to not step in. it is far away from baghdad. >> on a lovely note, my new heroes. their names are clive and jane green. thisars ago, they bought

haute and they thought they would sail to spain. literally 16 years later, 58,000 miles on, they travel the world, they have a rest, and they are both retirees. it is a lovely story. they have visited everywhere, the bahamas, new zealand, fiji, australia, cyprus. he was living on 130 quid per week. week? quid per >> they went off to spain, and they ended up traveling 16 years. we will still be here to welcome you. edition, there is the headline. sales stumble. the fastest drop in sales,

inquiries, and actual sales increases. according to the survey that came out at midnight. you will have a guest later in the show. we have spent so long talking about how the housing market has, what, cooled! i don't understand. people are now saying expectations have moved. how about 2020? i mean what are they -- >> they're just angry. >> if you have a house, then: house prices -- --then cooling house prices. >> it's not a bad thing. >> why would you want your biggest asset to increase 20% in one year, i have no idea. >> it's not sustainable. >> i think that is a youtube moment, really. "countdown" continues. --ed our, the french economy next hour, the french economy.

how will germany do? growth is expected to contract. second-quarter figures are coming up next. join me on twitter, every day, live at 3 a.m. drink more coffee. ♪ . .

>> no growth. gdp stagnates for the second quarter. germany faces -- numbers are breaking now. russia's president is in the annexed territory for a second day as the u.s. tightens its rules on sanctions. ukraine may open its doors. the country will allow russian convoys to enter the country if they are delivered by the red cross.

hello. welcome to "countdown." i'm mark barton. breaking news. yes, we have germany contracts gdp by .2% in germany. that is worse than the market had estimated. we assumed there would be a contraction of .1%. it's down .2%. that is certainly a big shock for the market in terms of a market reaction. we're going to cross over to hansen nichols. have a look at some market reaction. we have euro-dollar 1.3354. you can see this is obviously a retrospective figure. 1.3353 is where the euro-dollar trades. waiting for the pan-european number. it is declining. france strake made it -- stagnatecd. >> will the eurozone figure b as

buoyant as experts expected? .1%.se france missed by because germany missed, maybe the euro zone economy will not grow in the second quarter. we will find out at 10:00. french have also scrapped their deficit targets. growth in the economy gives you s.e ability to pay off debt let's get straight to germany. hansen nichols is standing by to talk us through the situation. that's a real disappointment, hans. isn't it? a disappointment on so many levels. not only did it miss expectations, down .2%, but they also revise the first quarter which was .8% down to .7%. some of that first quarter growth was because the weather was so great and germany.

the fact it was revised out for last quarter, and this is a miss, means behind me all of these cranes -- yes, they are moving now- theat the port to tell export story. but with gdp, we have a lagging indicator. ceo andd to talk to the see what is happening with the german economy in terms of exports. exports make up that the two percent of the economy. it is very much a manufacturing taste economy. one of the highest, the highest in germany, 22% comes from manufacturing here. the question has always been with the germany company in the last few quarters as -- can it continue to grow when its neighbors are not? we appear to have a pulmonary answer today. on these numbers today -- we appear to have a preliminary answer today. where weird quarter will have more of a bite from russia's sanctions?

is it going to be worse? are we going to see a rebound? we will talk to the experts. looking forward to some interviews. also want to get onto one of these barges. the hum of a port. things are moving. question is -- are they moving throughout germany? >> thanks. day, we willn the get around a. with that italy, spain. this morning, france with stagnation. way before sanctions. way, way before sanctions. one other thing that has caught my eye is the working day adjusted for gdp rose by 1.2% o n the year. the estimate was for a rise on 1.4%> . so i think those are the two things. still the euro-dollar. that has not broken. $1.3333. it's a drum i'm banging.

it is not broken the 2014 lowe's so -- lows so far. germany is under pressure. spain has pulled itself up. >> other european economies are showing signs of recovery. spain. portugal should grow today. and your lovely stats on greece. it is almost growing. >> it is. .2% is where we think that number is going to come in. 24 straight months of contraction. the recession is nearly an end. six year slump. what you have got there is a huge six years. a ammassive -- >> we must not forget that greece is russia's biggest trading partner. mainly oil and gass. the europea commission is forecasting growth. it hasn't seen growth since

2007. >> russian tourists are expected to fall by as much as 200,000. retail sales fell by 8.5% in june. interested reduction up. -- industrial production up. portugal on the up. >> italy on the down. but domestic demand is recovering in spain. which hopefully will lead to a pickup in spending. pickupt will lead to a in growth. poland reports today. alex will the czech republic, as will hungary. -- as will the czech republic, as will hungary. let's focus on the ukraine story. pro-russian separatists continue to battle government troops. trucksy of 2300

carrying humanitarian aid travels across moscow towards ukraine. ryan chilcote here with all of the details. the convoy. where is it? >> it's on the road, headed south towards rebel held territory in the east of ukraine. it is pretty far from the border itself. we'll have to watch this. some movement overnight. ukrainian said they will accept the russian humanitarian aid if they are allowed to inspect it. itself is given out not by the russians but by the international committee for the red cross. so still very delicate conditions. interesting the russian president, all of this happening while the russian president is where? crimea. which is far as the russians is concerned is russia's newest

territory. they are going to be -- he'll address the duma. i wonder if it will be at the lavada palace. it is a place steeped in symbolism. >> you were there. >> i have been there. >> wax works. >> is that on bloomberg.com? >> that is the cabinet of the russian -- they'll be there. talking about western sanctions. it is a coincidence as you have separatists in the east of the country asking to join russia. i think it should not be lost on us or our viewers. >> talk to me more about the new sanctions. the u.s. has gone for tighter sanctions. you said a 50% rule. what is it? becauseaded sanctions

stakeholder that had less than a 50% stake in it. i -- weividual is yur have some pictures of some of putin's inner circle. the largest shareholder on the right-hand side of your screen is garcia. there was this hoopla about sanctioned.s but they are back in the doghouse because yesterday the treasury change the rules and said if you have a collection of individuals that have been sanctioned, then what ever they have their stake in is sanctioned. because some of the other billionaires close to the russian president -- looks like trouble. miley cyrus and justin bieber may have some issues. they are supposed to perform.

summer they were going to perform at a helsinki stadium owned by arena events owned by a russian billionaire. rotenburg brothers. a judo partner of vladimir putin. with this new rule. with collectively the owners that have been sanctioned, more 50%, let's hope that justin bieber and miley cyrus have already been paid. >> you are looking at market reaction. five days of gains. mycex is up. it's higher. best run since may. gain the best run since may. >> he says,. best case scenario,

no invasion a lot of it is priced in. >> there is a feeling that this bring iny will negotiations between the separatists and the central government in kiev. if that aid does get through that would compel kiev to sit down with the separatists. >> have you seen pictures of the convoy? must be an incredible site. on the move. trucks of food. >> there it is. we saw it leave the base this morning. this is the most covered convoy. >> there are journalists moving in tow. listen -- , somet is the whole idea might argue. for you to see that picture. >> stagnation, contraction. what the latest growth numbers

from france and germany mean to the eurozone. ♪

time for today's company news. paves the way for the first

delivery of the plane to qatar airwaves. the trials have lasted 40 months. the final flight completed a three-week tour with the test playing visiting 14 destinations. qatar airways is the a350's largest customer. jobs andcutting 6000 forecast little or no revenue growth in the current quarter. in demand fromp phone and cable companies. the world's largest networking equipment maker and the latest round of firings represent an 8% reduction in the workforce. a 23% surge in first quarter profit. with pc marketing contraction, markethas kept winning share and expanding into the smartphone and cap the computer markets. -- and tablet computer markets.

>> in the past half hour france and germany contracted. more, we are joined by sturgeon capital portfolio manager. hello. where's the growth? >> in france, there is no growth. the growth is stymied in germany. you have to look further down. if you look at numbers from gr eece, better than expected. same for spain. confidence in ireland is the highest since 2007. yannick,u really, having a glass half-full approach? be honest. or is the glass half empty? >> it is worrying that if you have policy -- and it doesn't generate any growth, it will create some problems. that espirito

santo could be the systemic risk for the eurozone, i thought the biggest risk was the lack of growth in france and italy. >> let's get right to the crunch of the matter. zero rates. and money ready to come out of your ears. germany is contracting. there is no way spain, greece and ireland is going to pull this block up? what is? q.e.?t >> yes. the ecb will need to do the q .e. asset-backede. by securities. but it will take some time. from the latest information from draghi, they are not ready yet. >> if that is what it is. new form of q.e.

that would make it to the consumer. 25% unemployment in spain. you are looking at historical levels in italy. youth unemployment. how do you buy europe when it is this literally flat on its back? >> i am not that pessimistic. every country that did structural reform because they were forced by the market are doing better today. doingse who are structural reforms, not you italy or france, are showing signs of recovery. >> it would have been better for france to do it two years ago. >> does france have the appetite? how long to we have to ask that question? hollande was not elected with the agenda of doing structural reform.

having said that, since april, we have had the new prime minister. much more committed to growth. than the previous prime minister. late?too littel,le, too at least they said to do something about it. >> would you buy european debt? if so, what part of europe? >> the 10-year bund is close to 1%. it might even break 1% if we have negative news on the eurozone gdp. france is 1.%. 5%. if anything, there is no value and long-term government debt. portugal offers some relative value, because the spread versus the bund is wider than it used to be. 2.6% spread. >> so equity markets are opening

lower. some people say that a little bit of risk has, geopolitical risk is improving. is this aid convoy goes into ukraine, your strategy for 2014 equities.uy debt in will we see better opportunities than we are at the moment? >> since the beginning of the year, we have been buying. why? because when the monetary policy accommodated. it makes sense to do so. because of the lack of liquidity during the summer and because of the geopolitical environment, i am not sure it is the best time to do it now. all in all, we have a lot of cash on the side. we are a bit pessimistic for the next few weeks at least. >> let's hear what yannick has to say about russia. he has been exposed to russia.

we will tell you by what means after the break. ♪

you are very welcome back to "countdown." we are still with the sturgeon capital portfolio manager. before we left for the break, you were telling you the amount of cash you had on your book, and you said the hedge funds are

underinvested. the quiddity is a big issue, but, and i do like a little bit of volatility in my life. buysay you should protection. this is an opportunity. tell us what that is. it's a protection on american or european equities? what kind of volatility do you buy? >> you can look at the vix, or other equity options. the in all, today volatility is attractive enough for you to buy protection. i would think with a lot of -- a lot on the ledger, look at the hedging part of the portfolio because it is an opportunity. easing monetary policy. the fact that there is no expectation of a sharp move. everything seems to be priced in. if something is good value, you have to benefit from it. >> is there value in russia?

we have already asked one guest that today. you have dipping your toes in and out. manage, we did not have ukrainian exposure before the crisis. during the crisis, we did go in and out. for example, earlier this week, i bought some lukoil. a good, liquid name to go in and out. having said that, the equal committee is going down sharply. -- the liquidity is going down sharply. a specialist destination, rather than a generalist destination. >> the fear of further sanchez is such that a lot of fund manager are restricting themselves -- of further sanctions is such that a lot of fund managers are restricting themselves. where do russia, then you look in this race for yield? as i said to a couple of guests,

a switch. the fed is on hold. this is a conversation we had with ubs. the fed could be on hold for longer. mark carney is trying to guide the market. where do you go for yield? >> you can't have safe yields. it doesn't exist anymore. >> safer. >> still, within some high-yield bonds, you have some good value. is in all, the market expensive, so you have to do a lot of -- >> 6% in u.s. good value? >> no. if you look company by company, some companies offer value. for example, we are looking at nordic high yields. within the swedish high-yield markets, we think there is value. it is very exposed to the old mark -- the oil market. the oil prices are not going anywhere. quite stable. >> lesson of the day, what is it? >> you tell me.

>> safe in yields? no. >> has the london housing market lost his momentum? we take a look at the boe's warning next. ♪

>> welcome back to "countdown." time for a quick check on foreign exchange. r has not taken the 2014 lous. that is the number on every traders take it. 1.3325. we have dipped, day four. germany contracts by double the amount estimated. .2%. francis and stagnation. in stagnation.

hedge funds are not taking huge etss according to -- huge b according to ubs. . euro-dollar that rates fors cut their the first time in almost a year. the won is strengthening. that is the dollar declining. the won is strengthening by .1%> . the downside risk far outweighs the upside risk. hsbc says this is a one-off event and you will see return to form in rate hikes. next year >> i am mark barton. these are the headlines. s caretaker prime minister has lost the support of its own party. the group is urging supporters to drop maliki. but maliki insisted the attempts

to re-place them are illegal. >> it is a conspiracy being hatched inside and outside the country. we cannot surrender to such a constitutional breach. >> ukraine is open the door to compromise over humanitarian aid. the country says it is ready to accept the russian shipment of whereund for two cities pro-russian separatists are surrounded. will inspectit the aid first. russia. and eu warning pretextse the aid as a for an invasion. a top presidential candidate in brazil has been kllilled in a plane crash. investors are trying to assess what the campos death means for the october election. house prices are

growing at their slowest rate since 2011 according to the latest data. for more on the reasons behind the slowdown, we are joined by a senior economist, joshua miller. welcome to "countdown." and i mean, i look at this and i say, this is actually quite good news. slowest growth in three months. the lowest since march, 2011. surely it has come off the boi. l. >> the bank of england takes the view that this is good news. what is in nobody's interest is a very volatile housing market which is growing by 20% a year. so yeah, a more stable climate is in everybody's interest. >> does this all go back to the new guidance given to banks? the big loans they can make. is it beginning to bite now? >> i do not think that is it.

the messaging around that, the rhetoric coming out of the bank of england is concentrated. the bank of england has been successful in engineering a change of mood. >> what about affordability? is it not only stretched in london? >> not only london. nationally, affordability for 20% above.rs is in london 40%. >> is this a pause. >> what is critical is the view of our members, and they are telling us that prices is set to pick up again over the near term. expectations over that horizon are still upbeat. it is at a turning point. >> new buyer demand fell more sharply.

inquiries have fallen their fastest rate since april, 2008. tie that up to me. someere could be short-term factors going on. there could be the mortgage market review. landers taking time to adjust to the new framework -- lenders taking time to adjust to the new framework. that could be more of a short-term factor. as i say, i remember them telling us they are seeing sales, they expect sales to pick up near-term, medium-term. >> nationally. it is not just about london. the markets are resilient. buyer demand has stabilized. sales growth moderated. price momentum remains firm. that a good summary. >> that is a perfect summary. >> i got it from your report. nationally, what is the picture? >> i think it is very much the same kind of, the same number of

factors. mortgage market review slowing down things near-term. you still want affordability. flow generatedws by the bank of england. it is starting to weigh down our activity. expectations are still positive, but less positive than they were before. >> surveyors in scotland are the most optimistic. they are the most optimistic anticipating price gains of over 3%> is that just a long-distance ripple effect? >> it is not a ripple effect. the same is true for northern ireland. it is a different market. they had a hard time of it. the same in northern ireland. now we are seeing a catchup. sanctions. is it evident in london? >> there is some commentary. what i would say is that it is more of these change rates.

depreciation of sterling is putting off at the margin some of those oligarchs. >> do you think mark carney yesterday pushed back rate expectations? >> he did. that was the key message. it is looking like the beginning than late 2014. >> the first two questions went to the "daily mail." but the messaging that the bank of england are doing is to the people on the ground. do you think that is coming to some of the surveyors. are people worried what a rate hike means in terms of their mortgage? >> interestingly enough, we surveyed their interest rate expectations. they are telling us about 1/2% in one years time. >> a big debate. the prudential tool slowdown the housing market?

is it too early to say yes or no? we have had the mmr. is it too early to say whether that is the case? >> we are in an experimental phase. along with macro prudential policy, communications play a big role. the bank has been very successful in communicating. even though the recent announcement are not meant ot kick -- to kick in for two years, there are messages we can act. we are worried. >> he wants everyone to be more aware of your own affordability. >> mark carney had the skye interview. he is talking to everyone. >> we're going to have it leave it there. thanks. atlantic city in the u.s. is a popular casino destination. one of the most a tour is gambling whales in the game. a man called. johnson filed a

johnsonew way -- don explained to bloomberg why it is not his playground of choice. >> it is, a time when atlantic city was i think they were desperate for business and they were over pitching the games. >> atlantic city casinos, owned by mgm and seasons, began calling don, offered $50,000 in free bets. dondeals were so good, suspected atlantic city was in worse shape than any other gambling city in the country. >> vegas has enough critical mass, and they have a huge convention business. some fairly major properties that can do a lot of cross marketing with different properties they own around the country now. >> but the cross marketing strategy to keep las vegas strong also steals business from atlantic city. vegas casinos and just to grow profit outside the strip pitching small, regional

casinos. states are embracing these casinos. every single one of them. >> overall, i would call it a win-win. it is going to generate hundreds of millions of dollars in revenue. >> let's take the first step this year. >> for atlantic city, new competition means big losses. local casinos have sprung up around atlantic city and they are all siphoning players and profits from the boardwalk. >> i think atlantic city, they are losing too much of their business. this is too much competition and surrounding states. it started with delaware, pennsylvania has put a lot of pressure on them. new york has gaming. they are soon to be expanding. it is a matter of time before it's going to go back to being a beach town. >> germany's biggest provider of electricity turns to a loss in t

he second quarter. for details coming up next. ♪

companyfor today's news. some of europe's biggest pharma companies are among the bidders for intermune.

large drug makers are targeting biotech companies. 14% yesterday in new york, giving the company of valuation of $5.6 billion. amazon has unveiled a credit card reader that plugs into a handheld device. into thes its entry mobile check out market. the push of the point-of-sale system as part of an effort to provide more services for small businesses. homeal electric's appliance business has drawn interest of swedish luxur electrolux. the companies are in talks to buy the unit. the appliance division may fetch $2 billion if the sale is agreed. rwe reportedday, profit in the first half well

below expectations, falling 62% as earnings from generations declines. it is a slightly different story from aeon which also reported a drop in earnings. it benefited from earnings at its generation business. the story in germany is clear. they are moving away from nuclear energy. slowingwithin a european economy and within falling power prices. >> that comes through. you have power prices. what they are saying are the lowest in four years. there is a little bit of a tie -up. production is taken out of the system. rwe go on to say that they will take 1000 megawatts offline by 2017. and another 500 near-term. they are sticking to the 2014 target. >> that is something.

had theirshares biggest increase in over a year because of what they had to say. aeon. i have looked at both of their geographical regions. turkey,looking into russia, brazil. it has challenges, but it is cutting back on capital expenditure. interestingly it cut its capex in emerging markets to the lowest level since 1999. they are both doing the same -- cutting capex to shield themselves from the decline in prices. protection is a similar story to what we have seen in the mining industry, which is reinvent yourself, draw things back, stop spending money on projects that do not be up to what is called return on equity, the benchmark that is set. reducdes capex protects the dividend. that is a big driver within utilities. before we went to the fundamental change in terms of what is going on with the energy -- >> interesting what you say but

the wholesale power prices, which are at their lowest level for seven years. the company has been beating a presentation to analysts that says that european coal prices have troughed as well. forward power prices have reached bottom. when it comes to germany, everyone is thinking about what is the link between germany and russia? rwe and other utilities get 30% of their gas supply from russia. ukraine.mes via the eu is importing a bigger portion of its gas from russia. any turbulence in the market is reflected by these companies. >> it is. before we go, i think it is worth mentioning that the euro has turned around. 1.3365. andad stagnation and france contraction in germany. a market that is so sure. we are now at 1.3365. record.like a broken but if you break that level, the

stop loss is that -- is at 1.3325. of rwe isthe cfo going to join us on "the pulse," to talk about geopolitical issues. do not miss that. that is later. >> ratraders have a lot of think about. germany shrank. france in stagnation. how will the markets react? the euro is undecided. jon ferro cases to the market opening. ♪

toyou are very welcome back "countdown." we are nine minutes away from the start of the trading day. things are lower. the euro does not seem to know which direction to go in. >> what is your favorite level? >> not doing it again. even i'm bored listening to anmy self about 1.3333. >> look at some of the headlines coming out of that interview with the french finance minister. you delivered no growth. have a look at the new forecast of growth this year. 0.5% for this year.

you have delivered nothing for the first half of the year. is that growth forecast credible? look like theyy are in a race to recession. nevermind .5% growth. they have not structurally reformed. >> what about germany? surprise. is a a much bigger contraction than expected. rd.e again, spin it forwad this is not even the quarter when we have the sanctions. >> distorted by mild winter weather. germany poses. the sages have not fully come through. >> it is a big concern. a new twist now. because germany are seen economic weakness. not going to meet our budget deficit target this year. is angela merkel going to come out and say, you know what?

you need to reform. when her economy at home is also coming under pressure. that will be interesting, the political developments. and merrier draghi out -- mario draghi getting political. then beginwhere you to discuss quantitative easing. saying, it is going to be nonstandard measures. what is the tipping point? >> what is the external shock that it keeps talking about? germany slows, if down further, you could be pretty darn sure somebody will pull the trigger. get rid of the consultants. >> as governor carney ahead of weak growth numbers out of one of their biggest trading partners, there might be a reason for a dovish mark carney. he mentioned the geopolitical risk in the eurozone. that is a big concern.

>> he said that europe's best with -- jon ferro is the best -- >> you've upgraded your growth 3.5% forto 2.5% -- to this year. please tell me when we still have emergency growth policy? are we not putting too much emphasis on the first rate hike? a 25 basis point rate hike. that is accommodative in most people's minds. >> you can reply back to the government. >> you have no right of reply. thenot sure it is me or market or every journalist under the sun. guidance?out forward what was the whole point of forward guidance? it was about communicating the first rate hike. beyond that, you're still getting this lines that rate h

ikes will be gradual, limited, below historic averages with a new twist. not a promise, it is an expectation. chelton asked him, does this mean that you would move earlier than perhaps otherwise you would to meet that expectation? he was sharp yesterday. he gave no answers. he called one journalist modeled. -- muddled. given some of the forecast the bank of england has to revise, i am not sure the journalists had been muddled. the forecast of not been great. rex community thinks he has once again moved the goalposts. he moved it in june. >> hold on. the other side of the coin is that he is reacting. you would not want to be known as a reactive central banker, but he is dexterous. and noton your hands

move? >> "on the move" is next. market reaction when european equities open. jon will be with you. see you later. ♪

>> welcome to on the move. gdp day. where is the growth? where is the growth? >> it is flat. they have abandoned deficit targets. what will the germans say? >> we are here in the port to get a sense of what exports are doing. gdp is down. get a real-time

read on the barges. shipping cars across the world. goods and services. we will have that in the hour. >> a tactical pitstop yesterday. the trucks are moving towards the border. with lee it and then. >> france is stagnating. germany and the powerhouse of europe have negative growth. this was not even the quarter when the sanctions started to bite. let's see what happens next. futures are pointing lower. how will we open up? and itave equity markets is the second straight