Transcripts For BLOOMBERG Countdown 20140102

Im ryan chilcote. Im jonathan pharaoh. Ferro. Have dider does not you completed yet. Here with more is ryan. They dont have the deal done yet with fiat. 41. 5 in their actually only paying 1. 75 billion. The remaining is in installments. Its not everyday you can buy a carmaker in installments. Just 13 days ago, he was saying he was prepared to pay 4. 2 billion and we had this ipo. Was about price discovery. Basically, the results of the ipo was looking at a 10 billion or 11 billion valuation. Paying 4. 35 billion looks like a fair deal all things considered. Money strapped chrysler will have the deal but what does it mean for the leader of this group . Hes been working on this for the last 10 years ever since becoming the ceo of fiat. He tried to buy gm europe then he went all over to try and win that deal and they decided they would not sell. This was plan b. Sincebeen working on it 2009. Its very helpful for him in the sense that fiat is still lossmaking. He can still use this plus get access to the cache file chrysler has. He can use that to do a launch on this project, this 9 billion investment to try to make fiat, i guess, sexy again by selling retro cars, luxury cars that people really want. Its really important. It is helping solve the ongoing problem, the slowdown in europe. At the end of the day, you still have to sell cars people want to buy it. I have a plan to try to do that but its anyones guess as to whether they will be able to alone off. They are facing major competition in the United States. Gm is doing rather well. Ford coming out with 23 models this year. In theo have to keep up u. S. The competition is on. Look at other markets like china. 1, the European Union lifted restrictions on Free Movement of migrants from romania and bulgaria, the latest countries to join the European Union. European editor david tweed is in london. This results in a lot of debate here in the uk but the concerns are not just here are they . He might be surprised that its not just isolated in the uk erie these concerns are right across europe and i could just give you an example of all of it. From die zeitung a few days ago. They are quarreling over this very issue. , part of Angela Merkels centerright group, are arguing there should be a crackdown on what they call positive migration, people coming in from bulgaria, romania, signing up for social benefits. Coalition,rt of the but the centerleft portion that controls the labor ministry, are arguing that migrants coming into germany are good for the economy. We saw that when the polls came in after 2011. Germany took some time to allow the polish to come in and when they did, the benefits have been positive according to the labor ministry. Comeind out the migrants in and pay more in Social Security. They pay taxes. This jibes with the European Union report but also found that migration benefits the economy. Because you have migrants coming in, they are getting jobs that other people might not necessarily want to do, lower paid, longer hours, but they make their Social Security contributions and pay taxes. If you get too many migrants coming too quickly, you can put pressure on social services, pressure on some infrastructure like housing, education, that there is a positive effect. Im just reading the Financial Times and they were talking about the grouping of Catholic Charities which actually found that in italy, migrants paid one point 7 billion euros in social contributions and one billion euros in taxes. This debate will continue right up to the european elections in may. Thanks, david. Big story no doubt for the next couple of months at least. Preks moving onto the middle east, 2013 was a big year for deals. Will 2014 be even better . Our menelaus our middle east editor Elliott Gotkine has more. Live science is leading the way in 2013 . It accounts for about one third of the 7. 6 billion value in 2013. You had Companies Like the newest listing in tel aviv listing over the United States on that as well. The next big sector were Internet Companies was just over 2 billion worth of deals. Mergers and acquisitions which accounts for the lions share and initial public offerings. Far and away, the most notable deal with google, 1 billion e, the crowdof waz source gps and it put israel on the hightech map around the world. In the last few months, we had Companies Like wix which helps technophobes build websites. They have grown more than 50 since the ipo. And we will hear more about this later in the program near the shares have doubled since the ipo in september. One hundred 70 million was the average size of a deal in 2013, the best and more than a decade. Theecognizing its only second of january, how is 2014 looking . How do you think it will shape up t . They dont call it new years here. Happyld wish you a sylvester. 2013 was great for a few reasons. The big all, you have u. S. Tech companies that have a lot of money and they are chasing innovation. Outside of silicon valley, it is most concentrated here in israel. There are more startups than anywhere in the world and they said more interestingly, i have become more patient. Instead of selling out of the first knockout door, the year being patient, holding firm until they have become more profitable, more mature, and can command a higher Acquisition Price if and when they sell out. Its important to know that israel is not an island in terms of financial terms. If markets remain buoyant dance and they have the money to spend, there is every sense that 2014 could be another good year. Pwc notes it is cyclical and it can be snatched up very quickly so we could see a flurry of deals. Elliott, we will have to leave it there. Elliott gotkine, middle east editor. Not wait until boxing day to slash prices and now the holidays are over and we paid off. F it who likes to talk retail . Caroline hyde. Numbers came out at midnight. He used words such as manic monday. They were just flooding into the store is packed up the last minute. Christmas sales up more than 7 . The trend is obvious that its all around online growth. We are seeing Record Online 25 , almostre than one third of the consumer business. They say on christmas a itself, we were all going mad. Everyone was madly shopping on john lewis using their tablet and smartphones. Three quarters of the traffic online was going to mobile. Got fort what i christmas and it was not the electrical items. Interestingly, fashion have strong sales growth there. That was not the case across the board. Its interesting they call it monday and i was one of the many shoppers there on the 23rd. I grabbed one of the shop assistants and said i needed to buy four things in 10 minutes and i pulled off. The other thing is there were so many sales out there, not on saillewis but other set that i saw. Became forward with a warning. They are managing to come out of the market with market share when you look at department stores. Hit by the tall holiday discounting, they hit margins. Like for like sales over the christmas sales. Pressure on Household Incomes . Its a concern Going Forward and its why we saw the shares plunge 15 on tuesday at one point. Will we see the same happening next week . Onwill also have an update january 9. Will it all be the glory of john many think so. Coming up, our next guest says dollar yen is destined for 110 by the summer of this year. Find out why next. We are live with Michael Gallagher from idea global. Time for todays company news. To buy thereed remaining stake in chrysler from the united auto workers. 4. 3 5 billion dollar deal will allow them to merge as the seventh largest automaker. The deal happened less than five years after chrysler enter bankruptcy. John lewis seeing growth in holiday sales thanks to its strong online presence. Sawuk largest supply chain ordersease with online surging. Customers ordered online and picked up purchases in the store. India has canceled its deal to buy helicopters from the anglo following a 15 month corruption investigation. A 750 million deal in 2010. The former Indian Air Force chief and 10 other officials are under investigation for the theft. Lcome back to countdown im caroline hyde. Im ryan chilcote. Said tapering is highly profitable says our next guest. Thats welcome Michael Gallagher from idea global. Give us your favorite trade for 2014. The first is dollar yen. We are looking for a move to 110. The fed will keep tapering through 2014. ,n contrast, the bank of japan we expect them to accelerate the Purchase Program roundabout april to try to get inflation towards 2 and try to keep the recovery on track. Thats kind of the clearest trade. Is a very Good Relationship between the bank of japan, fed Balance Sheets, and bank of and the currencies. Behe think this will dictating foreign currencies. When do you think diapering when do you think tapering will wind down . For the first half of the year, the tapering itself and how much the tapering actually as will be the dominant issue. We expect 10 billion over seven meetings. As we get to the middle of 2014, the markets will then be saying we know theres a bit of a gap before we see tightening, but how much of a gap . The market is expecting sometime in the second half of 2015, we will get tightening. We think it is constructed for the dollar overall through 2014 and this whole debate will go on and on. Its not just dollaryen. We like it against other currencies and we think the Canadian Dollar can catch up with weakness weve been seeing in the aussie. That can alsog spillover to produce some defensiveness in the weaker emergingmarket currencies again in 2014. How much of a oneway bet is this . Is a not a risk to come down the middle of next year. We have had qe1, qe two. Is there a risk of that happening . The fiscal tightening in the u. S. Is much smaller than was the case in 2013. The shift in Political Landscape towards the end of the year towards more of compromise in congress points to that being the case. I think that means good growth for the u. S. Next year. The odds are tilted badly. You also have to remember the dollar generally on a trading basis is quite weak. Consequently, if you look at riskreword it does affect the dollar. Lets talk about the pound for a second. When i arrived in the uk, the pound was above two dollars and then we went down to 1. 35 and now we are back above 1. 60. Looks like its cheaper to shop in the states from the perspective of purchasing power parity. Does the compound continue to strength against the dollar . What against the euro . The trade is not against the dollar. It will be a strong dollar and a strong sterling story. At times, you will see that coming through and it will be very messy, very difficult. We think the story is euro sterling. The markets are starting to debate whether they will increase rates in 2014. We dont think that will be the case but we think in the early days of 2014, the markets will get jittery. It will wipe out versus bonds and it will shift towards the european curve. The ecb is not finished with easing. We are going to get ltr row probably alsoill get a refi cut and the emergence between bank of england and ecb expectations we think can move sterling. Preks will mark carney be desperately trying to bring back the views that we will see an increase in rates . Experts will need to push forward. Retailers are really struggling and it will not be great if we keep seeing the pound strengthening particularly against the euro. Preks it will be on the defensive but you have to remember the first real chance they have to try to counter speculation is not until mid february with the inflation report. Before and thees bank of england will look at the situation and again, once again, fears coming through. You see the first to rate rise in the uk act of christ towards the end of 2015. Bangladesh for that. Convinceally they will the markets that it does not need to take greater action. We think the macro prudential tools will be the big story of 2014 and they will be used increasingly aggressively through the year. We have more with Michael Gallagher after the break and we will talk about europe and whats in store for the euro. Were back with Michael Gallagher, director of research at idea global. We are all moving on china. The consent of slowing growth once again. The concern of slowing growth. How much of a concern is this Going Forward . Is this just noise . Should notrm, you get too sensitive. You have to remember that 2014 will be a good year for the g 10 , the main export market for china. We should see a pick up the next board growth to the course of 2014. The big question for china is can they implement reform without derailing the economy . The market becomes sensitive on the china story when it sees interbank rates spiking because its a fairer its scared of an accident the likes of 2007 where you see a squeeze in the withm causing difficulty financial institutions. We have had money market spikes. They dont want to really grab the tail of the shadow banking system. They want to have their cake and eat it. That will be the story of 2014, some moves by the chinese but it is consistent with 7. 5 growth. They will feel that china is muddling through and that is the broader picture. You are not too concerned about the 3 trillion in debt that china holds. Youre not concerned this could take us back to another crisis . If necessary, it can be taken either by the Central Government or, alternatively, depending on the structure i the Banking Systems that have cleaner Balance Sheets down the rest of the financial system. That is kind of a cleansing in terms of what the reality is. I think the issues more are to do with broader credit growth. We see that remaining in double digits, thats consistent and if 7. 5 ,ee dipping below they will be concerned. Dollar, 1. 37. What is the risk to the trade right now . Could the ecb do anything to push at lower . The ecb is thinking incremental. There wanting to cut the refi rate. The euro should remain strong in the first half of the year. Its worth pointing out kind of the wider Investment Community saying if you look at european equities, they are cheap on a pe. Asis a hot year for israel he deals. Find out why Life Science Companies led the boom. Thats coming up next. These are the Bloomberg Top headlines. Chinese mac factoring fell according to two indexes. Best chinese manufacturing fell. A separate official gauge yesterday showed a similar drop. Jpmorgan has stopped clearing dollar transfers or latvian lenders according to the entries banking association. They have been reprimanded by u. S. Regulators for lax control. Latvia adopted the euro yesterday but about 8 billion in nonresident deposits will sit in latvian banks. The bloomberg billionaires index showed the world richest people adding more than half 1 trillion to their net worth last year. Of 78 billion dollars, bill gates. The top billionaires are now worth over 3. 7 trillion. Welcome back to countdown. Im caroline hyde. Im ryan chilcote. Im john pharaoh. Will 2014 be even better . Elliott gotkine has more and he has a special guest with him. I do. The author of that report, the wc joins meeader at p now in israel. 2013, the best year in more than a decade for israel he tech. Why was it so good . The most dominating factor was really the average deal size. The highest average deal size we had seen in many years with 170 million for an average deal. Youmain reason for that is find that Israeli Companies that were sold this year are much more mature than in the past. Maturity being both from a product perspective, technology perspective, markets. Some of them are market leaders in their fields and some of them have a large stake in market acquired. G when you acquire a company that is much more mature, your billing to pay a higher price the fact and also that u. S. Companies have a lot of money and they are chasing innovation and this is where they find it. It was definitely a sellers market. A lot of the Israeli Companies have and join the competition over the acquisitions which also may the prices higher. Its really the right time, the thet combination of companies that brought 2013 to where it is. Tothey may be waiting longer sell with higher prices. Should they not be selling at all and building these big Israeli Companies that everyone from investors and entrepreneurs aim . Telling me is now the this is a debate that has been going on for many, many years. I can tell you my is and i think today theres almost no reason to doubt that exits are good for israel. The fact that companies are being sold is good for the economy. It brings value to the investor. It brings good returns. Invest backck and in israel. Some of these companies cannot be multinational. They cannot be large multinational companies. They can do an exit and they bring value to the acquirer been on the round, they will not be large. On the other hand, we have seen the beginning of ipo cost which may mark the beginning of an era of building those Large Companies that we so want. Tech ipos. Re six what do you think 2014 holds. If you were a betting man, what would you say . Optimistic by nature. Very difficult to say what the number is. There are around 10 preparing for an ipo. How much of them will come to life, thats very hard to say. Some of them will end in an acquisition towards that very difficult road. Some of them will turn out to be ipos. The expectation for 2014, i ipo market for technology stays open with an appetite for investors that we will see a terrific year. This window about of opportunity for deals. How long can the window stay open . Another year . Another two . They dont stay open for long. Two years would be nice. Hopefully we will stay open as long as possible. More business for you as well. Pwc israel, thanks for joining me this morning. On a day where we had the best year for israeli hightech exits, ipos, mergers and acquisitions in more than a decade. Back to you. Gotkine, thank you. When whales are hungry, they like nothing more than a few large mouthfuls of krill. What is it . A rich source of omega3, a healthy fat. Rich source of profits. Elliott gotkine reports on the latest Israeli Companies to take the nasdaq by storm. Grownm tiny crustaceans mighty companies, at least they hope so. Floor, on the factory you can smell it has been shifted from the ocean, brought into these reactors where the lipids inside are extracted and eventually turned into Nutritional Supplements known as krill oil. Its aimed at people with high cholesterol. They are looking to get into prescription drugs. Having all three under one roof is a winning formula. The growth was healthy and it was about 60 and if you look at the last nine months it is 80 . Im saying that were very confident that this is only the beginning. Investors seem to degree to agree. The shares have more than doubled. That does not mean there is no possible downside. In a recent note, saying the shares are already discounting an earnings growing more than fivefold in 10 years and that there is a risk of new studies critiquing the Health Claims of nutritional new gradients ingredients, possible litigation. Then there is grappling with getting bigger. We want to be able to continue manage. We are a very diversified company. Expanding in one single market, one single customer or business. Our challenge is to make sure from the management point of view that we continue to manage. It is still tiny crustacean in terms of size that this is one company with its sights set on becoming a lobster. Elliott gotkine, bloomberg, northern israel. A mouthful of krill. Not sure how you follow that, but if you did he to much over christmas, the british prime thester talking fitness and latest technology to help burn off those extra christmas calories. Time for todays company news. Arees of hyundai and kia down after seeing the because sales growth in eight years. They said they expected a 4 increase in deliveries next year falling short of analyst estimates. Increase competition and a stronger yuan hampering exports. Samsunging its toll on heading its price target and reduced the 2014 profit estimate by seven point two percent sending samsung down to the lowest intraday level since september. Falling behind its main competitor in the london market, shares of young and company rose and the taxes are paying the toll. Stop making beer and manage more pubs seems to be taking off. Welcome back to countdown. Im caroline hyde. Im ryan chilcote. Collects im jon ferro. Become the 18th member of the euro. I guess they dont necessarily get to choose when they enter the eurozone but why would anyone want to join now . Issuets the particular right now, but let me give you three reasons. Politics gives you a seat at the table. If you are a small country like latvia, you will be affect did whether you are a part of it or not and its probably much better to be part of the discussion. We will look up things like transaction costs, trade issues. It erases any of those aansaction costs and it has little bit more certainty and banks could be encouraged to do more lending to latvian businesses. Havehird reason, you officials in latvia also expecting lower our wing costs. Who would have thought it could offer that . Thats exactly what it does offer. The eurozone offers the mother of all insurance policies in the shape of germany. They do not want to eurozone member to default so it takes away that risk as well. Geopolitically, they were one of the first to join the eu itself. It is a little bit of an insurance policy against the reconstitution of the soviet. Nion you are spelling out all of the things latvia wins but what do they give . Not many people are looking to answer that question but what i think is really interesting is you have a country whose economy in two thousand 8 2009. They pretty much embraced austerity and what youve seen is the fastestgrowing economy in the eu. Fuel from a little bit of for the pr machine to turn around and say they have people queuing up to join rather than the exit, it is a bit is indication to say heres the poster child of what austerity can do for you. If you want them to continue in that direction, maybe latvia is an example for the germans to come out and say, look, this does work. Is convinceduble they will reinforce the line of strong stability oriented countries that will help europe to stick to its reform course. This is steve and politics. Ears, youging in his think they would stick to their own policy. They will stick to reforms as well and they are the ones behind on that and they are all suffering right now. They are thinking this could fall back in recession. The2014, france could be one to watch. Manufacturing numbers out from france later and it shows just how far behind germany they are in terms of growth. January is here and that means for many of us, getting to work off those extra christmas calories. Who could use a little help from a personal trainer . Checking in with David Camerons personal trainer to learn how technology will transform the way he exercises. Trains top business leaders, actors, even british Prime Minister David Cameron and hes embracing cuttingedge technology as the best way to get fit. His gems in london already use personal monitors that he believes in the next few years the technology will bounds ahead. Not just heart monitors but monitoring all sorts of data about you from your heart rate, how manyre, not just flights but things like your respiration rate. Even looking at your glucose levels, alcohol intake. Sound a bits not big brother, its meant to. Ifill know if they do you are slipping. The technology is getting so good it could put some personal trainers out of a job. Complexlgorithm is so and it is so detailed that what they are providing, it is phenomenal. If you think personal monitoring is invasive, how about looking at the very makeup of your body . Dna testing and analysis is being used to pinpoint your strengths and weaknesses. It means wasting less time youritting a program to needs. Already using this technology and seeing the results, good news for some, bad news for those of us who would rather keep our trainer in the dark. Edwards, bloomberg. Two things, we did not learn how much the trainer actually gets. I guess if youre cameron you can be like im free because you will get the notoriety. My personal formula began on january 1 and i began to drive to the new Years Eve Party and taxi back. Back. En id like to that was your new january resolution. Almost. Its january. Theou have these chips in back of the outfits and it really just has cut overall injuries by about 80 . Eague guysmier l have been as well. Its invading our lives and hopefully or the positive. Not my life. Buycks two young sports stars announce their engagement teed again sports stars announce their engagement last night on twitter. The headlines are next on countdown. Countdown welcome back to countdown welcome back to countdown. Rise in the popularity of Electronic Cigarettes are causing a headache and in italy its about to be hit by an 80 tax on sales. Electronic Cigarette Companies say it is being imposed to penalize them. Angus bennett reports. The liquid is opaline glycol proplyene. It is used to give them the nicotine hit minus the cancer causing chemicals. Euromonitorrch international estimates that it will be worth 7 billion by the end of the year. , last year they earned 15 million selling liquid nicotine and the own Electronic Cigarettes. They feel under threat. In january, they will have to pay 80. 5 of their revenue in taxes. The growth of the industry has meant big losses for Cigarette Companies as well as the government. There are huge interests, pharmaceutical lobbyists, the state monopoly by catches 14 billion euro in taxes just from cigarette sales. The Italian Institute or superior health is cigarette sales are at the lowest in 15 years and big tobacco has started to market their own e cigarettes based on monitor estimates. We calculate that global is 2. 3ette sales may soar to trillion and a significant shift to smoking habits and revenue. Angus bennett, bloomberg. Theust over one hour from start of most european trading today and its time to look at the top picks from todays papers. Cliff this is brilliant. The opening of our borders. Youve been pretty petrified of what was coming over from her mania and bulgaria. They told us that the buses and trains were full. They were going to come over. Certain media members went down and waited for the people to come. I havent got the flight time here. Welcome. They are greeted by two mps and the media scrum. They could only find one gentleman who has, over. Had came over. He had never heard of it and he said he was going back with lots of money. It just goes to show that these guys are coming here to work. If you look at the percentages of migrants, its much, much lower for those actually claiming benefits. A lot of them are already here. Fear mongering stories, at least on january 1 yesterday, not the seen that some may have described. Buycks maybe some heard and they decided to take the next flight. Whats the story . Keeping up with michael schumacher. Here shows where he crashed and curiously, he was off trail in between which i found interesting. The good news is hes in stable condition. The bad news is hes in an induced, which means he will have to be taken out and only one third according to this article of people who were taken out of these, who have had surgeries on their brain resume normal life. We are definitely wishing the best for him. Another interesting part of the article, they look at whether he was being reckless or not. We were hearing a lot about that. Was he being any responsible daredevil . The helmet split in two and that does not happen unless youre going within 35 miles per hour. In any case, the average speed per hour. S its a bit of a non sequitur in the article. Our thoughts are with him and his family right now. And a lotlute legend of people say he did not get the phrase he deserved. Seven times winning the formula one. I hope he comes around to hear what a lot of people have to say because i think he might be overwhelmed. Phenomenal for the industry and just such an athlete. Welle a sporty story as but its one of a more loving nature. She said yes. Two sporting legends have now become engaged. There has been much said about his relationship with caroline legend. I, tennis they are saying that maybe it is distracting him from his game but they tweeted on new years day, and australia celebrating and he tweeted, happy new years i have a feeling its going to be a great year. My first victory of 2014 s hesaidyes. Win now though . A lot of people questioned this relationship. They are doubtful of his career. Maybe this will give him some stability. We will leave it there. [laughter] continues in the next hour and more on the fiat deal for full ownership of chrysler and access to its 12 billion cash pile. What does it mean for sergio mark lyons he Sergio Marchi oni . The following is a paid presentation for beach body. For insanity, brought to you by beach body. I want for you to jump off of the floor. I have never had a workout as difficult as insanity. You have to b