Good morning, everybody. Welcome. Youre watching the pulse. Were live from bloombergs headquarters here in london. Im francine lacqua. Bernie ecclestone goes on trial. Well see what the racing series would look like without its current c. E. O. And shaqenomics. Hes larger than life. Shaq tells us how he built an empire after the nba. Were getting breaking news. German Business Confidence just breaking fow. The data coming through a little stronger than anticipated. Expected of i. F. O. Number was 110. 4 so a stronger than expected read fitting in with some of the data that we have seen. The euro, well, up another leg his morning. We know someone in frankfurt who would not be too pleased about that. Mario draghi. G. E. In talks to buy Frances Alstomach for 13 billion. Matt campbell and Caroline Hyde are here. Matt, lets start off with you. Why did this work for him . There is a macro maker here. G. E. Is of course one of the largest American Industrial companies. It has enormous amounts of cash held outside the u. S. When an American Company holds cash outside the united states, it is very costly ever to actually bring that home. Rather than effectively sitting in the bank somewhere, making foreign acquisitions is often a sensible thing to do. The micro and g. E. Specific jeffrey is that immelts tenure ee with power turbines, very unsexy but steady business. Buying alstom, which is a very significant industrial player would really be the biggest move imaginable. Well get back to french protectionism as well. I love those angles. Give us a sense. A lot of investors say this makes sense strategicically because of what matt was saying and alstom needs cash. Exactly. It is basically a smaller rival that hasnt fared the Current Situation that well. It has an awful lot of debt on its plate at the moment. It had to cut jobs. Selling assets. They have not managed to maneuver themselves since the financial crisis. They are not riding the waves as well as g. E. Wanting to invs. In infrastructure, do what alstom does best, get into locomotives. Being absorbed by g. E. Is more spiritise. It is interesting also as you were talking about similaritys with the pharmaceuticals at the moment. Pfizer, we were talking about having an awful lot of cash offshore that they want to invest. Companies want to focus in on what they are good at. Then there is a french story. Sarkozy, finance minister back n 2004, rescues this business. They love the fact that they have got the Fastest Trains in the world, but g. E. Has a good reputation in france. Do you think they can get it past . Someone was joking last night now gurt is strategic there is a slight wrinkle here with g. E. , which is g. E. Has a stellar reputation. About 11,000 employees. They are seen as a good corporate citizen. The c. E. O. Is about as establishment as it is possible to be. They have really done their homework. If you think back to what seems ancient history now, g. E. Was a candidate to buy a significant business from ariva years ago. If there is any American Company that can pull this off, it is them. They have been in partnership for a long time. Seen as one of the great industrial jewels of france and g. E. Is involved in that. They are seen as dogooders by the french. Maybe that is more for the advancement for the cause. It is a 100plusyearold company that makes things like power turbines. 29 holder in alstom. It has been said they said yeah, we would not mind this too much overall. They made a statement basically saying we dont own them. 29 stake, what are they going to do with that cash . To ll telecoms an area look at. There are so many 2013 messages out there saying why are the americans buying omething that works . Matt and caroline will be back a little bit later. More on this shortly. Hsbcs chief economist stephen king is going to be talking to us, less so about whats happening with the equityside this story, but what it means for the French Economy. Whats happening here . Well get his take on that. If we dont get such a pushback from the government, maybe france will finally be seen as business friendly. Facebook, apple came in ahead of stements. Both did. Jon, is this enough to calm investor concerns about the tech sector . To some extent. The perennial question goes on. You have to say facebook is decent. A 72 pop in revenue with the company. A shift into advertising revenue on the mobile side of things. I see two very different companies. They are doing what they do well. Apple selling iphones more than many anticipate. Those fears yesterday about flat revenue slapped aside. Profit up 7 . It is not all rosy on the product side of things. Ipad sales disappeared. The bottom line is this. The ipad is contributingless to overall growth of the company. The problem with that is it puts more emphasis on the iphone. A single project. Tim cook said it means more to us to get it right than to come first. A bit of a slape slap to the competitors on that one. China is a big theme in all of this. As you say, the phone did well. One of the reasons why the phone did well was because of china. Absolutely. I dont think it is just a matter of looking at what they sold. Look at where they sold it. Brazil, russia, india, china. That is quite an achievement in itself. Tim cook, though, starting to define himself away from steve jobs to the extent that he is bowing to investor pressure to give more money back to the investor. Some of the moves, a boost of dividends by 7 . T is going to be a 71 stock split. What it means is if you have one share, you end up with seven. They will be equal to one share at the close of business on june 2. Youbottom line is basically a stock worth 500 and bring it down to 75. Does this drum up appetite . Does it mean a higher share price . Jon, thank you very much indeed. Jon fer o on the latest out of the tech landscape. An event that has been a media spectacle over the past few years but for all the wrong reasons. Manus cranny is outside the hall where the event is taking place. You have some breaking news at barclays. Yeah, we have. They just released there is going to be a small reduction in the adjusted pretax profit for the first quarter. And that really sums up the challenge. A shift in landscape. A change in landscape probably within Investment Banking. The backdrop to jenkins appearing here today, they did housekeeping, it is the challenge of remuneration. Im going to be joined a little bit later by keeren quinn. To sum up, they say barclays epitomizes everything that is wrong with banking bonus culture. This is bank that is going to pay its staff three times the amount it is paying out in dividends. This is a bank which asked its shareholders for 6 billion pounds and has received a communication from the business that sits up the road here saying that, you know what . High pay policy is a dereliction of duty. So there is three votes on pay. Last years pay and bonuses where the bonus went up 10 . Profit is down by 30 . You can understand the ear of protesters. Manus, how is the city reading this . How much time are they going to give jenkins . I think he has been caught short. When he set out the transform program, she want out a return on equity at 7 . Prsage of remuneration, he said 35 . Comes in over 40 . Give him time, guy, they will vote through these remuneration issues. Was he joe ambitious in terms of the targets that he set or is he going to have to face the issues as u. B. S. And Credit Suisse did, which is structural change whats happening at the investment bank. The landscape of Investment Banking is changing due to regulation and investment capital. Are you prepared to go deep into the muscle of the business . That is chris wheel everys point that i spoke to earlier this morning. Preparing for the Barclays Barack Obama is in japan kick off a fourcountry tour of asia. E aims to show his commitment. Phil mattingly is traveling with the president. Obama said he is ready to use more sanctions against russia. Thats right. Any optimism that was coming out of the agreement reached by the u. S. And western allies seems to be disappearing pretty quickly. He said at a joint press conference with Prime Minister abe not only were sanctions ready to go , they were teed up and they need to work on things on the technical side and make sure their allies are ok with them too. There is no exact date when these sanctions could be imposed. Obviously the u. S. Is still leaving the door open for russia. The president says were talking days, not weeks, guys. What about the dispute with china . I think that was the big takeaway from the press conference. Senior u. S. Officials made the statement about the u. S. And Japanese Defense treaty from a couple of decades ago that would come into play should china take aggressive action on these disputed islands. The u. S. President has never made that statement. Today the president came out and reiterated that statement and said this was no change in policy but in this region, with china now and what is going on, which the president saying it is a big step forward and you guys mentioned that the u. S. Needs to come out and make sure their allies are comfortable, the security arrangement. I think that was a big step taken today. Phil mattingly, our white house correspondent. Thank you very much indeed. Coming up, shares surge in alstom as g. E. Eyes the firm. What will the deal mean for the French Economy . Well have that next with tephen king. Good morning, everybody. Welcome back. You are of course watching the pulse here on bloomberg. We have an exclusive from bloomberg this morning. G. E. Is in talks to buy Frances Alstom. It would be g. E. s biggest acquisition ever. What does this mean for the French Economy . Yeah, what does it mean for French Business . Would the french government even let the deal happen . We have stephen king of hsbc. Great to have you on the program. There may be a political hurdle. Is this going to be like a crux moment where we understand france is open for business or whether it is the same old socialist france . It is a big question. Not so much whether it is the same old socialist france but whether it is resistant to the idea of businesses from elsewhere in the world buying its key makers. The case where the yogurt maker was not able to be bought because of strategic concerns. The u. K. Model is very much in favor of basically all comers coming in and buying assets. The french model much more resistant to that particular idea. Well see what happens over the course of the next few days. The french need to be more open, though. The economic numbers are probably not as bad as people thought they would be but there is clearly a deficit problem and need for structural reform. One of the ways you can do that is by globalizing your companies. If you can start to have an impact through Companies Like g. E. , coming further into the fold. A consequence of Foreign Companies coming into a country, changing Business Practices that may have gotten stale and uncompetitive over a period of time. Those things are helpful. In the u. K. , markets have become much more flexible as a consequence of Foreign Companies coming in from the 1980s onward. We mentioned structural reform. It is a unique code phrase for creating win rs and losers. You often get significant resistance to it because there are a group of uncertain losers who in the near term did well but in france that sort of resistance is does that change . How crucial is that for france to start seeing real growth figures . Were talking about soft economics but it plays into the minds of people and companies trying to set up there. That is certainly true. Frances growth rate is not as disastrous as people thought a year or two years ago. There is some growth coming through. Some inside of stability at least. The bigger problem is if france wants to live beyond its means, one way of doing it is sell off the family silver to invest no, sir the world. You benefit the current general refrigeration. Possibly at the expense of future generals. Future generations. The french government probablyless involved in this particular transaction. Sarkozy rescued alstom. They are now rescuing p. S. A. They had to put 14 into that company as well. Different models of how capitalism is supposed to work. A brutal process. Sometimes shortterm. You try nurture companies. The problem with trying to nurture companies is youre locking in a lower growth rate for a longer period of time. The strength of the u. K. Economy, people are much more optimistic. You also have previous governments that have been trying to track foreign direct investment. That leads to buoyancy to a lot of people coming and saying i can find a job in london and where else because the flexible labor market and there are opportunities. It is clearly the case that the u. K. Has become an attractive place for capital and labor to come to. London is the 129 or 13th biggest french city. There is a huge french population in london. Them again, we should not forget the fact that the u. K. Has had problems. It has had a goodyear over the past 12 months but dispipets for a number of years. Disappointing for a number of years. You have capital coming in and out of the country. It could lead to political strength but also instability. Stephen king stays with us. Well be back in just a couple of minutes. Good morning, everybody. Welcome back. It is time for todays hot shots. Australias nick claims his third title after cruising in victory. Racking up an almost Pacific Northwest score. The climber known as the french spiderman scaled the macau tower. And volcanos in peru have been erupting. Some of the most active in central and south america. Wow. Look at that. Humble, almost. Lets see how the markets are trading. Thanks. The ftse up. The dax. Similar the cac as well. Yesterday the stocks did something that surprised everyone. Facebook, apple. The s p 500 so far 75 of companies have beaten earnings stims. One question, are they bad estimate or good numbers . Ooking at euro dollar. 1. 3839. German Business Confidence better than anticipated. Draghi speaks later on. Any time this pushes up to near 1. 40, e. C. B. Officials try to slap it back down. Look at the key week. The best performing major currency this year. The central bank there keeps on hiking. Back to you. Jon, thank you so much. Jonathan ferro with your asset check. Coming up, Warren Buffett weighs in on cocacola. Why he is against the companys pay plan. Just a reminder, you can follow us on twitter. Guy is at guy johnson tv and im at flacqua. When we come back, were going to be talking about the strength of the euro with stephen king of hsbc. Welcome back to the pulse live from bloombergs European Headquarters in london. I am francine lacqua. Im guy johnson. Formula one president Bernie Ecclestone is on trial today. Judges have found that ecclestone made illegal pames to a german bank officer. Ecclestone has run formula one since 1995. Elerian explains why he left pimco. When your daughter come to you with a list of 22 things you missed as a parent, you realize there are special moments in your childrens lives and every parent knows it and i was missing too many of those special moments. The it is that simple. I was very taken by that. The International Monetary fund has endorsed a 17 million loan for you crane to help them pay help them crane to pay down their debt. Lets stay with that story. Ryan chilcote has more detells a. Ryan . The russian statebacked use organization said there is a fire fight underway. In one of the 10 cities where separatists in ukraine have control. This is a news agency saying there is a fire fight underway the people they have been talking to at the local hospital say there are dead and wounded. Some of the reports we have gotten out of the ukraine have not proven true. It is definitely something, however, to take of. We have the Russian Foreign minister reiterating a threat saying russia will respond if russian citizens are directly attacked in the east of the country. Then russia will see that as an attack on the russian federation. There are russian citizens in you crained ukrainians that have russian citizenship. Very fluid situation. We just had president obama a couple of hours ago in japan at a press conference with abe repeating that sanctions were on the way saying they are all teed days, not come in weeks. It doesnt look like anyone is doing anything on that geneva accord. We havent talked about sanctions in a while. Since we understand that g. E. Is possibly making a bid for alstom. Alstom has a lot of interest in russia. Certainly g. E. Would be increasing its exposure to the russian market with an acquisition of alstom. They have a sizable business, not unlike renault and other French Companies in russia that have been building up over a long period of time. It has a 25 stake in russias largest train maker. It definitely has its eyes on what may be as many as 140 billion, Russian Railways. Thats how much they plan to spend on highspeed trains over the next five years. Siemens is the big player there. Last time i saw the c. E. O. , he was in russia and that was on his mind. Russian railways, itself, is not sanctioned. Only two companies at this point that have been sanctioned by the u. S. Government. There are no indications that Rail Companies would be sanctioned. The c. E. O. Of Russian Railways is personally on the sanctions list. Obviously g. E. Would be doing business with him as c. E. O. Shouldnt be a problem. Something presumably an American Company would be thinking about as it does this deal and were learning they are looking at. So this would be something on their mind. Thank you so much. Ryan chilcote there with the latest on ukraine and these russian sanctions. Won approval with a plan to a