European headquarters in london. Im guy johnson. Were going to get some breaking news. The german Business Confidence coming out. The headline . S come through at 109. 7. The median estimates 110. 3. Lets take a look at how the euro is reacting to this. We have a situation obviously where everybody is watching carefully to see how the German Economy is going from here. Crucial really, the next step from the e. C. B. Dipping on the back of this one. 1. 3597. This is a survey, a mere gaugor investor sentiment. Well break it down for you in just a moment. The headline number certainly something of a miss. Of course it follows weaker p. M. I. Numbers. Germany and france yesterday. I missed that yesterday. A bit of a catchup. You poor thing. At least you caught some tennis. It follows the p. M. I. Numbers. Were more likely to seeing draghi moving toward full blown q. E. Lets get a breakdown about what the numberings tell us on the state of the German Economy. Hans nickels breaks it down for us. Last month the miss was explained as being mostly about ukraine. It was in the rear view mirror not looking forward. It is a month behind. Overall Business Confidence, were starting to see a trend. The third bad number in a row. Initially when they talked about the first two bad numbers they were explaining them as maybe a little statistical noise. Maybe a little bit about ukraine. Now we have a third one keeping with all the other soft monotony of other bad data that we have seen. We saw p. M. I. Yesterday. The french . , not very good. The question in germany is can it remain strong if it is the only strength, if it is the only robust economy in europe . It is so export driven. Yes, they are a diversified economy. They also trade wheavel france, their number one trading partner. It appears to be weighing on german confidence. Guy, olivia . Hans, thank you very much indeed. Our international crorpt. Time for our bloomberg correspondent. Time for our bloomberg exclusive. We talked about mull laly. He said why he thinks he is leaving the company in great hands. This team created not only the product scradge but also the production plan and Business Plan review process. It has had wonderful success. It has served everybody well and i think mark is going to continue those major processes going forward. Do you think mark is going to do Something Different from what you did . You came here and it was kind of a revolution. Now the best thing for him to do, im sure in the eyes of the board, will be to continue your administration, but does he have his own changes to make . Well, mark and the entire team, as we talked about, created the process that created the strategy. Were just getting started. Serving all the markets around the world. Were restructuring europe. Were going to be profitable there next year. The u. S. Is growing well. The Fastest Growing brand in the asia pacific, india. You say were just getting started. Even though the end of the smopt officially oh, yes. I did say we. I have a few more days for the we. How many more days . I mean, you still have a sizable position in this company. Assume youll be coming back dearborn once in a while. I have fallen in love with ford. It is a great company. Im going to stay close to ford going forward. Mark will be able to call you up if he needs to . Absolutely. Any time. You know, it really has been an incredible few years since alan mulally joined ford taking them through the crisis, turning the company around. Matt asked him what he is going to do next. He refused so say. There is speculation he might go to microsoft and replace Steve Ballmer. Obviously he is not going to do that. He will probably be at starbucks. A starbucks . That is what he is going to do on day one . He is looking forward to kicking back and having some coffee and hanging out in a coffee store. He is going pick starbucks . His words. Not mine. He has done amazing thingsed a ford. The first thing he does kick back at a starbucks. The man has highs operations. I think he is looking for a little time to enjoy. To taste the coffee. Shares rallying this morning coming off the knees of a deal between the company and monosappetto. It is a sign that u. S. Firms are looking to avoid tax by moving their companies abroad. Genta. Ke over of syn more is s with caroline hyde. Just tax . I think there were some other things at play here. You dont splash there are 40 genta was on offer for syn if it was only going to be tax. Maybe it was the primary reason. They would have been the largest seed company in this world. A really strong competitor to the likes of by aers. Competitive strength has got to be an underlying driver here as well. Maybe it was tax, by and large, that really was the attraction. Switzerland had about 18 . Moving itself to switzerland was a key area that the Management Team was eyeing up. That was slightly concerned to syngenta. We understand it has fizzled out. It could come back again. Thats why shares have bounced the most in three years. They were worried perhaps that maybe the Corporate Tax loop would be ruined by the u. S. Congress by 2015. That is what has been speculated. They were worried about regulators. That they were going to make the Biggest Company in the world joining a u. S. Jauger knot with a european giant. There are going to be some ntitrust concerns. They are not that easy. This is a huge theme for 2014. Unbelievable. 117 billion pfizer astrazeneca deal was also put on ice. That was largely to do with the attraction of the the u. S. Tax ate. Its u. S. Announce address as well. All because they can the amount of money they have what 40 billion medtronic has. They dont want to bring it back to the u. S. They want to use it on acquisitions aboard. Not just pharmaceuticals there. We have are you noors b. P. Is eyed up by the u. S. Oil giant. Wall green in the u. S. You know it well. You go there shopping. The u. K. Pharmacy brand could offer it a better Corporate Tax rate. Congress could come back and say, look. Were going change this rule. It is starting to bug us about it. They are running out of targets. If you look at the pharma space, six of the top 10 in the u. K. Have already been tax inversion deals. All of those, some of the three of the six have already been by u. S. Companies coming and want make the most of the u. K. Tax domicile. The shrinking pool of targets going. Since 2013, they all reincorporated in the u. K. On average save themselves 8 in terms of Corporate Tax rates. That is why it is such a thing to eye up. An even lower rate of took profit that comes from i. P. You dont have to the cash that you have knocking around. You can use that productively. You get a double whammy on this as well. My my question is what will happen when actually u. S. Authorities do reverse it. At some point they are going to. Caroline hyde, thank you so much. Appreciate it. Here is what else is coming up on our radar today. On iraqi is calling leaders to unite. The u. S. Secretary of tate is urging leaders to cooperate with baghdad and help form a government. Ab certain holding a News Conference to unveil the tails of his abenomics and mark carney will appear before u. K. Lawmakers this hour. They are set to question the governor about the bank of englands recent change of tone on interest rates. The hearing will begin at 9 30 u. K. Time. We will continue the conversation on carney in a few minutes. Pimcos mike d by amey. Welcome back to the pulse. We just got the latest snapshot on the state of europes. Iggest economy german Business Confidence data coming out showing it declined for a second month in june. Gorp, mike. Taken with yesterdays weak p. M. I. s what is your reaction to this disappointing number . I guess the underlying theme is that growth looks like it is leveling out at 1 in europe. Doesnt look like there is that much momentum. It is quite interesting when you look at the relative Monetary Policy stance. Everything coming out of europe suggests it is going to continue to ease. I dont think there is anything in yesterdays p. M. I. s that would challenge that. What form is that going to take . They have got one bullet left. Q. E. . Some say that. Thats the way they have got to go. Obviously they are doing with going wait to see how things pan out. See whether that unlocks things. So they are going wait for the a. Q. R. . That is at the end of year. It will be odd to go through that set of packages and then immediately go for Something Else. It would seem quite strange. I suspect youll see three to six month where is well stick with the current policy stance. If things continue to look challenged, i guess we go for asset purchases. You can argue they are kind of in that game already 368 concern the already. The question of supporting risk assets rather than further stimulating. If you look at what they are doing. Thats ultimately what they have to do. If you look at the 10year bond at 130. You think they are going much lower than that . No, i think they are going to carry. It is pretty tough to say there will be a big rally. Whats the situation with the policy 1234 policy . You can probably see that, beyond that, middle of the curve, back end of the curve, not much reaction. If you look at what is pricing the curve, if you back out of the forward rates then the long dated forwards get too if you look at the oneyear rates, they have converged to japan already. To some degree, part of the secular stagnation is caught in a vice. You to buy the belly of the curve and just roll down the yield curve. Draghi has said, he is not finished. Youre expecting q. E. Mark is expecting q. E. The tltr o. He targeting ltro. They are striking signal rates are going the stay at hese levels for a normal level. You have an indication what the next steps are. This whole thing about buying asset backed securities. Thats the next game in town, to buy assets. Look at the prices for the next few years, looks like pretty much a done deal. It is all a game of supporting asset prices now rather than further stimulation. What they hope is that places like to fed start to raise rates and then the euro comes down and then thats how you get the next round of stimulus. Do you think it is going to get lending into these small and medium size businesses . It is tough to say. It is pretty hard to believe why any bank would want to accelerate their the loan, the f. L. S. Supported loan growth and lower spreads, but it didnt accelerate the volume of lending. I suspect for now, it is all about lowering the cost of funding rather than increasing the volume. It doesnt get you ultimately out of the game. Bonds are trading 1. 3. How wide does that spread get when it is the first rate hike . I think november is absolutely if you look at what he said, what carney said in the speech, i think the easiest way to think about the speech given it was quite a been Monetary Policy has getting more hawkish since the Inflation Report. Increases hawkishness. That house speech was a classic example. The biggest turn was the february Inflation Report and then you have another round in this Mansion House speech. Is this a signal he thinks it is going to improve . I think that is right. That is also what they said in february. What they said in february was broadly speaking, we expect the has to be quickly rather than over a threeyear period. By definition, they have already become quite bearish on productiveity growth at that point in time. You can argue it is a great story. The total level of output is there are good angles and less good angles to this. Much more on carney. The testimony today on inflation. The mngs house speech. Were coming back on the pulse in two. Good morning, everybody. Welcome back. Can we talk trash . Were going to do it literally now. One israeli startup is making garbage or as we call it, rubbish. It is biodegradable within 180 days. Elliott . Thanks, guy. Im joined by the c. E. O. And cofounder. Great to have you with us. 180 days to biodegrade. I know you have some of the packaging here. That we can all see. How does that compare with normal packaging . Can you just chuck it out in your garden and within six months, it is gone . Decompose within 180 days. Dont throw it in your garden. If you throw it some place se, for example, a land fill it will biodegrade faster than regular plastic. What is in it . What is this made of that allows it to do this faster . It is made from biodegradable poll mers. It decomposes like to orange eel within 180 days in compost. What is the Business Model here . Are you planning to build a massive Packaging Company or are you planning to license it . We plan to build a big company. With very good stability to sell these packages all over the world. You raised some 10 million just a few weeks ago. T was led by hong kongs richest man. What is that money needed for and are you going to need more . It is for increasing the sales force. Building the operation. Working more on the i. P. More in new packages. Well see about the future. We have enough money for now. Going to see drink pouches and well start to see packages and well take it from there. The cost is going to be similar to what current packaging is currently used or is this a premier yum product that in the beginning, the Technology Costs more. When it starts influencing the prices, were aiming to reach the prices. Is it just drinks . Were startinging with dry ood and increased granola bars. Fresh foods. Bakery, etc. , etc. The next generation, liquid foods. Your back ground is a software industry. How do you go from making software to packaging for soft drinking . When youre thinking of innovation, youre thinking of making new things. You their best people in the markets and build a strong team and then takes it from there. The fact that you dont know all the barriers helps you moving forward. We wish you the best of luck. Guy, olivia, i think im going to taste these crisps and see what they taste like in a few minutes. Back to you. Thank you. Elliott gotkine joining us there live from tel aviv. Coming up, carneys carney is about to speak on his uturn on interest rates. As we head to break, lets get you todays the pulse number. 54 million. The second highest price for a monet piece. Good morning, everybody. You are watching the pulse. Shares are rising today and hitting a fiveyear high. Talks of the possible deal are dead. Abe plans to shoot his third arrow today. He will formally unveil the details of abenomics. Governor isand about to testify before Parliament Treasury committee. Lawmakers will question him about his recent change of town on interest rates. But we are expecting from dr. Carney. Some people are calling this a moment where his credibility comes into question. Flipflopping from the unemployment rate, you have caught up with mike. Aboutis going to be clarity, communication, clarity. Normalization will come before the end of his tenure. The cafferty talking about how it is prudent to remove stimulus. The got a text areas people ive spoken to in the marketplace say they have looked at that speech and their questioning whether the central tenant of the governor was to change the expectations on a rate hike. Inflation is still low. As it to get us marketplace to readjust the risk premium . People in the marketplace say the market was already pricing in a higher probability. What is the most important western the committee needs to ask carney today . The market isnk so mispriced. What is a big driver of the change in your thinking . Isnt that the risk growth is substantially moved to the upside. More people showing signs of dissension . Or is it the Housing Market . About clarity. What did you mean . What have we got so wrong . Mike amy is still with us, managing director at pimco in europe. What triggered this change . The committee is more hawkish than carney is. As a result of that, he wants to front run the june minutes. That theome concern market is underestimating a rate hike this year. Benign, butely employment growth is very strong. The last 12 months, it scares them a little bit. It is ahose to do matter of some conjecture. If you look at what he said, i suspect the interpretation of i think it is a natural tendency. Deliver as you things you see things as opposed to what the committee sees. Lets talk about the committee. He was the last guy to be voted for more kiwi for more qe. It is a big turnaround. He always said you can let the recovery run. As long as the inflation output looks benign. It looks very benign. Weak. Gs growth is very the inflationary pressures do not look at strong. Policy in the u. K. Is so heart to gauge. Hard to gauge. Relative to the fed, the fed has been straightforward on what they are doing. Theyve made it clear what the game plan is. To my mind, they have one economy. The u. K. Does not have the worlds reserve currency and has a more volatile central bank. Intermediate yields are the same. Do you think that Forward Guidance is less substantive . Forward guidance is more substantive. If you back it up with cash, the fed is in the game of qe. When they think about hiking rates, they are still engaged in monetary easing. Pressing the pedal down and, Forward Guidance is more comfortable. Forward guidance in the u. K. Has been more successful in hiking expectations. It is an amazing journey. Stay with us. I am looking at bars coming out of the wilson room in westminster. As soon as we start to see a picture, we will bring it to you. We will tell you about the big deal that is bound to be struck between the two countries. Welcome back. You are watching the pulse. This is the wilson room down in parliament. Where is the market mispriced going into this hearing . The markets underestimated the profits downstairs. He gets the first series of questions. To produce Something Like that. It is appropriate to have a little bit of a gap between me producing Something Like that. It would not be fair to those coming in and taking my place. Is that reasonable . Does this approach have support . It may be useful for me if you would highlight any particular themes you might like me to dwell on . Obviously. Time, so