Transcripts For BLOOMBERG The Pulse 20140722 : vimarsana.com

BLOOMBERG The Pulse July 22, 2014

Earnings. Welcome. We are in london. I am guy johnson. We begin with what is happening in brussels. Eu Foreign Ministers are meeting today. The aftermath of the crash of malaysian flight mh 17. Calls are growing for meaningful sanctions against russia. Ryan chilcote is there. The ministers are in. They called on the way in. What did they say in what is he looking for in terms of what they will deliver . Foreignthe british secretary has said the eu Foreign Ministers will weigh him posing a weapons embargo. That is one of the concrete things they will be looking at. We also heard there is time to act. There is a real sense among the Foreign Ministers that if they do not do anything today, they may lose fiath. Faith. Eu power. A given developments and clearly the duration of the situation it is a turning point. Not only in the situation but our assessment. Talking attacks across the border and terrorist acts. There is a real sliding scale of action they eu could take. One would be simply to publicize the names and companies that they eu tends to sanction. Members met last week and decided they would do with a but did not publish the names of the individuals and companies. Maybe well get to the list today and maybe there will be a ban on arms sales. That is something that will be discussed. What we do know is that theres already talk of another eu meeting as early as next week. It might be what we get today is an intermediary step. There is some sense that we get from the dutch they would like to see the bodies recovered and repatriation assess completed above for action is taken. And these countries have their individual concerns about what a retaliation or economic stations against the russian to begin with for their own economy. Lets talk about their own economies and the risk that europe is taking care. We reference at the top of the show, the missile carriers, and a 1 russia trading on training all one and the metta terry and. A second could potentially be canceled. Training on one in the mediterranean. Talk to us about what we can see today. We start with the ships. The french are in the process or ship dealdle of a 2 worth over 1 billion. They finished the first helicopter carrier and received payment for it and the russians are training on a one of them right now offer the french coast. The french president was asked last night and said that sale will go ahead. He said if theres a weapons give up the french will on the sale of a second ship which has not been completed and of which they have not received payment. He explained for us it pay russia back just over one billion euros if they reneged on the first ship. There are thousands of jobs at stake. Hear the french president also say the british Prime Minister who he thinks is saying the pressure, to cancel that sell, should look closer to home and sanction himself. A real start of jibe. The horse trading that may be going on today. The biggest trading partner is germany. 8 billion worth of business with russia last year. That is clear how complicated it is. Citizens it 8 the netherlands lost 198 citizens and that crash. We will be back with ryan a little later and continue the conversation. Researcht at edison and he will talk about what it means for the french establishment jobs, money. This is not a move in the french will take lightly and also their reputation on the line as well. Maybe the situation is for the french to make and we will be discussing that today. Let us talk about company news we have been referencing. Suites is under desk Credit Suisse is under pressure. Let them go to zurich where manus cranny has been talking to the ceo. Credit suisse is under pressure. 2. 6 billion fine. Not affected the bottom line because it personas five everything about banking. By 3 . Ting litigation and the numbers and margins. What the rich people are doing with a Credit Suisse on the wealth side may be putting more money in a today are not trading and that is critically important. I think the result the lies much bigger issues. Belies much bigger issues. It is not in the bottom line yet. They are trying to reduce the size of the investment bank. One of the big issues is what might europe respond in regards to russia. Brady douganith earlier. I asked him how difficult will it be for him to continue business. It is more than general on markets and attitudes toward investing and how opportunistically the geopolitical issues have had a pretty big affect on the markets and this year for the most hard. The id business . Chris obviously, our business is primarily very global and and emerginge u. S. Markets. Certainly, the impact on the business and that particular parts of the world have an impact but relatively small. What about doing business with the wealthy russians on the Wealth Management side . Do you think there is potentially risk with the dealing with the russians on the wealth side . We take a again conservative approach to doing our business everywhere around the world. I think that applies equally to business in russia and elsewhere. We will continue to have that approach. The messages were clear. Whoks to the customers supported them and sorry for the behavior. In terms of government and what would change, he said they are focused. You that maybe they were not both on then Wealth Management side. Saying they did not have as many fx or libor issues. They had a heck of a tax evasion issue. This is a ceo referred to as the teflon man by the New York Times. Didnt strike me as a ceo who looked or felt under pressure in any way. What tips them over the edge. Its amazing how things can change so quickly. Ceoswas planning the 40th anniversary and he resigned. Manus cranny. A gray looking to zurich. The been to the place and parts of the world recently that is sunny, saudi arabia. , your ever want to invest am might come ture. True. They are looking to open up to International Investors. Big market and a lot of International Investors would like to bid to get in. What is changing and how is the changing and when we see the changes . A lot of big investors are looking to get into the market for years now. Speculation swirled about when it would happen. We know it will be the first half of next year. The official news agency announced the cabinet had authorized the allowable for Foreign Investors into the market and would like the cma decide. The cma said they will publish the rules for Foreign Investors 90t month and will allow for days to get feedback from investors and the public and they will review all of the endback ive the by the of the year. They hope the timeline, the first half of next year, the market should be open to Foreign Investors. And there are names we already know. Fairly big names. There are some large, Large Companies listed on the exchange that are suddenly going to be available. Absolutely. We have the largest petrochemical reducer called sabat, the biggest on the stock market there. You have aroche bank, one of the largest arab lenders. A lot of Different Companies that are fairly diversified index where a lot of Different Industries are in it. They have been keenan to ensure re a lot ofen to ensu the industries are in the market and available for investors which have been up for the longest time. There has been some Foreign Investment but pretty limited through etf, not very big. Thanks very much indeed. It is getting a lot of traction in terms of our audience. Exactly what the rules will look like. It will be a fascinating story. We will get a more. Let us talk about what we have coming up. Possibly willing to stop the sale of a second warship. How it will cost the countries. France is taking a big risk. The reallife catch me if you can. He cashed 2 million in fraudulent checks and now works for the other side. The gatekeeper. Frank will be joining us. We will see you in a few minutess time. Welcome back. You are watching the pulse. France said its prepared to stop the second cell of a france said its prepared to stop the sale of a second warship to russia if the eu imposes sanctions. How much would it cost . Let us start off with the cost here. The french have been incredible reticent about making any kind we have Russian Troops training on one of them and the second is being constructed. Talk to me about what it means. It is a very large contract, one point 2 billion euros. That is 15 of the entire dns. It is more profitable than that. Slast year,at dn they talked about how well this contract was going. 5 ofldve expected to be 1 the profits of this year and next year and then a drop through. The palace owns a stake. 5 of theiry profits. 2014 and 2015. It really does have an effect. And lots of jobs . It is 1000 jobs. Terms of the significance of the second carrier, suffers are already training with the russians in the mediterranean. It iscond carrier, different than the first. Talk to me about why. This contract came, there were 2 carriers and an option for another 2. Ultimately, the russians should be able to build themselves. They will have a majority of the technology. Will not deliver the second but thats missing the point. It is almost like we will not deliver the second but that misses the point. These are sophisticated pieces of equipment. Very advanced assault ships and can invade areas. They are incredibly sophisticated. Not, anybody could build them and they cannot. Your point is basically you get one and it does not matter about the second one. Once you have one and you have the designed and technology. Can they get out of selling the first one . They would it would cost france. They would have to pay a penalty clause. Itll be around one billion euros. Would there be buyers for it . Sophisticated a piece of equipment. Is there another obvious buyer . They would have to give it at a discount or something but it would not be impossible to resell. And ownedhis be taken by that European Union or nato . Has it ever happened before . Zone does notn have a record of that but nato does. They have a fleet. They are commonly owned. That is certainly possible. Nato has a good track record. Could be could be humanitarian . It colorful so you can use of most things. There are alternative uses. Anyn any piece almost piece. S have french and italian exposure. The italians have been pretty close for the past decade or so. At first i was a military trainer. M346. Ame the 300. Have sold an initial there is an Assembly Line to produce those. Ane concern about there is Assembly Line for western helicopters out in russia now. Theyre the ultimate piece of equipment. They become military pretty quickly. In terms of the defense establishment, when you look at helicopters, Army Personnel carriers, how likely do you think they will be making this decision . It is big, big business. I am concerned there has even been a tiny compression from france. If we were having this conversation in the middle of france, i would say there was no chance of this deal being changed. Deliver,cides not to but if ipo money, but if i put money on it, i would say they would deliver the first and hold off on the second. Thank you. Well take you inside the topsecret plan. This is the First Time Ever it has been on television cameras. To see be fascinating what happens inside of this building. What they got up their sleeves. We will discuss that when we come back. Good morning and welcome back. You are watching the pulse. Let me show you some photos. Wing ll hosted its first suit competition. How do they come up with this . Amazing pictures. How on earth . It will look like this. Some people in canada came up with a new diving. Withlaunched themselves the help of a swing having mastered the somersault. And midair catches before hitting the water. Nice. Uk has hosted the sixth round of the grand. That is good. All of the tir tricks. The markets the how are doing. Jon ferro. Or geopolitical risk, stocks go up higher. Higher on the dax. Ministers and the brussels. How do the u. K. Go to the party . T remains to be seen a compromise. The big earnings story came from arm holdings. The stock is up by 3 . Of the royalties side of the business. You see a slowdown. On the licensing side, you see it move higher, much higher. A strong flow the royalties side. I spoke to the ceo this morning and he seemed confident about it picking up in the second half of the year. Watch out with what is going on with russia and the ukraine. It has been a minimum. You see the dollar moving higher to a onemonth high. It could be geopolitics. Cpi will come out later. Inflation is one to watch. The fed will scratch their heads. Credit suisse, a conversation with the swiss banks ceo. The fine has the bottom line. That is coming up. Well see you in a moment. Good morning, everybody. Welcome back. Youre watching the pulse. Were arrive in bloombergs european headquarters. Im guy johnson and these are are the top headlines. Saudi arabia is set to open up its stock market to Foreign Investors. It expands the arab worlds Biggest Exchange to money manufactures. Indonesia is set to declare jakartas governor the winner of the closest president ial lection in a decade. Police and politicians are calling for calm after his opponent flagged a potential challenge to the volt. The Foreign Exchange story is interesting. Well bring you more on that later. And e. U. Foreign ministers are meeting in brussels today to discuss further vanks against russia after the crash of the malaysian aircraft. Sanctions on Russian Energy Companies Including rosneft. To zurich now. Credit suisse shares under pressure this morning as the bank posted its biggest quarterly loss since 2008. Remember, they paid 2. 6 billion to settle a u. S. Tax investigation. Manus cranny sat down with chief executive brady dougan and started by asking him about the size of the fine, which is enormous, actually surprised him. Obviously this has been a very long running issue for us. These are events that happened a long time ago. We spent a lot of time fixing this business and cleaning it up and spent a lot of time actually working through the resolution. I think that was long sweep of time for an issue like this. I think we ended up obviously as you say, it was a very significant fine. Most importantly for us is getting it behind us, something very, very important for us as a business. Obviously this is our biggest litigation or regulatory problem out there. It is about you, your tenure at the bank. It calls you the teflon man. In other words, you as the c. E. O. , youre still standing, brady. Here is a guilty play. There is 2. 6 billion of a fine. Do you feel you personally should take more responsibility for what has happened . Well,s as i say, these are issues that were not created on my watch. It is something where this Management Team worked very hard to resolve the issues. We had an honorable resolution to them. We didnt require any emergency law from swiss government. Frankly it has probably been the single issue that has taken the most time over the years to resolve. It was important to get a resolution for the bank and i think we did so honorably. I want to do what is in the best interest of our employees, clients and shareholders. Thats what i plan to do going forward. You think continue in the role absolutely focused. That is your intention, brady . We have a lot do. I think particularly getting this behind us. We have a very good future in terms of, you know, continue to drive the strategy. I think were doing a great job for our clients. I think were going to be able to do a great job for our shaileds. What a governments point of view, you were on the executive board from 2003. What have you learned over this investigation that needs to change from the top to make sure this kind of incident doesnt creep in again . I think it is one of the things that i think has been one of the more important focuses of us for many years is making sure were running a very compliant business. If you look at our record, i think we have a pretty good record. We havent had any issues on the libor side. We actually i think we have learned a lot of lessons and continue to work very hard to run a compliant business. That is an everyday challenge. Something you have to go work at and try to tackle every single day. I think we have had a pretty good record of that and that is something were going to continue to be very, very focused on. It is the right thing for the shareholders. We have to run a very compliant business. Brady dougan, the c. E. O. Of Credit Suisse talking about how his business is a very compliant business and how tough that is. Right. Lets talk tech. Arm seeing its revenue hit by a slowdown. License revenues picking up and it looks like things could get better in the future. Lets find out whats going on here. Money now looking a little weak. Licensing revenue, which points to Better Stories down the road, getting better. Exactly. And this does hint at some of the concerns we have talked about in the developed world. Saturation point when it comes to smart phone. Just a meager 1. 2 billion units. Up only 19 . Oh, woe is us. Clearly there is a slight slowdown in smart phones. Royalties up 2 . They are really not particularly strong but they have warned analysts to brace themselves for this. License design. This is when they sell a design to a samsung to an apple that i might use in two or three years. There is growth in other areas. They feel they should be looking more at the license side of things. From what we have seen talking to our customers and going on in the markets, there are definitely signs this is going to pick up in the second messagede expected and consistently for sometime. That has been happening in our customers in q 2 and q 3. We are expecting to see a bit of moment numb royalties in the second half. A certain rather large smart phone maker is due to be launching a slightly larger phone. With licenses up 42 , 41 signed in the last quarter. I find license deal with you. You are going to use my technology, you pay me

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