Transcripts For BLOOMBERG The Pulse 20150202

We are live from bloombergs European Headquarters. We are just getting some breaking news in terms of the euro pmi. It climbs to 51. German number, a little editor, french number, little weaker. The focus in the eurozone remains greece. The new finance minister began the European Tour with paris yesterday, seeking support. In a News Conference with his french counterpart, he suggested that his country is addicted to loans and needs to break its dependence. For more, lets go to hans nichols in berlin. Tell us more about what he had to say yesterday. He clearly wants to keep open that finance window through the ecb. That is so crucial. He indicated that withdrawal is going to be a difficult process. Have a listen. We have resembled a drug addict craving the next dose. Do i believe that we should be taking another punch of loans . No. It is not that we dont need the money, we are desperate because of certain commitments and liabilities that we have. He was speaking in paris yesterday, mr. Varoufakis. He got some support from the finance minister in france, also some nice words from mr. Obama in the states. If they dont stick with the euimf a about, which ends at the end of february, they wont be able to access the ecb for funds beside that. They wont be able to pay back what they owed the imf, which is due next month. There are a lot of ifs, a lot of conditionalitys attached to the financing component of this. In terms of the larger restructuring, they did indicate a willingness to work with greece and find some common ground. France will make it easier. France will always dobe there to find a solution. We have this common believe that greece is in the euro and will stay in the euro. We could have a little good copbad cop going on, with varoufakis being the bad cop. They made some conciliatory comments. And even president obama getting involved. What has he been talking about . Run us through what has been happening stateside. Obamas comments are interesting. They are his first in length after the election. He is echoing what syriza was saying during the election. You cannot grow with these crippling crippling sanctions that are in place not sanctions, excuse me. In some ways, he gets to leave a symbolic sign that could undermine merkels ability to isolate greece. Hans, thank you so much. Now, while mr. Varoufakis is touring europe, greeces Prime Minister is also making diplomatic overtures. Alexis tsipras issued a statement to bloomberg, saying greece will stick by its obligations. For more, we are joined by marcus from athens. Weve got a lot of rhetoric from athens. Is the new government realizing the need for compromises . Are we getting the same message from mr. Tsipras and mr. Varoufakis . What is going on . What is the commentary that we should be reading . Theres certainly a feeling in the greek government, a sense that they felt the need to calm things down a little bit. It is worth bearing in mind that the rhetoric that was coming out last week did scare markets. It was by all of ministers addressing new portfolios but very much speaking offthecuff at the beginning of their new jobs. Perhaps there is a sense that syriza as a Political Party has always been a party that is hard to exert Central Control over. A lot of this wasnt coming from tsipras himself. After the meeting on friday, which was not a rip roaring success diplomatically, there was probably a feeling among Prime Ministers that they need to calm things down a little bit. Hence the statements over the weekend. From the initial Market Reaction this morning with greek markets up a little bit, at least in the shortterm, it seems to be working. Just bringing down the tone a little bit. How big a bearing will the shortterm liquidity situation have on the governments negotiations . Greece faces a cash crunch in march. Varoufakis has said that he does not want to extend the current bailout agreement. He doesnt want new loans. He just wants to bring together a new agreement. Of course, it is not clear how we get over this come. Theres some imf debt that needs to be repaid. The whole ecb situation is not just in terms of the direct refinancing operation but also emergency liquidity which also needs the ecb seal of approval. The problem there is that if the government tries to meet shortterm funding commitments this is something the ecb is not going to be very happy with. It is a very drastic decision to cut off liquidity. They will want some political guidance. Whether or not the bailout is extended beyond february, some kind of agreement needs to be reached with the creditors on how this is going to be dealt with next month. We look forward to hearing from mrs. Merkel. Thank you very much indeed. For more news on the greek story, go to Bloomberg Business at bloomberg. Com. Check out the bloomberg review piece in which he says europe should call greeces bluff. That is one you have to read. It is a great read, probably the top read uptodate. Lets turn to top corporate stories. Ryanair listed its fullyear profit outlook. They jumped as also feel prices slid. Kari lundgren joins us with the latest. Very strong numbers in a traditionally weak period. Does that mean customer friendly ryanair is working . Something seems to be happening. This is the fifth profit of great in fiscal year 2015. This time last year, they were doing profit warnings. Theyve done a lot over the last year in terms of the new website. They recently rolled out a u. S. Focus website. They are continuing to do changes. Bank charges, friendlier attitude, hugging puppies and all that sort of thing. You can see that not only in the passenger numbers which you expect given that they are increasing capacity, but the load factor is at 88 . Really impressive numbers. Hugging puppies. I would love to see that onscreen. He would do it for you. [laughter] load factors are in the 80s. The hedges are in the 90s. It was an interesting comment from ryanair today. They said they are 90 hedged so you might see players that are less hedged being in a better position in what this could lead to. It sort of seems that they are suggesting that could be a price war here. Ryanair tends to be strong in these positions. They are not afraid of lowering fares. They are saying, we will pass on any drop in fuel prices to passengers. You can see that rhetoric playing in and getting customers more demanding to those airlines that are charging passengers for fuel. Do we have any update on aer lingus . Ryanair has a stake in aer lingus and iag is trying to buy aer lingus. They were cautious on that. They said they had not received a formal offer. Last week, we saw on the back of qatar buying a stake in iag, we saw more coming out of ireland more coming from the Irish Government about that deal. It seems like the sentiment might be turning against it. I think ryanair will wait until they see what the offer is. Show me the money. That is where they stand at this point. Kari lundgren on the latest from ryanair. What else is on our radar . The ukrainian president has called for a truce with prorussian rebels in the eastern part of the country after peace talks broke down and violence escalated. A statement from the website called for an unconditional and immediate ceasefire as the conflict is escalating. The number of civilian casualties is growing. The statement came after poroshenko spoke with Angela Merkel and the french president yesterday. Back in the spotlight today the former imf managing director and former french president ial hopeful goes on trial. He is one of 14 men and women accused in an International Prosecution ring. The trial is expected to last at least two weeks. Rupert murdoch has taken to twitter once again. He shared his thoughts on the democratic field for next years president ial election, saying joe biden actively preparing to run against hillary. Murdoch didnt share any details. John kerry, the current secretary of state, has ruled out another president ial run. From twitter to twitter, our twitter question. See how many times i said twitter . Would you fly ryanair for business . That is the question of today. You can tweet us. Have you changed your views . That would be the interesting one. Let us know. We would be delighted to hear from you. Coming up, can greece kick its debt addiction . We will have more with oxford economics, next. 15 minutes past the hour. Welcome back. You are watching the pulse. We are streaming on the allnew bloomberg. Com. Check it out. Restoreth europe. Prime minister alexis cigarettes Alexis Tsipras and Yanis Varoufakis due to arrive in downing street. We are joined by gabriel sterne. Gabriel, thank you so much for joining us. What does mr. Varoufakis need to do . Last week was a fiasco on the market. They steam seem to have tempered that stance. Clear message to investors should be what . He has a dilemma. He is driving his own domestic constituency which is saying enough is enough. There was a nice quote he gate over the weekend. Then, there is keeping the whole thing afloat with his community of finance ministers who he needs to keep greece in the eurozone. Here is a guy who is playing brinksmanship. It is the first time we are seeing profit brinksmanship in the oil crisis. It will be interesting to see how it pans out. Where do the weak points lie . People are looking at the debt restructuring story. You get the sense that there are a few problems. The weak points are his finance ministers that want to give what he wants that is quite a week negotiating position. What does he want . Ultimately, i think what the negotiation comes about is what primary fiscal deficit can be agreed between both sides. Im guessing that he will bid for surplus. He will be going for 1. 5 . The imf has projected 4. 5 . That is a colossal difference. In some sense, a lot of greek debt is tied to floating rate interest rates. That has come down a lot. I would imagine the deterioration that has gone on around the election will more or less white that leeway out. I think it is difficult negotiations. They want four months to do it. I dont think they will get that because of the state of greek banks. If you want a fiscally neutral budget, how big a difference would that make to the Greek Economy . What is fiscally neutral . If i were a greek finance minister, i would say primary balance is neutral. That is not on the table because it would mean a rising debt to gdp ratio. Long ago, the imf you can go over 120 , you can have rising debt. In the near term, if they can find a way of not worrying about getting bigger and they have a neutral budget, do you think that would be enough to keep the greeks happy . I think that would be enough to pique the greeks happy, but wouldnt be enough to keep the germans happy. But what is programmed is a 4 primary surplus. They wont except that. Gabriel, do you think the current government in greece misunderstands europe . When he asks for a summit to talk about issues, this is what the eurogroup is for. Are they playing because they want to be seen much more radical than they are, so it is a negotiating tactic, or do you think there is a difference between how europe sees themselves and what these guys want . That is an interesting issue. Everybody thought before the election that they will come they are all talk. Ever since, they are saying weve had enough of this. To be fair, it is probably the Worst Program of all time. The imf and the troika did revise down gdp projections. They have got a point in some aspects. In other aspects, they are proposing some very backward policies which wont necessarily be good for output in the long run. You can pick things out that you like and dont like from both sides of the debate. Theres a lot of opportunity here. One of them seems to have landed in draghis lap. How does he with the issue of the greek banks . How is he going to finance or provide liquidity for the greek banks when he doesnt have clarity on his political cover and the longterm story of greeces tenure within the eurozone . It must be tremendously difficult for him. Anybody with exposure to greek banks are probably the ones that are the catalysts to see if they can get this form of leeway to reach negotiations. In the end, they will reach an agreement, but it might not be in time. The ecb has been unbelievably creative in ireland, greece, and cyprus. They can kind of do what they want. But it just might not come in time. I think in cyprus, it was less than three weeks between the election of a centerright president and the banks being closed. If we are thinking about the left field concerns, it could be less. Are currency controls part of that . If it got to the point where the ecb said, enough is enough we dont want it on our Balance Sheet then you would see something very similar where you get capital controls restrictions on withdrawals. At that point, it really gets interesting. I think you would find that greek people dont want to exit. Youve got a very ugly situation. Not just you, but the whole world media would be portraying a country with no banks. To put that in context imagine if the u. S. Could do that to north korea or iran. You would never see sanctions. It is the most wicked, damaging thing you could do in peacetime. You talk about contagion. What kind of contagion is that . Just to come back to your earlier point draghi, he can singlehandedly pull the trigger on this area on this. Do you think he will do everything in his power to make sure that they have enough money to survive . Almost sounds like whatever it takes, doesnt it . I dont think he will do anything everything in his power. As a central banker, your primary concern should be about safeguarding the value of your assets, making sure youve got guarantees. Maybe if he could say to the europeans, if we give this e. L. A. That means letting the bank of greece take on more exposure. They could, if there was an exit, one part of their Balance Sheet would get redenominated area the other wouldnt. In that case, they wouldnt be able to pay the ecb back. Can the ecb get guarantees from the european politicians that would make sure the ecb got made good . If they got those guarantees, maybe the ecb could say ultimately, it is a political decision. Gabriel sterne, thank you so much. Coming up, how youtube tries to steal the super bowl show from nbc. Details on that story, up next. Good morning. Welcome back. You are watching the pulse. We are on bloomberg tv and radio. Telefonica is planning a share sales war between 4 billion euros and 5 billion euros. The spanish Telecoms Company is said to have hired jpmorgan to handle the sale. It would be used to pay for recent acquisitions in europe and bolster its Balance Sheet. Shares were down this morning. The irish Building Materials company has agreed to buy businesses owned by lafarge. Holcim and lafarge need to sell off assets in order to win the approval of regulators. Youtube hosted its first super bowl halftime show. The show included a host of youtube stars doing a chemistry demonstration. It was not intended to compete with nbc, but to give teenagers something to watch on their phones. As of sunday night p eople spent triple the time watching on their smartphones. Welcome back to the pulse live from bloombergs European Headquarters in london. These are the Bloomberg Top headlines. The family of the australian journalist has said they are ecstatic after he was released from over a year of detention in egypt. The journalists were detailed on terrorismrelated charges in 2013. He is being deported from egypt. The fate of his colleagues is not known. The new England Patriots have won the super bowl. They defeated the Seattle Seahawks 2824. They secure their first nfl title in 10 years. Asian stocks have slumped after a chinese manufacturing gauge indicated contraction. The purchasing Managers Index fell below 50 for the First Time Since 2012 fueling speculation that the worlds secondlargest economy will need to boost stimulus. The Foreign Ministers of china, russia, and india have been meeting in beijing. David tweed is in hong kong. He has been following that meeting for us. Is russia looking for more support from beijing . Russia is looking for more support from beijing, but the interesting thing to look at is what is going on in the wider asian region as well. If you look at what russias been doing, especially in the last six months or so, it has been accelerating a pivot towards asia. We talk about the u. S. Pivot towards asia. Russias been doing the same thing and it has been trying to increase the speed that it has been doing that. We have seen some military agreements the first ever with pakistan in november. Putin was in new delhi meeting modi, the Prime Minister of india. We are seeing a whole lot of things happen in this tripartite meeting of finance ministers. This is part of that push. It is the 13th of these meetings, and the first time we are going to see the Indian Foreign minister going to beijing, where shes met with xi jinping along with the Russian Foreign minister. Thats the background to what is going on, and the whole message here is about how putin really is looking toward asia for economic support, military support, diplomatic support, and he seems to be getting it. David, im interested in the indian inclusion in this. There was some sense that it was just sino russia. Russia has asian ambitions, not just chinese ambitions. Absolutely. The extraordinary thing, what i found surprising was the way that the asian political elites dont look at russia through the same prism that the United States and the European Union does look at them through what is happening in ukraine. The asians seem to think the ukraine situation is probably a oneoff, to do with soviet history, and they are not quite so concerned, maybe because they are much further away but they are not as concerned as those in the European Union. You see examples of that. Prime minister modi told Vladimir Putin in december that he opposes the sanctions in place. Even japan, japan has joined the rest of the g7 in putting sanctions on russia, but they are much more limited than the ones you see from the United States and the European Union. Another interesting thing to look at was the attitude of the malaysians. You would expect the malaysians, like the australians, to be critical in russias role of the downing of mh17 but the Prime Minister of malaysia told putin that they want to wait until the official reports are out before they make up their mind. They are not just out there to rail against russia. Russias overtures towards asia are being looked at in a different light. One of the reasons is because Asian Countries are very conscious of the fact that china , in the region, its power is surging. Asian countries are looking to russia to balance the situation. David, thank you so much. David tweed live in hong kong. We will be following any developments. Talking of developments, lets talk about oil. More volatility in the markets as u. S. Refineries strike. Oil trading lower as the unions stopped work on sunday at nine sites after failing to agree on a labor contract. What is going on . Lets bring in our senior oil and gas analyst. Good morning. What is happening now, and how does this relate to the Lower Oil Price . The profits of the u. S. Refineries have been very good in the last couple of years. This is due to the shale gas boom. Gas prices have come down. Energy costs have come down. That is one point. Of course, oil price came down the last couple of months. The stock for the oil refiners is now not as costly. The refinery workers say, we want our part of the gains. We want our share. So the milliondollar question that we have in europe, how will it be resolved, and is there any risk that it will catch on in europe . I think it is a u. S. Specific thing right now. Europe doesnt have any shale gas and the gas price is much higher in europe. Energy costs are higher in europe. You also have the problem of oversupply. Several refineries have been shut in europe over the past couple years. There are risks that further refineries may be shut down. In europe, it is more the question of what refineries will survive, and not so much what will workers get paid. So how does this end . For the integrated large Oil Companies that also own refineries for them, the refineries have been a good thing in the past couple months when the oil price went down. It was, the crash, was a big cushion. The refinery margin didnt crash. They actually were able to process some of the crude oil they produced in their own refineries. This is integration, almost, if you like. It is more likely they will have a more lenient stance toward this then independent refiners that only have refineries. All right, thank you so much. Right, coming up, the conversation on oil. We will talk about the attacks on airlines. Ryanair warning that she oil could hit earnings at competitors. It is not going to enjoy the benefits. We are going to dublin, next. Weve had a very good year. Numbers increased by 14 in the last quarter. Load factors exceptionally strong. The guidance is clearly being driven by the always Getting Better program. Customers are pleased with the performance we have and the product we are offering. We are delighted to increase to 840. The press conferences it is beginning to work. Business passengers are up. Fasttrack is going to be available. How much premium our customers prepared to pay . Thats what i want to get a handle on. It is a new experience. How can you squeeze that . We all squeeze our passengers. We are very nice to our customers. Encourage them to spend more money with you. First and foremost, the low fares that we have area we have. They stay with us because they like the reliability of the product. There is a modest premium for people who want to have that. We are 27 business passengers. Our objective over time is to convert 10 of those. Talk about the hedging policy. You see that Earnings Growth next year will be modest. It is not because of the fuel hedging policy. Our fuel is hedged at approximately 92 per barrel. That is an 8 per passenger saving. A number of the weaker competitors get an immediate benefit from fuel falling. Ryanairs objective has always been to give back low fares to our passengers. If we see a reduction in fares elsewhere we will clearly match that and be that in the market. We are saying, dont expect all these savings and fuel to go straight to the bottom line. Warning everyone to temper their expectations for Earnings Growth in 2016. We are only doing our budget now. The expectation would be that all of this will fall to the bottom line. We will absolutely hit the passenger next year. It is the first time an airline will carry that many passengers in a year. This is great for our customers. That was the ryanair chief Financial Officer in bloombergs first interview this morning. For more on ryanair, lets get to dublin. We are joined by stephen furlong. Great to have you on the program. Ryanair is this simply because they are doing a better job than they used to, or is it a shift of business passengers . I think ryanair is obviously performing very strongly with the numbers that came in this morning. Load factor up six points. Revenue is expanding. The passenger volumes are huge. It is a conversation a combination of things. Theyve tried to improve the product further, there always Getting Better program. Also, the way they shifted the schedule, higher frequencies to more primary airports as well. They are trying to focus not just on the leisure passengers but business passengers. They were saying they have 27 of their passengers flying business. That is helping the performance of the company. Can we talk about fuel . How much is it going to hurt them . They have a hedging policy. All the big airlines have hedging policies. Theyve hedged 90 for the current year, and for the next year as well, so it is really i wouldnt say hurts them, it is a question of where it is in fy 2017. They did signal the Profit Growth would be more modest into next year. There is some saving there, but it is more the cost certainty. Maybe there is going to be a bit more competition. Ryanair will be aggressive on fares if they need to be. They tend to be the big player in the market. Im interested to know what your view on the broader hedging strategy is for the sector. Emirates has a zero hedge policy. They are able to make advantage of the Lower Oil Price. Clearly, emirates and ryanair dont compete, but do you think we are going to end up with a situation where the less ably managed carriers get the biggest benefits out of this Lower Oil Price and that does start to eat in to load factors and profitability . I certainly think we are going to get lower fares as we go through into next year and the year after. Some of the Bigger Airlines have hedged and therefore, the immediate benefit is less for them. I think, for some of those weaker players, it delays the inevitable. They continue to lose market share. It is going to be aggressive. Other airlines have less hedges. They are going to be more aggressive. Absolutely, when you look at capacity for the next number of years theres a lot of planes coming. Theres going to be a lot of competition. Fares will probably be weaker which is probably good for consumers. What you are saying is the competition will heat up but at the same time, because of the lower price of fuel, the companies will survive a bit longer . I would say the competition is going to heat up. You will keep getting a bit more consolidation as the bigger players gain market share but theres probably a little rest bite for the smaller players. That makes it a little more competitive. I think the real competition is the delivery schedules from boeing and airbus, which will crank up over the next number of years whether it is shorthaul or long haul. Those giant orders from emirates and qatar, those type of airlines, it will make for an interesting couple of years in the airline industry. What is going to happen with aer lingus . The government opposition seems to be hardening a little bit . I would say, awful lot of commentary in a vacuum, and a lot of, i would say, you could say, negative commentary. The reality is, we havent really heard from willie walsh yet. We wont until there is a formal offer. I think the formal offer will be quite compelling. I think they will look at aer lingus for investment, for growth, and conductivity. Then we will see, because the battle for this deal hasnt even started yet. Some people think it is unlikely to happen. You can see that with the share price. My view, we havent even started yet. I think it has got a decent chance of going through actually. It is going to be interesting to watch. Stephen furlong joining us from davies. Coming up, julius baer cuts costs by more than 100 million francs after a surge in the currency. Shares up this morning. We will talk to the swiss bank after the break. Welcome back to the pulse live on bloomberg tv and radio. Also streaming on your tablet your phone, and bloomberg. Com. Julius baer assets under management raised. The bank will cut costs by 108 million due to the surgeon the swiss franc. Manus cranny has been speaking to the companys ceo. That was a difficult little period and this is how they are reacting, cut costs. There is no option. The head of Swiss National banks said, it is a wakeup call. When the smb backed up, it forced the banks it is forcing them to cut costs. Collardi, the ceo at julius baer, has taken the first plunge. Next week, it is Credit Suisse and ubs. We are talking about 100 million swiss francs. They will be back in middle office jobs. One thing i put in was this, how much damage did the Swiss National banks actions do for the reputation of swiss ranking per se . I dont think i can say that it damages, but i can say it was unexpected for all the different market participants. Certainly, that increased the stress level for many of the market participants. I think, in a few months, the market has overreacted. I think, in a few months, it was the right thing to do. Julius baer are not charging their clients for Holding Assets in the swiss bank at the moment. I thought the irony was, collardi said, what a great time it was. To be actively out there with the clients. Tell them, get involved with the European Equity markets. Im not being ironic. Of course, you can look backwards and say, what a great opportunity. German equities actually did the best in january. Whose equity market was up the most, the germans. A whole other story. Ok, the swiss franc trying to find a floor. What did the ceo say about that . He suggested that the market had overshot in its ambitions down to those late 80s. But collardi made the point that he felt that even at parity, it was an overshoot. Parity with the euro is overvalued. Therefore, i think it is more going to be tending naturally toward 1. 05, 1. 10. 1. 10 is 7 , 8 lower than it was at the floor. That is something we should be able to compensate. 1. 10, he can suffer the productivity, they can match it with productivity gains within the bank. I asked what would his first conversation be. He hasnt spoken since the action and hasnt had any formal conversations with jordan. He said he thought he was a rather lonely man. [indiscernible] ill come with a bit of cake. We will have a cup of tea and a chat about the swiss franc. Cant wait. Cup of tea, bit of cake . Thank you so much, manus cranny with the latest on the switch frank. For those listening on bloomberg radio, the first word is next. For our viewers, it is a second hour of the pulse. Weve got some great ceos coming up. First up, we are speaking to the ceo of crh, a cement company. It bought a huge chunk of assets. We will talk about whether a lot of the assets he bought were in france. And hes paying some would say, a high price. Believe me, concrete is something you want to hear about. We will also be talking about the super bowl. Youtube trying to get in on the action. All these advertisers paying top dollar for their slots, but youtube decided to take a different route. Is this the way forward . Viral advertising . Call it what you will. Could be very effective. We want to know if during big sporting offense you are on your mobile. If you are on your mobile, youtube is onto something. Reminder, you can follow us both on twitter. We will also be talking ryanair and we are back in just a couple minutes. Addicted to death. Greeces finance minister says his country must quit its debt dependency. He is due to arrive at downing street shortly. Ryanair of great its fullyear profit goal but warns that fuel costs may trim next years earnings. The crh ceo seals a deal with rival holcimlafarge. We will speak to the ceo this hour. Good morning to our viewers in europe. Good evening to those in asia. A borgwarner welcome to those waking up in the United States. This is the pulse live from bloombergs European Headquarters in london. Yanis varoufakis began a European Tour in paris yesterday. In a News Conference with his french counterpart, he suggested his country is addicted to loans. For more, lets go to hans nichols in berlin. He is our International Correspondent. Lets deal with yesterday and then talk about today. What did varoufakis say yesterday in paris . Varoufakis wants to keep lines of credit open, but he wants to give up addiction to eu and imf loans. He also indicated that the withdrawal process, if we are going to stick with the addiction metaphor, could be difficult. We have resembled drug addicts craving the next dose. We believe that we should be taking not another bunch of loans. It is not that we dont need the money. We are desperate, because of certain commitments and liabilities that we have. He of course was in paris appearing next to the finance minister of france who gave some positive comments, as did president barack obama. Heres the issue. The imfeu bailout runs dry at the end of this month. If they dont have a new program in place, then they cant access the ecb. Theyve got 4. 3 billion euros, inc. Next month. Symbolically, he did get some support. They might be slightly open to making things easier for greece. France will make it easier. France will always be there to find a solution for everyone to overcome their difficulties. We have this common belief that greece is in the euro and will stay in the euro. The Prime Minister, Alexis Tsipras, he is off to cyprus today. He made some more conciliatory comments. In some ways, seems like we have good copbad cop, with varoufakis playing the bad cop. Remember that meeting on friday, saying they wouldnt have any negotiations if they dont recognize the legitimacy . One thing we need to find out, will there be a sit down between the new greek finance minister and his german counterpart . We were hoping to find out very soon. What did president obama have to say over the weekend . He was largely sympathetic. He said, it is really hard to undertake the kind of reforms that everyone says is necessary when youre economy has contracted by 25 . In some ways, he was channeling cerise up. In a lot of ways, he is undermining chancellor merkels strategy to isolate the greeks and make it clear that they need to come to europe for a program. Symbolically, president obama seemed to be sympathetic. Thank you very much indeed. Our International Correspondent hans nichols. While varoufakis tours europe greeces Prime Minister is making diplomatic overtures. Alexis tsipras issued a statement to bloomberg saying greece will stick by its obligations. Mark, we heard a lot of rhetoric from athens last week. Is the government realizing they need to compromise . There is an understanding that there is a need. It is worth noticing from a markets perspective that syriza [indiscernible] a lot of the comments that were being made were the ministers reiterating things that were set on the campaign trail. It has always been a party that is hard to take control. A lot of these comments were coming from tsipras himself. The official policy platform for the new Legislature Session will come towards the end of the week. Certainly, after the fiasco of the meeting between varoufakis and dijsselbloem on friday which didnt go that great, there was a clear understanding that they needed to do something to cool things down a little bit , hence the statements over the weekend and the earlymorning reaction in markets. You can see that having an effect. Marcus, we will leave it there. Thank you very much indeed. For more news and analysis, lets go to Bloomberg Business at bloomberg. Com. You can check out the Bloomberg View piece. It is a great piece. Get reading. Right, lets turn our attention to one of our other top stories. Crh has agreed to buy some and assets from holcimlafarge. 6. 5 billion euros. Shares in the Company Getting a boost this morning. The ceo joins us now on the phone from ireland. Good morning, albert. We were expecting acquisitions. This is a bit bigger. What made you change the strategy . First of all, it is not really a change of strategy. Crh would expect to do 1. 5 billion to 2 billion euros a year. What we are seeing is a regulated the consolidation in the industry. Because of the value opportunity, it is compressing those acquisitions into one transaction, due to the fact that it is a very strong opportunity for us. It is really compressing two or three years into one particular transaction. Albert, great to speak to you. Give us a sense of where you expect the biggest demand for cement in europe . It seems that it is still a tricky and risky business, buying assets in a depressed euro, especially with what we are seeing in greece. I think what we are seeing in europe is, we are seeing markets normalizing. It is a question of looking at europe as a patchwork quilt. We are located primarily in northern and western europe and also in central and eastern europe. For us, this is very strong. We are the largest Building Materials player in poland and ukraine. It allowed us to form a very strong cluster of business in central and eastern europe. We would look to be funded by eu funds, infrastructure growth and construction needs. The stock price reacting very nicely this morning despite the fact that you are issuing some stocks. The market is very happy. Some were suggesting that maybe these assets wouldnt go for as much as they were. Was 6. 5 billion the upper end . Walk us through the transaction. From our point of view we had been waiting 10 years for this transaction. We have been very disciplined in our investment approach. Weve taken a very measured approach to acquisitions. We kept the Balance Sheets ready for a day like today. What we have is an unusual situation of deconsolidation of assets in our industry. It is the way they fit with our businesses. There are four distinct platforms of business. In north america and canada, we see an opportunity in canadian assets. Our northeastern United States business is the strongest region. The business is going extremely well in the northern part of the United States. In western europe, these businesses complement our network in belgium, the netherlands, and ireland. We have great strength in that cluster. We have spoken about the inside issue. The unique opportunity to drive value within our businesses, both opportunities and create benefits and create demand. The unique opportunity for that and also, to step into asia in a bigger way. We have Big Investments in india and china. This gives us two very big markets for construction in asia. High growth, good population growth, big construction needs. We have an opportunity to buy the secondlargest player in the philippines. When we look at the prices paid for this, we are buying 752 million with 90 million on top of that. It is a very strong story. Will you be posting any plans . At this point, i am with no plans to close any plants. We will be looking at the full portfolio of. Of assets. Some, we will dispose of. That is the closest we are about to enter into. Albert, just a quick question. What numbers are you plugging in for energy costs this year . Overall, energy costs are declining. We are we dont buy an energy spot. We are covering a portion of it. Energy costs will be lower this year for sure. In terms of the volume of that, we will let the year play out and see it. Certainly, we are on a downward trend. Our customers are watching this as well. A lot of people think we capture the benefits of that downside trend in commodity products. Thats not entirely true. Our customers are aware of those trends. We will try to manage our business in such a way that we can hang onto margin. We will have to see how the year rolls out. The trend is definitely south. And you are expecting the trend in the currency story as well to the south . Are you expecting a cheaper euro throughout the year . It is going to keep at its current level. We think the strength that has been shown by the dollar will continue. That is very important because we get close to 60 of our earnings from the euro. Last year, we were translating those earnings to north of 130. It is hard to see if that is going to shift significantly. All right, albert, thank you so much. Albert manifold, the ceo of crh. We are getting some live heads. The greek Prime Minister is speaking after a meeting. The Prime Minister saying europe needs time to breathe. The troika is necessary and it is timely for europe. The one headline that i like is he is surprised by how much support hes been getting with his european allies. The french, basically. Hes obviously getting quite a lot of support. The two countries, many would say, in very similar boats. He is saying the euro area would be mutilated without greece and cyprus. In a few minutes, we will have live shot from downing street. The voice is in my head. We are waiting very shortly. That is not number 10. That is where we are expecting george osborne, the british Prime Minister, to welcome the new greek Prime Minister, Yanis Varoufakis . Welcome to the pulse. Right. Leaders from the new greek government hit the road this week, hunting for allies in the austerity fight. Prime minister Alexis Tsipras government has been quick to show its commitment to reform. Now, what happens next . Lets find out. An economist joins us now. It has been a fairly interesting first week for the greek government. Do we get into a period now where we start to argue about the numbers . It feels like it has been about politics and rhetoric. Are we going to get into the numbers conversation . Do you think that is resolvable . Youve probably got a short period still where the new government is going to make the points that it is sticking to the terms of its electoral mandate. Then i think we will begin to move quickly after that into a serious discussion about the numbers and what is to be done with negotiations for the troika. If you look at the greek government, demands, youve got rising public spending, they dont want new loans from the trike a, they want a debt writeoff. It has to raise cash somehow over 2015. At best, it is going to run a budget balance which we think is questionable anyway. How is it going to raise cash . Not on international markets. Something has got to give. I think that is going to be the basis of talks between the finance ministry and the troika. It is a very dangerous game. The more noise they make i understand what you are saying. More money is going to be taken out of greek banks. That will at some point become unstable. That is the second dimension of the argument. That is how the european authorities provide liquidity to greece and its banking system. Two things can happen. Number one is that Program Extension is not renewed. Then the ecb cannot take greek sovereign paper in its liquidity operation. At the same time, the governing council can vote against the greek centralbank providing emergency liquidity assistance. That means slowed outflows would continue. It is actually quite a short window now for the two sides to come to some sort of agreement. They are realistically not going to sort those problems out in three or four weeks. You can imagine some sort of patchwork agreement. I think we are familiar with these sorts of fixes. 10 years, 2. 5 u of this morning, which one is mispriced . Greece or portugal . Arguably both are correctly priced. This happened three years ago. It is not more than that. I think it underlies the point that these markets believe that greece is not a systemic problem within the eurozone. Thats not to say there is no contagion through european markets. We saw that last week. But quite correctly, markets are saying that greek problems are not portugals problems. Portugal has its own problems. Is that just the ecb pushing down portuguese yields . Maybe their problems are the same, but the fact that the ecb is buying portugal means that the price is different. It helps. I wouldnt say that portugals problems are the same as greece. Its overall debt is a lot smaller than the other debt to gdp ratios. In greece, youve got a much more functional government. You are likely to see more of the same. You havent got a powerful syriza party in portugal. Fundamentally, portugal is much safer than greece in that respect. You think theres a chance that we let greece go if thats gets too messy . Is there a new risk of the eurozone breaking up that the markets are not pricing in . There is a risk that greece leaves the eurozone. A little bit less than 5 . Ive heard numbers significantly higher in athens. It is not the greek governments intention to leave the eurozone. If greece leaves the eurozone its problems would be multiplied by a factor of 10. I dont think Alexis Tsipras wants to be known as the man who led greece to a new economic depression. Similarly, european authorities dont want greece to leave either. What you are looking at is, is the risk coming from these accidental parts of the fence that sometimes happens . It is not the intention of either side to have them. Accordingly, greece remains in. One quick weston. If that were to happen, would you have to price the eurozone as the erm or the emu . How to you look at the eurozone . We believe it is not systemic. Then you price the eurozone as monetary union. This is one big exception. It is extremely unlikely to be repeated elsewhere. Never say never, but you are not looking at a system where you have to manage your Exchange Rate risks as carefully as you would do within the erm. All right, philip shaw invest tech bank chief economist. Coming up, why u. S. Oil workers are staging their Largest National strike since 1980. Stay with us for that story, here on the pulse. Welcome back to the pulse live on bloomberg tv and streaming on the ipad and bloomberg. Com. Telefonica is planning a share sale worth between 4 billion euros and 5 billion euros. That is recording to a report. The money would be used to pay for recent acquisitions in europe and to bolster its Balance Sheet. Irish Building Company crh buys cement businesses owne d by holcim and lafarge. Holcim and lafarge need to sell off the businesses to win the approval of regulators for their merger. Tesco is close to naming its new chairman after last october. That is according to the sunday times which reported that john allen is the man said to be leading the race. Coming up, how you do tried to steal the super bowl show from nbc. This is a fascinating story. It is trying to target teenagers. They say instead of watching the nbc Super Bowl Ads, for which they pay top dollar, watch youtube. They say they are not competing with the big advertisers running those ads during the super bowl and paying huge amounts of money for them. This is complement three. We will see how that one turns out. Just a reminder you can follow us on twitter. We can talk super bowl. We can talk the rise of youtube. We can also talk ryanair. That is our question of the day. Ryanair pushing its business credentials. Would you fly ryanair for business . Have you flown ryanair for business . Let us know your thoughts and experiences. See you in a moment. Marked contraction. Speculation that the second largest economy will need to boost among sliding tax receipts. President obama suggests companies should pay 19 on foreign earnings. He is seeking a 40 tax on it 2 trillion in held in offshore centers. These are from people who are from a with his budget proposals. The money would be used to pay for roads, bridges and other infrastructure projects. The australians are ecstatic. He was detained. He is being deported from egypt. Lets find it was going on in the markets. Jonathan pharaoh has more. The dax is pushing high. Its a good day for manufacturing data. China is an contraction areas for the first time. You dig into the numbers and you look at the separate countries and that tells you the story area france, italy greece, in contraction. I dont a how much you can read into that. Last week we had these down 14 . There is little bounce in the bond market. The yield of the 10. 8 on the 10 year. The greek finance minister is on tour. Once he going to say to reassure investors elsewhere . We dont talk about this very often. Denmark, yields are down by 10 basis points. Denmark did Something Interesting friday. They suspended issuance of bonds. Its like qe with a twist. They did the same thing and reduced appetite for denominated assets. They want to maintain with the euro. They are suspending bond issuance over in denmark. The big story is where it started. Capitulating on the floor, we went straight down to parity. We have this nice level here. This market whisper of a soft floor between 105 and 110. The Swiss National bank declined to comment. What do we do . We go into the sweet spot. We go up to 10554. One last Exchange Rate to have a look at this morning. The ozzie moves higher. The big question and i will leave you with it, will the Australian Central Bank become the 13th centralbank to ease Monetary Policy so far this year . The drawing the rally is the best rally. It is influencing Exchange Rates as well. Thank you so much. There is a great Bloomberg View piece. The market has the most volatile. In three years to start the year. In 25 minutes, tom keene joins us. What are we looking at today in the states . There is that strike among u. S. Oil workers. Tom brady is going to disneyland. It was the night of the super bowl. We will look at that as well. We will talk to some marketing people about the ads in the super bowl. What a game it was. New england beat the Seattle Seahawks, last years reigning champs. We will look at the markets. There is a strike going on in the oil business. Olivia stearns has been looking into that. We are cautious about the market. Michael fuel we will look at a challenging january and what it means for murder mergers acquisitions. We have a jobs week to look forward to on friday. I know more about the nfl than i did last year. I expect you to go to guy or jonathan pharaoh so you can do it costume change like katy perry. You can change into your next outfit. That is your gay get. I believe you to that. Tom, thank you so much. Surveillance starts in 25 minutes. That went an interesting direction. What is happening in the u. S. Oil sector, we abstract taking place in the states. Refinery workers, its the biggest right since 1980. They have failed to agree on a new labor contract. What happens now . Caroline hyde is checking out the story. We are joined by philip. Lets start with you, caroline. 10 is off. This is changing oil into gasoline. Its about 3000 workers. If the spreads, if you go to the rest of the unionized refineries and terminals across the United States, you could see 64 of fuel production hit by this. Its a concern on what is driving the oil market lower. If we build up Global Supply the in and states is going crazy for shale at the moment. That is adding production. Now, we are expecting worse. We are seeing diesel push higher in gasoline prices rise. This can affect production. It has to do with that contract. It is all to do with the last time they did it, it took several negotiations. Shell is the company that does the negotiating with the union on behalf of companies. This time, they have rejected five. How are they going to get the pay rises they want and how well Companies Fight back . We still want to come to the table. They are looking at ways to mitigate this and keep producing despite the walkout. What have you heard from companies . Refining has been a good thing for integrated Oil Companies in the last couple of months. When the price went down, the Product Price did not go down in the same way. Refining margins have been good. Oil companies are putting their own crude production into their own refineries. They are able to cushion the loss from the loyal Lower Oil Prices. Refinery workers one their part of the share, of the game. Refining profits have been good. The gas price is low and energy costs were lower. How is this going to affect results . Exxon is out today. The majors are reporting. How does this feed into the numbers . Personnel costs for an integrated oil major are not a very big chunk of cost. Its too or 3 . Its just risen lately. In the Fourth Quarter results, we are unlikely to see any impact from that. If it persists, there might be a slight nuance in the results. Its probably going to be minor. Its interesting who holds the chips at the moment. Workers are watching the boom in the United States. They want a piece of the pie. The refineries are doing well. Oil prices have fallen by half. Maybe they dont have the power that are feeling the pinch far more. Some of these workers one substantial pay increases. They want better working conditions as well. Its a balancing act as to who has the power. The First Security and safety at work is an issue at work. We might see more concessions in that respect. Companies are willing to pay more or grant more Safety Equipment and pay more for the safety. On the waistline, it remains to be seen. The integrators will be more lenient to a pay rise as the and dependent refiners. The integrators are just a smaller chunk of the whole cost base. Thank you so much. Lets hear from the press swiss private banking. Profit almost doubled last year. Joining us is the dean of faculty at one of the founders of Robert Kennedy college. Thank you for joining us. You said this was ivan banking is in survival mode. I think the reaction has been positive. The strength to increase dividends. I would be surprised. We are in a challenging environment. This is the Third Largest asset manager. This could get some of the benefits. Give us a sense of how much reputational damage the Swiss National bank has done to everyone in switzerland. I think a different view. The damage is not very big at all. In the short term, its a shock. In the longterm, that is consistent. Neutrality and stability. We are independent thinkers. I think the mistake has been having pegs at all. Given what is given over time this will be a sign of strategy. They can be stable with the currency. How hard is it going to be to hang on to talent . Private banking is a relationship business. Those relationships move around with managers. Some of those guys are going to leave and go elsewhere . How big of a problem is this going to be . I think the announcement today was positive. It underlined that the cuts they had were not in staff. That is the challenge. Lets cut bonuses. Payments are high. The industry relies on individuals. Your talent is what you have. Thanks have to balance this. They have to balance cuts with growth opportunities. It only comes if you can repay your key personnel. It is a challenging environment. There is a lot of opportunity. I think challenging. It can be very profitable. They could bring more business to the biggest players. Some of the foreign banks there is the challenge to bring opportunity. How big a takeover target is it . It is quite a big takeover target. There have been rumors of a possible takeover. It could make sense. They have a Strong Capital position. I think the numbers are very positive overall. It would be an expensive acquisition. Much depends on the strategy and what cost saving can be made. At the moment, there might be more speculation that reality. We will see smaller players with much smaller assets under management. We believe it there. Thank you very much. You could pay 10,000 for a Super Bowl Ad. We discussed the competing Super Bowl Ad giants after the break. Welcome back to the pulse live from london. The super bowl did not disappoint. Katy perry and Lenny Kravitz were putting on a show, youtube was hosting a performance of its own. What does this new venture tell us about the future of online viewing habits . Martin mcnulty is joining us. Thank you for joining us in the studio. We sat down and asked you your views. Martin, you think this is not youtube trying to get market share. I wouldnt say that it isnt trying to get market share. They are trying to get as much as it can whatever. Tv generally is on the decline. Events like the super bowl attract a lot of interest. Tv likes to talk about it. People who care about Super Bowl Ads are commentators. I think the problem is digital is taking share. I dont think theres a single of that thats going to displace a Super Bowl Ad. You get 100 million viewers. What is strange is youtube has the potential to say we are going to do Something Like a youtube Super Bowl Ad. I cant see it displacing it. The fact is youtube is the secondlargest Search Engine after google. The numbers are going up and up and up all the time. Its not about youtube replacing the Super Bowl Ad. Its about extending the reach to a wider audience. They did an alternative halftime show. That is were they are able to extend that reach. Is there a hybrid medium . Are the advertisers going to figure out there is an opportunity to do both . They can find a way of doing it online themselves. I do know why youd watch the super bowl on youtube. You would watch it on tv. If you are a teenager, you watch everything on youtube. Its not about a hybrid medium. Its about the difference between television and digital changing. We think about television and digital as two different media. In the future, its going to be just one medium basically. Its just morphing from what we have now into what is coming with digital. The reason we come in is we have a lot of people coming on talking about disruptors, but they never think its affecting them. This was a great example. Do people realize this will change . Youtube will change everything they do. I think they do. We keep coming back to the Super Bowl Ad. The reality is digital is taking market share in more mundane things. If you find a product using google, thats taking advertising and that used to be on tv. That is happening subtly. The super bowl is a big brand event. Its very different. That affects a number of advertisers. I like people are seeing the difference the digital is making in their lives. Its such a steady process. I can watch netflix its just a button on the television. Im doing Something Different from a traditional tv, but it feels the same. Dui get a choice of which adverts im going to see . Can we end up the situation where i tune into that channel during the outbreaks . Effectively, other companies are common in because of the hardware and the way its set up, you can be back. Things will become more tailored. If you look like sky tv they can serve an app to an individual. That is exciting and compelling. That is the opposite of what the super bowl is. Its a collective event where we watch the ads together. You have to forego that if youre going to go down the tailored route. We are starting to see second screening. While people are watching the super bowl, theyve also got their mobile or tablet in front of them. Thats for you have the opportunity for multiple advertising. How you monetize that . Its usually powerful. You can insert ads at the right moment. You can make competitive ads. You can go right on as a competitor in show on other channels your ads. Its very specific and tailored it. If i am pope or pepsi, why would i pay millions of pounds and dollars to advertise on the super bowl . I could just advertise on youtube. My target audience will be watching me. There is reach and prestige. If you are a brand like coke its all about prestige and you being the person that did it. Thats why wiser went to the super bowl for god knows how many years. Its about image. If you conflate targeting with image, you run into all sorts of problems. We have to leave it there. Thank you so much for coming in. We are to talk about president obama. We will get a view on that in a moment. We just had a great conversation about advertising on the super bowl. That wraps us up for today. Surveillance is up next. We are off for a costume change. We will see you at the next same time tomorrow. Ukraine is that war and peace talks fail. The ruble weakens your it january was unkind to investors. We consider volatility. Tom brady and the patriots may deflate the seahawks. Good morning. This is bloomberg surveillance. We are live. Joining me is Olivia Stearns and brandon greeley. Time for top headlines. The new Prime Minister of greece is on tour to push back against german calls for more austerity. They will head to rome first followed by paris and brussels. The new finance minister says greece wants a new deal with it creditors by the end of may. Greece will not take more aid under the existing agreement. To i believe we should be taking