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Transcripts For BLOOMBERG The Pulse 20150211 : vimarsana.com
Transcripts For BLOOMBERG The Pulse 20150211 : vimarsana.com
BLOOMBERG The Pulse February 11, 2015
Im francine lacqua. A crossroads for europe. Greece and ukraine face critical meetings that will determine their path for the next couple months. Lets get straight to our reporter on the ground. The greek
Prime Minister
, alexis tsipras, won a vote of congress a vote of confidence for his antiausterity program. Now, the tougher task of convincing creditors to a new agreement. Germany is showing no sign of backing down from its opposition to the new deal. For more, we are joined by hans nichols. You will be going to brussels later today. What can we expect from the meeting . We are going to get the formal presentation from
Yanis Varoufakis
on what he wants in terms of a bridge loan. What we expect is 8 billion in increase in the tbills, and an additional 1. 9 billion. Let me read you some headlines from the greek papers this morning. One, high taxes will bring recession. Another, new taxes for real estate and income. The eurogroup will either point to agreement or a rupture. At the same time, the mass circulation here, they have a fullpage spread of everything theyve said over the last two or three years morning against, and warning that there could be a greek exit from the eurozone. You have schaeuble who hasnt changed his rhetoric at all. Hes very clear yesterday, he talked about, there would be no way back. He said it would be over if greece doesnt want its final. It will be in brussels. We will get those readings. Are there also signs that greece will look to russia if they fail to make a deal in brussels . We have the defense minister, he is a part of the minority party, he says theyve been contacted by russia and china and they look to them. At the same time, the foreign minister has meetings in russia today with his russian counterpart. It is opening up this prospect that greece has a plan b and that could mean getting some sort of bridge financing either from russia or in some accounts, china. Francine . Thank you so much, hans nichols and berlin. He will be covering that story and brussels today and tomorrow morning. French, german, and ukrainian leaders are meeting in belarus today to discuss ukraine. The ukrainian president has confirmed that he will be attending. Chancellor merkel and president hollande month ago, according to officials. For more, lets bring in ryan chilcote. What are we expecting at the meeting . Theres going to be a meeting. Thats a good starting point. It is all or nothing. If one goes, they all have to go. The french and german leaders are they going to go . It sounds like they are going to go. It sounds like it is on. Things have been all over the place. Who are we expecting . A rushing go . Petro poroshenko,
Vladimir Putin
Angela Merkel
, and
Francois Hollande
. The socalled enormity format. They all sat down on dday in normandy in another set of negotiations. The french and germans are there to hash out a deal between the russians and ukrainians. The
Sticking Point
in terms of a ceasefire is how much autonomy these regions actually get. We had
Angela Merkel
and
Francois Hollande
traveling to russia over the weekend. If they dont achieve anything there, what are the chances today . They are not really telling us. I think they want to achieve a deal and they think the minutia of the progress is something that is not good to share. But the way theyve characterized their diplomatic activity, hollande and merkel, is they dont think there is going to be a deal. They would like there to be a deal, but neither of them want to be remembered as leaders who didnt do their utmost to achieve a deal. They give these talks a last chance effort before larger warfare breaks out. What is the latest on the ukrainian economy . They are still looking for foreign aid. We just heard from the ukrainian finance minister. She said that shes going to be talking to creditors after negotiations with the imf are completed, perhaps in march. She also said she thought the ukrainian currency had overshot the mark when it comes to depreciation. Down 36 just in the last nine days. Ukrainian bonds, people are expecting a big haircut here. The yield right now is about 39. 5 . Part and parcel of ukraine getting the 15 billion it says it needs this year in additional finance from the imf is sorting out its issues with russia. Lagarde has been clear that the if there is a war going on, it is difficult for the imf to give money. The imf is trying to get other countries to coinvest. In addition to that the ukrainians of the russians about 3 billion. Thats how much the russians were able to give ukraine before
Viktor Yanukovych
fled kiev. Now, they are saying, youve got to pay that money back. That would also have to be part of an overall settlement. The private creditors want to make sure they are first. Usually, the imf gets to be first. Ryan chilcote with the latest on possible peace talks. Later, we will be talking to
Carlo Messina
. We will be talking earnings, the banking sector, and what low interest means for his business. Also, the chrysler ceo says a ferrari ipo could be sold faster than he could eat a bagel. That brings us to todays twitter question. Is marchionne right to be so confident about a ferrari ipo . I will be right back. Welcome back to the pulse. We are live on bloomberg tv and radio. Back to our top story, it is crunch time for greece in brussels today. Joining us now, bank of
America Merrill
lynch head of g 10 fx strategy. Thank you so much for joining us. When we talk about greece, it seems the markets are worried sometimes, not that much. Theres a general consensus that because we are dealing with politics, theyll find a way. Is that a wrong way to analyze the situation . Icing i think the market has seen greece before. The market will say, it is going to be a surge in the coming months. I dont think the market is taking this as seriously as it should. Also, the russia situation is quite complicated. The cause of circumstances which are slightly different, the market is a little less worried. Although it probably should be more worried, we think. Jock seems to be intimating that the market is affected by what is happening around them. The new government in greece are radicals. Theyve made that very clear. They say one thing and now they are almost saying, if we dont get a deal with europe, we will go to russia. Is that a misinterpretation, negotiation tactics, or
Something Real
. They have been more confrontational than anyone expected. They are discussing the roadmap for negotiations. They are negotiating how to start negotiations. This might be a negotiating tactic. Eventually, they will compromise. The russia card is something that i think they might use at the very end. Hopefully, they will not go there. Do you agree . It feels a bit cyprus. When we talk about looking for help elsewhere, you enter a territory in europe which is probably not welcome if there was a search for financial help in russia given the situation there. I agree that this is probably not the time to use that card early on. It has already been talked about in the press and so on. I think this makes it more complicated. Europe has always compromised, but the format in the way the greek government is communicating is very different. That i think is going to be the first reality check tonight. We need to tone down and start on a level playing field. That is going to be the first test. Is it to ginger is . Too dangerous . The germans are trying to involve russia in another way. What are the chances that because of miscommunication the greeks accidentally leave the eurozone . The convergence toward the euro exit, the probability on the back of the draghi call, has been questioned and should be questioned. An accident can happen. It is very clear. Everything is going to be deployed to prevent an accident. It is more likely that it doesnt happen than the contrary. But when you look at the positions for europe and the greek position, it is one of the largest gaps weve seen in any negotiation since the beginning of the crisis. It is the first time weve had a democratically elected government with an economic agenda that is accidentally leaving the eurozone, 35 chance, 40 chance . Why are the markets not more worried . I think it is hard to come up with an estimate. We still believe this is a very small probability event. Although the government has been confrontational, they have saved some room for compromise. The government has said they would like to implement structural reforms. We remain optimistic that the worst will be avoided. Basically, as long as the negotiations proceed, avoid an accident. We will be concerned if they are not talking to each other. And thats a possibility . I find it difficult because you have so many ministers saying things that are so undiplomatic , if you are sitting in france or in germany, theres a point where you may just get fed up. I think by the end of february they need to agree on their roadmap of discussions. By early may, they need to have a deal. The maturity schedule starting in june is very heavy. It has been three years of trying to rebuild the
Monetary Union
and bring it to some form of stability. Weve seen in a space of one month that the debate has come back. The reason is probably because there are two different audiences. That creates this enormous difficulty of coordination within europe. So the markets are obviously looking at this and saying, what is the probability of exit . The mechanism is very different. [indiscernible] it is not a
Financial Markets
contagion. It is more
Political Risk
. We have a lot of people saying this may be another lehman moment. How do you model that . I dont think we can model it. [indiscernible] you will have a breakdown in negotiations. That brings you to a new level of threat which probably will involve the ecb reducing exposure to greece. That is the first level of heightened uncertainty you will get. Is there going to be a contagion if there is a greek exit . I think the debate is divided. The reason is because people say, weve seen it before. I dont agree with that. The implication of any country exiting, maybe not from a financial standpoint immediately they would probably respond. But the mediumterm implications are strongly negative. I cannot believe there wouldnt be do you agree with that . Does this mean that germany has to do everything in their power to keep the union together . I agree with his view. When you look at a contagion it is hard to see how it will happen. If denmark today is under pressure because the ecb removed the floor, we can imagine what will happen in a gregs it a grexit scenario. They need to respect the rules. The rules are there on how to address a crisis in the eurozone. They have to make sure they dont keep throwing bad money after bad money. This will allow a more gradual
Fiscal Consolidation
path in greece. Will we get more reforms in greece when the officials are saying, look at italy, they are just as bad as us . Again, not helpful. This is a facesaving exercise on both sides. Probably the red lines that have been set on both sides are too far away. They need to be more orange. It is possible that you find some compromise. The two thirdsone third story is interesting. You might have some intervention of nonforgot organizations. That might have less of a negative stigma. I think there are elements of answers there. We are only at the beginning. Weve got two weeks. Not a little bit shorter . It seems the markets are focusing on the next two or three days. It would be very hard to imagine tonight or tomorrow morning there is some form of consensus that comes out and everyone happily agreeing on matters. I think we are at the very early stages. It is going to continue probably escalating. I was going to ask about that. Escalating in the sense that they need to not get further apart . How important is it now that both sides temper expectations a little bit . With every insult or injury, the risk is bigger. We only have two weeks. If there is no agreement, there is a consent that they might start putting pressure. By that time, they need to be on the roadmap. If they start discussing actual policies, it will be a very long and difficult discussion. What is the impact on fx . If you look at the u. K. The economy is not doing as well as people were expecting. The u. S. May be near
Interest Rate
rises. What is your favorite play . The greek suggestion has not affected the euro markets. In the last two weeks, the euro has remained relatively well supported. We believe there will be more volatility looking forward. We like selling yen downside. These are traits that can do well in this volatile environment. On the euro, we think it is down on the dollar and any escalation of the situation in greece will probably push the euro lower. This current structure is the cyclical development in the u. S. That may be preventing the euro from falling rapidly. Ecb lawmakers have called down the pace of depreciation. G20 as well, maybe sending some small signals about the fx front. The trend to us is still down in terms of the euro versus the dollar. We have to mention russia a little bit. Economists have to be political analysts. How difficult is it to analyze the situation where it is one man and his decision, and what does it mean . How much do you worry about russian implications on the euro zone economy and how much do you worry about greece . Actually, things are happening faster. There are too many things driving the market. At the same time, the ecb has ended qe. Russia is a huge risk if things escalate, no doubt. We believe that volatility is here to stay. Historically, low but much higher than last year. The fed is not there with qe to bush volatility down. This is a preview in terms of what we see in fx markets. Looking at the linkage between russia and western europe, i think the initial view a year ago was, small market share in terms of trade, so who cares . The reality is that the collapse in exports from europe to russia and ukraine, down 40 45 , down 25 to russia, starts being meaningful. We shaved about 20 basis points out of gdp last year. It is a large number. The question is, in the last leg of the crisis in russia which has been the combination of oil and fx, how much weaker domestic demand are we going to get and how much of that is going to feed back into europe . We are worried that we get in a run negative leg in terms of the russia weakness. We are now seeing it filtering through as well into the neighboring countries. That remains a significant problem. Ukraine inflation also very difficult in terms of financial supports. The amounts keep on rising because of the situation deteriorating. Thank you so much for all that. Jacques cailloux and athanasios vamvakids. Coming up samsungs threesided phone. Is the
Company Planning
to unveil its new secret weapon . Coming up, exclusive interview with
Carlo Messina
. We talk earnings and of course banking. Welcome back to the pulse live from bloombergs
European Headquarters
here in london. Here are bloombergs top headlines. The greek
Prime Minister
won a parliamentary vote of confidence for his antiausterity program last night. Greece now faces the challenge of making a deal with its creditors in brussels today. Germanys finance minister said there are no plans to discuss a new arrangement or give greece more time. The eu commissioner told bloomberg there is no clear way forward. There is no plan on the table. Ideas, yes. But not a plan. Europe once a plan. We must build a plan for greece in the eurozone. We will see what other technical issues have to be dealt with. First of all, weve got to speak, to talk to each other. President obama has spoken by phone with the russian president and the ukrainian president as representatives from russia and ukraine prepare to face each other at peace talks in minsk. The german chancellor and french president may also attend the meeting which aims to end violence in eastern ukraine. If the talks fail, russia could face fresh sanctions. Obama said on monday that he hasnt ruled out providing weapons to ukraine. A record sale for english football. The chief executive announced that sky will take over broadcast matches from englands top division. That is a 70 increase over what they paid for the last cycle. Sky will broadcast 126 games in the u. K. Starting in the 20162017 season while bt will show 42 matches. Italys secondlargest
Bank Increased
its annual dividend to seven cents a share from five cents. Joining us now is
Carlo Messina
for a bloomberg exclusive interview. Thank you so much for coming in. Yesterday, you had some pretty good results. A lot of analysts were saying you were the
Strongest Bank
in italy. What does it mean for the year ahead and profitability overall . We are the
Strongest Bank
not only in italy but also in europe. Sorry, just to be clear. We are working in order to have a benchmark in europe and we are overdelivering on the
Business Plan
. The
Business Plan
is based on growth. We are sharing the benefits with all stakeholders all shareholders, increasing dividends. The main engine is growth. We are growing revenues and it is the highest level of growth compared with european peers. It is the
Asset Management
area within the company. We think that we can overdeliver. I spoke to a lot of analysts who were mentioning you in the italian context. When you look at the european context, you think a lot of analysts put you as an italian bank. You still think there is an italian discount. You are still considered and wrongly so, as an italian bank. Thats a good point, because we are considered a very strong bank by the analysts and investors. The majority of my shareholders now are international. Especially usa investors are considering
Intesa Sanpaolo
as a machine, a very good company that can give sustainable earnings. On the other side, we are 80 concentrated in italy. We are working with families and private bankers, and you know that we are benefiting from the country. We can be considered as one of the real leading players in europe in banking. If you see our
Revenue Growth
and you compare us with french spanish, we have a
Prime Minister<\/a>, alexis tsipras, won a vote of congress a vote of confidence for his antiausterity program. Now, the tougher task of convincing creditors to a new agreement. Germany is showing no sign of backing down from its opposition to the new deal. For more, we are joined by hans nichols. You will be going to brussels later today. What can we expect from the meeting . We are going to get the formal presentation from
Yanis Varoufakis<\/a> on what he wants in terms of a bridge loan. What we expect is 8 billion in increase in the tbills, and an additional 1. 9 billion. Let me read you some headlines from the greek papers this morning. One, high taxes will bring recession. Another, new taxes for real estate and income. The eurogroup will either point to agreement or a rupture. At the same time, the mass circulation here, they have a fullpage spread of everything theyve said over the last two or three years morning against, and warning that there could be a greek exit from the eurozone. You have schaeuble who hasnt changed his rhetoric at all. Hes very clear yesterday, he talked about, there would be no way back. He said it would be over if greece doesnt want its final. It will be in brussels. We will get those readings. Are there also signs that greece will look to russia if they fail to make a deal in brussels . We have the defense minister, he is a part of the minority party, he says theyve been contacted by russia and china and they look to them. At the same time, the foreign minister has meetings in russia today with his russian counterpart. It is opening up this prospect that greece has a plan b and that could mean getting some sort of bridge financing either from russia or in some accounts, china. Francine . Thank you so much, hans nichols and berlin. He will be covering that story and brussels today and tomorrow morning. French, german, and ukrainian leaders are meeting in belarus today to discuss ukraine. The ukrainian president has confirmed that he will be attending. Chancellor merkel and president hollande month ago, according to officials. For more, lets bring in ryan chilcote. What are we expecting at the meeting . Theres going to be a meeting. Thats a good starting point. It is all or nothing. If one goes, they all have to go. The french and german leaders are they going to go . It sounds like they are going to go. It sounds like it is on. Things have been all over the place. Who are we expecting . A rushing go . Petro poroshenko,
Vladimir Putin<\/a>
Angela Merkel<\/a>, and
Francois Hollande<\/a>. The socalled enormity format. They all sat down on dday in normandy in another set of negotiations. The french and germans are there to hash out a deal between the russians and ukrainians. The
Sticking Point<\/a> in terms of a ceasefire is how much autonomy these regions actually get. We had
Angela Merkel<\/a> and
Francois Hollande<\/a> traveling to russia over the weekend. If they dont achieve anything there, what are the chances today . They are not really telling us. I think they want to achieve a deal and they think the minutia of the progress is something that is not good to share. But the way theyve characterized their diplomatic activity, hollande and merkel, is they dont think there is going to be a deal. They would like there to be a deal, but neither of them want to be remembered as leaders who didnt do their utmost to achieve a deal. They give these talks a last chance effort before larger warfare breaks out. What is the latest on the ukrainian economy . They are still looking for foreign aid. We just heard from the ukrainian finance minister. She said that shes going to be talking to creditors after negotiations with the imf are completed, perhaps in march. She also said she thought the ukrainian currency had overshot the mark when it comes to depreciation. Down 36 just in the last nine days. Ukrainian bonds, people are expecting a big haircut here. The yield right now is about 39. 5 . Part and parcel of ukraine getting the 15 billion it says it needs this year in additional finance from the imf is sorting out its issues with russia. Lagarde has been clear that the if there is a war going on, it is difficult for the imf to give money. The imf is trying to get other countries to coinvest. In addition to that the ukrainians of the russians about 3 billion. Thats how much the russians were able to give ukraine before
Viktor Yanukovych<\/a> fled kiev. Now, they are saying, youve got to pay that money back. That would also have to be part of an overall settlement. The private creditors want to make sure they are first. Usually, the imf gets to be first. Ryan chilcote with the latest on possible peace talks. Later, we will be talking to
Carlo Messina<\/a>. We will be talking earnings, the banking sector, and what low interest means for his business. Also, the chrysler ceo says a ferrari ipo could be sold faster than he could eat a bagel. That brings us to todays twitter question. Is marchionne right to be so confident about a ferrari ipo . I will be right back. Welcome back to the pulse. We are live on bloomberg tv and radio. Back to our top story, it is crunch time for greece in brussels today. Joining us now, bank of
America Merrill<\/a> lynch head of g 10 fx strategy. Thank you so much for joining us. When we talk about greece, it seems the markets are worried sometimes, not that much. Theres a general consensus that because we are dealing with politics, theyll find a way. Is that a wrong way to analyze the situation . Icing i think the market has seen greece before. The market will say, it is going to be a surge in the coming months. I dont think the market is taking this as seriously as it should. Also, the russia situation is quite complicated. The cause of circumstances which are slightly different, the market is a little less worried. Although it probably should be more worried, we think. Jock seems to be intimating that the market is affected by what is happening around them. The new government in greece are radicals. Theyve made that very clear. They say one thing and now they are almost saying, if we dont get a deal with europe, we will go to russia. Is that a misinterpretation, negotiation tactics, or
Something Real<\/a> . They have been more confrontational than anyone expected. They are discussing the roadmap for negotiations. They are negotiating how to start negotiations. This might be a negotiating tactic. Eventually, they will compromise. The russia card is something that i think they might use at the very end. Hopefully, they will not go there. Do you agree . It feels a bit cyprus. When we talk about looking for help elsewhere, you enter a territory in europe which is probably not welcome if there was a search for financial help in russia given the situation there. I agree that this is probably not the time to use that card early on. It has already been talked about in the press and so on. I think this makes it more complicated. Europe has always compromised, but the format in the way the greek government is communicating is very different. That i think is going to be the first reality check tonight. We need to tone down and start on a level playing field. That is going to be the first test. Is it to ginger is . Too dangerous . The germans are trying to involve russia in another way. What are the chances that because of miscommunication the greeks accidentally leave the eurozone . The convergence toward the euro exit, the probability on the back of the draghi call, has been questioned and should be questioned. An accident can happen. It is very clear. Everything is going to be deployed to prevent an accident. It is more likely that it doesnt happen than the contrary. But when you look at the positions for europe and the greek position, it is one of the largest gaps weve seen in any negotiation since the beginning of the crisis. It is the first time weve had a democratically elected government with an economic agenda that is accidentally leaving the eurozone, 35 chance, 40 chance . Why are the markets not more worried . I think it is hard to come up with an estimate. We still believe this is a very small probability event. Although the government has been confrontational, they have saved some room for compromise. The government has said they would like to implement structural reforms. We remain optimistic that the worst will be avoided. Basically, as long as the negotiations proceed, avoid an accident. We will be concerned if they are not talking to each other. And thats a possibility . I find it difficult because you have so many ministers saying things that are so undiplomatic , if you are sitting in france or in germany, theres a point where you may just get fed up. I think by the end of february they need to agree on their roadmap of discussions. By early may, they need to have a deal. The maturity schedule starting in june is very heavy. It has been three years of trying to rebuild the
Monetary Union<\/a> and bring it to some form of stability. Weve seen in a space of one month that the debate has come back. The reason is probably because there are two different audiences. That creates this enormous difficulty of coordination within europe. So the markets are obviously looking at this and saying, what is the probability of exit . The mechanism is very different. [indiscernible] it is not a
Financial Markets<\/a> contagion. It is more
Political Risk<\/a>. We have a lot of people saying this may be another lehman moment. How do you model that . I dont think we can model it. [indiscernible] you will have a breakdown in negotiations. That brings you to a new level of threat which probably will involve the ecb reducing exposure to greece. That is the first level of heightened uncertainty you will get. Is there going to be a contagion if there is a greek exit . I think the debate is divided. The reason is because people say, weve seen it before. I dont agree with that. The implication of any country exiting, maybe not from a financial standpoint immediately they would probably respond. But the mediumterm implications are strongly negative. I cannot believe there wouldnt be do you agree with that . Does this mean that germany has to do everything in their power to keep the union together . I agree with his view. When you look at a contagion it is hard to see how it will happen. If denmark today is under pressure because the ecb removed the floor, we can imagine what will happen in a gregs it a grexit scenario. They need to respect the rules. The rules are there on how to address a crisis in the eurozone. They have to make sure they dont keep throwing bad money after bad money. This will allow a more gradual
Fiscal Consolidation<\/a> path in greece. Will we get more reforms in greece when the officials are saying, look at italy, they are just as bad as us . Again, not helpful. This is a facesaving exercise on both sides. Probably the red lines that have been set on both sides are too far away. They need to be more orange. It is possible that you find some compromise. The two thirdsone third story is interesting. You might have some intervention of nonforgot organizations. That might have less of a negative stigma. I think there are elements of answers there. We are only at the beginning. Weve got two weeks. Not a little bit shorter . It seems the markets are focusing on the next two or three days. It would be very hard to imagine tonight or tomorrow morning there is some form of consensus that comes out and everyone happily agreeing on matters. I think we are at the very early stages. It is going to continue probably escalating. I was going to ask about that. Escalating in the sense that they need to not get further apart . How important is it now that both sides temper expectations a little bit . With every insult or injury, the risk is bigger. We only have two weeks. If there is no agreement, there is a consent that they might start putting pressure. By that time, they need to be on the roadmap. If they start discussing actual policies, it will be a very long and difficult discussion. What is the impact on fx . If you look at the u. K. The economy is not doing as well as people were expecting. The u. S. May be near
Interest Rate<\/a> rises. What is your favorite play . The greek suggestion has not affected the euro markets. In the last two weeks, the euro has remained relatively well supported. We believe there will be more volatility looking forward. We like selling yen downside. These are traits that can do well in this volatile environment. On the euro, we think it is down on the dollar and any escalation of the situation in greece will probably push the euro lower. This current structure is the cyclical development in the u. S. That may be preventing the euro from falling rapidly. Ecb lawmakers have called down the pace of depreciation. G20 as well, maybe sending some small signals about the fx front. The trend to us is still down in terms of the euro versus the dollar. We have to mention russia a little bit. Economists have to be political analysts. How difficult is it to analyze the situation where it is one man and his decision, and what does it mean . How much do you worry about russian implications on the euro zone economy and how much do you worry about greece . Actually, things are happening faster. There are too many things driving the market. At the same time, the ecb has ended qe. Russia is a huge risk if things escalate, no doubt. We believe that volatility is here to stay. Historically, low but much higher than last year. The fed is not there with qe to bush volatility down. This is a preview in terms of what we see in fx markets. Looking at the linkage between russia and western europe, i think the initial view a year ago was, small market share in terms of trade, so who cares . The reality is that the collapse in exports from europe to russia and ukraine, down 40 45 , down 25 to russia, starts being meaningful. We shaved about 20 basis points out of gdp last year. It is a large number. The question is, in the last leg of the crisis in russia which has been the combination of oil and fx, how much weaker domestic demand are we going to get and how much of that is going to feed back into europe . We are worried that we get in a run negative leg in terms of the russia weakness. We are now seeing it filtering through as well into the neighboring countries. That remains a significant problem. Ukraine inflation also very difficult in terms of financial supports. The amounts keep on rising because of the situation deteriorating. Thank you so much for all that. Jacques cailloux and athanasios vamvakids. Coming up samsungs threesided phone. Is the
Company Planning<\/a> to unveil its new secret weapon . Coming up, exclusive interview with
Carlo Messina<\/a>. We talk earnings and of course banking. Welcome back to the pulse live from bloombergs
European Headquarters<\/a> here in london. Here are bloombergs top headlines. The greek
Prime Minister<\/a> won a parliamentary vote of confidence for his antiausterity program last night. Greece now faces the challenge of making a deal with its creditors in brussels today. Germanys finance minister said there are no plans to discuss a new arrangement or give greece more time. The eu commissioner told bloomberg there is no clear way forward. There is no plan on the table. Ideas, yes. But not a plan. Europe once a plan. We must build a plan for greece in the eurozone. We will see what other technical issues have to be dealt with. First of all, weve got to speak, to talk to each other. President obama has spoken by phone with the russian president and the ukrainian president as representatives from russia and ukraine prepare to face each other at peace talks in minsk. The german chancellor and french president may also attend the meeting which aims to end violence in eastern ukraine. If the talks fail, russia could face fresh sanctions. Obama said on monday that he hasnt ruled out providing weapons to ukraine. A record sale for english football. The chief executive announced that sky will take over broadcast matches from englands top division. That is a 70 increase over what they paid for the last cycle. Sky will broadcast 126 games in the u. K. Starting in the 20162017 season while bt will show 42 matches. Italys secondlargest
Bank Increased<\/a> its annual dividend to seven cents a share from five cents. Joining us now is
Carlo Messina<\/a> for a bloomberg exclusive interview. Thank you so much for coming in. Yesterday, you had some pretty good results. A lot of analysts were saying you were the
Strongest Bank<\/a> in italy. What does it mean for the year ahead and profitability overall . We are the
Strongest Bank<\/a> not only in italy but also in europe. Sorry, just to be clear. We are working in order to have a benchmark in europe and we are overdelivering on the
Business Plan<\/a>. The
Business Plan<\/a> is based on growth. We are sharing the benefits with all stakeholders all shareholders, increasing dividends. The main engine is growth. We are growing revenues and it is the highest level of growth compared with european peers. It is the
Asset Management<\/a> area within the company. We think that we can overdeliver. I spoke to a lot of analysts who were mentioning you in the italian context. When you look at the european context, you think a lot of analysts put you as an italian bank. You still think there is an italian discount. You are still considered and wrongly so, as an italian bank. Thats a good point, because we are considered a very strong bank by the analysts and investors. The majority of my shareholders now are international. Especially usa investors are considering
Intesa Sanpaolo<\/a> as a machine, a very good company that can give sustainable earnings. On the other side, we are 80 concentrated in italy. We are working with families and private bankers, and you know that we are benefiting from the country. We can be considered as one of the real leading players in europe in banking. If you see our
Revenue Growth<\/a> and you compare us with french spanish, we have a
Revenue Growth<\/a> higher than competitors. It is due to the fact that we are working with our country. Youve made no secret of the fact that you dont want to be part of a banking consolidation but you want to buy private wealth. What are you looking at . [indiscernible] is it u. K. , are you interested in switzerland . The real point is that names are concentrated in switzerland, u. K. , and probably asia, but it is not easy for an italian bank to buy an asian
Wealth Management<\/a> company. What they need to make the acquisition is to have a flotation of my
Private Banking<\/a> division. It is the only way to pay at the same amount, so you can use shares to exchange with other competitors. The real target for 2015 is to work in this
Wealth Management<\/a> area. This is what we talked about in davoes. S. You were looking at the ipo. Would it be this year . I am looking first to create an holding in the sector. The second could be the flotation. Flotation would be the step that would be in line with the possibility of making acquisitions. I will evaluate, considering possible alternative targets. Not theoretical. You have to buy something. [laughter] you need to make a deal. In reality, we talked about switzerland in the past, but if you look at what happened with the
Swiss National<\/a> bank, it seems you would be paying through the roof. There are a lot of possibilities. It is to find a
Good Opportunity<\/a> and have a good relation with the management of the company that you consider for the acquisition. At the end, management is very important. If you have a
Good Management<\/a> team, very smart so im increasing the operation outside of italy through this
Management Team<\/a> because im opening a branch in london to serve italian people. I want to work with foreign people. I need a brand because the italian brand is not easy to work with the rich people outside of italy. Give me a sense of what you do with your
Asset Management<\/a>. Would that also be considered an ipo . All forms of management could be considered for ipo. There is a trend of regulations that can improve your attitude to make flotation. It is better not to maintain the full control of the 100 control this could be another area in which i think we will see that flotation in combination with other asset managers. It is something 2015 will be the delivery of the plan. [indiscernible] are you not you are looking at ipos, but this is a very dangerous year because of the volatility we are seeing. That is because of russia greece, the fed thinking of raising
Interest Rate<\/a>s. How concerned are you that 2015 is going to remain very volatile . It is volatile for markets but it is a clear year of recovery for italy. After 40 years of negative gdp, italy will have growth in gdp. Italy is exportoriented. Now, we are seeing clear signals of recovery in our country. It is growth by definition. It is the oil price [indiscernible] all of the engines for growth will allow italy to become the real surprise for europe. In any case, you can have some volatile position for us but you could have an engine for growth. We are ready to work not only on
Wealth Management<\/a>, but also on growth and provision. So im very positive. I dont know if italy will be one of the best countries. I was looking at the numbers [indiscernible] im really proud to be italian. Other countries are presumed to be better than italy. Give me a sense of how concerned you are about a lehmanlike affect if greece were to have a referendum on europe but especially the
Banking System<\/a> . This
Transmission System<\/a> is working better than it used to. How concerned are you that this will spill over . The point of lehman is based on leverage that was really the weak point of the international banks, and it remains the weak point of international banks. As i told you, in my opinion leverage is something which must work now, not in 2019. There are a lot of european banks that are within 2 and 4 of leverage. We are at 7 . It is a key driver in which the economy will recover. This could be a problem. Moving to
Greece Greece<\/a> in my view is only a minor problem. I dont know if all the others are things that i consider it a point of negotiation. Politicians in europe have not demonstrated to be in a condition to remain in a difficult crisis. At the end, the results will be a postponement of maturity. They will find an agreement. There will be volatility for another week, two weeks, and this could be sold in a positive way. Thank you so much. Some analysts say this is a disaster. The markets, for the moment [indiscernible] if i have to deal with 3 of the total debt of the eurozone, it would not become the measure point for the eurozone. Easy to say. That is a whole other conversation. Thank you so much for joining us,
Carlo Messina<\/a>. Coming up, premier league payday. Sky nbt pay a record for tv rights to englands top football league. We will break down the deal after the break. Welcome back to the pulse live from bloombergs london headquarters. Apple set a new corporate record on tuesday. Before the bell rang, the
Company Announced<\/a> that it is investing 850 million in a new solar arm in california. Exxon has a market cap of 385 billion. Apple has been growing in value since the release of the iphone 6. Emirates airlines has a simple message for competitors. Improve your service. Speaking to bloomberg, sheikh a hmed said airlines in the u. S. Should focus on providing a better offering. Offer the best to the passenger and people will fly you. [inaudible] now, the worlds thirdbiggest
Brewer Heineken<\/a> said beer volumes in 2015 will grow at a slower pace because of dampened demand. Profits came in just above analyst estimates at 1. 7 6 billion euros area euros. Heinekens ceo explained why europe remained a challenge. Europe will remain a difficult market to operate. It is not naturally a growing market because it doesnt benefit from fantastic traffic but it is a big contributor to our business, and we stay committed for market share and
Revenue Growth<\/a>. Football mad. Not just the british public, but broadcasters after sky and bts rivalry the show live matches pushed premier league writes to a record high. The value that is being delivered for these three seasons following the open and heavily scrutinized sales process will be 5. 136 billion pounds. Here with more is caroline hyde. Amazing amount, but do the markets think that sky overpaid . If you look at share reaction, yes. Weve got bt higher today because they paid 30 more. Sky 883 more. The shares sky paid 83 more. They are spending 4 billion pounds. They are spending 11 million per game. That is pretty phenomenal overall. We see a bit of a reaction. It seems can they off or not to get it, is the question . That is exactly right. They thought they couldnt afford not to have it. Sky brags about phenomenal homegrown production that they make elsewhere. They are signing deals with o2 to become a mobile company. They are also a broadband company. The top paying subscribers are the sports fanatics. The u. K. Has the most popular sport, football. This is why they are willing to spend the big rocks big buc ks. Before this kicked off, you had bank of
America Merrill<\/a> lynch saying they could lose 15 of their biggest paying subscribers. They could lose half their customers if we saw bt have a majority. Adding to the fear that bt could go big, you have the fear that new entrants saying they might like a bit of match action as well. When you are handing in your envelope, it is a game of game theory as to work out what price you should put in there to make sure you held the top spot. They are still at the top of the leaderboard. For 4 billion pounds, you could buy you really could. As a viewer, do you get hurt because they spend less on production now that they forked out so much money . Here is the key question. The chief executive of sky said, i understand that is one third of one billion more than you were expecting, but we are going to swallow it. Francine, one third of one billion per year in cost efficiency . This is cuts in the company they have to make. Where are they going to make it . Are they going to have less people on the end of the line . Or is it actually that they have to force the payment on to the sky users. Is the sky sports subscriber going to have to pay more for this . The top packages also, there is an investigation going as to whether the u. K. Should be showing more live matches. And indeed whether they should be charging this amount. Caroline, thank you so much. Amazing, amazing figure. Caroline hyde with the latest on the
English Premier League<\/a>. We will bring you live pictures from moscow,
Sergei Lavrov<\/a> and his greek counterpart. We will have plenty more on this after this very short break. Welcome back to the pulse live on bloomberg tv and radio. Now, despite oils recent rally the biggest independent oil traders say that crude could resume a slump. The vitol ceo spoke with
Jonathan Ferro<\/a> and said there is no chance of u. S. Oil slowing. Im pretty sure that efficiencies are coming every day and technology is moving very fast. We sense that
Oil Production<\/a> in the u. S. For 2015 is going to go up. Obviously, what is getting cut now is future investment, future projects. Will they be big or in the case of shale, relatively small . I dont think we know how it is all going to shake out. Obviously, it is very different from each part of the various shale baize ins. The other thing we are not sure about is what is going to be the response in demand. We all talk about supply, but not demand. Whether
Economic Growth<\/a> is more important than demand demand was very poor last year. If demand doesnt pick up, i suspect they might find that things arent quite as rosie. Jonathan ferro joins us now. The problem with the oil story is that analysts get it right, between 20 and 200. We are all oil experts, arent we . I started the conversation with him in june 2014 and said, what happened . The consensus back in june 2014 was this range of 110, 115 on brent. Every time the oil price dropped 10 , 15 , the consensus on the line in the shan for u. S. Shale production came down with it. I had people say, 70, 60, 50. We still dont know what the threshold is for shale. Hes looking at total u. S. Production and saying, where we are right now, supply is still here. It is not coming off. This may be a political decision. This may be a little bit like
Supermarket Price<\/a> wars. Market share is more important than profitability if you want to squeeze your opponent out. It has been pitched as versus u. S. Shale. It is more nuanced than that. He didnt subscribe much to that argument. To him, people spend the money, theyve gone into the ground that oil is going to be produced. They are in. It is going to come out of the ground. He is saying, look at the situation now. People will cut spending. That will impact prices. But right here, right now, we are here to stay where we are for a little longer. Oversupply is going to weigh on prices. They may go lower. Thank you so much. For our viewers, a second hour of the pulse is coming up. We have that
News Conference<\/a> from lavrov, the foreign minister of russia and his greek counterpart. We will also be talking about greece. Showdown, greece meets its creditors as germany talks tough. Meeting in minsk, peace talks in belarus. And we hear about the ferrari i. P. O. That could be sold quick. Good morning to our viewers in europe. Good evening to those in asia. Welcome to those just waking up in the united states. This is the pulse live from bloombergs
European Headquarters<\/a> in london. This is a snapshot of the
Financial Markets<\/a>. Weve seen quite a lot of volatility over the last couple of days. In terms of the markets today, they seem more flat. The cac 40 down to. 5 , basically investors awaiting this greek debt talk. Does it mean theyre a little bit more optimistic . Yes, it seems that theyre a little bit more optimistic that greece can reach an agreement on new bailout terms with its euro creditors, but markets are volatile. They turn very quickly. Keep an eye on that. Mid week crossroads for europe. Greece and ukraine face critical meetings that will determine their path for the next couple of months. The greek
Prime Minister<\/a> won a vote of confidence for his antiausterity program. Now greece faces the tougher task of convincing its european creditors to agree on a new debt arrangement at an emergency meeting in brussels today. Germany is showing no signs of backing down. For more, lets go to athens. What can we actually expect from the meeting . What we can expect for sure is a final resolution of this issue today. Both sides have tamped down of expectations. The reason why weve had this extraordinary euro zpwrupe because theres so much work to bring the two sides together. The public has been very tough on both sides. Greece is saying were not backing down on our austerity pledges, but its one thing to make both commitments in a
Parliament Session<\/a> to address greece. And they said in their comments yesterday, they want to try to get binding commitments from greece. Whatever comes up will not be a final solution, but will be if we get the shache a final solution. At the same time, there are signs that seem to be indicating that greece will look to russia if they fail to make a deal in brussels. Is that real or just a threat . Well, ever since the start of this crisis, there have been a lot of people in greece at various stages that will affect russia, china, whatever, and immediately after the election are where these rumors start to circulate. The greerks the night the russians denied there was any request for such a loan. They raised it yesterday. Yesterday the defense minister mentioned it, but he was quite nonspecific. Hes not somebody that should be involved in economic policies. Theres absolutely nothing concrete along these lines. Sorry go ahead, marcus. Yes, i mean, its not something that the government that the financial
Decision Makers<\/a> have. Marcus thank you so much. Joining us to make sense of this greek uncertainty is our international c. E. O. Andrew wilson. Great to have you on the program. Try to make sense of this. Actually greek stocks are down but overall they were down and its politics, theyll find a deal. Theyre very hard to make a deal. Both signs are more entrenched, not lessen trenched. Weve seen a lot of volatility in greek stocks. They were up 8 , down 3 this morning. Were seeing bond yields moving by 50 to 100 basis points each day and again on sentiment. Thats very contained in greece. If you look at what happened toity scomplee spain, if you take them as programmers it of concern around contagion, those are only 15 to 20 basis points wider. Despite whats happening in greece and the uncertainty around that situation, markets are taking a pretty calm view on the rest of europe and frankly, we think thats down to the e. C. B. And the q. E. Program that begins next month. At this stage, it is very contained to greece. Too contained. Does it mean the markets dont understand . Since the start of the european crisis, which i would now qualify as another leg, not starting a new one, weve never had two sides that have been further apart actually than the german and it is greeks right now. So the chance of an accidental leaving of greece i guess have never been higher. I think the sum probability of an accident leaving but i think it still remains pretty low, and we shouldnt forget the greek population has over 70 and still want to be part of the eurozone. Fundamentally, the greek population want to be part of it and a party, theyre just trying to negotiate better terms. This is not going to be resolved today, despite the meetings, probably not tomorrow or next week. This is going to rumble along as both sides try to find some sort of compromise and i think ultimately thats where were likely to end up, but there is risks around it, and i think thats what were using being priced into greek bonds. Is it a lehman brotherlike frisk . I think wed all like to refer back to lehman. Again, that seems unlikely. That was clearly a bigger surprise. Were very focused on it, and i think the policy actions the e. C. B. Has taken around the remainder of the eurozone provide a pretty good buffer. You dont know how that plays out in the terms and conditions but i dont think its its not a nearterm thing. Despite the focus and volatility, its a much bigger decision. We certainly think if you need to get to that point there will be many more stages to this particularly around the referendum. Its not so clear they have a mandate for greece to leave the euro. But if they have a mandate which is antiaurs at the time, its not going to be difficult to do the reforms. Europe is going to say no way. They can survive the 28th of february the stay that is the spector for the greek economy, is that real, or can they give themselves a couple more months . Its hard to put a time frame on it, because were not sure what tax revenues have been doing over the course of the last month or so, but weve been hearing those have fallen away some, so theres no clear line in the sand to say this date theyre going run out of money. We think its probably going to be another month to two months, and a lot can happen in those time. Theres those negotiations you talked about, increasing bill issuance. Well see how those things play out so i dont think were going to hit any definitive date and say, oh, this is the problem, i think were watching closely what is happening to greek banks. Weve seen a pretty big out flow out of that prior to the election, somewhere in the region of 13 to 15 billion euro have come out, although what we hear more recently is those have stopped. Those are all signs this situation is escalating or remaining calm and people will be a compromise. I think its a matter of watching those developments rather than saying, ok, this date, if it doesnt get resolved, this will continue. I know we talked about it last week, and then it went away. If you look at what happened is there a chance this would actually happen in greece . If we get to the point of capital control, then its deteriorating, and its why i reference whats happening on the greek banks. We saw those outflows that have slowed. If thats the case then i think its unlikely. If we get to the point of capital control, we have ratcheted up another level. We still dont think that is likely. Were going to watch developments really closely. You have greece and you have the kind of implication for the eurozone, and i guess youre watching spain. You have the u. K. Elections, and then you have the kind of mess in usualukraine. Where do you find value . Theres a lot of political elements going on here, and it makes it hard i think from an investor point of view to sort of work out what things look cheap and what looks rich in the context of that
Political Risk<\/a>. Were still looking to the u. S. , places like the highyield market which has been hurt by the oil and expectations of higher dwaults. It looks relatively immune from the european situation. Well no doubt talk about oil at some point, but to me thats an area where youre seeing some value that will be less impacted by a lot of these political discussions. On oil, how concerned are you that this has now run out of hand . We were saying if it stabilizes, then this is going to be a nice little boost to world growth. Now it seems that its even more difficult to predict where the price of oil is going, because youre not sure whos playing what. We dont even know at what point shell gas becomes unviable anymore. Is that a fair comment . We still need to go back to the point where we need to see stability. Maybe were seeing a bottom. It would be very early to call that, but maybe weve seen that but certainly seeing more stability around the 50 mark. Were moving up and down a few percent, but were still seeing more stability there. I think if we see that stability, that will sort of give some confidence ok, we have more clarity now around investor plans around potential dwaults, and that will enable you to be a bit more confident. I think the political situation, im not sure it will play a big part in this. I think its really down to the supply and demand dynamics. Weve seen the cutbacks and
Capital Expenditure<\/a> or the plan to cut back. People are focused on this recount reduction. We think maybe theyre overplaying that to be honest, but nevertheless there are some signs that the supply story or the exit supply story will wane later this year or into 2016. Andrew, thank you so much. Stick around. Were going to talk about russia, the fed, and the u. K. Elections. Also coming up the chrysler c. E. O. Says a ferrari i. P. O. Could be sold faster than he can eat a bagel. How fast does he eat a big snell that brings us to todays twitter question. Is he right to be so confident about a ferrari i. P. O. . Welcome to the pulse live from ploorgs
European Headquarters<\/a> here in london. A swiss
Bank Reported<\/a> full year results this year, boosting its dividend and reassuring investors. Lets go straight to manus cranny in zurich, standing by with the c. E. O. For an interview youll see first on bloomberg. Manus . Very good day to you. You wrapped up the numbers beautifully. The dividend finished up. Great to have you with us this morning. When i look at your statement, the impact but you are well positioned to absorb the impact. What makes you so confident to make that kind of statement when others are cutting jobs when theyre talking about keeping an eye on cost cuts . Very strong statement from you. Thanks for the question. A number of things make us very confident on this. First we had a very
Strong Development<\/a> on our asset base last year, which gives us the very diversified and global book of business. Second, we already or still have a very strong footprint in switzerland. We still do revenues, some ch gives us a very strong anchor in our home market, and thirdly, we want to look at
Cost Management<\/a> as a series of one of the initiatives and simply now keep a steady ship and move on. Steady ship and move on, as you say, which is something that the
Swiss National<\/a> bank are not necessarily promising as an industry. Do you think that the swiss franc at around 105 to 110 is a sustainable area for the country at the moment . Our forecast is 110 at the end of the year. We think it would now fluctuate between 105 and 110, that would be probably what you can expect. Did the swiss franc do any damage to the credibility . You have a big american focus. Youre very well diversified. Has it been thrown a bad one . On the contrary of it, switzerland is currently the only developed market in the world that tries to run its economy without cheap money and i think you always have to keep things in perspective. When they trade at 450, the british pound traded above it, and if the
Deutsche Mark<\/a> would still exist today, it would trade at 5510. Switzerland has always had to cope with a strong currency. Obviously shortterm fluctuations at this amount are a huge challenge. It is tough. We will have challenging times, but im very confident and very calm long term this will be a win for the strength and independence of switzerland. Negative rates will decline negative rates. Where do clients turn to in terms of search . Clients move decisively away from cash. The concept of paying something for giving somebody money is completely out for clients. They look for innovative fixed income solutions, so global aggregate bonds, absolute return bonds flexible bond strategies are very much here, so clients are willing to take on well managed rates in order to protect their assets and have a decent yield. They look for structured products that gives them success, and some of the clients have started to look into gold again. You promised so much. Is this the year of delivery . We never promise to do a deal. We always promise to use our capital wisely and in the interest of shareholders. I think we done so. We will not have many interviews where you talk about buying back capital. We still have huge flexibility in our balance sheet, and were willing to use it, but we will remain very cautious and very disciplined. Great to have you with us on bloomberg. I hope you have a conversation with us. Ze no staub, thank you so much. Back to you, francine. Thats it at vontobel. Thank you so much. It is a swiss week. Good try manus. He should definitely speak to us before a deal, try to get him to agree on that. Manus cranny. Now lets continue the conversation with
Goldman Sachs<\/a> international e. M. A. C. E. O. , andrew wilson. When we look at greece, the political fallout that were seeing here in europe, when you look at central banks, how concerned are you that the
Swiss National<\/a> bank messed it up . We look at denmark, its unfair, and yet it took the market by such a surprise. Is there a concern that denmark will follow the same policy . This is the better part of 15 years. If you look at the economy its much more closely aligned with europe. The correlation of growth is close to 80 versus switzerland about 50 . If you look at the top five export destinations switzerland, only two of them, europe wheres for denmark, four out of the five are in europe. The economies are much more closely aligned. I dont think its an issue. We saw that with switzerland, again with swirtsland, its a real safe haven. Its had a lot of capital inflow just because of problems elsewhere. I dont think its likely, but its something people are talking about. Theres no doubt, of course, the
Swiss National<\/a> bank certainly surprised markets and we had a pretty big
Market Reaction<\/a> there. And yet denmark has negative rates. You look at yields around the world, and theyre going to go down, but where to, because theyre so low at the moment. How do you see this panning out . When is the first time were going to get a negative
Corporate Bond<\/a> . Its an interesting question. Weve seen some of the commercial paper for some of the big names, loreal caterpillar have actually traded negative, or at least been on screen at negative rates. We havent seen a longer term bond trade yet at negative rates. Apple at the moment is in the market for an offering for swiss franc. The 10year is somewhere around 25 basis points. As investors well give apple to 25 basis points for the next 10 years. Does that sound crazy . It sounds crazy talking about it two years ago. Swiss yields trade at minus 1. 5, minus 1. 2 . I think were living in a world where weve got all of these very distorted markets, what looks like incredibly expensive yields. Were paying to lend a good number of the
European Countries<\/a> money for the next two, three years as well. Again, youve got negative rates in a number of different places. It does seem theres a threshold to go negative on corporates but certainly if you look at swiss rates, maybe theres a corporate issue with someone like nestle, maybe they should issue for two years at a negative rate. I think its a matter of breaking that psychology, high quality names in japan. We saw them trading below the government bond. They were not negative but i think in a love where theres a lot of liquidity, and leents forget the e. C. B. Hasnt started q. E. Yet and its going to be a matter of supply and demand, and if there is not enough assets around, knowing it is possible we see some of them trading with negative yields. If we were to set policy for the world, which were not, thank god, but if we had one central bank, it would be easing. Would that be fair . Well, i think if you look easing, it would actually be lowering
Interest Rate<\/a>s. Well, i think it would be a tough question, because you have a look at places like europe and say clearly they need low growth rates. Lets not forget the u. S. Economy is doing pretty well. Payrolls last friday very strong, added over a million jobs in the last three months. You could argue, and maybe we would argue this, that policy in the u. S. Needs to be less accommodative. If we start to see pickup in wage rates, and maybe last friday was the first sign of that, that were seeing some improvement in wage rates, knowing a very valid case is to say
Monetary Policy<\/a> in the u. S. Needs to be less accommodative. Thank goodness we dont have one central banker, but there is divergence in whats happening in the world that were going to see this year that divergence sort of continue to carry on. The u. S. Is pretty lonely, right . Youre still expecting an
Interest Rate<\/a> hike in june or september . June or september. I think its a close call which of those meetings the fed decides to move. If we see continued improvement in the labor market, and thats the critical issue here, whats happening in the labor market, and specifically what is happening to wage rates, because if we see some sign that wage rates are picking up, i think theres a good number of members who will start to say, hold on were seeing this coming through. Weve still got incredibly accommodative policy, its time to make it a little bit less accommodative. How much do you read into it . It was a festive season. Their participation is not that great. It picked up a little bit. The
Unemployment Rate<\/a> came out of 5. 7. Participation picked up a little bit. Little bit. So, again, were all trying to understand that sort of demographic argument of a longer term decline of participation. Its hard to see through exactly what is driving each of those facts, but you added over three million jobs in the u. S. Last year. Thats a lot of people who have employment, have wages, have money to spend. We havent touched on it so much, but it also means theres more money in their pocket. We started to see that. You put all that together, the u. S. Looks pretty good. You talked about it being sort of lonely, but you might want to be there if youve got growth, looking to be above 3 , maybe as much as 3. 5 this year remember that sounds like a pretty good situation. Would you buy in the u. S. . Is it corporates . Would you buy bonds . Yields still look too low. We touched 2 yesterday. We still think they need to go higher than that. Where we think theres good opportunities is in the high yield market. It has been hurt as a result of whats happened in the oil sector and of
Course Energy<\/a> makes up a big proportion of the highyield market, about 15 is energy companies. Weve seen some company widening of the spread of energy companies, getting to the point where, in our view starting to look interesting. If we had some stability in the oil price and maybe were seeing some signs of that in the last week or, so then i think the market is overestimating the number of dwaults well see in the energy sector. It looks like a reasonable place to invest. Whats your take on russia . Is there money to be made in russia at the moment, or because of the
Political Risk<\/a> and the fact its so difficult to understand what
Vladimir Putin<\/a> wants or what hes going to do, would you stay away . I think were saying a more cautious stance. If you look at the financed mentals, ex politics, russia looks really cheap from an asset point of view, conditions a point of view. You overlay the political situation, it becomes much more difficult. I think the meeting today in minsk will be critical. Again, we dont necessarily get a definitive situation here but some sort of ceasefire. Well give up some confidence that maybe some of those russian assets have now priced in the worstcase outcome. Andrew thank you so much. Andrew wilson there
Goldman Sachs<\/a>
Asset Management<\/a> c. E. O. For m a. Headquarters here in london. Im francine lacqua. Were bringing you live pictures from moscow of a giant statement by the russian minister and his greek counterpart. Lavrov is saying direct talks between ukraine and rebels are the only way to peace. Well see a little bit later on whether we will have those meetings in minsk to see whether we can talk about some kind of peace agreement. Mr. Lavrov speaking there, and well hear more from his greek counterpart later on. Hes also saying that a military solution isnt possible in ukraine, saying ukraine is in institutional reform. Here are bloombergs other top headlines. The greek
Prime Minister<\/a> won a vote of confidence for his antiausterity program last night. Greece now faces the challenge of making a deal with its creditors at an emergency meeting in brussels today. Germanys finance minister said there are no plans to discuss a new arrangement or to give greece more time while the commissioner tells bloomberg there is no clear way forward. There is no plan on the table. The
Commission Wants<\/a> the debate tomorrow with a plan but with ideas, yes, with a way forward, but not with a plan. The president wont have a plan. We must together build the plan for greece and the eurozone, and well see what are the technical issues that have to be dealt with, but first of all weve got to speak, to talk to each other. I think thats what lacks until now. President obama has spoken by phone with russian president
Vladimir Putin<\/a> and representatives from russia and ukraine prepare to face each other at peace talks in minsk. The german chance her and the french president are expected to attend the meeting, which aims to end violence in eastern ukraine. If the truce talks fail, russia could face fresh sanctions. Obama said on monday he hasnt ruled out providing weapons to ukraine. A record sale for
English Premier League<\/a> chief executive announced yesterday that sky will pay just over five billion pounds to broadcast matches from englands top division. Thats a 0 increase over what they paid for the last threeyear cycle. Sky will broadcast 126 games in the u. K. Starting in the 20162017 season. Lets check in on the markets. Jonathan has your asset check. Were expecting investors seem to be a little bit more relaxed about the greek situation. I wouldnt say relaxed, maybe just waiting to see whats going to happen. S in the eurozone showdown, and this is how were set just ahead of that meeting a little bit of losses over in spain, down by. 2 . The dax right here might leaf my feet in frankfurt. Things are settled but they could get volatile ahead that have key meeting. Greek stocks giving up some of their gains yesterday. I can tell you within that index, the bank has taken a little bit of pain. At the moment, the bank is coming back. You see the likes of one of the biggest losses. But some of these companies are penny stocks, and they are going to be volatile and jump around on news flow around the greek debt situation. In the f. X. Market, euro sterling really the standout. We go down by. 4 . For the first time were hitting levels not seen since 2008. Outside of the f. X. Market, and outside of the greek situation actually i take you to the bond market. The big one for me this morning, denmark. The twoyear that is a minus sign youre seeing, negative yield. Theyre trying to keep a peg of the danish central bank. Euro danish 7. 46. Theyve had a series of rate cuts to try to defend that peg. Theyve even suspended bond issuance to try and maintain that peg. That means trying to reduce the amount of danish denominated assets, reduce the appetite, and try to keep it. This morning they had a table auction. They accepted zero bid for that t bill auction. They had 5. 9 billion worth of danish for that auction. They are having such a tough time keeping that peg that they cant even get away a t bill auction. What you are seeing in denmark, negative yields. Yields go lower, even lower. In sweden, they issued their first debt with a negative yield. That really is the story at the moment. Central bank easing, yields just keep going south. In about 25 minutes from now, its surveillance with tom keene. He joins us from new york with a preview. I know youll look at yields and talk about ukraine and greece. What else is on your show . What john farro just said is absolutely critical. Its one of the examples of the great distortion that is out there, negative yields on the shortterm paper market. Theres no free lunch. Well talk to
Brendan Brown<\/a> with his skepticism on europe and his caution about how the various institutions of europe will work out the various issues of the moment. Of course, greece, as you said, front and center. Well talk to robert nardelli, a frequent guest here, and well talk about this idea of what mcdonalds and cocacola do. What do you do when your
Core Products<\/a> become so challenged . Well talk to bob nardelli. Our most important question, jonathan stepperman will join us. This off his important, most strange interview with mr. Assad of syria. Thank you so much. Im really looking forward to the interview. On the question on yields i was speaking to
Goldman Sachs<\/a> earlier on, and the sque when are we going to see the first
Corporate Bond<\/a> negative yields, and that will be a game changer. Again, its a knockon effect from one great distortion. As john brilliantly said, a negative yield in sweden, you dont expect that. No, but then we werent expecting yields so low in the u. S. And germany. We probably werent expecting that two years ago. Tom keene with surveillance in 25 minutes from now. A little earlier this morning, i spoke about the banks in a position to overdeliver this yearment he also said that despite head winds and volatility in europe, the winner in 2015 may be interesting. In the end, after four years of negative g. D. P. Italy is export country, and so now we are seeing clear signals of recovery. It is the prize. It is the export in italy, so all the engine for growth will allow them to become the real surprise n. Any case you can have some volatile position for other items. We are ready also to work on management, but also on long volume, and any closer for provision, because we will be better within the country. Im very positive. Coming up the big apple, the tech jeent reaches a record 700 billion market cap. Welcome back. Live from london on bloomberg tv. A place on the premier
League Playing<\/a> field just got much more expensive. Sky has paid a record 5. 14 billion pounds for the rights to broadcast live
English Premier League<\/a> soccer, football. 80s an increase of about 70 from one of the sports most lucrative leagues. Did they get a good deal . Joining us to discuss is the media analyst, ian whitaker. Great to have out program. The fact they got a good deal is slightly overstating it they paid so much more than the last round. Could they afford not to pay that much . Could they afford not to have these rights . Thats a good question. If they lost the football that actually would have been significantly more. If you bear in mind, its not just a case of what they would have lost in terms of subscribers, the possibility at sky comes from things such as clubs, wholesale revenues, and advertising as well. So a good chung of those revenues have been lost at a very high margin. We estimated back in december that if sky was to lose the majority of the rights then probably there would be a 35 impact on forecasts. If you look at what we said this morning they paid 83 more than they did last time, then we estimate
Something Like<\/a> 22 to 27 impact on estimates. This is a good deal. Well, its a good deal when were speaking. If they lost, then it would have been absolutely disastrous. But the issue here is that, i think youve got two points for sky. One is the obvious one. The cost of inflation was higher than what people expected. The consensus was around a 40 increase, yet they came in with an 83 increase. The second thing which is perhaps a little bit more theoretical, but probably more important for sky, is how do you now value this company from a longer term perspective . If its every three years, youre certainly going to have significant price inflation, then from the standpoint, it becomes quite a difficult stock to actually value. This auction is about that, what happens next year the bidding for the league rights. What happens next year seems to be another question. If you cant afford to lose, it you may be overpaying every time, and then the skys the limit, right . Yes exactly. Thats absolutely true. They now face a situation if you back if you go back, sky was the dominant force. They could outbid virgin and everyone else. If you look at the situation now, theyre facing a strong competitor in b. T. Potentially competitors as well. B. T. Has far more cash flow than sky. Certainly sky is the dominant player, potentially been overbid. Yeah. By these other players as well, and thats a unique situation for sky. What does it mean for
Foreign Companies<\/a> . Were not going reach these levels, but does it mean that the stake is now significantly higher or the price is significantly higher . I think for
Foreign Companies<\/a>, theres an interesting question. Theyre coming in but their problem has been they dont have a
Distribution Platform<\/a> in the u. K. , so they would have to sell those to either b. T. , sky or virgin media. I think for those players, sort of i suspect they are interested in premier league rights, but again, theres an obvious limit, and its not as high as sky could afford to. Give me a sense of what sky now needs to do. You fork out five billion, and then you say, oh, but were going to be cost cutting. This is not small space cost cutting. Are programs going to lose . At the end of the day, is the viewer going to lose out on better programs . Well theres two ways you can do this. If you look at what theyre paying they pay an extra six
Million Pounds<\/a> per annum. You annualize that take into account b. A. T. , youre looking at an extra 70 pounds per year. You connect to 140 pounds. That is quite a significant increase. That is going to be very difficult to put through. If you take that cost, the first thing you say should be five. This is a company with a 150 billion pound pro forma cost base. Six billion of that, realistically, you cant do much about those. Youre therefore looking at that four billion extra that youve got to take costs out of and if you consider a considerable 5789 of that is marketing costs, which when youre trying to build your subscriber base, youve got b. T. , and there seems to be a grown for people take pay tv services, thats difficult to cut. Quite frankly, i think theyre really going to have to do something remarkable in order to offset the costs. Is there anything they can do thats remarkable in terms of offering . Were focusing on cost cutting. Im not even thinking of new programs, but is there anything to be done in social media . Is there anything they can monetize on this . I think they try to do certain things for example the mobile offering. If you look at now tv which is a payperview offering, where people dont have to take a subscription, they can just take a day package, for example, the problem is how do you price it . Are people going to pay nine pounds, 10 pounds for one single match . Are they . I guess football is in a league of its own, pardon no pun, but you know, what i would say its almost impossible for any format in television seems to be possible when you look at sports. Thats very true. But again, if, for example youre paying that, you may pay it once are you going to pay it three, four times during the year. Why not watch it there . Sky has had revenues before, and its never been a significant chunk of its overall revenue base so history would suggest that actually its unlikely to be sufficient. How surprised were you overall . This is the one question to argue, when the numbers came through yesterday, i mean, we knew it would be higher but how do the negotiations go . You can just see them sitting down and going, um, how much . Based upon inflation, if you were to look at the most likely scenario, we had last week there was talk that it would go automatically from the first or second round, so it sounds as though things were pretty close, and then sky was thinking theyre prepared to be aggressive. Weve got a bit higher, and make sure its high enough where theres no risk that b. T. Could beat it. I think for b. T. , this is a very good outcome yet they havent seen significant price inflation. In terms of their strategy in terms of using football to protect their base, you now have a continuation of that. I think you have expectations 40 increase, again, its double that in terms of inflation, so the market would have been very surprised as well. What does it mean for the premier league . Are we going to get better matches . Are you going to get better matches . The answer is certainly not. You would get a couple more matches. Its probably great for near manchester and more than anybody who deals with football nation. For those, its fantastic. Its great for the community. Id be skeptical about that, quite frankly. This money is going to go through to the clubs and the players. I think as far as fans are concerned better players at least, or does that not even automatically filter through . Again, it all becomes relative to the game, because of the cost. Lets say the
Spanish League<\/a> goes up, and they can pay their players more than, then you get in a bidding war. Again. Just continues to go up and up. I wouldnt necessarily say that this is going to lead to a fantastic improvement in the quality of games. All right. Ian, thank you so much for joining us, media analyst. Lets get you some of todays other top stories. Samsung is set to lanche a new smartphone with a threesided screen. They plan to release it next month, and it will have a display featuring three sides. Thats according to people with direct knowledge of the matter. The company is using its skills to revive earnings that have slummed for three straight quarters. Make sure you dont drop that phone, thats all i can say. Iraq and iran have cut their march crude oil prices to the lowest level in more than a decade. Iraqi crude will sell at 4. 10 a barrel, while iranian crude will sell at a discount of 2. 10 a barrel. The cuts come a week after saudi arabia reduced pricing to asia to the lowest levels in at least 14 years. Taking ferrari public will be an easy job for the banks handling the offering as quick as eating a bagel, according to the c. E. O. Of the automakers parent company. When he spoke to bloomberg about a possible i. P. O. In terms of governance, some team actually encournls people to be long term. The within that weve got allows you to earn your right to have the extra vote if you hang onto it for three years. Its a longterm commitment strategy in terms of the shareholder base. It may work its way to ferrari we dont know yet. Apple set a new record when it closed above 700 billion on tuesday. The
Company Announced<\/a> its investing 850 million in a new solar farm in california. The worlds next
Biggest Company<\/a> has a market of 385 billion. Apple has been growing in value since the release of the iphone6 last september. Well have much more on todays two big meetings. Can greece make a debt deal, and will russia and the ukraine call a truce . Well have plenty more next. Welcome back to the pulse. All eyes on brussels today as greece tries to do a deal with its european creditors. Marcus joins us from athens. How likely is a successful outcome . Well, today were not really expecting any resolution to this standoff. I mean theres so much distance between the two sides, so this is the reason why weve had this
Extraordinary Group<\/a> being called on the weekend. Another euro group next monday which, you know, if theres it would be more likely a different outcome. You know, ahead of today, but its publicly digging in quite a bit in terms of their public country. Theres also a lot of work and communication behind the scenes, but the sides are kind of far apart, and theres a lot of confusion if a deal can be reached, what kind of shape that would take, and a good scenario is that we might get some more clarity on that. Of course, finance ministers will want to squeeze that out, the greek finance minister and a key thing is how much they can bring out and how much they can resist. All right, marcus, thank you so much. Marcus in athens for one of the stories of the day, and then its interesting because the foreign minister of greece is krpt until russia, and i dont know how much of it is blackmail. If we dont have a deal with the e. U. , then well go to russia. I think theres fair. The amount of money that greece needs, the amount of money were talking about is much more than russia would be prepared to involve. The underlying threat is germanys chancellor wouldnt appreciate that much. Sure, absolutely. There are other games in town, thats the idea, the russians, the chinese. Peace talks in minst . Looks like theyre going to happen. Theyre set to start at 6 30 minsk time. Thats three hours ahead of london. The russian president , ukrainian president , leaders of germany and france set to attend. These will probably go way until the middle of the night, probably get a result after the markets close f. They do a deal, thats positive. If they dont, one source says more sanctions could be on the table tomorrow. Lets see. Thank you so much, ryan. Greece on one hand minsk talks on the other hand. Follow me on twitter, f and had lacqua. Well be back with surveillance. This is bloomberg surveillance. Tom it is a bridge too far as greece demands an agreement from germany. Hollande and merkel wants to go to minsk, who and is there with a ukraine agreement. There is a 100 chance that all will sit. Elon musks spacex launches delay. Should your tax dollars help poor elon . Good morning, everybody. Were live from our
World Headquarters<\/a> in new york. It is wednesday, february 11. Olivia sterns is with us. She does not own a tesla. Brendan greeley is considering a tesla. Brendan
Brendan Greeley<\/a> drive a minivan. Olivia germanys finance minister says there are no plans to discuss a new deal or give greece extra time, but
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