>> a budget deal on capitol hill. party leaders unveil an agreement to avoid another u.s. government shutdown. questions remain about grassroots support. >> rbs loses its chief financial officer. nathan bought stock returns to twosantander after only months on-the-job. >> and a bloomberg exclusive with france's biggest telecom company. good morning, everybody. you are watching "the pulse."

we are live from bloomberg's headquarters here in london. >> we have another big interview to bring you with the u.k. secretary of state for scotland. support isask why starting to grow for scottish independence. that is according to the latest holing. >> u.s. budget negotiators have unveiled a agreement to avoid a government shutdown. the house will consider the measures. >> manus cranny is our markets editor and he has more on this story. talk us through the details. an imperfect deal, but it is the spirit. they have raised the overall spending limit. they have reduced the deficit. they have done away with nearly $60 billion worth of automatic spending cuts. the military gets a little bit of protection. no tax hikes, that is the message on the republican side. there are revenue increases.

every time you get on a plane, if you are a federal employee, you will be paying more into your pension. haveryan and patty murray a lot to sell to the house. news washer overnight the approval of the volcker rule by regulators. what does it mean for regulators? >> i think it is probably true that lobbying does pay. 700 meetings with the regulators and wall street gets their attention. the biggest issue was this. our traders making markets to meet client needs or are they making markets to make profit? the element of profit has been taken away rid -- has been taken away. you can no longer remunerate those debts in a manner that fits proprietary trading. there are broad exceptions. the definition of hedging is very clear.

you cannot say, it was a hedge. nope, it was a trade. you have got to be very clear. you have to be very clear what you are heading and why. that is going to be critical. cftc.e comment from the 2.5 weeks ago, i doubted this legislation. here we are, it is rigorous and strong. the definition of a portfolio is very clear. hedging is hedging. you cannot speculate. they say this will be another static situation. the banks are clever. you know? >> that is my rule of the situation. bankers are slippery devils and they will find a way. to circumnavigate these rules. thank you very much indeed. let's say with the banking

theme. european finance ministers in brussels last night inched towards a deal to get toward the banking union. costs when a bank fails. david tweed is in berlin with more. david, the big questions still in my mind have been left for this emergency meeting that comes in next week. we still do not have the resolution that we need and this is going to be a very slow process to put this banking union in place. >> when you think about it, when they started talking about a banking union, it was only 18 months ago. seems to me like it has gone incredibly fast. there are so many meetings and so much detail that they need to decide on and so many compromises involved. i suppose that is why it seems like it is a slow process. we are beginning to see how it

is going to look. we know that the european central bank will be the supervisor. asset quality reviews and stress tests, next year. it looks as though the compromise will be that the european commission is going to be the authority which decides if a bank is going to be resolved. there is still bickering over exactly how to fund the the final fund and thing, if there is not enough money in the resolution fund, what will be the ultimate backstop? they are moving towards an agreement. that is the noise i am getting out of brussels. to make will be able some sort of agreement at the european meeting. the thing is, what is the legal basis of all this going to be? that is going to be and resting. we could look at some intergovernmental agreement. >> there has not been a process

for choosing a head for the single supervisor at the ecb. what do we know about danielle. >> she has been at the bank of france since 1974. she has been in charge in france since 2004. she has never done a formal sit down on the record with a major newspaper. that is very interesting. she will have to up the image and start talking to the press she has to be the person who will explain why the single banking supervisor might take them of the decisions they have taken. for example, if they were going to actually go there. we do not know a lot about her at this stage, apart from the fact that she is extremely well- respected. she spent five years as the secretary-general of the board of banking supervision. the -- so she certainly has a shot.

>> she certainly does. thank you very much, david tweed. >> rbs' director, nathan bostock, has stepped down just six months after they lost stephen hester. let's go into more about this. caroline, another one out the door. >> stephen hester and now the cfo, nathan bostock, going as well. it is just 10 weeks into his role as chief financial officer at rbs. anis going to be given orderly handover in terms of responsibility. some say he has a 12-month notice, so he cannot run off to his new employer anytime too soon. it is another poor headline for rbs. bad just have a glut of press recently. technology problems back on monday. they could not make their electronic payments. from the eu regarding libor

and the interest rate scandal. of course, allegations that rbs is pushing businesses into default. mcewan'sa lot on ross plate. he only joined on october 1 as well. he was upgraded from the head of the retail bank. he is trying to get a grip on rbs. of course, he has promised that he will unleash his new outline on the first of january. he is trying to rally his senior executives and make sure they stay on board once the plan is unveiled. cutsanking unit makes job and of course, they are expecting a substantial loss from the u.k. lender as they shift a lot of their toxic assets into this bad bank that was unveiled earlier this month. >> nathan bostock is returning to his old employer, santander. what will his role be?

>> fascinating, because it was only a few years ago that he came from santander u.k., which was known as abbey national. he was the chief financial officer there. he is going back as deputy chief executive and chief risk officer. an awful lot of speculation now. be in charge of helping float this unit? of speculation that hsbc will be offloading its retail unit into the ipo market. will santander u.k. be similarly going to the market and selling shares? the santander chief executive has said not next year, but could they change their appetite for a share sale given the appetite that is out there at the moment? she is currently the head of santander u.k. will she be leaving anytime soon? will she be going back to spain?

he only left in june of 2009. going back again, he must have come up with a bit of a bargain, it would seem. >> it makes you wonder what she will be doing back in spain. thank you very much. >> here is what else is on our radar. earnings and estimates. profit climbed one percent three the world's largest clothing retailer is getting a boost from online. for -- blackfin is going to price the hilton ipo later. it is expected to be the biggest ipo on record. hundreds of ukrainians have dismantled and antigovernment crowd. clashes roque out, the ukraine's biggest road test in decades.

last month, the president snuffed a european act. >> the secretary of state for scotland joins us next to discuss the possibility of an independent government north of the border. ♪

>> welcome back to "the pulse." we are live on bloomberg tv,

streaming on your tablet, phone, and now any windows phone as well. calls for scottish independence have increased for the first time in a year according to the latest poll in scotland. it is a complicated situation. jon ferro is your do explain. >> this is a poll that came after the big policy outlines for independence could look like. support rising, the majority still want to stay within the united kingdom. a lot of confusion on both sides, particularly the side that is against scotland coming out of the united kingdom. , free education for higher education students going into university. how do you finance that? the scottish may face an additional 1000 pounds per year in higher taxes to maintain independence. then you have the pound. they want to keep the pound and the bank of england. so much confusion about this.

with the english allow them to do that? and then you have the membership to the european union to talk about as well. >> a lot of people think that scotland would not get in the european union. talk to me a little bit -- the prime minister, mariano rivera rajoy, the prime minister of spain weighed in on the scottish issue. >> does the carolina -- about scotland? he certainly does not. he cares about his own country and the region of abalone up. this could set a precedent, a country leaving the u.k. and getting to maintain their you membership. -- eu membership. stamp that out and said that if scotland leave the u.k., you can forget about membership. we getuld be way before a referendum of our own to leave the eu.

this is a subject that divides the united kingdom. >> thank you so much. guy, you have more on this. >> let's continue the conversation with the u.k. secretary of state for scotland. good morning to you. thank you for taking the time to join us. despite the latest polling, there seems to be an overwhelming sense, particularly in london, that this is a done deal. that this vote is not going to go against westminster. is there a sense of complacency? do you feel the sense of complacency? >> we know what he can do and what he has done in the past. is feeling complacent over this, there are still 10 months to go in this campaign. just about anything is possible. , those of us who went to the meeting in the united

is still anre enormous number of don't knows. who are these don't knows? you see a picture emerging. the don't knows are people who have been traditionally loyal labour voters, who were not massively impressed with 13 years of labor government. , went lock, stock, and barrel to the scottish nationalists. we have seen them do it once. it is possible that they could do it again. at that point, the margins become very tight. every vote is in play in this election. thisave got to remember, is a referendum. this is not a general election. >> it strikes me, as a scottish mp who operate in westminster, you are in a lose-lose position. if the referendum goes the way of raking up the union -- of

breaking up the union, you have lost the vote. if you win the vote convincingly , is there a sense in the rest of the union, why are the scots voting for this? why do they think this is in their interest? are they getting too good a deal? >> this is not my position. >> i am using this as a -- >> i get your point. the beauty of the situation is that having a strong scottish parliament delivering health care, education, transport, and the domestic services of while being part of the strength of the u.k. economy and membership to the european union as part of the united kingdom really gives scots the best of both worlds. that does not mean there will be a backlash.

i do not see it in terms of a backlash. does it mean there could be a growing demand in other parts of england to take tighter control of their own domestic affairs western -- domestic affairs? be one of thel unintended consequences. i would be delighted if it happened. >> you would be surprised if we saw a reaction that says the scots voted for this. of course they are voting for this. they are getting such a great deal. why would you not vote for this? >> the fact that the united kingdom is stronger for having scotland as part of it. entityted kingdom, as an , is much stronger than some of its constituent parts. >> talk to me a little bit about the pound. the first point is that there is a view in scotland that says the rest of the u.k. has got to

accept scottish use of the pound , simply because the aggregation of volatility and all of the instability that will go with having the scots go their own separate way. that is a valid point. >> the only people who hold that view are the scottish nationalists. is aknow that the pound strong, stable, widely respected currency. it is something that people value as being part of the united kingdom. terms, they are trying to say, of course we could leave the united kingdom, but we can still keep the best of the united kingdom. we like having the pound and the bank of england. that is something they cannot control. they might want that. actually, there are two sides to that negotiation. if you are sitting outside scotland, you would have to say, well, actually, what we are being asked is that the task

they are should stand behind the bank of england, ready to bail out banks over which they have no control. you wonder why, in these circumstances, they would actually want to make an arrangement of that sort. a currency union only works if you align your economies closely together. we know that from the eurozone experience. the whole point is that you do things different, not that you have to run your economy along the same lines. >> you bring up europe. why are you not, as a strategy, hammering the debate back? people like mariano rajoy are saying there is no guarantee. why are you not taking that in a much more aggressive way? >> we will see how that argument develops. i think the prime minister's

intervention was absolutely crucial and telling. nationalistsof the is to take the risk out. course we will be members of the european union. they told us that we would never have to leave. even the most enthusiastic scottish nationalists would say that if scotland leave the united kingdom, then we leave membership of the european union at the same time and we would have to apply to get back in. the question is not, would scotland be a member of the european union, but it is membership. as part of the european union -- of the united kingdom, we get really positive member terms. things we have negotiated over the years. you would have to get unanimity among all member states.

20 different capitals and saying, are you going to give us a better deal than you have got yourselves? i just do not see that happening. >> thank you very much indeed. a secretary of state for scotland. we also invited politicians to join this debate as well. they were unavailable. we are going to take a break and we are back in a couple of minutes. ♪

>> welcome back. let's get straight to manus cranny with your asset check. essentiallyrkets

uncertain on which way to go. france rising, pain rising. in the u.k., things under a bit of pressure. you waiting for the china dated to come through tomorrow. wave of negative sentiment, risk aversion sweeping through these markets. gmaking of australia, getting ready to exit australia. the aussie dollar coming lower. sell into the rallies seems to be the consensus. you have a 20-day moving average. i know you have all gone to sleep. that is the level to watch in terms of resistance. back to you. >> up next, a bloomberg excuses. -- a bloomberg exclusive. we are speaking to the ceo of orange. he joins us to talk about the industry and how he is looking to grow his business.

just a reminder to follow both of us on twitter. we are back in just a couple of minutes. ♪ . .

>> good morning. welcome back. ."u are watching "the pulse we are live from bloomberg's european headquarters in london. these are the bloomberg top headlines. u.s. budget negotiators have unveiled an agreement to avoid another government shutdown next week. it eases the automatic spending cuts and reduces the deficit. the house will consider the measures this week. the agreement would end a three- year cycle of partisan showdowns. both wall street and u.s. regulators are claiming victory after the adoption of a strict new volcker rule.

regulators are pleased with the restraints on hedging and other risks while banks want last- minute exemptions for their market-making. they are able to push the role 2015.tart date to july dismantling an antigovernment campaign in kiev. as they flooded the site, clashes broke out with demonstrators. the biggest protest in a most a decade was triggered last month when the president snubbed a european integration pack. let's talk tech. from smart phones and smart watches the smart clothing, a few startups are betting on wearable electronic devices. we met with one of them. this is the tech summit in paris. has created aup connected shirt to measure your well-being. the smart shirt will be launched in the first quarter of next year. caroline hyde reports. >> show us your shirt. it is pretty revolutionary.

shirt.s a bio sensing i own many of them. i wear them at the gym, at the office. it is a lifestyle shirt for real life. it reads my body's biometrics and streams them into my iphone. -- takeny live directly from my heart. for every biometrics, the more it is -- the healthier the biometric is, the more worried about it i should be. would you were looking at here is my live breathing rate. this is my step count today, pretty low. i should be more active today. my calorie counter is taken directly from the heart touches more accurate. >> so you are going to consumers first. eventually, we could be monitoring -- the health benefits of this, it could be used in looking after the

elderly. it seems pretty limitless. >> absolutely. we picked the right place to start. we will get large-scale adoption faster. we are working with some rusty just medical institutions in the u.s.. the medical applications are limitless. our primary focus right now is consumers. two and one day company is they're looking for a boost from startups. it is france's biggest telecom, orange. stephane richard joins us now with more on that. thank you so much for joining us. give us a sense of what our and has been doing. you have backed startups. you own a fund. you are invested in companies like dailymotion. what are you hoping to achieve with startups? when are they going to start giving back to orange? invested into dailymotion

because we see our role as a telco, as an aggregator, a distributor of content. we need to get access to the technologies that are relevant for the web. has the video player, the second-largest in the world, it is a very interesting platform for our own services. we are going to now implement some further cooperation between dailymotion and orange. i could mention romania for instance. we are recently launching a tv service based on dailymotion's platform. dailymotion is or us an opportunity to understand better some business models, some technologies that are relevant in the users of our own customers. orange is one of the big players in the ecosystem. invested in to the

some startups or companies that are interesting. we think that we can provide to companies like dailymotion, not only financial resources, but expertsess to our own and leverage on our own customer bases. 235 million customers in the world. for dailymotion, for a company that is trying to switch from a 100% free business model to a premium model, it is very important to have this access to a large customer base. i think it is definitely a win- win partnership that we can build between dailymotion and ourselves. resumingou started searching for partners for dailymotion? yes.

isyou know, dailymotion playing in a worldwide playground. dailymotion has a very big competitor who is youtube. dailymotion is tiny compared to youtube. definitely dailymotion needs to grow and to accelerate its growth to have partners. decidedng said, we have to remain as the majority shareholder of dailymotion, so dailymotion will stay as the subsidiary of orange. at the same time, we are looking for some strategic partners, probably for the u.s. markets which is the largest market for video service in the world. also for other parts of the world. i am thinking about asia. withe currently discussing some potential partners in asia. the purpose of this is clearly to enable dailymotion to access

more easily those big markets, u.s. and asia in order to increase the audience of say,motion and to, let's try to compete with youtube which is much larger. dailymotion evidently i think has a role to play in this competition. >> who is interested in partnering up? discussions with different people, different companies. today not mention anyone because as you can imagine, those discussions are still underway and should remain confidential. i think i can say that we have a real interest expressed by some big, big guys from the internet or from the digital world. there is a lot of people in the

world that are in favor of some diversity in the landscape. far theoutube is by leader in this market. people aret a lot of interested in promoting alternatives to youtube and dailymotion is the number one in the challengers. >> the ceo of deutsche telekom said last week that now is the moment to consolidate. will you be a big part of that consolidation? >> yes, as you know i have a very close relationship with the ceo of deutsche telekom. analogiese the same of where we are in europe. i totally agree with him when he says that the industry is fried

vented in europe. this is the result of a policy that has been led in the past 15 years. i think europe needs consolidation. europe needs to see larger players that are able to really sustain their competition at the worldwide level. that are more competitive in the dialogue with the big players and have the means to invest in the next generation network. a needink that we have for consolidation in europe. they can be in marketing consolidation in some countries, but clearly in the years to come , it is not a short-term agenda. in the years to come, i definitely think that there is some room for at least one or maybe several larger european bases. >> are you already in

discussions for a possible marcher with deutsche telekom or could it come in the near future? >> no. of course if i had any discussions of that kind, i would not talk about those discussions, sorry, on tv. everyone can easily understand this. the fact is that we have a working relationship with deutsche telekom for years. i just want to remind you that crossrs ago, we were shareholders of both companies. there is a strong link between the companies. we have regular meetings. we have some common enterprises. we are in the u.k. together. we are taking care of nearly all the needs of both companies.

we have a very close relationship. we have a very regular exchanges and meetings between both teams. we have no discussions of course regarding a possible merger between our companies. >> thank you so much for joining us. we have to get you in the studio here in london. guy, over to you. >> francine, thank you very much indeed. it is time for today's hotshot as we bring you the best video from around the world. the big waves in hawaii. the final stop on the world championship tour, the race andon world title the final qualifications for the 2014 season. the first iceming rink in three decades. ice rinks were abolished following the revolution in 1979

because men and women are prohibited from skating together. no women were present at the grand opening. decked inted states, red and white for the 14th annual santa sunday in maine. 210 skiing and snowboarding antas gathered to support annual holiday toy drive. coming up, computing hardware makes a comeback in 2014. it seems unlikely but some innovators -- we are going to dig into that story next. also, she topped the charts, swung on a wrecking ball and resurrected twerkign, but will that be enough to become person of the year? we will see what chance miley cyrus has. that story, coming up next. ♪

"> welcome back to "the pulse live from bloomberg's london headquarters. >> let's talk tech. it has seen a tough year for imagination tact. the company's stock price has been something this morning. it posted numbers earlier this morning. let's talk about what those numbers told us about this is this. caroline hyde joins us now.

tough set of figures. >> they are. they are talking the talk in an optimistic mood, but they are not walking the walk. buts did climb some 19%, not as big as many had hoped for and dragged down by licensing revenue which fell. these first-half sales show that licensing targets are going to be difficult to achieve in the future. the results demonstrate the challenges in licensing that chip designers have. madedesign chips that are to go in your smartphones, your tablets, even your cars. their share is down 15%. they are trading at their lowest in four years. many feel that this downgrades of shipments they are for seeing are going to continue. >> analysts also warn about

erosion of market share earlier this year. >> they have. credit suisse saying, media tech is one of the key clients for imagination tact. they started using arm chips instead. that was a key concern. arm eating into the market share of imagination technology thating the graphic chips media tech had been using imagination technology for. key concerns here are with shipments falling, slower growth in smartphones and arm just eating into their market share across the board. there are some bright spots coming out from the analysts. the factsaying, yes that we are seeing licensing being a drag will have a financial performance going forward, but in the longer term this is still a buy. the fact that it is at a four- year low says we are poised for growth. qualcomm is about to start using imagination technology intellectual property.

says it remains an attractive investment. to ride out the current downward spiral of the share price, it could be a buying opportunity in the future even though arm keeps getting into their market share. >> caroline, thank you. bloomberg industries has released a new report on the global computer hardware outlook for the coming year. the hardware slump is said to continue in 2014. >> joining us now is bloomberg industries tech analyst. teamberg industries' provides global research and data on 100 industries in all major sectors. great to have your outlook. give us a flavor of the main trends in 2014 intact. -- in tech. 2013 reinforced the idea that we all want tablets instead of pcs. >> we have slowing growth

across. product categories. tablets are taking away share from pcs. 2014, youe to look at have slowing shipments and greater price pressure across various different categories. we have the emergence of china across the area does when things, tablets, smartphones, even servers and storage. the emergence of china is a double-edged sword. you have great shipments but lower prices. if you are a hardware company and you have various pieces of such products in your portfolio, you have to think about two things. where am i exposed from a product worry? do i have to much of pcs and too little of tablets? much of or do i have to the far east and not enough of the europe and u.s.? both of these trends will come to bear in 2014. >> the lifecycle of these products is expanding. >> it is.

onm a pc perspective, both the enterprise side as well as the consumer, the average life of a pc has gone pretty substantially over the last five or seven years. the replacement cycle methodology isn't working quite as well in years prior. we have seen the emergence of windows eight but we haven't seen a dramatic upgrade to windows eight despite the fact that windows xp is going away. compounded with the fact that people can do more and more on their tablets, whether it is media consumption with a smaller tablet or content creation with a larger tablet. you have less and less reason to use a pc now. >> thank you so much for that. now as we head into break, it is time for today's post number. 11, 12, 13. that is today's date. is the last time we will see three consecutive numbers line up for 90 years.

the u.s. enjoyed it back in november. >> the wrong way around. producersthe former of the show pointed out, when you say your birthday, march the third, that is the way you do it. >> exactly. we have it all figured out here. we are back in two bank. ♪

>> good morning, everybody. you are watching "the pulse." we are on bloomberg television, stripping on your phone and on bloomberg.com. in today's new energy, the eu parliament have voted to allow back loading or withholding of carbon permits. will the decision be enough to boost the market from its record low? i am joined by a carbon analyst for bloomberg news. good morning. the critical question is, is this a solution or a stock cap? stopgap measure but it has always been intended as a stopgap measure. decision yesterday is important relief for two reasons. first of all, it is a vote of confidence in this market. yesterdayolicymakers

stand behind this have clearly said, we stand behind the european a mission trading scheme. we want this policy to be the flagship climate policy after european union and not only that, but we are also willing to intervene in this market if it doesn't function as we think it should function. that agreement is important because the road to this agreement has been much bumpier than was initially expected. this sends a strong signal from policymakers. secondly, this is important because it will completely change the market dynamics over the next two or three years when these options will be withheld. at the moment, you have auctions coming in automatically every day. these auctions are enough for utilities to meet the demand for utilities.

when it starts in around april it wills we expect, significantly cut the amount of these auctions. there won't be enough for utilities. utilities will have to incentivize to part with their allowances. >> thank you very much indeed. francine, over to you. >> for those listening on bloomberg radio, the first word is up next. for our viewers, a second hour of "the pulse" is coming up. this is what we will be talking about. we have another exclusive. we will be talking to the founder of softek. this is a venture capitalist. we will ask him where he wants to put his money. with we will be talking medio bangka and banking analyst about the volcker rule. you can follow both guy and i on twitter. we will see you in just a couple of minutes.

♪

>> a budget deal on capitol hill. party leaders unveil an agreement to avoid another u.s. government shut down. questions remain about grassroots support. >> rbs loses its financial officer. nathan bostock returns to santander after only two months on the job. >> hilton is expected to price its ipo today. the hotel giant could raise up to $2.4 billion. good morning. good evening to those in asia and a very warm welcome to those just waking up in the united states. i am guy johnson. >> i am francine lacqua. this is "the pulse" live from

bloomberg's european headquarters in london. >> top story, a breakthrough in the u.s. congressional budget negotiations. it was announced last night. potentially what this is doing is removing the threat of the government shut down. yang yang has more now. >> u.s. positive conference committee chair paul ryan and senator patty murray announced their answer to avoiding another government shutdown with a two- year budget deal. the deal sets the annual spending cap at approximately $1 trillion a year, higher than the $967 billion under current law. be eased byts would about $40 billion in the first year, $20 billion in the second year. the cost would be made up through the likes of auctioning of government airwaves and increased pension premiums for federal workers. there will be no major changes to taxes or entitlement programs at this time.

the deal is not the grand bargain that many had hoped for but should be enough to thaw the battles that have defined congress the past three years. it will take some convincing of rank-and-file members. chairman ryan calls the deal a step in the right direction and focused his remarks on republican selling points. >> this bill reduces the deficit by $23 million and does not raise taxes. it cut spending in a smarter way. we knew that if we force each other to compromise at core principles, we would get nowhere. we decided to focus on where the common ground is. >> there may be common ground but there is still plenty of room for disagreement. urray said the issue of tax increases and entitlement reform can't be ignored forever. >> we need to acknowledge that our nation has serious long-term fiscal and economic challenges this deal doesn't address and our budget process has been broken.

>> for now the u.s. has a short- term budget deal. she at her's have made the deal with a few days to spare. a nice change of pace here in washington. president obama praised it as a good first step and said he would sign it if it reaches his desk. back to you. >> that was yang yang in washington dc. news, regulators signed off on what they are calling a strict volcker rule. the final draft of the ban on proprietary trading imposes new curbs but leaves many of the details to be worked out later. our markets editor manus cranny joins us with more. who is this a victory for? >> i think if you talk to wall street, they will say, we got what we wanted. that concern they would see a rush of liquidity, they have got a delay. the volcker rule doesn't come into effect until 2015. liquidity is the pre-issue. they have exemptions.

you have a group of people, men and women sitting at desks, traditionally proprietary trading desks. they are more or less gone now. you have exemptions. continue to make markets as long as you don't pay the people the same way you pave traders. what is critically important here is that the exemptions are there. you have to show that you're buying stocks and derivatives but that is what your customers want. you have to show a reasonable mess in terms of the inventory that you carry. you have to buy and sell at the same time. no longer that they can miss. you have to be very clear and that is what the regulators are going to be looking for. 700 meetings with the lobbyists and regulators, perhaps lobbying does pay. >> jamie dimon pretty active in that process. he had meetings with the head of the federal reserve. to a certain extent, it was jpmorgan that shaped this story.

it was the london whale and the details surrounding the story that had a bigger impact on this than anything else. >> i think it did. it was the roadmap. it came down to this, in the past two and a half weeks, the word identifiable, that is the phrase that was used by a number of regulators. what, listen, you know reflect back on what jamie dimon said. if the volcker rule had been in place, it may well have stopped parts of what is known now in history as the whale, the london whale trading. the portfolio that morphed into a size beyond recognition. the portfolio must be defined. when you're hedging, you have got to define what it is that you are hedging and when it moves or when the portfolio changes. you need to alter your hedging process in sync with that portfolio. ,> so the big question now is it all sounds great, everybody is happy apparently, is it going

to be something that is going to work in reality? bankers to a certain extent are paid to get around rules. are they going to observe the spirit of this? >> they are. the cftc had a conversation with erik schatzker in new york along with a number of others in the u.s.. he said, banks traditionally look for a way to get around the regulation. this must not be a static rule. it must be something that progresses. he said that two and a half weeks ago, he doubted this would be a rigorous and robust piece of legislation. the foreword, identifiable, that has seeped into the consciousness of volcker. it is not to be a static rule. monitor and calibrate, recalibrate is the name of the game on the street. >> thank you very much indeed. theill continue conversation on the outlook for the banking sector later this hour. christopher wheeler will be joining us to give us his take

on the volcker rule and all the other things that have been happening in the banking world. francine, over to you. >> what we are focusing on next is hilton. it is expected to price its ipo today and could raise up to $2.4 billion. bloombergs ipo reporter joins us with the very latest. this could be one of the biggest ipos for the hotel company. what does it mean for blackstone? >> it is a great story for blackstone. the unrealized gains could be about $8 billion which is huge. it is among the two largest private equity profits that we have seen in all time. those numbers could increase because they subscribed about four times yesterday. clearly there is investor interest. >> at the same time, how does helton -- elton was bought back in 2007 and escaped many of the troubles that other hotel groups went through? >> yes. they did a couple of things

well. they brought in new management. the ceo helped drive the company back to profit. the other advantage they had is they have large checkbooks. theythe markets went down, could buy debt at cheaper levels to protect their position. that has worked out really well for them. >> are we seeing more private equity ipos in general? >> absolutely, we are. we have seen private equity ipos -- there are a couple of reasons for this. investors are more confident of economic recovery. inse assets that they bought 2007 and 2008, they are now able to sell them on the market. with investors more confident, they are able to look at higher leverage levels. it is a good time to be in private equity. >> it certainly is. thank you so much for that. we will have to watch out for this later on. guy, back to you. >> let's talk about what is on

our radar this wednesday morning. hundreds of ukrainian riot police have dismantled and antigovernment campaign tf square. as they flooded the site, they clashed with demonstrators in ukraine's biggest protest in almost a decade. it was triggered during the last month when the president snubbed a european integration pact. zara owner inditex has placed its earnings in line with estimates. almost 1.7 billion euros. the world's largest clothing retailer is getting a small boost from expanding online. the royal bank of scotland is losing its chief financial officer. nathan bostock is returning to santander after only two months on the job at rbs. his departure comes six months after the royal bank of scotland ceo stephen hester announced his own resignation. rbs says it expects a substantial loss this year after the creation of a bad bank. ahead, he leads one of

silicon valley's most established venture capitalist firms. our exclusive interview with the founder of softtech is coming up next. ♪

>> welcome back. you are watching "the pulse." thesetalk about some of things we are seeing in the foreign exchange markets. i'm going to talk about dollar- yen. we topped out near the 103 level. this is one of the best risk indicators out there. correlationto see a between what is happening with the stock markets. they yen starting to gain traction, the dollar has been under a little bit of pressure. my question is, if you look at what is happening the last 24 hours, is this budget deal passes on capitol hill, the grant through stats -- the grassroots test, doesn't that make the fed liable to taper? isn't that going to potentially change the fiscal drag story moving forward? all of those things positive for the u.s. economy.

that may make the taper a little bit more of an easier pill to swallow. that resume ugly as we move forward into a new cycle of monetary policy, could be dollar positive. francine, over to you. >> thank you so much. let's return to paris where the conference is underway. joining us now is the founder and managing partner of one of the most established venture capital firms in silicon valley. he is jeff clavier of softtech standing by. he has bagged a handful of startups. welcome to the pulse. talk to me about what the main trends are going to be for 2014. is there new technology, one nation in the market that you think is going to be the hot topic for the next 12 months? concerned, them ability to put a lot of those vertical industries in the cloud and take advantage of the

economic savings and flexibility is really one of the key elements that i expect for the next 12 months. is actually back the developing something for the farming world. we put cows in the cloud and we have 177 cows over there. it is fascinating what sort of technology and better business practices farmers can do in terms of margin predictability. it is just one example of many of those developments we expect to see. >> give me a sense for example, you have invested in something recently. are you looking at other types of companies like this? this is a hardware device, right? is this a niche you want to be more present in? was the key investor and

invested five years ago. those two guys came to me with a prototype like this saying, we're going to revolutionize the world of wellness. it will give people a much better sense of their level of activity and calories burned. they can get a better handle on their health. that turned into what i have here on my wrist. it is very very successful. we have done a few of those. more recently, we are invested something that happens to be programmed by your cell phone. most recently, we got this company called coin which is a programmable credit card. it is like a computer in the size and shape of a credit card. we had a pre-order campaign a few weeks ago in the u.s.. it was one of the most successful campaigns in history.

we really sort of are keen about those mass-market appeal type of devices and expect to do many more of those. >> talk to me a little bit more about the credit card. it is basically the size of a small tablet? how do you use it? >> sorry, the scope for what? >> what you were talking about, the credit card that you just invested in. >> oh yeah, sorry. the scope is, you have an average of four to six arctic arts in your wallet. you have a number of loyalty cards. what we will do is scan all of those cards and suddenly you have one card in that while it which will be programmed to react like any of your credit cards. messye that sort of

situation with several cars and replace it with one device. many people expected that the cell phone would be the payment device that you can use that actually it hasn't materialized. we think that having something which has the phone factor, the size and shape of a credit card so you can run it through an atm machine, use it at a payment terminal, is the way to go. this is something that we will be releasing next year. there has been a tremendous level of interest behind the product in the pre-order campaign. we haven't announced numbers, but it is one of the most successful campaigns in history. >> if you look at the trends, i was asking you about them earlier, would you say that anything that is wearable technology is the main trend for 2014? me, it comes together as

-- we have payments, we have geolocation, we can do so many more things on demand. it is the on demand economy which enables -- it is something that has been developing very very impressive sort of way. i passed on over as an opportunity but the rumor is that they got to about $1 billion in gross revenue in three years on this notion of on-demand service. it is really staggering to me. i expect that many more of those , services willes be made available to people on the push of a button on the cell phone, will be fascinating. we expect this to become much broader where people will see that this is inspiration for

other types of services. >> do you expect a lot more ipos in 2014 on the back of twitter, on the back of a lot of technology companies really engaging so much interest from the consumer at large? >> i hope so. i hope that some of mine will actually make it through the window. the great reception that fact thatst saw, the they just broke $50 is pretty outstanding given that the trade means that the market is pretty hungry for those kinds of really mass appeal, mass-market devices or services. see how thet to market continues to open and hope to see some of my own companies make it through in the

next 12 to 15 months. >> good luck with that. jeff clavier, founder and managing partner at softtech talking to us from paris. >> coming up, shares of the chip designer imagination technology have had a turbulent six months. the stock is sinking even further. we are going to dig into the reasons why later in this hour. >> plus the next year intact. bloombergs research team is anticipating 2014 hardware trends and it is looking good for the tablet market. details still to come. ♪

>> welcome back to "the pulse" live on bloomberg television. let's take a look at some companies that are on the move. markets editor manus cranny joins us at the touchscreen. >> let's check in with europe's biggest newspaper publisher. journalism pays. an online edition is seeing a pretty significant uplift, uptick in terms of signing on to pay for that.

100 52,000 customers have signed up in six months. it is all about conversion. they hit your website, you get them to pay. let's have a look at finance. silvio berlusconi, his family holding trust, they are selling over 5.6% of this particular stock today. the market says it should eventually wash out and give a better financial structure. today, they are down 4.9%. bae, there is gold in that budget deal. defense companies are going to be sheltered from about $19 billion worth of cuts. bae gets 44% of their revenue in the united states of america. the consensus from the market is this, it is good if defense is protected. it is even better for the likes of bae.

back to you, guy. >> manis, thank you very much indeed. let's pick up with today's pulse number. $20,000. that is the prize money a college basketball player won after a shot from half court during an nba game as month. he wasn't playing in the game. that is a shot 47 feet away. he was probably taking the shot at halftime. the problem with all of this is that college athletes aren't allowed to use their athletic abilities for financial reward. college student knows, rules are meant to be broken. this time, the regulators agreed. they said that this young man will be able to pocket his winnings. francine, over to you. >> that is what we would do. coming up, tablets. will the pcs fund carry into the new year? also coming up, she topped the charts, swung on a wrecking ball

and resurrected twerking but will that be enough to become time's person of the year? we will see what chance miley cyrus has next. ♪

>> good morning, everybody. you are watching "the pulse" live from bloomberg's european headquarters in london. i am guy johnson and these are the bloomberg top headlines. the royal bank of scotland is losing its chief financial officer. nathan bostock has returned to santander after only two months in the job. his departure comes six months after rbs ceo stephen hester announced his resignation. it expects a substantial loss this year after the creation of a bad bank for its worst loans. u.s. budget negotiators have unveiled an agreement to avoid another government shutdown next

week. it eases automatic spending cuts and reduces the deficit. the house will consider the measures later this week. the agreement would end a three- year cycle of partisan showdowns over the budget. both wall street and u.s. regulators are claiming victory after the adoption of a strict new volcker rule. regulators are pleased with the restraints on hedging. won exemptions for their market-making that. they were able to push the role's start date to july 2015. let's talk about how the european markets are trading as we go to the u.s. session. manus cranny with more. >> european equities managed to galvanize themselves. it attempt onit the upside by the heart of europe. paris up 0.6%. we are waiting for the chinese to tell us, are you sticking for your growth targets of 7.5%? are you sticking to your inflation started of 3.5%?

there is a budget deal on the table in the u.s. look at the aussie dollar. the reason i mention china is because tomorrow we find out about the inflation numbers. what could that do for the aussie dollar? what if they actually cut their target two 7%? my understanding is there is a little bit of short covering going on in aussie dollar. they are trading higher. is it time to get out of that position? have a look at the british pound, just off two-year highs in dollar-sterling. this is one of the strongest performing currencies just find the new zealand dollar. you are seeing dollar sterling comeback a little bit and that whole debate about tapering comes back very presciently onto the table. a wave of risk aversion has swept the market. with that in mind, you might see a little bit of a change.

>> thank you very much indeed. back to tech. it has been a tough year for imagination technology. their stock prices slumping after concerns that it is losing market share. here with more is our european business correspondent, caroline hyde. abouttalk a little bit what this company does, who it competes with and what is next. >> imagination technology designs chips. it doesn't make the chips, it designs them and leases their design. >> so this is arm. >> precisely. really, imagination technologies' forte is in graphics. that is where their chips are used. it is smart phones, tablets, even in your car. lowest in down to the four years as we get a sales update from the company. that threat from arm is really easing in. sales did rise but not nearly as

much as anticipated. it is largely the licensing revenue. when they go to qualcomm and offer them their design, the amount they are getting is just not ramping up in the way they have been expecting. slower growth in high-end smartphones is where they are being hit hard at the moment. jeffrey saying these results just highlight the weakness. >> sometimes the market price is things correctly. sometimes the market miss prices things. we are trading at significant lows of the stock at the moment. you should saying sell or is there a few outliers? ask having read what is happening over the past year, it is down 40% prior to this date. i thought analysts would have had a sell rating. they are pretty equally split. suisseave been credit and the like flagging that arm is starting to ease into their market share, particularly with their control of graphics. jpmorgan said this is in the

short term going to hit their financial performance, but they are ready for growth. qualcomm is about to start using their intellectual property. jpmorgan says therefore we are going to see a ramp-up in the share price. jeffrey says it remains attractive. the company itself is sounding pretty up the. they say they will maintain a leading position. they are not sounding too downcast. >> carolyn, thank you very much indeed. ok, francine, let's continue to talk tech. >> bloomberg industries has released a new report on the global computer hardware outlook for the coming year. perhaps not surprisingly, the hardware slump is set to continue in 2014. joining us with more is a bloomberg industries tech analyst. of course, we want more tablets. >> we do.

the grand 2014 takeaway is one of slowing growth. growth is good in some areas. growth is slowing. compare that to pcs where there is diminished growth. if not narrowing. -- have to overload that overlay that with pressure. the emergence of the asia- pacific region for my shipping perspective. if you look at all of those together, a large hardware company has to be aware of two very important things. do i have the right product portfolio? do i have tablets and phones to offset weakness in pcs? do i have the right corporate versus consumer exposure? on top of that, they have to be sensitive to, do i have the right regional asked dozier? -- regional exposure? too much china, too little u.s. and europe means that again you have shipment strength but

potentially issues relative to any revenue weakness that you might have faced in the u.s. you have these offsetting trends that are going on and i think 2014 will be a year of how you manage all of those offsetting forces. >> that is what i was going to ask you. as a market leader or a big competitor, you have to place bets in 2014 which may be you didn't have to in 2013. >> you can't ignore the china market. to question is, you have have a strategy for the china market in which you participate. maybe some segments of the china market. as was shown in most product categories, there are both new competitors as well as global competitors you have already faced in multiple theaters. across all of these competitive dynamics, you have lower pricing across the board. a bias towards the low end of the spectrum, that is where the

volume is. you compromise on that. you will see one part of your portfolio do well versus the other or vice versa. >> we talked more and more about the internet of things, the interconnectivity among all the products. we have already been talking about it a lot. is that going to take off in 2014? >> we are going to see more connectivity across products. we are going to see different devices talk to a central hub both in the home as well as in the enterprise as well as various parts of the average consumer's life. the problem is the size and scope of this. the issue is where rebels. ist we want to figure out how big is this market? who participates in this market? how could a product in this category appeal to the consumer whether it is a watch or a smart refrigerator, whatever how does it appeal to the consumer? will therere growth be relative to the usual growth

trajectory? how much more revenue can the average company make by making a "smart product" relative to a not so smart product? >> thank u so much for all of that. minutes, joining us from new york with a preview. what are we looking at today? >> we are thrilled to bring our audience worldwide michael spence. we will talk to professor spence about the volcker rule, his thoughts on asymmetric risk and asymmetric information. thrilled to have michael spence again. also joining us, robert nardelli. that is wonderful. we have him the day after that historic announcement by general motors. he ran chrysler for a bit. we will talk to bob about the challenges facing mary barra at general motors. >> i am fascinated with that it will be great.

focusing on the volcker rule, you went through it extensively yesterday. >> we are going to look at the volcker rule with professor spence. pages, it deserves a lot of scrutiny. >> tom, thank you so much. i am looking forward to surveillance and 20 minutes. coming up, more on the volcker rule. wall street let out a sigh of relief yesterday as it stopped short of some of the strictest bans. we will take stock of what this means for the banking industry next. ♪

>> welcome back. you are watching "the pulse." we are alive form london. off to radio. i am guy johnson. >> i am francine blackwell. -- francine lacqua. let's get you some company news. blackstone is expected to price its hilton hotels ipo later today. it is the biggest hotel ipo on record. foxconn is launching an investment fund to finance wearable technology startups. foxconn is the maker of apple's iphones and ipods but it wants to expand beyond manufacturing as phone sales challenge the company's goals of 15% annual revenue growth. lloyds banking group has been fined 28 billion pounds by the

u.k. financial conduct authority. the fine is for serious failing to control how it awarded sales teams. it is the biggest ever fine for a retail bank for sales. >> staying with the banking team, over to you guy. >> the long-awaited volcker rule was finalized in the u.s. yesterday. regulators signed off on what they are calling a strict volcker rule. the final draft of the ban on proprietary trading imposes new curbs. it leaves many details to be worked out later. a media bangkais banking analysts. everybody wins. >> i think so. as i said this morning, one of the key things here is banks have been making massive changes to their business. goldman sachs is a classic example. funds, what you have actually got there, most of

the work had been done. the businesses have changed, no doubt about that. >> in terms of implications moving forward, most of it has been put into practice and priced in. what happens next? >> it is a great market compliance office. it just means that a lot of people are going to be sitting there putting together reports for regulators on how the banks have played it, how they have run their hedges to make sure they aren't going outside the volcker rule. outside of the u.s. isn't covered. >> there is kind of overlap. -- when you go through a process like this, you discover loopholes. they discovered some fairly big loopholes as they worked their way toward yesterday. what is to say that there aren't

further loopholes down the road? wilbanks observe the spir of of in a only sort fairly fluid way? i am wondering where the loopholes are likely to be found . are the banks going to go after them aggressively? ask my sense is that banks are not going to do that. everybody is living in a world of here. i keep going back to the example of libor and foreign exchange scandals where clearly some of the e-mails, very dangerous and in some cases criminal. banks are aware of that now. they are going to try and avoid finding loopholes. in the excitement of the moment, when you have a big order from your client or a lot of activity around the stock, you are still going to be going after those traits to make money. hopefully, you're going to have controls and place to stop those from breaking rules. it will be quite difficult. >> can i change this completely? nathan bostock has departed the

royal bank of scotland. i thought this was sort of frowned upon. he has only been there two months. >> i find it really surprising. i have to believe santander must have said, can we talk to this executive at another bank weston mark is not normally what occurs. i am a bit surprised they were given permission. he tried to go to lloyd's last year. i'm kind of shocked. as i said, i am not sure we have heard the end of this. >> what are the implications for santander? he has been brought in to manage exits. one would have to assume that looking at what is going on. what are the implications for the business? >> it was always inevitable that he was going to move to a more senior level. that is fine. they hired a gentleman that stephen jones at barclays who is

now the ceo at santander. market,ay, known by the nathan looked incredibly uncomfortable when he was talking about the bad bank back in november. know whether already his mind was moving on at that stage. when they go, it depends. they command the highest undulation they can. probably a bit more price discovery next year. >> at what point does the market to crowded out? you look at the pipeline -- it is enormous. what -- how do you manage that process? >> i hate to say this as somebody who works in investment banking, but i am sure investment bankers are saying, don't worry about it. look what happened in the mid- 90's.

it was fine. i am not sure that is the case this time. these are really different banks. we have banks that are going to come to the market with very little in the way of legacy. still we have the legacy assets tracking down so many banks. at least these banks will come in and say, we can command a higher valuation. is, banks like lloyd's, barclays and hsbc, there is an argument that you should value us more highly than those banks. the question is, can you achieve that? it all tends to come together. >> thank you very much indeed. mr. wheeler joining us from medio bangka. what do we have coming up for you? miley cyrus and pope francis. what do they have in common? you don't see them found this very often but they are on the shortlist for time's person of the year. we will tell you who else is in the running. that is coming up next. ♪

>> welcome back. you are watching "the pulse." we have some breaking news for you. bmwooks as if he and w -- is considering building engines in north america. that is fairly significant for this business. it could be mexico, the united states, we don't know the details of this.

the bloomberg team is learning that this is becoming an increasing possibility and may be announced in 2014. the north american market, extremely popular when it comes to bmw's and what the company is trying to do is hedge out the currency risk. it is one of the factors that it certainly needs to think about. it makes it easier as you move production to were the ultimate end-user. let's show you what is happening under a-dollar this morning. this is a german based company. euro-dollar as we speak, unchanged. a little bit of volatility earlier on but we are trading efforts of -- upwards of 1.3761. what will budget deals on capitol hill mean for the currency market if we do see that deal being pursued? the fed's like a little easier? will it make the taper that much easier to negotiate for the fomc? have inact will that

the foreign exchange story? that is fx, let's talk tech. in wearablertups electronic devices. caroline hyde met with one of them in paris. the canadian startup has created a connected shirt to measure your body. >> show us your shirt. it is pretty revolutionary. >> you back, that is the part where i undressed. it is a bio sensing shirt. i own many of them. i wear them at the gym, at the office. it is a lifestyle shirt for real life. it reads my body's biometrics and streams them into my iphone. what you were looking at right now is my live ecg taken directly from my heart and streamed onto my iphone. for every biometric among the more it is in the green, the healthier it is. what you're looking at here is

my live breathing rate. look at the center of the circle as i breathe. is my step account for the day which is pretty low. i should be more active today. my calorie count was taken directly from the heart which is more accurate. >> so you are going to consumers first. eventually, you could be monitoring the health benefits of this -- they could be used in medical practice, looking after the elderly, it seems pretty limitless. >> absolutely. we picked the right place to start. we will get large-scale adoption faster. we are working with some prestigious medical institutions in the u.s. on various forms of arrhythmia. the medical applications are limitless as well. my primary focus right now is consumers. >> smart shirts. what will they think of next? >> they have to make them a little bit better looking. jon ferro joins us now with a look at what you need to know for the rest of the trading day.

>> it is an exciting list. >> you have the likes of pope francis, barack obama on there. then you have miley cyrus. to be honest, let's be brutal. >> bashar al-assad as well. >> maybe not person of the year in terms of likability, but certainly there is a massive impact this year. some might say more so than the likes of barack obama. what to watch, let's talk about what everyone is watching. victoria's secret show, the most expensive fashion show ever, featuring the most expensive bra ever. $10 million. with diamonds, rubies. that is not it. that is not it. i hope it is coming. if not, this is all over. >> keep talking. [laughter] sometimes a picture says a

thousand words and keeps me out of trouble. taylor swift performed last night. it is there for everyone. >> i am a fan. that is it for "the pulse." keep it right here on bloomberg. ♪

>> this is "bloomberg surveillance." a protest and confrontation in kiev as the ukraine is torn between europe and russia. the majority choosing the west.

agreement on capitol hill at least among leaders. sequestration is out. debate and deliberation are possibly in. every home should have one, weighing in at 540 pounds, put the baby grand by the window. we are live from a world headquarters in new york this wednesday, december 11. i'm tom keene. joining me is scalp -- scarlet fu and alix, i need a baby grand, steele. here is the way it works. da da da. this?a chopsticks like >> ok, briefing. overnight we did get earnings from cosco. profit missing estimates. the where hast -- warehouse chain boosting discounts. we will do mortgage applications in th