speaks out.sky bloomberg sits down with the former russian prisoner in one of his first interview since president ruden released him. >> italy takes on google. buying internet ads from locally registered companies. >> travel chaos in the u.k. this christmas eve. extreme weather causes several deaths and severe delays. good morning, everybody. ,"u are watching "the pulse live from bloomberg's european headquarters in london. >> we begin with the google tax

that has just been passed in italy. the law requires them to purchase internet ads from locally registered firms. >> caroline hyde us with the details. what is the objective here? >> it is all about clamping down on the shift of taxable profits. ofis all aimed at the likes google, amazon, yahoo!. we know that they shift large amounts of profit around the world to so-called havens. the likes of ireland, luxembourg, bermuda. italy is trying to crack down on this and they passed a measure saying that if you are going to buy internet ads from a company in italy, you have to buy it from a locally-registered company. it cannot be something that happens to be registered in ireland. there is plenty of concern at the moment. >> this law is not without controversy. some say could violate eu law. >> this is what many lawyers are

saying. as it stands, the measure does not hold above water when you look at eu law. they say it is a violation of competition law. they are trying to force the hand of the oecd. they are trying to lead the way because there is $100 billion at stake and that is how much europe and the u.s. uses intact from the likes of amazon, google, starbucks. the oecd put out a blueprint to clamp down to try to fight these strategies of these companies. ,taly taking the first step maybe forcing the oecd to shift up a gear. at the moment, the plan they are currently formulating will not be finished until the end of 2015. >> let's talk about money. how much could who will lose as a result of this or how much will it save by shifting its profits? >> at the moment, a staggering $2 billion is how much google managed to cut off

its mobile income tax bill just last year. is claimingoes it all the advertising it sells in europe is done from its irish unit. it then pays the royalties do and irish unit headquartered in bermuda. at way, they are able to push down their overall tax costs. italy, their income tax stood at just $1.8 million last year. clearly, italy feeling aggrieved by this and wants to push through a law. is saying we will abide by the eu laws and try to fit in with that. it looks like they are trying to speed up the process. >> interesting to see if they will follow suit. days since being released from prison, mikhail khodorkovsky is speaking out. bloomberg spoke with the man, one of his first interviews since given his freedom two days ago. ryan chilcote got his take on

the company that replaced his as russia's biggest oil producer. ,> after you were released which, to a certain extent exists thanks to the assets that were part of your company, said they would be happy to give you a job read he was joking. maybe he was actually mocking you. how does that make you feel? >> his comments were a joke. that, right up to the very end, he was trying to convince the country leader not to free me. only because he was personally afraid of something.

a man who wants to joke around with an opponent on weaker footing and with integrity should not use the power of the state to get rid of him. 20% of rosneft. some would say that effectively legalizes what some would argue was the expropriation of the assets. how do you feel about that and bp? >> i agree with the idea that when you are doing business, you can do anything that you love within the law. what bp did is entirely lawful.

it is another matter whether it was ethical and whether business should be concerned with ethics. perhaps every company in society has to answer that one for themselves. >> ryan chilcote there. you will hear more from our interview with him later on as well. fors u.k. shoppers hunt their christmas dinners, more and more are turning to german discount supermarkets. david tweed joins us from berlin. david, you have some data on our mince pies. >> i do indeed. it is quite surprising. there was a test, 12 retailers would in their mince pies to be ranked. the number one mince pie in the entire united kingdom comes from

aldi. pie andpest mince number two in the entire united kingdom comes from lidl. 1.79 for 6 pies. that compares with nearly 13 pounds at fordham and masons. those are the bottom of the list of 12. you might think that this is a complete freak and not something that would necessarily repeat itself. the thing is, this is part of a strategy that is working for aldi and lidl. in the three months up to the ninth of december, those two stores in the united kingdom actually gained market share while the big 4 lost market share. i am talking about sainsbury, tesco, asda, and morrison's. actually gaining

market share. quite extraordinary. >> tell us about the owners of these german supermarkets. they are billionaires. >> actually, they are the richest and the second richest germans. if you look at them in the rich list that bloomberg does, they rank immediately after mark zuckerberg. the richest of them is worth 23 billion -- no, he is worth more than that. brecht.ur right -- al al-di. albrect discount. that is where comes from. the two brothers started to expand in 1946. that is the basis of what they have been doing. a are pushing into the united states at the moment. $25.6xt one is worth billion.

interesting story about the name of this. store whato call his would translate to black market so he settled on the name lidl. these companies are worldwide institutions. they have been in the united kingdom since the mid-1990s but they have only been really gaining market share in the past five or six years. middle-class shoppers have become a lot more price aware, partly due to the recession, i suppose. >> thank you very much indeed. david tweed joining us from berlin. >> here is a look at what else is on our radar today. strong winds and flooding are disrupting holiday journeys. gatwick airport has reported a major power outage at its north terminal. that is causing flight cancellations. there are also delays at heathrow. rail services have also been

disrupted. at least three people have been killed from the severe weather so far. >> president obama has extended the deadline to sign up for health insurance. today was supposed to be the last day to sign up for coverage in the new year. when thousands of people rushed the site, the government pushed back the deadline to midnight to give them all access. andnd twitter's cofounder chairman has been elected to walt disney's board of directors. he will stand with the other directors at a meeting in march. disney says the company hopes to reach more people through new technologies and new platforms. >> as we head into break, the backstreet boys made it big in the 1990s with songs like "everybody." now they are making big changes to how they are managed. he will tell you about a new trend sweeping the music industry. ♪

>> welcome back to "the pulse." we are live on bloomberg tv, streaming on bloomberg.com, your tablet, phone, and any windows phone as well. the bank of japan has left deflation off its monthly comic report for the first time since 2009. that is as the yen extends to eight straight weeks of losses against the dollar. joining us now to discuss the

outlook or japan is the head of economic research at mitsubishi. great to have you on the program. what will happen to the yen? >> it is something of a one-way bet. there is no such thing as free lunch. there are two scenarios in which the yen could rebound. one is some sort of asset price speculative fever retrenching to some degree in global markets. the other situation would be very good news on investment opportunity in japan. capital expenditure by companies picking up. i think that would tend to go along with rising yields and a stronger yen. >> why is that? capext scenario of picking up is in the range of 10%-20%.

we do have the problem in the u.s. with quantitative easing and monetary uncertainty. businesses realize that there is an asset problem in the future and distrust level of high equity prices. in the case of japan, they have lowered the yen and do not plow funds into investment. that is a problem. >> what is your take on the u.s.? bankse them as to central completely diverging. the fed is thinking about tightening. or you see the fed as very dovish. even if they pull back a little on stimulus, the amount of stimulus is so dovish that there is not really that kind of dichotomy. >> what we have seen over the last few games -- days is more to do with games than any real fundamentals. fact, a bit of the data may have been swayed by inventories and there is concern about retail sales maybe not being a strong. i see the real action being in

the bond markets with the u.s. bond yields having risen substantially since early this year. whilst japanese yields have gone down and remained stuck at about .6%. that widening spread has been key to the yen move. i by no means think that these u.s. yields are rising further. the inflation outlook is at about one percent. ten-year yields are about three percent. that is not way out of line with what you would think. a lot of the action has already happened in the u.s. bond markets. this yield spread between the u.s. and japan, maybe one should be looking more at potential upsets on the japanese side. ifwhat happens to euro-yen the ecb does straight qe? asi think of the euro-yen

being the best barometer in the world of asset price inflation. the euro gains from asset price inflation. a lot of money comes in the european stocks and high yield products. in the case of japan, money tends to leave japan. it is a big move that we have had during 2013, the yen-euro going from 100 to 142. tells you what is going on. the key factor as to where that goes in 2014 will be the degree of asset price inflation in the world and my overall central case would be that that tends to decrease a bit, which means that you would see the euro falling back against the yen. doingot see the ecb anything in terms of unconventional policies. >> because why? bundesbanklly, the in the background -- >> is in control. >> it is not in control, but

with the german economy strong, there is no reason they will concede experimenting. of crisise any sort or asset price deflation in the world, then yes, the ecb would go in that direction. >> what is the biggest risk of 2014? there is so much optimism on the markets. so much confidence that we will have sustained growth, at least in the u.s., possibly in the u.k. is there something that the markets are mispricing? >> markets are very expensive. there is a lot of fluff read nobody knows how much. you look at high yield reddit markets or equity markets and if we get any sort of disappointment, maybe the u.s. economy is going down during the first half and everyone is , or, ofg acceleration course, what we are seeing in china is very important and emerging markets also. there is a range of fragile

emerging markets. any sort of disappointment or accident. the problem is that markets are all set up so much by asset price inflation that we could get a violent reaction in the opposite direction. >> thank you very much for all of that. over to you. >> some company news. blackrock says it has been buying up turkish stocks over the past few days. political turmoil in turkey has been driving share prices down. blackrock says that raised the valuation of -- that makes the valuation of shares more compelling. blackrock says it pays to be brave when others are fearful. the world's largest producer of aluminum is suing the london metal exchange. madesay that the ime irrational and disproportionate changes to its policy last month to speed up withdrawals. they say the lawsuit has no merit. deutsche bank has settled a lawsuit brought by allstate.

knewate says deutsche bank it securities were a toxic mix of loans to borrowers who could not afford their properties. the settlements were not disclosed. as we had to break, one of the world's most famous luxury department stores is adding a abbey."f "downton offering couple of mentor he canapés served in style. -- offering complementary canapés served in style. ♪

>> with christmas just a day away, the party season is upon us. when it comes to hosting extravagant parties, there is one company that promises to deliver your every wish. >> the report on what quintessentially events. >> imagine it and we will deliver it to read that is the motto behind one of the world's most prestigious events companies. hang wins in the pool. -- penguins in the pool. with the the ones access, the connections, and the tenacity to get it and deliver it. >> caroline hurley is the

company's cofounder and prides herself on being able to do the impossible, including getting pop stars to play at your party. >> as soon as you start bringing in a major label, that will always be costing $1 million or more. party.illion on a sounds extravagant, but not for everyone. early says business is growing and when it comes to hosting parties, people are always trying to outdo their neighbor. >> there is definitely an element of competition. it is fairly broad all around. and inlike to celebrate celebrating, it is a statement about who you are and how much money you have. many of the most extravagant events are not in europe or america. the gulf states and central asia take background. azerbaijan, in

really exciting territory with lots of opportunities. >> it is enough to make your next party feel a bit modest. >> looks like a great party. >> it does look like a great party. let's get straight to our european business correspondent. >> caroline hyde, is there a party in the markets today? i suspect not. >> a little bit of one if you are going for the green. the bar and uzi at stake as we head towards a shorter day of trading. stocks are holding up to our gains. every single industry group is rising. we look at how the euro stoxx 50 is at the moment. i can show you a board. we are higher in france and higher in the u.s. stoxx 50. the ftse is the upper former at the moment, up almost .5%. leaderboards in the u.k. is sky.

there are a couple of stocks on the move. stock exchanges from germany and italy entirely shut today. let's look at what is moving. b-sky-b up. the daily mail is reporting that potentially vodafone is eyeing this company, saying it would be the perfect incentive for vodafone to stop itself from being bought by at&t. up 2.3%. regi1. its stake in percentp almost three today, the highest in almost two years. >> thank you very much indeed. youp next on "the pulse," have heard about the elevator pitch, but have you ever done one? we can tell you what hotel is turning this networking tactic into a real-life scenario. >> as we had to break, in the

1990s, the backstreet boys climbed to the top of the charts with hits like "i want it that way." for their latest studio release, they are ditching the classic record company contracts and changing industry. ♪ . . . .

>> half past the hour. welcome back you are watching the pulse these are the bloomberg top headlines. weather is bringing chaos to millions who are traveling home for the holidays. a major power outage in a terminal. have beences disrupted by strong winds and flooding. have sadlyree people been killed loss far. -- this far.

47 was conceived in 1941 while he was recovering from wounds. since then, they have been used in conflicts in hundreds of countries and have become a symbol of guerrilla complex. forident obama signed up health insurance under his affordable care act. many of the issues have been resolved and yesterday was the last day to sign up or coverage in the new year. the deadline was extended until midnight tonight. >> the middle east is a change place going into 2014. mark joins us to break down what we can expect in the region in the new year. it is great to have you on the program and thank you for joining us.

talk about the biggest risks to the region. >> you have syria and knee live civil war going on. you have half the population and 2.5 million in jordan, lebanon, turkey. nobody wants to intervene and you cannot ignore the situation. , you know, ones year ago, you had the muslim brotherhood-elected government in place. now you have a bombing in which 12 people were killed and the government is describing the muslim brotherhood as a terrorist organization that they want to go after. that is a growing and unstable situation. >> share prices have gone down 13% in the last year. how dangerous is the situation in turkey? >> not any situation like egypt

or syria. it is dangerous for the prime minister and there are political risks that are being seen in the stock market and the currency valuation. 10% is in the last few days since it was revealed that there was a fight within the prime minister's religious conservative base. that is, in fact, more dangerous to him than the protesters who we saw a lot of in the summer and are important. they said a lot about turkey but were not a threat to him. this is quite serious and is his own base. i faith movements has moved against him and he has moved against them. it is not inconceivable that he

gets moved out and that would be very interesting. more likely, he will win. in order to do so, he will have to purge institutions, he has first the police and he will have to purge the courts. that is very dangerous and part of the reason for the stock market change is that people are worried that he is going to go after companies that are linked to the movements. he won after secular companies after the protests. been sold out and what happens if the prime minister is put out of power? what comes next? >> if he is out of power, that is interesting. he has been in power for 10 years and we do not know what would happen. ,e would hope that other people who set up the justice and development party with them, the

deputy prime minister, those people, the competent people in the government who have been moved assigned as the prime minister has become the only person. the marketsiked by right now. if those people were to move back in and take over the , that could party be a good thing. the prime minister's dna is all messyand this could be and unpredictable. >> thank you very much for that. guy, you are with the middle east. >> let's continue the conversation with a different twist. or biggerdollar idea for investors. we are a little short on time. the elevator pitch, if you convince a team of investors before you had the ground floor,

your life could change forever. for more, we have our middle east editor, elliott gotkine giving it a go. >> this is the 49th floor and this is the elevator for the elevator pitch. neighbors -- >> my startup detects cancer. 94% of consumers around the world who do not buy shoes. it takes about 1:24. that is how long the start ups have to persuade the judges for the $100,000 prize. >> hello. thank you for giving me this time. it is great to hear and i have

been dying to meet you. everybody loves books stop some people were more polished than others. >> people use books. books, this beams your book collection and a bookshelf. people can see what you are reading. this is not solvent. >> the second finalists have 10 minutes to flesh out their ideas . they range from a shoe scanner the canine health monitor big tip went to a mobile company. >> we enable mobile phones to camera ofcer with a the device that can be used anywhere and under any conditions. >> what do you think?

>> it is back to the drawing board. >> i would have thought the health products would have to take the stairs. that is quite a good idea. >> thank you. >> what did you hear in the elevator and will this be expanded? >> it is sorted out by a , the start ofny festival was first done in toronto. they had 100 startups giving elevator pitches in the elevator. of it, i can tell you that my ears were really buzzing and there was popping every time you go up and down. some ideas were more wacky than others.

one caught the judges attention and was almost a replacement for a braille keyboard for a touchscreen. it is hard to know what you're are typing if you cannot see. the person in vented a gesture- .ased way i saw a lady on a lift from a company called flux who said fruits andd vegetables that tell you when they are hungry by analyzing the water. she confided to me that when the fish is ready to eat it, you have to be the one to whack its over the head and kill it. tower and you 101 have to do some fast talking if you are going to make a page there. we see so much news coming out

of the startup nation. >> it is looking to be a record year for initial public offerings and two of the top car that we had were the that ran on a are and water. you fill it up with water and that helps recharge a lithium battery. the other one was a seeing aid. it can tell you when it is read crossgreen and safe to the street. there are amazing companies. hopefully, 2014 will bring more companies. >> elliott, thank you very much indeed. elliott gotkine is out in tel aviv. >> the backstreet boys are back. a european business correspondent, caroline hyde,

joins us with the latest on this story. how does this change the way they are changing their music? >> we are looking back to the 1990s. again andening to it again when i was at school. they claim that they have been cheated out of millions of dollars. 1990sere burned in the and are coming back, but avoiding traditional record companies. players and it gives you that much more independence. it is like hiring a consultant. you get far more bang for your buck. money ratherf the than 20% of the money and that is forcing the hands of

universal and sony. >> it is amazing. you need to be famous and you need to have a business minds will stop >> yes, you need to be wealthy as well. -- wealthy, as well. they will give you an advance for your recording before you go big. of themet boys is one and peter gabriel was one of them. prince and the pet shop boys have enough money to support themselves. they are forcing so much transparency and where is the money going? where is the marketing costs going? we are seeing these being shared by social media and spotify. it is not just about getting on the radio and mtv. they are bringing a lot more fairness to this.

>> thank you very much, caroline hyde. mnj.erger in we will look ahead to the new year.

the hour.tes past you are watching the polls. i am guy johnson. mergers inpick up in the telecom sector. whatdeal was more than investors expected and will pick up quite nicely in 2014. and it is nicee to see you. year, we pick up the end of 2013. opposite of what i expected.

the fourth quarter was slower than anticipated and the end of the third quarter is making it, and terms of volume. a bit, not so much. and what happened was a few ingredients that go into catalyzing mergers. the ability to fund transactions and the other is confidence and getting it done. i think we had access to capital and that was easier during the course of the year. it is the risk appetite that has not been there just yet. will we gain that momentum? >> if you look at the economic data out of the united kingdom, it is pretty good. if you look at the economic data at the united states, it is pretty good, as well. what is the catalyst that will

start the reaction? >> we are optimistic with mergers and acquisitions and what changes in 2014 is, in terms of access to capital, markets are open for most of the year and the equity markets are more supportive. you can see that on the equity side and it is up. if you look at the ipo calendar, it is double what it was this time last year. >> they are giving confidence to the people. >> absolutely. they have visibility and you are starting to get that. >> versus private equity, you markets andabout they are starting to allow these guys. where are they and where the general partners for equity firms?

are they ready to commit? what is the background? >> if you look at the asset management, it is around where it was five years ago. in addition, you have home. times that have home are at six years and there is enthusiasm and fundraising conditions that are really good and getting more positive. in order to keep the momentum, they have to prove that they are recycling the capital. >> which areas would you be looking at the most? andhere was a combination there was real estate. that we are talking about tnt.

>> that will continue to be a theme in 2014 and you will see the likes of the consumer and to do companies looking deals in 2014. -- for joiningom us from ubs. >> the backstreet boys may debate with songs like this and are making changes with their management. we will talking about the trends that are taking the music store in the second hour of the pulse. >> backstreet is back, all right? now. we are back again. ♪

>> welcome back. bloomberg television, streaming on your phone and bloomberg.com. folks we are bringing you a piece from our "best of bloomberg" series. rachel crane takes us inside the united states and inside the home of some of the green technologies of the world.

>> welcome to the jail of the 21st century. >> we have less inmates. >> located 35 miles from silicon valley, is home to advanced energy technology and there are robots. 25 of them are doing the job of 50 inmates. but we are the only jails that have robots doing the laundry and food. >> you have to have ma'am flower that you have to have manpower -- you would have to have manpower if you did not have the robot. safety issue. >> it is a safety issue. >> intelligence community difference between life and death. >> this is a safe facility. knowing that we have a backup

system makes our job so much easier. occurs, itlackout took 30 seconds for the facility to power up. ternity,ney be -- an when you're talking about inmates. now, it takes four seconds. the countryjail and requires 2.1 megawatts in order to keep 3000 inmates locked up. grid has million smart reduced their energy bill by 2.5 million a year. compatible smart grid and has a protocol that allows you to use all generation. shey run the jail 24 hour

a day and seven days a week. >> well would you say to the suspicious taxpayer? money hereutting because it is a high-cost facility and is a real-world laboratory where we are showing that these technologies can work. >> interesting technology being used in interesting way and we will have more of that kind of news coming up in 2014 we continue our energy series. >> for those of you listening on bloomberg radio, the first word is up next and this is what we will be talking about. will run through the ideas on that subject and -- >> backstreet is back. we talk about the future of the music industry and is a reminder

to both of us. we will see you in a couple of minutes.

>> we speak down the former russian prisoner in his first interview since he was released. >> bailey takes on google and thatament passes a law requires people to buy internet ads from locally-registered companies. >> the key deadline for obama care is extended as more than one million americans try to sign up. good morning to our viewers and .- in europe

>> i am francine and this is the pulse. have kit juckes, who memo on which countries are leading and lagging ingrowth. a lot requires an companies to purchase internet ads -- a companies to purchase internet ads from locally-owned businesses. stop theiring to shifting to taxable profits to havens and are stopping google, moving starbucks, from their profits and try to reduce their overall tax burdens. this is costing to -- this is

cut -- this is costing countries big. the company you buy from has to be locally registered and you cannot buy advertising from google, which has their units registered in ireland. this is going to shake things up significantly. and, indeed, where the profits go. >> they will have a seamless and also finances. some would say that this violates the laws and many would say that it violates the current eu laws at the moment. this is not in line with where regulations are, at the moment. maybe they're just trying to be the charge, in terms of the debate about this? july, they putin together a blueprint to change the strategy, completely

legitimate strategies employed by yahoo!, google, and apple. they want to stop the profit and it will take time. the blueprint is not going to become a final plan until the 2013 --0 -- the end of 2015. >> how much to google say by shifting profits? what's it is quite staggering, the money that has been cut so far. andle cut $2 billion claimed that they sell their advertising from ireland. they pay royalties to bermuda. that gives their tax burden low and in italy, they're only taxed 1.8 million euros last year. these numbers are staggering and europe and the united states loses $100 billion in the movement of taxable profits.

they want to restricted and it will take some time. back to you. >> caroline hyde had the latest. >> days after his release from the axle tycoon -- the with ryanoon sat down chilcote. >> describe the most difficult day in prison. around 4000 of the cold days. which was the most difficult? it is tough. they the most difficult was when i saw him destroying the company or, maybe the most difficult they was when i learned that the chief legal counsel had died or, maybe the when i goty was

knifed in the face. >> stabbed with a knife. but it was difficult. >> what was the most difficult thing about prison? >> the most unpleasant part of prison was the feeling of wasting time. food, clothing, being an enclosed space. -- in an enclosed space. these are things you can get used to if you have discipline. i spent all those years in surveillance inside of a prison inside of a prison and there is a third prison inside of that. level is where you are a prisoner like everyone else. the second level is when there

is a camera trained on your bed, your table. the third level of security, to when youan example, is have other prisoners reporting back the authority on your every move. president putin was personally interested in how you are treated. >> of course. >> what you want for christmas? >> i really hope i will get the present i am waiting for. my wife. >> home for christmas. othering to free political prisoners and spoke to us from berlin. he says that he has a year-long german visa.

u.k. preparee their holiday meals. and him youjoins us have an analytical breakdown on how they cracked the u.k. market. andhey have a story to tell you know when visitors come to london, a lot of them have the store that is supposed to have the best of the british and it. in it. pie will set them back d and will not be london. mince pie in aldi hast the top --

the top mince pie. this is not an accident and is a strategy that is being pushed by aldi and lidl. withare filling stores quality products. market 4 have lost share, compared to lidl and aldi, which are gaining. >> they are pursuing a strategy and are representing success in the united kingdom and now, maybe looking at the united states. >> they are in united states with 1300 stores. they announced that they will spend $3 billion to continue to expand their. stores are planning to open.

that will take them to nearly 2000 stores. new headquarters in california and the good news for the united states is, apart from jobs.w stores, is 10,000 -- watch outr kroger!. our radar.what on president obama signed up for health insurance. rushed toof people the government site and the government pushed back the deadline until midnight tonight. >> strong winds and flooding are disrupting holiday travel and they have a major power outage in the terminal, which is causing cancellations and delays at heathrow.

killedthrough july been from the severe weather. jack dorsey was nominated to the board of directors and will face confirmation in march. disney's ceo says that they hope to reach new people through technology. hugs we are heading to the break a the backstreet boys suited manager for cheating them out of millions. back with a new management system and we will have details.

>> welcome back. you are watching the pulse. normally, we talk about the euro-dollar. the yen and we are not going to talk about that. we're going to talk about the best and worst performing currencies around the world this year. -- the other end of the spectrum might be less of a surprise. depreciation is significant in the currency is

down 50% this year. that is going to have geopolitical implications in the representation of the problems that the country is experiencing and the success that may be, the -- that, are having maybe, the sanctions are having. a trade that many people got wrong this year. conversationn the about what will drive the currency markets next year and a few other things. >> for christmas, i would like a somalian schilling. >> i have one from a long time ago. >> joining us for the next half an hour is the global strategist, kit juckes. he has just published his global outlook on who will win the world cup. kit, who will win the world cup?

>> the germans. all i know is who won the world cup. i'm trying to look backwards from next christmas. that tells you how i feel about 2014. my money is on the germans. .> we are reviewing 2014 we are not previewing it. we are reviewing it. will it be dull? >> the starting point for financial markets is that the fed will not raise interest rates and the ecb will not raise interest rates. the bank of japan will not raise interest rates and some things will not change. gdpgap between nominal growth may have widened 4.5% by this time next year and we will still be pushing a lot of money into financial assets and will be trying to work out of that.

we will not talk about tapering. we will talk about macro prudential policies and whether or not they work. >> ogaden. 2014 sounds like a real hoot already. you talk about the banks not raising rates. some will carry on. >> some 10 and that makes them interesting. canecb will do what they and we will talk about negative deposit rates a long time before we get them. qe?he we -- debateecb has to have a with the germans on whether or not it is legal and the debate has to happen. higherth of slightly inflation in europe does not mean that the threat of deflation has gone away. >> will this happen before the

world cup? >> the world cup is not until next summer. in some countries, we saw italian confidence numbers up yesterday morning and it looks like they are heading down the slope in the wrong way. >> i'm trying to think about how you head down a ski slope in the right way. >> italy is going the other way. >> you would like them to be going somewhere gentle. you are not helping. i think that the real thing that changes in europe, in a sense, is what happens if we start seeing consumer price inflation getting closer to zero again. we had a month where it looked like things were better or higher. changed, the language and you had a sterner debate

when things got tougher. i don't have things improving much in europe. >> i'm surprised about mentioned france. . -- i'm surprised that you have not mentioned france. not tiedan policy is to fiscal policy. the country is suffering from a serious competitiveness problem and we can see that. problem andhe germany has a solution, to some degree, in terms of finding policy. buyingh the pace of bond has slowed through next year, they will not let your author look by two percent -- let ook.pe off of the h

>> thinking six months in advance, we will see rates go up in the u.k. and united states. when does the markets are pricing this and? in?on >> 2015. you see that macro debate and mark carney not raising interest rates because the economy is doing better. at what point do we not believe him? that debate could happen in united states. the fed is working overtime and has won the battle of making us understand the tapering is not tightening. >> tapering is not tightening. we all have that now. >> and six months time, we can talk about tightening.

see afour months, if we fed that is dovish, how will the markets interpret that? >> this is more dangerous for currency markets. we will break the bond market out of its range. 2 over the summer, that is the big adjustment for tapering. we will moving to the range during the first half of the year. m, what could, u be a good start in the year for emerging market currencies is going to have a danger of a shakeout and that is the dangerous moment. t, when the fed

becomes behind the curve. think that the catalyst for the markets to look at the world differently are another step up. -- whene that step up, we have that step up, we survived and it will be difficult next year when the bond market exerts pressure on the advertisers. kit, thank you so much for now. stay with us. bitcoin bygoing -- chris christie -- by a christmas tree. by 50ved in style butlers.

customer blankets. >> we should point out that boxing day is after christmas in the united kingdom. day?y's it called boxing >> we will see you in a moment. ♪

>> welcome back. bloomberg.com.

in the countdown to christmas, matt miller has been examined --ing what he can buy with matt miller has been examining what he can buy with bitcoin. >> you take bitcoin. >> last year, no one had heard of it. intocepted because i got it in 2010 and have been an enthusiast ever cents. -- since. big, as a a showpiece. inches2 feet and a few -- it is 12 feet and a few inches. i have decided on the 12- footer. to may be a pain in the --

transport. to transport. it says received. 0.08 btc. said.e is what kit should we take this seriously? >> for now. i am not a convert. alternative currencies have come and gone for a long time. currency you became a that has sustainability when you can pay taxes in it. that is what allows government to be in charge of money. they tell us how they can pay. hatevered around with w

we want and we stashed loot that we can pay taxes with in our old age. >> will talk about taking your business on a 1:24 pitch.

>> welcome back to "the pulse." i'm francine lacqua. >> and i'm guy johnson. now, we need to talk about the top headlines. >> u.s. president obama has extended the deadline to sign up for health insurance under his affordable care act. has been leggram problems, but recently many issues have been resolved. when thousands rushed to the site yesterday, the government pushed the deadline to midnight tonight.

>> the time companies are pay a so-called google tax. some lawyers say it will face legal challenges. popular assault rifles inventor has died. more than 100 million of the weapons have been sold spreading conflict to more than a hundred countries worldwide. >> let's talk about the financial markets. our european business correspondent caroline hyde has more. >> two hours left of trading in the united kingdom. tradingngle industry up. mine, the only industry group to

a fallen this year, about 16%. every other industry group higher, led by the financial services. a quick look at how those indices are doing. the ftse 100 is on the rise. london is definitely feeling optimistic ahead of the early close. diving into a couple of the stocks that are rising in the there is talk in "the daily mail yuriko vodafone has a lot of cash to be spending in 2014. could they be doing a bit of m &a? dcp at the highest in two years. >> you think you have a million dollar idea?

hotel has created the elevator pitch. if you can convince a team of investors to back your idea before the elevator hits the ground floor, your life could change forever. -- oureast editor mideast editor give it a go. >> this is the 49th floor. this is the elevator, this is the elevator pitch. neighbors caught me. >> my start up uses mobile phones to detect cancer. of consumers do not buy shoes online. >> it takes about one minute 24 seconds to rocket to the top and back. that's along the startups have to persuade the judges that they deserve the hundred thousand dollar prize.

>> hygienic. highfill up. i've got this great idea that i've been dying to tell someone. you know how everyone loves books, right? >> some pitches were more polished than others. the point is, people are using e-books now. how do show everyone what you have read? i have this great idea. is a hologram that beams all of your book collection were your bookshelves would be. that way everyone can see the books you're reading. the seven finalists had a further 10 minutes to flesh out their ideas. ranging from a shoe scanner to a canine health monitor. [applause] the paycheck went to mobile a ct. >> we have technology that enables a mobile phone to detect cancer optically through the

device. it can be used anywhere. doesn't matter the conditions where every mobile phone could be used. >> is back to the drawing board. >> elliott joins us now for more. your idea is pretty good. obviously not quite up to muster, but tell us about the ones that did. counted among the more wacky ideas. one that stuck with me was this young lady you saw briefly in elevator. their ideas you can grow vegetables and fish organically in a box in your own home. are various ways of analyzing the water and whatever else that would tell you when the fish is hungry or the plan needed water. it all sounded pretty promising , you until she said to me

are going to have to kill the fish. you, guy, i'mt happy to eat the fish, but i don't necessarily want to eat what i kill or even kill what i eat. personally that put me off. there were some amazing ideas. 100 startups in total whizzing up and down the elevator for several hours. by the end of it i think i needed to go into it decompression chamber because my head was popping so much from that lift. this is the second country in the world to do it. you can't argue with the company that is found a way to detect cancer, can you guys? >> i think the health one should take the stairs. seems appropriate, doesn't it? you have 24 seconds to make a pitch for 2014.

>> i think we need to be wary of places i can cut significant rates significantly still and where they are vulnerable in particular. i'm still selling the australian dollar and the japanese yen. i am very happy to own the pound. first major central bank and the g5 to raise interest. >> the nordics. whether not we can ask to see some of those raising, elevating rates of the earlier? have been weaker. at some point is going to turn around. i'm tempted to catch it. sweden looks different. the mosts ceased being expensive place in the world. they still have room to cut rates. norway is the choice out of them. it has been unloved all year in a very big way and at some point is going to sell. >> your take on china is a

little cautious. >> the chinese are trying to slow the economy down. they're trying to manage it day by day in the last 10 days with credit conditions getting tight and put liquidity in this morning overnight rate is going to help us through the new year. they are trying to slow credit growth, avoid property bubble from bursting and slow their economy down and shifted towards consumption. this is a monumental task in terms of what they're trying to achieve. they will come out of this with growth slower than seven percent in due course, weaker overall growth. growth that is shifting away dashbeing such a massive of raw materials. if you're optimistic you will say they have slower growth and is not going to end badly and if you're super pessimistic, armageddon is around the corner. >> on that note, hopefully your summer in the middle.

at societeeneral generale. the story on artist profits next. ♪

>> welcome back to "the pulse."

live on bloomberg tv and of course the internet. scarlet fu joins us from new york with a preview on christmas eve. scarlet, what are looking at? >> we have david kurt patrick of the economy joining us. he is going to give us a big scene for the world of global technology. how automation has benefited the economy but not necessarily the job market here it is going to be an interesting, lively discussion. it is christmas eve, so it is the last day for anybody to get their shopping done. we have seen signs of 70-80% off. you wonder if they're going to go 80-90% off to get those stragglers into stores to buy something before christmas day comes upon us. francine? >> thank you so much, scarlet. in 15 minutes from now, "surveillance" but scarlet fu. now the back street boys are

back not only with new music but with the new management style as well. how have they actually change the way that they're making music? >> we're looking at the 1990s when it comes to back should boys. back then they were flying up the charts but they were pretty earned by their manager at the time. who ended up suing him cheated them out of millions of dollars. they're coming back, a little bit older, middle-aged men. but they're coming back a little bit wiser. they are now using label services companies. they're more like consultants. that therefore gives you more bang for your buck. , with sign with alexa bmg , you'reabel services getting 70% of your overall profits. back in the day you're only

seeing 15-20% and they really are shaking things up. formula is, teams more useful for the more established brands than the ones i want to break through. >> you are exactly right. you need a bit of cash in your bank. the likes of peter gabriel has been doing this, prince, pet shop boys. more older, established bands who have the money to pay for the recording costs up front. >> interesting is that they're forcing these other come needs to be more transparent. they're forcing the likes of universal music, warner music, sony to start offering not only their own label services operations but just letting their artists know exactly what cost are paying, what marketing fees you're charging and with everything going more viral, more social media heavy nowadays, many of these acts can actually get the marketing they need on their own.

>> caroline, beyonce has been another big act to shake up the music industry. she is not pleasing all retailers. a she really has been disruptor in the music industry as has her husband jay-z. he sold magna carta exclusively to samsung earlier, getting about five million dollars for the privilege and then it was let out to wider usage. she has done the same, selling her album exclusively to itunes. 430,000 albums sold on the first day. you had to buy the whole album. you couldn't just buy songs. she shook things up in that way, but really how she has rattled the retailers is that they feel they should've got the cd at the same time as itunes. most annoyed is target. that is the second biggest u.s. discount change after the likes of walmart. they are saying, no, we don't want your cd at all. in fact we are refusing to sell it. they wanted at the same time. amazon also only selling her out

bum in mp3 form. if you're the cd coming up to go to a third-party sales. they're just not promoting it very walmart is promoting it. she is therefore getting a bit of a christmas thank you by dropping into their massachusetts branch and offered of allfor the first $50 750 shoppers in the store. >> she is a marketing machine. thank you, caroline hyde. >> let's talk about the story a little bit more. he works with music artists such as george michael, foreigner and mel c. >> i think the music industry is moving towards label services style of business. war acts are able to control their own careers. a company or companies

to look after the management of those careers for them. something that can be >>e every step of the way? you need a support system. the traditional model of the record company had that support within the company itself. >> the new model is cheaper, involved in you're a major deal, there are several acts with a group looking after all of them. offoney used to be made selling singles and albums. now it is off performing live. your rights from radio and tv. licensing income. synchronizing income from films and tv usage in advert usage. these are all creating the income stream that supports acts.

>> you been in the industry for decades. >> a couple of years, thank you. [applause] [laughter] >> what is the most unexpected thing. ? what is one thing that has taken your back. change. a speed of the constant change you have to be aware of all the time. five years ago itunes wasn't the main player. it is a huge player now. now spotify and youtube are coming to market. businessst moved the in a different direction. >> established artist used to support start artists because they were on the same label and the label could invest in new bands. affected the way that fans progress, their lifecycle? >> band lifecycles are quite different these days. there are no new bands and upcoming bands finding funding to go solo without having to go

to a major deal. i think one of the problems is the speed of change means that bands don't have long lives or fewer bands have long lives. bands tended come and go quickly which is always a worry. >> are there that are still able to break through? >> if you don't have the support of the big group, is it more for acts that are more unusual to get recognized? hadn the old days you counted on the record company to promote your act. without this companies involved and you niche releases don't have to have huge success to be successful.

>> are record labels paying the price for treating acts unfairly in the past? >> yes. how far through the process are we? as a balance of power shifts come how much further does it have to go? >> it is deftly shifting and there are lots of companies like mine in the marketplace and more coming to market all the time who are looking after helping those bands get to market and control their own copyrights and have control over their own careers. one of the major issues is that lots of those bands that they're being controlled by record companies. by doing it themselves they control their own careers. the pace of the release, how they want to go to market. the control is as important as a financial issue. >> is important that you have someone business minded in the band? an extent you do. but businesses like mine and it helped those artists do that and give them a situation where they can plug into all our services. our crucial.ns are

>> i love christmas songs, dear? >> when you look at what's going to change in this industry, i'm not going to use the dword, disruption, but it has been an industry that has had more disruption than many other within the media sector. what lessons over the last five years are we going to take forward? as ours,ries such journalism, changing significantly at the moment, what can we learn from what you have been through? >> you have to learn we have to and those closer to protecttivity, our copyright. there are issues about keeping artist copyright protected because it is a wild west out there in terms of being able to access music online. you have to make sure they get

paid properly for it. that is what we have to look after going forward. >> is it a good thing or a bad thing for a group to release a christmas song? perceived as naff? >> if you make a christmas record a christmas album that it has a life for years to come. >> what an and unity. >> henry, thank you so much. nce, the director of absolute marketing. >> we would tell you what else we are watching for the rest of this half trading day next. ♪

>> welcome back to "the pulse." where streaming on your tablet and of course on bloomberg.com. earlier on i was bringing you some more of the exotic winners and losers from the foreign exchange world. to me talk about some the asian ones this time around. the somalianwas schilling which is one of the best performers. the chinese have had one of the best years in asia. the indian rupee, the worst of

all of them down by 20%. the biggest impact in asia in terms of foreign exchange, news has been what has been happening with the japanese yen. 16-17%. >> caroline hyde is back. a play on word on backstreet boys. i'm waiting for a bit of a song. sing and dance, like the backstreet boys. we watching except for guy dancing. >> we're looking forward to a short day. is a closed day if you're in germany or switzerland. everyone home by lunchtime. if you can actually make it. i know my train is only starting to work. scaring me to start talking about trains. quite, is the understatement

of the year. everyone have a great holiday. next to meances up was he in the new year. -- surveillance is up next. we will see you in the new year. ♪

>> the white house extends the early enrollment for obamacare by one day.

east -- to 70% off become 80% off on the final shopping day? good morning, this is "bloomberg surveillance" live from our headquarters in new york. happy christmas eve third i'm scarlet fu. joining me here in new york, michael mckee and stephanie ruhle. tom keene is offer the week. -- is off for the week. it is hard. >> embrace it. >> now i'm going to take you to the morning brief. china's benchmark money market rate fell the most since february of 2011.