pretty cheerful here in the u k. >> he is watching how cheerful we really are. >> there are plenty of reasons to be cheerful. on.e are things to zoom in a lack of financing. upy are looking to put prices. with wages flat, can the consumer afford another price with thewe will speak chief of goldman sachs. stocks get a lot of their revenue from samsung. samsung numbers are not much of a bright spot. we saw profit falling. white off of their market cap -- wiped off their

market cap just over christmas. all of these companies combined. >> we are focused on chipmakers and also blackberry. >> i had an exclusive interview with the ceo. he said to bring back the physical keyboard. it is going to be on most of the phones. at the 43 analysts we surveyed, only three thought you should buy it. >> i am old school. if we are going to type, i need a keyboard. >> you also need the apps. >> you need a combo. as a menace, what are we watching? we arean unemployment, waiting for those numbers. it is definitely a progress day. that is for sure. we will see if that momentum continues.

the yen is falling. european inflation data will come out a little quicker. the inflation data is in some sense what is going to drive the risk momentum in the market. you have got macquarrie. they say the yen will drop by five percent. they will continue to reassess the position and add further stimulus. that is the currency market. sometimes it is a precursor to in risk appetite that comes the equities market. it is leaking out a small gain. we wait for pan-european inflation numbers. we expect inflation to continue to drop. up the agenda for rhetoric on thursday from the

european central bank. we are optimistic. weestic sales are levels haven't seen since 2004. the reason i use the word domestic is he does that is critically important to what has been going on in this country. at 1997.orders are let's give you a quick reflection of some of the companies on the move this tuesday morning. selling some of the supermarket chains. they have a deal where they can sell a little bit more. ubs has raised the stock to a buy from neutral. low cost of production. price target 96 euros. these guys had a blinding day yesterday. they put 200 million in.

more speculation. i am surprised it is not higher. they may look at that stock. we have covered almost everything, but i want to go back to macquarrie. the most accurate forecaster of foreign exchange for the past four quarters. it is absolutely based on data. there is a lot of calls for the emerging markets to go lower. this is going to drop more than eight percent. market agrees. 80 on the way. back to you. on theks for the latest markets.

our next guest expect more volatility for 2014, but it could still be a good year for equities. joining us is chris. great to have you on the program. talk to me about 2014. from an equity perspective? >> from industries or something you think will be a real bargain this year? generally we have seen towards the end of last year with cyclical stocks starting to outperform. it has just been upgraded. that has been a quiet stop for a couple years. we like technology. anythingndustrials and slightly cyclical. >> how do you actually do

technology. 2013 was the year of technology. part of the technology stocks are actually very softly. >> we are emphasizing the technology stocks that tend to and have persistency in earnings. the semi conductor sector is probably an area that has been downgraded by a couple of analysts recently on the fact it has gone too far. we were deemphasizing and emphasizing the software side. now google remains one of the biggest money owners. it's companies are always earning decent profits. expect the growth to pick

up in 2014 and 2015. >> any money to be made in retailers? >> it is not an area we emphasize. the u.k. market is a big cash flow. it is a big market for a lot of strategists. it is a cheap market. some of those come from retailers. some of them could be interesting from a free cash flow point of view. >> thank you. next we will talk about the u.s.. we will talk about tapering. here is a look at what else is coming up. the smartphone wars heat up as .mazon faces challenges and it is back to basics for blackberry.

plus goldman's chief economist joins us for the key questions facing the economy this year. keep it right here.

>> i am francine lacqua." hold?ill 2014

the vice-chairman looks into his crystal ball with a list of surprises for 2014. manus cranny is here to move us through the highlights. he gives surprises and probabilities. we are going to have the best and worst times. the worst will come first -- and of dio politics geopolitics. the s&p is going to correct, but don't worry. is going to go right up, 20% higher. it comes to the currencies, dollar is going to strengthen. have growthg to above three percent.

dollar, one dollar 25. he is the only leader who understands dick cheney. deficits don't matter. the new day will spike. -- the nikkei will spike. top three.he >> what else is on the list? luster of lack the

gold that was the o -- it hasn't happened in 1970. was --hest occurrence is

muslim to two percent. corrections less than 20%. it happened four times since 1970. quirks does that mean a bigger correction monsieur? we had this cheap liquidity of their. there. quirks you could say that this time is different. the range of outcomes for next year, what happened in previous years. haveng at mortgage but been up 25%. in the following year, outcomes have been worried. -- wide. there is no signs to see there's any degree of it about what could happen. that is excluding the bubble years of technology. the liquidity is still there.

markets do not look particularly expensive. appealingstill very compared to other us at cost. -- compared to other costs. up eight percent-10% next year. us fed has repeatedly told tapering is not tightening. when we will get tightening, that was when there were possibly be a huge correction the markets. am i right? economists can change their mind quickly. that is the biggest three walter this year. the streets is for the fed in december. 2015 is when we start to see retries. if we hit six percent

unemployment in the u.s. and the federal flood out, the rate of unemployment, the on employment comes down faster than we expect , then we can see reads going up earlier. quirks when do you expect him to grow up? quirks and the consensus is 2015. quirks and worries you the most? process -- are you concerned about france? me some of they france.coming from

if you have a hiccup in e himit willrkets start to miss a beat. ift hat stays solid i think you takeee rebalancing will some time. concerned about china? can they keep this under control? >> the bitcoin is an example. the flows are strong as it is.

to the economy him. relates to rebalance the dollar and stirling. it could be good for chinese companies. performll better. you get more higher returns from the investment. there is so much capital chasing those returns. i am quite possible about chinese equities. i am worried they may suffer.

>> you seem optimistic. what is the one thing? is it going to be the fight between central banks and the us and uk having to make the difference? what is going to be the main theme in 6 months. correction. olympic games, you concerns about terrorism. from a structural point of view, the export strength in germany is one to watch out for

and china in terms of how ke en they are to push those reforms. feels theup samsung heat. we dig into the latest numbers next.

>> welcome back to on the move.

one of the biggest gainers. the large containership company plans to sell its business. easyjet is picking up speed against ryanair. irish carrier ryanair added 1.8 million customers. walmart didn't properly inspect products in china. week it willlast compensate affected customers. samsung reported a profit drop thanks to a stronger korean want. us for more. joins it is the first profit drop in

nine corridors. down.is the slowest pace of growth we have seen in two years as well. there is competition coming from the top and bottom. you have got apple, iphone. they sold 9 million iphones. sold galaxy. the top and is being saturated to a certain extent. you have the cheaper and also. lenovo also offering smartphones at cheap prices of less than $100. you have to eat away at those. the biggest area of revenue is

about six percent of revenue. they have tv units. that is going to slow down. the only area of growth is shipped. vestors were expecting this. >> absolutely. we look at the share prices. we were all feasting on turkey and christmas festivities it dropped almost 60%. that is the entire soitalization all combined, it is a juggernaut of the company. investors have been worried about her office. incentivizeing to employees. profits.hat ate into

>> we are in trouble, but we are innovating. what is samsung saying? >> the chairman is saying innovate, innovate. south korea's richest man controls samsung. he says we have got to change again. .e need to lead they are showing us this. the consumer electronics show on in las vegas. also they are pushing into new smartphones. necessity of being able to view, that isays another innovation. ofthey are innovating.

ing to and innovate more.

welcome back to "on the move." i'm francine lacqua at bloomberg's european headquarters in london. that seek out things are shaping up. this is what the day is bringing you. we opened a little bit unchanged. now we are on the lower side. down 0.1%.0 is the dax is pretty much flat. we are expecting data in 25 minutes from now that will show shown, or we think it will

german unemployment fell for the first time in five months. of coarse we have some eu inflation data at the top of the hour. impact a picture of the this will have on the euro- dollar, currently at 1.3620. janet yellen is the first woman by the u.s.med senate to be the head of the fair. of the fed. head china's cabinet is said to have imposed new rules on the multitrillion dollar shadow banking industry. willank regulator says it -- as many as five different lenders.

the deep freeze in the u.s. has set records in the midwest. below in chicago reached a record of -27 degrees celsius. jetblue airways suspended its operations overnight, contributing to the cancellation of nearly 4000 flights in the u.s.. latest quarterly survey in britain was released. we head over to jonathan ferro for details. >> there's plenty of good news in it for the manufacturing sector, for the service sector as well. when you look at employment levels, they're back to precrisis levels. 0.9%.oints to growth of he won a strong recovery, you want the confidence that business will pick up. businesses can hire and invest

her to the survey suggests that that confidence is there right now. john, i was not all good news. some are still struggling to get financing. .> the perennial problem if you want to translate that into business activity, these businesses need the finance. this is an ongoing concern, particularly on the cash flow side. you can have a profitable business, poor cash flow and you're going to struggle. generalgworth, director says he is seeing companies turning down orders because of a lack of financing. this story is in the heart eta. business lending did indeed continue to slump. let me leave you with another concern going forward very surveynately, the indicates many companies in this country are on the brink of putting up prices, either to offset higher raw material costs or to offset higher overheads. not good news for consumers,

remainly not while wages flat. food for thought for the treasury and indeed the bank of england. to the chiefme economist at goldman sachs. kevin, congratulations on your award.served 2013 ended remarkably strongly. it is unrealistic to assume it will be white a strong through 2014. there will be two positives. there has been a slow ongoing recuperation of the banking system credit provision that is -- the we have been very highlight has been important in 2013. i think the ongoing recuperation

will continue to support growth. i also think there is likely to be stronger demand in the main sector, a moderate improvement. against that, the reason why growth will moderate this year is the sharp rise in sterling exchange rate. up six percent from the average of the first half of 2013. that is enough to knock around one percent off the level of gdp over a. of two years. we think the recovery will continue, but at a slightly more moderate pace through 2014. about are confident productivity growth. the main problem for the bank of england is rising sterling? >> for now, i wouldn't be meetingd in the january when the minutes are released if

we don't see a warning from the bank of england about the strength of sterling. that will be a concern for them. the u.k. is the fastest-growing world ateconomy in the the moment, so it is not surprising that sterling has risen, but nevertheless it is something that the bank of england will be wary of, choking off the recovery going forward. we think they will continue to be dovish, reflecting the strength of growth. we do think unemployment is likely to continue to fall and hit the seven percent threshold around the middle of 2014. that is a lot earlier than we and the bank of england previously had it. we don't expect the bank of england to begin tightening policy on till the middle of 2015. a long way after that. reflecting the fact at although growth is that are then is limited in our view. >> or they will have to change it based on the threshold? >> it is unclear. we would not want to rule it out, but within the mpc there

will be a lot of members of the mpc who will be reluctant to go down that hath. i certainly don't expect that for january. there is some speculation that they made do so already. is a possibility for the february inflation report. they change the threshold or not, the more if itant aspect is -- rising interest rates is imminent. >> is been a big focus of years, the recovery will be led by a stronger banking system. the bcc chairman said he is concerned they're still not getting enough lending, that small companies and medium enterprises are not getting enough funding area this is something i know that is very close to what you look at heard is that true? is difficult to exaggerate is.bad the situation

how desperately needed they were to improve the credit provision in the u.k. economy. we know that the improvement was much quicker on the mortgage side than on the business and small business site in particular. i do think there is some recovery taking place there as well. it is coming from a very low base. it doesn't surprise me that companies are still complaining of a lack of finance. i do think the situation is improving. >> talk to me about the --ductivity present productivity puzzle. 2014 be a turning point for that? >> we think so. both for cyclical reasons and there is evidence that productivity was picking up at the end of 2013 into this year. in addition to providing a

short-term boost to growth, we think it is also important in resolving the uk's medium-term problems. to allocate resources to the firms and sectors that need it most, you saw it in the previous report heard companies who do have productive potential so they can get the finance to materialize on the production, that will help resolve the uk's productivity problem as well. it is a big area of an uncertainty. >> overall, you are optimistic about 2014, apart from sterling. at what level do sterling become too dangerous? >> we are optimistic. we do see some moderation in growth. for 2014 as a whole we have three percent growth versus a consensus 2.5%. we're above consensus on growth, below consensus on inflation. the targetation in

of two percent by the end of the year versus current consensus of 2.5% on average. we are optimistic on how well the economy can grow without creating inflation. trajectory of sterling that will worry the bank of england more than the level per se. is still relatively low, but the speed of the appreciation will hurt growth going forward. willnk the january minutes get some warnings from the bank of england who are concerned at the levels in the speed of appreciation of sterling. >> kevin, thank you so much for your time. kevin daly, chief economist at goldman sachs. u.s. treasury secretary jack lew arrives in paris today. everything from minimum wage to trade partnerships. more on that next.

♪

>> first. bloomberg. >> i'm francine lacqua in london. streamingn the move." live on bloomberg.com, your tablet and your phone.

the u.s. treasury secretary is the french meet with finance minister. of his trip leg which includes stops in berlin and lisbon. our correspondent hans nichols joined us in berlin. hans, first stop harris. stop paris. ecm adopting a rather defensive position. he says the friends -- the french effort to spur -- when he lands in germany tomorrow, that is two months after he and the treasury department issued that report on currency manipulation that was harshly critical of germany. the message to germany is the same since 2009. spend more third is simply need

to do something to boost aggregate demand. lou certainly wants an update from his german counterpart chaueble. >> where will be implement it, how will be implemented and what that will do to boost growth. goes to portugal. it is one giant slap on the back, a congratulations for implementing their reform packages. >> basically, the treasury secretary comes to europe and through what he says you can -- >> it iser it right. lou will be asked about janet yellen. she has been confirmed. the vote was 56-26.

yes, she is the 15th president of the fed. she comes to that position showing the discord on capitol hill and in the senate heard it is not a good sign if you are concerned about what happens with the debt ceiling vote later in february, which is a couple weeks away from when the debt ceiling will be triggered. there doesn't seem to be a whole lot of consensus in the united states senate. he saw a fair number of republicans, crucial republicans, voting against her. maybe they're making a point, maybe there is a prelude to what is going to come in this debt ceiling fight. and you look at what jack lew has to explain about u.s. negotiations, he considered have a budget, but they don't have a resolution to the debt ceiling, earning long-term deficit reduction plans. >> hans, thank you. we will do plenty more on that story throughout the morning. is coming up 15 minutes from now. we'll be talking about new energy and tech and of course

about jack lew. energy slot today has a fashion focus. that will be interesting for the tech story. we have got that covered. as you say, jack lew is going to be a big story over here. the fascinating thing about france is they are so upset about the rest of the world giving them a hard time. did you see this "newsweek close quote article is in the french and the way that the social security network operates. apparently you can get three nappies and all these things. whatll get a sense about the real story is of the french economy. the pmi numbers to not paint a pretty picture. a bit ofeconomics and fashion, what more could you want? back to you. >> it is all right here on "the pulse." in the meantime here are

some companies on the move. microsoft said it sold more than in 2013. xbox one the companies were neck and neck in early december. sony's executive is expected to push his message at electronics show today. his vision is being challenged by it $118 million quarterly loss. they have been pushing the company to spin off the unit. ramping up its presence at the consumer electronic show despite exiting many of its consumer businesses. john chambers will deliver a keynote today. cisco is making several announcements including a deal with samsung to offer web conferencing on its galaxy device. blackberries bill young keyboards, according to ceo john chen who spoke to bloomberg at the annual electronic show in

las vegas. the move is part of blackberries turnaround strategy as the touchscreen phone fails to gain traction last year. ryan chilcote joins us with the very latest. i am addicted to blackberry, right? >> we are both blackberry users. >> i love my blackberry. i go beyond the user. it is because it has a little key boat -- a little keyboard. >> every new model seems to be a little worse than the model before it. i don't understand how a company can do that. i'm a blackberry fan because of that keyboard. the phone, it is the keyboard come even the transition with the hybrids we have the keyboard and the touchscreen haven't worked for me because i don't know where to press. the touchscreen is going off in my pocket, i'm calling people i didn't want to. that is awkward third >> i haven't changed in five years. >> but the company wants you to buy the new products. i think blackberry has

understood that the keyboard is a draw. we're not the only people that think that very they're going back to their roots. have a listen. personally love the keyboards and so you will look to blackberry going forward to keyboards. i wouldn't use the word exclusively, but predominantly. he lovesn the ceo says a part of a product, you can be sure it is going to be part of the product change going forward. the issue is, some people have migrated to the touchscreen come even some of us hard-core fans of the physical keyboard. now there are other options as well. one example of how serious blackberry is taking this whole issue of sticking with or going back to the keyboard is they are suing a company called typo products which is created a snap on keyboard for the iphone 5 and five as. and 5s. is going to cost $99

and you snap it onto your iphone and it covers the home button on your iphone but you can use a button on the snap on keyboard, for us, even better perhaps. it speaks at your iphone through bluetooth. basically, you get the beauty of you get yournd blackberry in one. you have all of those apps that your iphone has. you have got rid software-based, plus you can do your physical thing with the keyboard on it. -- >> theing to be best of both worlds. >> there are some minuses. we reviewed the product. you have to charge them both separately. your iphone and his keyboard. the guy that reviewed it actually had a gold iphone and he complained that he could show off his playing. the keyboard was covering up some of the goals.

it is a conversation starter because your phone gets bigger and your hard-core iphone fan -- but the phone would be a conversation starter anyway. >> the people get passionate about their phones. users would say oh, that is really perverting the iphone by adding that keyboard to it. your black right people are like wow -- >> fascinating story. it is not the only story at the ces. there was an awkward moment when michael bay was on stage. >> everybody has a bloopers on tv. i have had more than most, but this is really awkward. have a listen. >> viewer escape. when i try to do as a director, [sighs] the type is all off, sorry. i would just wing this. i will just wing it right now.

i take people on an emotional and -- >> the curve? heidi think is going to impact our users it's. it's -- how users experience your movies? >> i'm sorry. i'm sorry. a popular bay is not guy when it comes to the media and a lot of people criticize him or just a reputation as being arrogant. relish see why we should in his demise there on stage. there's nothing nice about a meltdown. >> we always use prompters and we are used to dealing with them. if you think you have a proctor and you don't. that would fluster anyone. >> maybe he had a little panic attack. >> ryan, thank you so much. ♪ y with "on the move."

to fall forcting it the first time in five months, we were expecting it to fall by 1000. unemployment figures fell from 15,000 when we were expecting it just to fall by 1000. this is a picture for the

indices overall. area theaining 0.2% ftse in the cap basically staying unchanged. guy johnson i are back with "the pulse." coming up next ♪

>> jack lew checks in. u.s. treasury secretary wants more growth and more restructuring from europe. >> back in the u.s. is the coldest day in decades. millions of americans will wake up to record low temperatures and even more travel chaos. >> the world's largest smartphone may post its first drop in sales since 2011. >> good morning, everybody. you are watching "the pulse."