>> a bloomberg exclusive. the chief executive of ubs says he won't spin off its investment bank. bankthink the investment is very strategic for us. francois hollande has his hands full but with a french president's private life get in the way of economic reform? >> airbus is set to announce record orders today. we will be live at its press conference. welcome. you're watching "the pulse" live

from bloomberg european headquarters in london. >> this is what we are talking about. and next close of look at the goldman sachs global strategy conference right here in london. manus cranny is standing by with a quick preview. manus. we got the european perspective, the japan view, next up, u.s. investing. in.d just popped it is all about share buyback, dividends. join me in just under 30 minutes for the goldman's view on the usa. >> thank you very much indeed, looking forward to that. the ubs chief executive sergio ermotti is denying reports that switzerland's biggest bank will spin off its investment banking business. he spoke to bloomberg an exclusive interview and shanghai. >> ryan chilcote joins us with all of the details. we had a report saying they are thinking about spinning it off. now, the ceo has poured cold

water all over this. >> let me give you the background. ever since sergio ermotti took the helm at ubs, he has been cutting back. is cutting 10,000 jobs, has closed many of the debt trading desks. banca came out with this report on thursday and said maybe they will get rid of investment banking altogether. we caught up with sergio ermotti and shanghai. he said that is not going to happen. >> there are no speculation. i think the investment bank is very strategic for us. we are making a lot of changes to our strategy. the strategy is working and is focused on supporting our clients and wealth management, corporate and institutional's. assets a very defined and capital that we want to put at work in the investment bank and the business model works. there is no necessity for us to make changes.

>> is a spin off one of the options you are considering? >> no. we are not considering that option. the man behind that is chris wheeler. i got off the phone with him and said, what do you think about this? he said sergio ermotti is playing politics. there are two ways to deal with a leverage ratio issue. tothe finance minister was get her way, it would have to go to six percent to 10%. it is now about three percent. one way is to curtail lending. the other ways to get rid of investment banking. sergio ermotti has said that he wants to keep investment banking available for their big high net worth clients for things like ipos. that is not going anywhere. what wheeler says is happening here, if you read between the lines, sergio ermotti was saying, forget the six percent to 10%. we just can't do it. >> let's stay in switzerland. the basel committee meeting over the weekend and they water down some of these rules.

>> this goes back to june when global regulators said that they may tighten the rules that banks use to calculate their leverage ratios. today we got an about-face. the regulators coming out saying, we are not going to. there was a thinking that that banks something like 30 basis points. now they won't have to do that. i can lend for. -- they can lend more. they are perhaps less safe but can make more money. that is why you see a lot of banking shares up. shareholders stand to do well. back to you. >> thank you very much indeed. m&a in general, u.k. energy consulting company on mac has agreed to buy swiss energy company foster wheeler. matt campbell joins us now with more. they are buying the u.s. company, right?

>> it is a company with u.s. roots that is based in switzerland for regulatory and tax reasons. effectively, yes. this is a comedy centered in the americas. this is a sign that the oil and gas services space is hot right now. there is a lot of demand for these services. it was plenty of oil and gas in the world. we are not running out. that oil and gas is in many cases more difficult to get at. it is an more inaccessible locations, has to be piped to market. it has to be refined and distributed. that is where these services companies come in. amec is trying to take advantage of that. >> what does this mean for the sector as a whole? i saw a guy who said, why would i want to own a oil company when i can buy a services company? these are the guys with most of the resources right now. when you look at shale, it is really dependent on some of these companies as well. this is the hottest space right now. more deals to come?

>> probably. as you say and a coursing proportion of the reserves are controlled by national oil companies. rosneft in russia being the biggest. they'd need expertise. they don't necessarily have the kind of expertise at a bp or chevron would have in-house. that creates demand. shale gas, shale oil requires a lot of site-specific installation. however, foster wheeler is a bit more focused on the downstream end of the market, less the upstream, more the refining, the pipeline. that tends to be somewhat less lucrative. that has a few analysts asking some questions about this deal. also looking at another offer last year. does it mean that it is completely stepping away? amec wasms like looking to get bigger.

can't was worth about 800 million pounds. this is a somewhat larger accusation. it does really make that question. are they finished with canned? probably. kent has gotten bigger on its own by making its own deals. it seems like a subject that is going to be off the agenda. >> matt, thank you so much. >> ok, let's move on. bmw has held onto the luxury car top spot for the ninth year in a audiven as german rivals and mercedes-benz step up their attempt to overtake it in the fast lane. hans nichols has more. >> guy, here is a fundamental question i don't understand about why these three exclusive luxury brands are vying to the top place. don't you want to be exclusive? why would you want to see more bmws on the road? em w wins the top spot this

year, increased sales by 7.5%. strong push from audi and mercedes. came in first place in the united states with around 300,000 cars but if i'm going to buy a luxury car, don't i want to be the only one on the road? i don't understand why there is so much bragging at stake in this race to the number one. guess because the more cards you sell the more money you make. there probably is a point in time where those two lines cross. the point is, they are not there yet. mercedes really needs to push on. >> and mercedes is making a big push. they are updating their class with a lot of tech. it will look like your iphone, your ipad. they are unveiling at the detroit auto show. this is their first revamp and about seven years. our cities has a starter car in the states and that is really increased sales. it is around 30,000 you --

$30,000. still, basically it looks the same outside. inside, a lot of bells and whistles. just a little more techie. all the car companies are going really techie inside. one day they will all be driverless and we can just chat in the back. you do anyway with your chauffeur. that is where we are headed. >> yeah, ryan chilcote stepping up for that job. thank you very much indeed. >> a chauffeur that can also do live interviews, great. here is what else is on our radar. and world leaders are paying tribute area sharon today. joe biden is among those who attended a memorial service at israel's parliament. sharon will be buried today at his desert ranch. he died from oregon failure -- organ failure. thai protesters have begun blocking major roads in bangkok adding to pressure on the prime

minister to resign. the demonstrations also looking to cut off access to a government complex. the government says it will deploy 20,000 police to open the blockade. >> the female stars of american at thepicked up awards annual golden globes. jennifer lawrence won for best supporting actress and 80 adams -- amy adams was awarded best actress in a comedy film. up, trying times for francois hollande. the french president holds a major press conference tomorrow to lay out his plans for economic reform. the question is, will his private life get in the way? ♪

." welcome back to "the pulse we are live on bloomberg tv and also streaming on bloomberg.com, your tablet, phone and any windows phone as well. >> president francois hollande has his hands full at the moment. it is a bit of an understatement. not only does he have his private life splashed all over the newspapers but he is due to hold a major press conference tomorrow outlining his plans to revive the french economy. business leaders want action. will hollande deliver? , theng us now to discuss chief eurozone market economist at bnp.

i guess what is happening with hollande's private life not what he needs right now. the challenge is significant. >> that is true. it is an unwelcome distraction. i would imagine it is a very difficult time. opinion polls suggest the approval rating for this president is at rock bottom, a record low. the pressure is on to tell the french public that things are going to change. i think from an economic perspective, it is difficult to see that change coming anytime soon. without something radical being on the agenda. either a much bigger a prevent an economic conditions across the euro area and globally or alternatively, is something more , a shakeupdriven with the labor market or some change to the level of taxation. i think the big question is, do

the french people want that? are they willing to accept the consequences of public expenditure to get the tax burden down? is not entirely sure. we will probably see incremental reforms. probably not something radical for the time being. >> why not? he has been anything but radical over the last year and a half. now that there is this very colorful image that we are getting from him, he has nothing to lose. can we not be surprised by francois hollande tomorrow? his private life right now is in shambles. if he doesn't want to explain that, do something radical on the economy and you get better. >> i hear where you're coming from. that argument makes some sense. if you are unpopular anyway, that increases the likelihood you will go for broke and embark on a radical change. that may be the way the

presentation is pitched. in practice, there is an adjustment issue here for the essence of what is required to liberalize and economy and make the changes necessary to improve competitiveness and participation in the labor market. across a number of countries, we see that these reforms are difficult to deliver. typically they are unpopular because first-round effects can be more negative. it increases the ability of just their just -- i headcount at increases uncertainty for the household sector. argue the opinion polls suggest, why not, but in practice we have learned that it is difficult for euro area governments to deal with these programs because there is a lot of resistance to them. that is really the uncertainty at the moment. how far is he willing to go? howe will find out tomorrow far he is prepared to go on cuts.

i turn our attention to germany? wolfgang charlotte out talking this morning, making it clear that he feels that germany needs to support the eurozone and make sure the eurozone survives. when you look at the economic platform that germany is putting forward at the moment, it seems that yes, we will continue to support the eurozone. yes, we will make sure that the ecb does it fit. a lot of this seems to be more words than action. we don't have a common backstop when it comes to the banking union. we don't have germany significantly expanding its domestic base. how do i tally these things up? >> i guess the political situation is that germany will continue to strike a balance. it will talk about the importance of keeping the euro area together and doing what is necessary to make the euro area function more successfully. at the same time, i think germany has a vision for how the euro area should go which is not

shared entirely across the rest of the euro area. there are differences of opinion about how economies should grow and so on. there is some potential tension there. while the german economy is inng relatively well, contrast to most of the rest of the euro area, it looks to be in pretty decent shape. i think the german position isn't going to change. there is a discussion about whether the new government may have a more pro-euro area stance than the previous one. slowly but surely, the integration project is moving forward. there are some problems with the specific detail with the resolution mechanism. in general, there is a process. that is moving on. i think that is probably the way we will continue to go. incremental change, not as fast as i would like.

thatems pretty unlikely the political dynamic is going to change in a radical way. orwhat is the probability the possibility of the eu having to do qe and what is the probability of germany backing that? >> let's differentiate between those two. the probability of having to do qe in my view, very probable. given that their mandate is to deliver inflation of around 2%, they will continue to fail. as they exhaust their conventional ammunition and there isn't much of that left, they will have to consider more radical options. -- at what at much mr. draghi is saying, he is giving a hint in that direction. it comes to germany's position, their position will stay the same. they opposed omt even with conditions attached. i would think they would oppose any move towards large-scale

asset purchases. as we learned from november's decision to cut the rebalancing right, you don't need unanimity to make a decision. you don't even necessarily need a strong consensus. a majority is enough. >> thank you so much. >> coming up, an exclusive look at the goldman sachs global strategy conference in london. we will be live with david kostin. both of those coming up here on "the pulse." "the pulse ♪

>> time for a look at pictures from around the world. it takes guts to dive off a famous cliff. but it may take even more guts to climb down. these cleaners spent hours scaling the 35 meter cliff, picking up rubbish dumped by terrorists. -- by tourists. >> now, and the state of maine, eight monster trucks redefined the notion of alpine sports. drivers behind the wheel of these trucks raced one another on the slopes of the sunday river ski resort. they crowned the fastest truck king of the mountain. >> christmas came late for six

astronauts aboard the international space station. a private supply chip from the u.s. carried christmas presents for the crew. in addition to 3000 pounds of equipment. to the billion dollar hot source industry. -- hot sauce industry. >> here is a look at what is hot in the world of hot sauce. ♪

>> you have to be a very brave person to try all of that. >> eye watering. how hot are the european markets? caroline hyde joins us. probably not the hottest thing in the market now. we are carrying on gains. is bad news good news? --. unemployment figures jobless payrolls came in the weakest since january 2011.

maybe the stimulus will be reined back slower than was anticipated as we hold onto gains in germany. spain, the periphery outperforming at the moment. that is a little dig into what is also moving, the dollar on the back of those disappointing figures in terms of payrolls. the dollar is currently slumping against the japanese yen. 103.45. this damage to the dollar is going to be limited. look for parity eventually with the euro. we will see the euro decline this year. we could see parity with the dollar. currently it is 1.36. we are seeing banks holding on significantly to their gains this morning, up 0.8%. ubs telling us that they will not be spinning off their investment banking unit. overall, very little heat in the market. >> thank you very much indeed,

caroline hyde. come,ll do,, -- still to fashion week moved to milan. he speak to executives about the industry next. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. i am francine lacqua. >> i am guy johnson. tope are the bloomberg headlines. >> iran agrees to curtail nuclear activities starting january 20 under a deal with world powers. in return iran will benefit from some sanctions relief and the start of the 6-12 month timetable to reach a permanent accord. >> protesters have begun blocking major roads in bangkok, adding pressure to prime minister yingluck shinawatra to resign.

the demonstrators have cut off access to a government complex. >> a bloomberg exclusive for you now. sergio ermotti says ubs won't spin off its investment bank. he says the current model is working. stephen engle spoke to him in shanghai. >> their airyou and. the investment bank -- there are no speculations. the investment bank is very strategic for us. the strategy is working and is focused on supporting our clients in wealth management. defined as sets and capital that we want to put that work in the investment bank and the business model works. or for there is no necessity for us to make changes. >> is a spinoff one of the options you are considering? >> no. we are not considering that option. >> what would be next for you?

are you happy with the pace of asset reductions right now or is something else in the pipeline? >> we are ahead about targets that we announced two years ago and a year ago we now announced an acceleration of that strategy. us tois no necessity for revise our targets. >> are there other potential assets? is there something else that would be a possibility at this time in the medium term in 2014? a veryink that we have well-defined business model. i don't think -- some of our coming off as expected. we are today the best capitalized bank among our peer groups. we have almost reached our targets. we want to have a 13% corrected ratio by the end of this year.

we are on track. >> are you on track for that? there was talk that perhaps the target is going to be pushed back another year and that would affect dividend payouts as well. >> know, we are on track and we will achieve our targets. was ubs chief executive sergio ermotti speaking to us in an exclusive interview. >> let's go to the start of nation, israeli startups a big feature of 2013. elliott gotkine's joins us now from tel aviv with more. well it doesn't get hotter than 850 degrees celsius. thatis the temperature they used to convert co2 into fuel. explain to me exactly, how do you take what many see as a liability and turn that into an asset, liquid fuel? >> the idea is to take co2 which is wasted from numerous

industries around the world, more than 30 billion tons per heat suchusing excess thesear energy, taking and turning them into useful fuel. >> sounds like a wonderful idea. does it actually work? >> it actually does work. we started two and a half years ago. reached ourek, we first stage milestone where we operate an apparatus that proves the technology at a rate of 200 times more than we started at about 30 times cheaper than we started. >> you're turning solar power into methanol, things like that? >> we produce a gas which is a mixture of hydrogen and ceo -- co from which people produce methanol, synthetic gas and

other products. >> what industries are you targeting? what is the next step for you? >> the next step is to produce a commercial scale product that will go to a pilot and the customer that we are approaching gas wells that have a lot of co2 emitted or the steel industry, gas industry and others. this can improve their efficiency. >> to get to that stage, you need money. how much are you looking to raise? you have been financed by an australian company. >> that is correct. we are looking for $10 million to take us to the next stage where we have tested commercial scale reactors that would be ready to be tested. >> alternately what you're doing here is trying to solve two problems. fuel is very expensive and

people want renewable fuels. people are concerned about co2 emissions because of its link to global warming. you are basing your technology can resolve both of these problems in one go. to make money in order to implement these kind of technologies. ,he benefit of this technology it is very high efficiency. the product can be very profitable. that is really incentive for customers to buy this product. >> you are the only ones doing this right now? >> in this way, probably yes. there are other people trying to do that but we think that our main advantage is the fact that we are presenting 40% efficiency from the heat down to the chemical energy in the gas. such alows us to be profitable product. >> and you are looking for $10 million. can you quantify the market? >> the market size is in the

range of billions of dollars. we are looking for $10 million but it is not the final stage. we will need more, still a ways to go. whenever you invest so much money, the technology has to be very stable and reliable. we still have a way to go to bring that to that stage. >> i hope you look him back to speak to us. tt, thanks for joining me. next we can, we will have the ceo of genealogy website my heritage. >> looking forward to that. thank you very much indeed. >> let's focus on fashion. the spotlight moves from london to milan with men's fashion week. we caught up with italian luxury companies to discuss the trends. a this is a suspect -- subject i know a lot about.

>> what guy doesn't know is caroline hyde -- he is a bit of a fashion guru. he pretends not to be but underneath his smirk, he definitely is. >> i am sure you will be all eyes on moncler and salvador ferragamo. fashion.dge of it is a $100 billion market. there isn't much question -- >> i can see me in this. >> you should put in an order immediately and where it on air. there were many trends and themes coming out in fashion having talked to some of the heads of these companies. versace weevr -- spoke to as well. expected to see the slowest pace of growth in the luxury market in four years, just 2% growth last year. it was down to a slowing in the chinese buyer and certainly zegna putting this forward.

they hope the second half of the year will pick up. sayador ferragamo, they italy is still quintessentially the beacon of fashion for many an asian buyer. they are saying, look at the smaller chinese cities where the growth is going to be. some mixed reports on where the growth is going. italy, still the center of all things cool. >> it cheers me up. some of those images from moncler were rather odd. >> i can see you win some of that. >> we will get unicode. ok, and then i. the one thing we have been talking about, is it going to continue in 2014? >> fascinating trend. we did see lvmh snapping up these smaller independent brands. -- lesst to have more ostentatious sort of labels.

they wanted to start buying into the brands. a big theme coming from the italian men's fashion week is how many of these companies do not want to be bought up. selling a 10%e stake but they just want to get some companies on board just to raise a quarter of a billion euros and then they will look to sell shares. moncler sold shares last year. they are looking to expand. they don't want anyone else to come on board. tara, also saying, we value our independence. ferragamo, also saying, we value our independence. not only do they want not to be smiled up -- swallowed up -- >> no, no, no ipo. we want to stay private. the family is united. we believe in organic growth.

they want to fight independently. they feel that even selling did, theye moncler feel that is selling out independence. >> a lot of these companies want to remain independent. it is very difficult to go through if you don't have a son or daughter who wants to take over. we are here. >> guy in particular. >> i know this story inside out. i am the man for the job. let's take a look inside goldman sachs. we are going to be doing that next. the strategy conference is in milan -- number line, it is in london. manus cranny is standing by. what have we got, manus? >> we are going to talk u.s. stocks shortly after the break with david kostin. his view, america is the rump of the global equity letter.

it is all about share buybacks and dividends. stay with me. david kostin shortly after this break. ♪

>> good morning. welcome back. you are watching "the pulse." >> let's talk tennis. the australian tennis open begins in melbourne today. expectations for a boost to the local economy are high but so are expectations for sweltering

heat. >> angus took a look at some of the key stats behind this key tournament. >> the world's best players have gathered in melbourne for the midsummer australian tennis open . over half a million spectators will attend with nearly 350 million watching at home. the competition is going to be hot but as if that wasn't enough, players will have to compete with temperatures that regularly reach over 40 degrees celsius. this week, it will be no exception. heat,bat the blistering medical staff are kept on standby to offer intravenous drips. the tournament has an extreme heat policy. play if theyuspend believe it is getting dangerously hot. over 300 ball boys and girls will be wearing gel neck coolers on court where temperatures are

high enough to shrink the tennis balls themselves. talking of tennis balls, over 48,000 will be used while a whopping 3600 rackets will be restrung. sweaty players will go through an estimated 30,000 towels. those watching will buy more 145,000 bottles of water. with the prize pool boosted to $31 million, it will be a lucrative tournament for the singles champions. the city of melbourne is also a winner. the state government estimates $214 million will be pumped into the economy. i guess and it, bloomberg. >> the heat is definitely on. something that is a little cooler right now, the u.s. jobs market. >> did disappointing jobs report raising concerns. >> what does this mean for the equity market?

manus cranny standing by with more from the goldman sachs conference. is david kostin and he is probably one of the best people to talk to about u.s. equities in terms of tapering. great to have you with us. friday's jobs number, everybody says it is an anomaly. we are in taper mode. we have two little events that could change perspective. how do you look at the market? you had that pretty poor jobs number. anything unsettling? >> no, i think the way to think about the market is the level of earnings. the multiple which should be applied to that earnings growth, that is really the fundamental driver of the u.s. equity markets. interest rates are an important consideration but the rates we are expecting -- the earnings growth should be rising around

8% this year. we will get the final numbers for the fourth quarter results in the next couple of weeks. $108 growing to $116 this year. that is likely to be the principal source of return for u.s. investors. multiple is now at 16 times which is historically speaking a pretty elevated level. >> we are still going to get about a 6% return but it is not going to be as spectacular as last year. >> that is correct. last year we had the multiple 13 times coming in and it closed at 16 times. that led to the 30% return. this year we are not likely to experience a big pe or much of a change at all. it is going to be driven by fundamental earnings. margins have been flat.

margins have been hovering around 8.7%. you are not getting any margin leverage to the earnings. it is about economic growth, sales growth. margins are flat. earnings are growing modestly. that is your key driver. >> to other linchpins. dividends and share buybacks. translate that into the view for 2014. >> if you're a corporation, you have five different uses of cash. let's break it into two. you can give it to shareholders or invested for growth. your two strategies. we have a very large increase in share buybacks. about 35% growth. the companies have been very aggressive and have had a number of announcements in terms of planned buybacks. that is a real source of that. there is a whole strategy related to companies that buy back shares.

has been a pretty attractive way of investing in the market. the other way is to invest for growth. we have had capacity utilization back to a close to long-term average. >> david, we have to leave it there. thosel keep an eye on terms. david kostin here, chief strategist on u.s. equities. back to you. next up is jan hatzius and the american economy. we will have a little conversation on that. >> looking forward to it already. manus cranny, thank you very indeed. >> coming up, the challenge to cut carbon. we'll talk to one company that is using the data to help cities understand their energy consumption and get the community more involved. it is coming up next. ♪

>> and today's new energy, how do you get everyday citizens excited about saving energy? one company, carbon culture is tackling the challenge. the firm was built on a digital platform to help businesses engage with employees and now is scaling to urban cities. joining us now is the coo, luke nicholson. i to have you on the program. carbon but it is difficult to get people excited. in this platform, you can actually see things as they motivate people. >> there is a lot of work going on around energy generation.

lots of people are looking in a policy context. not nearly enough is going on on how we can use less. thatre exactly right energy efficiency, people know it is important but they don't find it exciting. the things people are excited about aren't about data. >> because it is not tangible. your apps make it tangible. ,f we look at downing street you can see exactly what the energy cost is, the energy use. make thisan do to even better and higher. >> that is right. that is all there. we launched at the department of energy and climate change. they saved about 10% in a few weeks as a result of having that. we are now beginning to work on a city scale as well. we are looking at how entire cities can engage in saving energy and becoming more

efficient. >> which is brilliant. it motivates people to come a for example, cycle to work. >> that is a big part of it. the story about efficiency can't just be about saving energy, turning the boilers off. if you can turn it into something that is more about people's own aspirations, the things they care about, it can make it more relevant. seeps into the consciousness. it is the small things, turning your tv off if you have a tv on your desk, turning the lights off, things like that. >> those small things are a part of it. , they are not small justin how they feel but in terms of their impact. it is a great thing to join in with but it won't save the world by itself. it is an important part of a balanced diet. it can go together with different kinds of decisions you make in your life. ,t can make a huge difference up to 10% of our global energy demand. >> what are the five top things

we should do and think about not only as citizens but as employers? the mostmployers, important things employers can do is engage employees in the kind of changes they want to make. begin a conversation. it is much more difficult for people to join in with something that is imposed on them from above. enable conversations between employers and employees or between citizens and cities so they can work together. >> interesting. thank you so much. guy. >> what have we got coming up? those listening on bloomberg radio, the first word is up next. or our viewers, a second hour of "the pulse." we are going to be talking about airbus. we have a big press conference today. john strickland is going to be talking to us about 2014 in the airbus world. from planes to cars, the detroit auto show is underway. reporter -- is

going to be joining us. from ford and mercedes. we will be talking about those. see you in a moment. ♪

a bloomberg and elusive -- the chief executive of ubs says he will not spin off the investment bank. >> and there is enough speculation. i think the investment bank is a strategy for us. >> mercedes hits the streets of detroit early, daimler unveiled sedan with tech features. >> highflying airbus set to announce record orders any minute now. we will be live at the press conference in toulouse. good