bernanke. as the fed winds down currency, stocks fall. >> lenovo is buying motorola mobility for $3 million. >> on the rocks. investors punished diageo. you will hear from the firm's ceo in this program. good morning. welcome. you are watching "the pulse" in london. i'm guy johnson.

i'm francine lacqua. >> coming up -- super bowl scandal. an ad vert that is stirring up a storm. >> h&m is gunning for a touchdown. we will see if the new david beckham campaign will help the retailer. buyingfed trimmed bond -- segue. >> if you have a good way -- so the fed is pushing global stocks lower. >> to break it down, let's bring in manus cranny and jonathan ferro. a statement. >> the statement focuses on the labor market. it's mixed, ok? and growth has picked up. it is the first non-consenting federal reserve.

i think that is important. this is a federal reserve thta at going into the tenure of janet yellen and the potential to step back from tapering. it's pretty darn high. the view from citigroup is that hasta la vista, baby. that is what the fed is saying to emerging markets. excuse the pun. i liked it. worry about yourself. >> it makes sense. that is what the mandate of the central-bank is. emerging markets not too happy. >> manus talking about the unanimous decision. at this point, you have to say points towards the fed going to contribute to trimming assets by $10 billion every single month. warren buffett has a saying dekes when -- hsas a saying, whn

out, you determine you is swimming naked. ow there is a political problem not being addressed. >> that's what buffett said. there is nothing no. ew. we know there are structural issues at play. when phil gross is coming out with this. the in effectiveness of raising rates in turkey. turkey and south africa -- >> 39 hours. >> there is more at the moment. turkey flunks the currency test. don't hang around to see who is next. the -- de-risk and gold to treasury. structural problems.

we looked through it all. and discern the wheat from the chaff. it's bang, bang, indiscriminate. that is the big concern. they are looking at the market and seeing the central bank putting rates up by several percentage points. in the case of turkey. some social banks are struggling to fight the fed. if you are an investor, you're looking at these markets -- >> as guy johnson said, don't try the fed. it will be very hard. let's carry on and talk about emerging markets. what impact is it having on the world's biggest companies? well, we are starting a given idea. diageo's shares are under pressure and it fell short of estimates. let's find out what is going on. let's bring in our beverage reporter, clementine fletcher. what is going on?

>> diageo a tale of two havles. -- halves. north america,, they did well on their sales. great news. then you go and look in emerging markets. that is always kind of an issue at the moment. my,the government crackdown. they are having the same problem in china. down 66%. >> that number is staggering. >> and then you expanded out from china to southeast asia. there is economic turmoil there. a lot ofk, -- nigeria, government problems there. and the currencies, too. that, you have seen what is happening over the last 40 at hours, -- last 48 hours. any sense that it will get harder, not easier? >> an analyst said there is a

positive effect in latin america where -- people who don't have access to currency are not buying from diageo might temper. but she did warn over the last -- the rest of the emerging markets, the same effect may not occur. >> we will leave it there. ok. marketalk about the pc and what is going on in the tech space. the world's largest pc maker -- lenovo is acquiring googles motorola phone unit. our international correspondent hans nichols joins us. thisrst blush, you think is a company, google, that is cutting its losses. it is not so clear. wrung quite a bit

of cash out of the handset maker motorola. they sold off the home business, the desktop tv's. so, when it comes down to it, this is the same story when they initially made this acquisition for $12 billion 22 months ago. and that was where they were going. they retained 15,000 patents. 2000 will go to lenovo. but this seems like it is fundamentally still a patent story. on that front, what has google done? they consolidated their hold on android. samsung has gone gangbusters. they have not had any patent wars. and they stay the market leader. this may allow them to give back to their core which is advertising, organizing data. and they are it.

using oem making phones androids. that will help the relationship. an interesting parallel with microsoft at the moment. let's look at it from the other end. lenovo on a buying spree. determined to make things happen, particularly in western markets. problem with western markets is they will need regulatory approval for all these acquisitions. so, they are going over -- after ibm's server business. now going after google's handset business. they will need approval. if they get into the hardware business and if the deal goes through with motorola, lenovo will be three behind samsung and apple in terms of mobile device manufacturers. remember, they are making a play for blackberry. blackberry took itself off the market.

lenovo looked around and gobbled up motorola. outeems like it was lenovo there shopping. it was really hard, based on the topline numbers we have to say who got a better deal. but both sides wanted to make the transaction. they both wanted to go back to their core competency. and we will see how it shakes out from there. again, google retains the patent. >> a critical thing you cannot take away. you cannot do the math. in the numbers start to stack up a little the better for google. thanks very much. hans nichols covering from berlin. >> here is what else is on our radar. a forecast. sales climbed to the biggest -- for a cancer drug. it is added to its portfolio with new products including breast cancer and chemo treatments that have been approved in the u.s. shell's profit plunged in the fourth quarter on expiration expenses.

that matched the drop the company had forecast on january 17. shell has two assets deals announced this month. sales for the uk's largest broadcaster rose more than six percent. the company is facing increased competition for broadband customers. still to come, a blast from the past. we see how offshore wind farms. are diffuse in world war ii bombs that were dumped at sea. ♪

>> you are watching "the pulse" streaming on bloomberg.com. your tablet, your phone. let's bring the focus back to the fed. they cut monthly bond buying by another $10 billion. the last one with ben bernanke at the helm. we have a new chairman. janet yellen is likely to maintain this consensus. let's find out. we have a global strategist at socgen. in reality, there was not that much to take away from the fed last night. it's focusing on the u.s. economy. >> they have a long track record of doing that.

we would not of had the 1990's asian crisis at the fed had not been focused on the normalization of policy. script before. to have backed off the second .onth of tapering >> they are comfortable with the data. >> they have probably seen this afternoon's gdp numbers. wn,ill put my two pennies do that that is better than the market expects. they might be even be growing at a 4% rate. that is something between five percent and six percent nominal gdp growth in the second half last year. >> and the central bank is -- the balance of the makeup of the is becominghe fomc hot this. are we going to continue to see this? -- it's becoming hawkish.

for aare nicely on track move and 10 billion increments to get us down to the end of tapering by the end of this year. there is any acceleration will we have this much volatility in markets. >> no mention. is that a surprise? >> conventional fed policy. we look after our issues. and i do not know what they could've said about it that was useful that would not have sent the wrong message. we've come -- we're trying to go from zero interest rates too low interest rate, low volatility. we are going via a big pickup in volatility that we should not call a crisis yet. a certain amount of volatility comes with the territory after such a long period of extraordinary monetary policy. >> the fed's seen this script

before. alan greenspan had reacted to the asian crisis. when it came, it was substantial and it was going to have a material impact into the u.s. economy. 400ey's raised by 200 to basis points. the south africans raised by 50 basis points in the currency went down. we are seeing some volatility, but it does not take that much of the great leap of the imagination to see these countries are going to have to close their current accounts quickly with huge effects on the ripple across the world, and we still have not talked about china. >> yeah. this would be a reason for saying, i would say, you should not have left rates this low for this long is much q.e. this is not a great place to start. we created this with over easy money for such a long time. but now that we started normalizing, some of the currency weakness corrects. these countries are much

better managed. so far, the strain is an emerging market currencies more than an emerging market bonds. we are not seeing, so far, it is not going to cause huge problems for countries. but but but but but -- this morning, it looks like everyone has to come up with a list of which currencies they can speculate against. k hehe fed -- do you thin brings an international perspective? internationally minded. it brings a very big intellect to the fed. if bring someone else who is very smart there. i think when you are starting from a place where you are sayin extraordinary policy and now i need to carefully unwind them, i think we have to keep on going unless things get bad. this is not going to change them

yet, as long as the u.s. data is all right. the worst thing for the global economy is if the u.s. is not growing at 3%. >> just to get your take and what is happening the last 48 hours -- did you, did anybody expect the turkish -- to turn around as quickly? what wene expect to see got from south africa yesterday? >> a lot of e-mail that people expected it. the common line yesterday was, obviously, if you try to keep rates up for more than a month, it will have negative economic effects. and we're not sure that the problem here is speculation asinst the turkish lira opposed to money flying out of a country with the current deficit. has that helped be on the short term? that was easy to say. anybody who knew that was going to be at 9:00 yesterday morning we would go backwards again is smarter than me. >> fair enough. if you were to see -- and

emerging-market slowdown. it feeds into a proper slowdown of growth. how quickly? with the transition mechanism back into the u.s. economy -- how speedy? >> it is quite slow. we are going to see slowing growth in emerging markets. partly because of china and partly because the massively low, the very low real interest rates and a lot of e.m. countries are getting unwound. we are going to see slower growth, but the first effect is lower imported prices of law materials -- raw materials. it will make currency stronger on balance, so it keeps inflation lower, which is going to help consumer demand to some degree. i mean, the game changer if you like is china. china's half the size of the u.s. economy. china is like a

one percent slowdown in the u.s. >> one final question. to that point about the consumer and inflation, if you were to see inflation falling significantly in the u.s. you see it in the u.k. -- it came from five to two. a .7 core in the eurozone. that is a big part of the mandate of fairly big central banks. >> and it is an invitation to central banks to key policy accommodative for a long time. that is important. there are different degrees, but in europe, the idea that deflation is not a risk, given there is no wage growth, i think that is fatuous. states, i think level interest rates is lower than it should be. if what you're are looking at is willtral bank is to say, i not change policy into icy inflation. inflation.

we are not going to get any scary things. in the months to come, i may well more good news on headline cpi's. it does. it invites policymakers to key policies easing. fed, thatse of the should not stop them tapering. >> we will leave it there. nice to see you. fran, back over to you. >> still to come on "the pulse" big super bowl bet. we see if the new multimillion dollar ad campaign to give the clothing company more access in america. ♪

>> good morning, everybody. welcome back. it is time for today's hotshots. drivers and fans gearing up for a new season of formula one. they showcase their skills. cars duringir new the first week of winter testing. -- windsor testing. noses on some of these cars. they are her run this. -- horrendour.

s. exercise, they are at full speed. there is nothing like good old mortal fear bringing everyone together. >> of course. that was surprisingly close. that is a very big tank. biking the tendons to to the toeets -- viking descendents the streets in the fire festival. they burned a replica of a ship. that could be quite a party, i think. >> all sorts. >> all sorts today. talking of things on fire, let's talk about what thing is going on the market. manus cranny. >> i trust you two if you are driving the tank. equities are dropping at the moment. emerging markets, the debate continues. asia down for the fifth day. german unemployment dropping more than the market had estimated. jobless numbers drop by 28,000.

nothing can stop the retracement. uk mortgage data comes out in a couple minutes. i love this. you have not seen mortgage approvals out this level.since 2007. lehmans was in business and sterns was in business and gordon brown was prime minister. the turkish lira. raising rates. anybody that knew that it would not work by any dramatic amount was a braver man than him. the lira is continuing to decline. very little will stop the current move. money seems to be the view that is moving the fx markets at the moment. we will wait and see how long money pays. >> thank you very much, indeed. bowldastream's super scandal.

find out why the scarlett johansson ad is stirring up a storm. ♪

>> welcome back to "the pulse" live from london. i'm francine lacqua. these are the top headlines. china's manufacturing contracted for the first time in six months in january. purchasing managers index fell to 49.5 from 50.5 in december. a survey shows companies cutting jobs. german unemployment declined more than 4 in january as companies grew more confident of the strength of europe's largest economy. the number of people out of work decreased by 28,000. lts advance for the first

time after mark carney said the bank of england is not ready to move away from her comeau interest rates. the boe governor was speaking in edinburgh on the issues of scottish independence. he said it independent scotland would have to surrender some sovereignty in the monetary union with the u.k. >> the existing banking union between scotland and the rest of the united kingdom has proved durable and efficient. these arrangements help ensure that scotland can maintain a banking system whose collective balance sheet is larger than the gdp. >> so, let's get more on the bank of england. with the chief economist at markets.com. bill, are we sure that rates will remain low for a little longer? that threshold for an employment will be hit quickly. >> i am fully committed. after we got the unemployment numbers on the 22nd of january, we saw a massive drop, getting close to that seven percent. two things. first, i think we had 167,000

new jobs, of which 74,000 were estate agents. could that be a temporary job? and what we got those numbers, the futures market was implying that we would see the first rate hike in the fourth quarter of this year. as we have seen from mr. carney twice, saying that they will stay lower for longer. one of the things, if we look at the economic recovery -- we are not seeing a massive increase in " productivity." davidt week and davos, cameron and carney were at pains to say that this is not a trigger. >> yes. and one of the things, as we dave seen the secon consecutive month from the fed. we are seeing a moderate recovery. now, we are seeing the same recovery here and the u.k.. the london away from

and the real estate market in new estate agents, we are not seeing, because of sterling especially -- 1.67 -- this is a killer right for productivity and especially the export market. i fully believe that mr. carney, i do not expect any change next week. but the key is going to be february 12 one we get the inflation report. i would expect mr. carney to say forward guidance is a guidance and rates will stay lower for longer. >> thank you so much. bill hubert of markets.com. is banking on david beckham to win over america. for more on that plan, let's get to hans nichols in berlin. hans, we will see the moment in numbers in a moment. let's talk about what this company is planning an united states and american why david beckham has to score for them. >> they want more stores.

this is very clear. when you look at the earnings, they missed estimates this morning. in part because of foreign exchange. they plan to open 375 stores, some 80 of them in china. a large part of those also in the states. the states right now is 10% of their market. so they want to move in there. they have this added at the super bowl. we will see how successful that is. the ceo tried to put a brave face on the numbers this morning. he said -- even though there are still challenges in several markets, we are optimistic about 2014. we talked a lot about this over the last three or four months. for a comfy do have a european base, sales are not great. then they get the double whammy of the currency exchange. the answer -- expanding go to asia and north america. >> go to north america. david beckham is the right guy to do this? him running around in his underwear will crack this market for them? >> of the universe of things

that i can think uni are less qualified to talk about, whether or not david beckham and his underwear is going to appeal to american mass-market, i think -- i do not want to hazard a guess. we need francine or maybe olivia. to drill down to that crucial question. >> ok. we will get an answer on this one. i take your point. not well qualified. not the right people to talk about this. but hey. thanks very much indeed. hans nichols joining us from berlin. we have just been talking about the h&m story. is becoming a tradition with the super bowl is a controversial sodastream ad. this one features scarlett johansson. it caused outrage among palestinians. i will send it to elliott gotkine. sodastream says it is being censored here. >> it does.

i suppose -- if you're not allowed to say what you want to say, then you are being censored. they are not being able to get their message across. the issue is at the end of the advert when scarlett johansson says sorry, coke and pepsi. sodastream has been told off of mentioning nor -- their competitors. when i checked, there were more than 2 million views of the uncensored advert featuring scarlett johansson for the super bowl ad. it has a lot of views. it is gone viral. sodastream said it would much rather play the full advert. and the ceo spoke with us last night. he thinks the company is being discriminated against. >> coke and pepsi constantly throw competitor -- show

competitive product. but we cannot do that. i guess we are small. we do not have the money and maybe we are too threatening and someone has to watch out for the interest of our competitors. that is a big shame. as an american, i am upset and ashamed and disappointed because democraticuld be a society and freedom of speech should be very important. actually, we will run the spot in russia. in russia to make the point that what runs in russia does not run in the united states. come on. i will take this opportunity to turn to fox and ask fox to reconsider. running ad. -- run the ad. would grammatical pedants be unhappy about the advert because scarlett johansson says she will get less bottles instead of less sugar, fewer bottles. >> you have to let this one go. i promise you. let's talk about what else he is doing and how it relates to all of this. >> well, she's playing a part

in this ad, but she is also becoming a brand ambassador for sodastream. it poses a conflict. set againstd companies that have factories in the west bank, which is occupied by israel. sodastream does have a factory east of jerusalem. and employs 500 palestinians alongside jews, and other israeli arabs. it pays them all the same wages and the same benefits and they are building a bridge and helping coexistence between israelis and palestinians. to isolate israel economically until it has evacuated settlements. they say this encourages israel to remain in the palestinian state. took scarlett johansson to task.

they have a conflict. that'll leave it there on note. thank you very much, indeed. elliott gotkine. >> guy, as we had to break, it es time for today's puls number. as the euro the horse kicks off in china, 3.62 billion trips are expected to be made in the country according to state news. the lunar year holiday is the world's largest human. migration ♪

>> if you look at the last three years, we have made a significant number of emerging markets acquisitions from india to turkey to brazil. we are very pleased with our footprint and we are looking at more things. if they meet our criteria, we will move. 's ceo talkingageo to me in the last hour. the world's biggest distiller posted results today that missed estimates. diageo's growth strategy involves expanding in emerging markets. what can it do to slow down volatility there? also joining us is our bloomberg's that fish --

beverage expert. us.k you for joining matthew, let me start with you. how surprised were you about this? we spoke to the ceo. he was upbeat. olatile.are vali >> the risk is that there is worse to come. worriedrisis we are about we could be in the early days of the consumer slowdown in emerging markets. we had a panic about higher interest rates which puts pressure on consumer expenditure. 6, 9, or 12 months to feed through. this could be a worrying sign that we are seeing this already in a businesslike diageo, when we expect the real ramifications of a consumer slowdown to be felt six or nine months down the road. >> what they are doing is going for the higher premium. they are making acquisitions in the u.s. they want to position themselves so that they are higher.

so they are more insulated. >> absolutely. if you look at their strategy, it is always to sell more premium drinks whether it is in the u.s. or china. they say they are still a doing that at the very high-end. in china, because of the specific problems of that market. they are hit below the really expensive stuff. that is supportive of their market. as you said, it is a bit of -- in emerging markets. the other thing that concerned me a little bit about this is talk about fluctuations in currency's affecting what their business is doing. front, currency is an issue. if people are buying less hall ohol that could be a problem. >> how much of this is specific to diageo? maybe they have not been able to push the brands. if this industrywide?

if it is, that means it will hit luxury stocks. >> i think it is the latter. i would suspect we are in the early stages of worrying about these consumer focused companies exposed to e.m. geographies --r latin america, nigeria. but diageo are a class operator. you look at their margins. they are dominant. the valuation -- it is all representative of a class act company, strong and execution. if they are having problems. others are less well-equipped. >> is that what investors are telling it. >> absolutely. are down a little bit on the warnings from china. this is old news because they had -- they say they are struggling with cognac in china. heineken is down in china. nigeria is a tough market.

that is a huge market for heineken. >> how do you turn around investors concerns? they announced a cost-cutting program. doesn't need to be deeper? >> i could not tell you that. they have been looking at how they buy basic materials. it's certainly going to be something that people will keep an eye on to support those margins. >> do you think they need to be more aggressive in cost-cutting? >> i wonder how much more there is to be done. well-run company. there are disappointments at the top line. it is volume lead. when you look at the prophet, it is close to what analysts had been expecting -- if you look at the profit line. the question is, how much better can it be? >> m&a. we tried to quiz the ceo.

he mentioned tequila brands. way they may stay ahead of rivals? >> i think they have a dominant market position. yes, there are acquisitions they can do to reinforce markets, but these are incremental. what this business need -- is the better end market. that is out of control. >> chinese consumption. he was saying baileys is very popular amongst ladies and china. >> baileys is doing well in china. the very high-end stuff, though really, really 000ensive bottles of 2 pound bottles of johnny walker are doing well. johnny walker black is suffering. it is the middle of the consumer, you can't buy it. luxury stocks. people are still buying expensive handbags. it is the squeezed middle. >> in luxury, a lot of fashion companies tried to put their

prices higher to become more desirable. gucci has done it. is diageo going to do the same? >> it is one lever that it can pull. the lesson was clear today. wine producer. shares are down 20%. raising the price impacted demand. the challenge of china is where they have a high-end business. >> thank you. our bloomberg average reporter, clementine fletcher. >> let's get you other company news. erickson has reported profits missed estimates as phone operators curb spending. the chief executive have told directors within the business he has no plans to step down. he reports he was a candidate for the steve ballmer job. he'll join tom keene on the surveillance program later in. -- the biggest gainer on the

stoxx 600. it is the biggest gain since 2011. the fragrance company reported results earlier that beat estimates. nintendo shares fell today. the company's president failed to impress investors with plans to improve profits. be videogame maker will called to release existing game titles for smartphones. now, it has been a longtime since nintendo's glory days. jonathan ferro looks back. dominance of the $93 billion gaming industry is over. but it was not always this way. according to independent analysts, of the top 20 video games ever sold, 18 of them were released by nintendo. the top three of all time all carry the nintendo name. wii.mber 3, mariokart this game sold 34 million copies.

a-game health cement nintendo's dominance as the console of choice. and -second- >> it's me, mario. hasuperamerica brothers sold over 40 million copies since its release in 1985. it was hugely influential on the best-selling game of all time for about three decades. that was until -- it took gold. and helpedh a wii define the success of the original console, which went on to sell 101 million units. >> hole in one! >> remember the mall. some --remember them all. coming up, offshore wind farms are facing an unwelcome thoughts from the past. millions of times of world war ii explosives that were dumped at sea.

we will look at one company that is using military tactics to solve the problem. back in a moment. ♪

>> good morning. welcome back. you are watching "the pulse" liv e from bloomberg's london headquarters. we are streaming on the ipad, on bloomberg.com. we got it all covered. let's talk about new energy. the growth of offshore wind

farms is onthe rise. the source? millions of tons of world war ii bombs dumped at sea. an unexpected niche in the green energy sector as they work to solve the problem. our new energy reporter joins us for more on this story. world war ii -- a lot of ordnance leftover. all got dumped in the sea. these guys are in the right place at the right time. >> that is right. renewable energy and bombs do not tend to go together in the same sentence, but the u k and europe have a legacy of a lot of unexploded ordnance. for two reasons. firstly, a lot of munitions were dumped after the second world war because nations did not know how to deal with surplus weapons such as shells and mine shrapnel. we have a lot of sea mines that were deployed to attack submarines and sink vessels. 300 kilograms.

we need to get rid of those. some of those are on the seabed on exploded. this is happening as we have nations such as the u.k. in germany and stalin and more offshore wind turbines. more offshore wind turbines. there is a company that says that they can use their bomb expertise to remove this risk. >> you talk about the vast quantities of this stuff lying around. how often do these guys have to go out, how big a problem is it for the teams that are going out and installing turbines? >> the british army in the royal air force had about 2 million tons of this kind of munitions to get rid of after the second world war. in the north sea, the german portion and the baltic sea, it is estimated there are 1.6 million tons of these weapons. it happens every 10 years a mine or a piece of weaponry is

drudged up. dredge these things up all the time. it is not just a european problem. it is happening on a global scale. the u.s. -- has some munitions dumping also. it is a global hazard. >> thank you very much, indeed. and explosives story for the new energy team. is bloomberg's "first word up next on radio. >> an explosive hour on "the pulse." bye-bye, ben bernanke. we will talk about his legacy and what janet yellen will do. we will talk tightening and tapering with an oxford director gabriel stein. then we will talk about advertising and selling these big ad advertising dollars at the super bowl. we will talk to the avas chairman. you can follow us on twitter.

we'll see you in just a couple minutes. ♪

bernanke. the said winds down its stimulus plan. stocks and currencies from europe to asia under pressure. buys google's motorola mobility for $3 billion. asinvestors punish diageo emerging-market drinkers back off. you will hear from the ceo this hour. good morning to our viewers in europe, good evening to those in asia. and a very warm welcome to those just waking up in the u.s.

i am guy johnson. >> and i am francine lacqua, live from london. bowldastream's super scandal. scarlett johansson advertisement start up a storm. >> h&m is gunning for a touchdown, if a david beckham ad campaign can help the retailer win over the u.s. a bit of breaking news -- >> why not? extraordinary performance for german unemployment, much better than expected, around one hour ago. economic confidence a touch below expectations for january. we were expecting 101, came in at 100.9. >> singles that inflation or disinflation might be gathering traction. data might be pushing us in that direction. macro economic things, the fed. trimming its bond buying for a

second month, another 10 million will be knocked off, pushing global stocks and currencies lower. manus cranny is here. jonathan ferro joins us also. manus, you did not stay up late and cover the fed statement as jon did. tell me what i need to know. >> i was hovering over my terminal last night. >> on mobile. >> i was on mobile, i cannot say which brand. >> he was tweeting. >> in his pajamas. >> i want to bring it back. >> back to the fed and ben bernanke. >> it is a united federal reserve, there is not a descendent insight. sight.ssenter in which, for now, is

not bowing its head towards emerging markets. right? depends how you describe it. the hurdles to get the fed to step back from what they are doing is getting higher and higher. from steve englander at citigroup. hasta la vista, baby with regards to emerging markets. a statement from the fed. federal reserve has two objectives -- growth and full employment. >> in the u.s. and only the u.s. is the message that seems to come from the fed last night. we will find out from the minutes. what are you talking about? >> emerging markets. >> they did not make a statement, we don't know whether they talked about it. >> i think that is fairly significant. >> the emerging markets are only

talking about the fed. not go to saying "do the war zone with a peashooter." that was new england governor graham wheeler. you see south africa and the rent only rallies for two minutes, the problem was bigger in turkey for the lira. even if you trade in fx, it is a big concern. a central bank with dwindling foreign reserves. turkey is tanking out -- turkey chunks at at 10% time. riddle. -- brutal. >> what will it take for a market to take these central banks seriously? 250 basis points from them turks, a big move. >> a lot of peashooter. >> half a bazooka. >> not like our friend at the oecd.

>> a fascinating one-liner from analyst. 2014 is therkets subprime issue for markets in 2014." the shoe will drop, she is not sure where. no gross goes on to almost endorse that -- turkey and south currencyve flunked the test. do not hang around, go to treasuries. >> making this exact point, this is the third leg of the financial crisis -- the emerging markets. they have lived too long on too much liquidity. we will get into the next phase. >> this will impact the developed markets as well. i have been talking about the 02,lar/yen, back to 1 japanese soul off h -- the japanese sold off hard overnight. no matter what the boj does,

risk aversion. thenteresting to see if equipment of stanley fischer does anything, he has an international perspective. >> to tech. lenovo acquiring google's $2.9rola mobility for billion, sounds like a fairly small number. hans nichols has been doing being sums. let's talk to him. >> comes down to how much you think the 15,000 patents -- these are the patents google will retain and not sell to one of -- how much they are worth. lenovo.ents will go to look at what they paid 20 months ago for the deal, $12.5 billion. it came with a lot of cash, motorola. subtract about $2.5 billion.

then they sold the home tv unit, almost $3 billion. patents, just a patent play, in the neighborhood of $6 billion. their did preserve operating system and their dominance with the samsung android phone. theasn't under attack on patent front. google is getting out of the sameare business, at the time, they have patents to protect what they are good at. sarge and organizing information that.lling ads against not terribly surprising, the price is interesting. >> flip it around, we were having this conversation with guy a little earlier, what lenovo get out of this. smartphones or more access to other stuff? does it become bigger and have a bigger scale? >> lenovo has been on a shopping

spree with a fair amount of cash. they bought the pc is this from ibm in 2005. lastly, they were interested in the server business from ibm. this is getting into the mobile space. they kind of have a three-pronged threat. sayingld caveat all this it is still subject to u.s. regulatory approval. company a chinese-based tries to have inroads into the states, there tend to be regulatory hurdles. we don't want to get too far ahead of this. regulators in china and the u.s. have yet to weigh in. interesting comparison with microsoft. some might say the reason google is getting out of the business is that it does not want to compete with handset makers that are making android products. it wants to be the team that controls the android. products,lse make samsung included.

microsoft is doing almost the opposite. buying nokia's handset business and in competing with other companies that try to bolster the ecosystem. fair point. what microsoft wants is greater control. maybe google realized is that what they had with android and samsung provides them enough control over the direction of the phone. perhaps they just chose a better partner in samsung. teaming up in terms of the operating system there. the challenge for microsoft is to get people to migrate to windows phones. with this deal, lenovo will be the third biggest, if he goes through, the third biggest handset producer behind samsung and apple. ahead of the microsoft-nokia venture. you are right, different bets. >> interesting to watch, thank you very much. hans nichols, international correspondent. >> the world's biggest

distiller, diageo reported growth that missed estimates. after theith the ceo earnings release. he told us about his acquisition strategy. >> if you look at the last three years, we have made emerging markets acquisitions from india to turkey to brazil. we are very pleased with our footprint. of course we are looking at more things. if they meet our criteria, we will move. where opportunities will show up in turbulent times. >> baby and overstatement. we tried to get him to talk about acquisitions. bloomberg beverages reporter commenting fletcher. -- clem entine fletcher. emerging markets are not doing great, our acquisitions a solution? >> it is lots of consumer goods companies we have seen. it is not a huge surprise they

are having a tough time. of their acquisitions over the last couple years have been in emerging markets. in turkey, brazil, china. -- theyy have to find have to wait for the macro stuff to see through. numbers stunned by the out of china, down by nearly 60%, one of their core brands. >> it is a difficult market. remy talked about the problems is having with cognac and china. different from a more local spirit. the government is cracking down, they don't want people to spend much on expensive bottles. it is a problem for companies like diageo and remy. >> for china, we are talking about the squeezed middle.

either the really high-end premium bandrands were doing well but the middle class is getting squeezed. is it the same story in china or is everything getting squeezed? >> partially the same story, you slow.een gdp growth to the more specific high-end alcohol stocks. the story across emerging markets is that economic turmoil, government led or because people are writing in the streets or whatever, is a problem for companies. >> thank you so much, clinton ementine. roche adding new products to quit sportfolio, including breast cancer and leukemia newtments -- adding products to its portfolio,

including breast cancer and leukemia treatments. be interested in an acquisition of a vodafone. people familiar with the situation said it made the announcement to satisfy them u.k. regulations. >> sales profits plunged on lower production, matching the drop the company had forecast on january 17. shell accelerating asset sales. farewell.e's his final move before he hands over the ranks to janet yellen. our next guest says the central bank might bring qe to an end, we could see a rate hike. stay tuned for that. ♪

welcome back.g, you're watching "the pulse." let's talk about the currency markets. huff, huff. yesterday we were talking about the turkish lira and the rand. sharply, the market is examining the balance sheets of emerging markets from eastern europe to africa to asia. you are going to see a series of these kinds of moves. how central banks respond is going to be interesting. to political pressure not

raise rates is significant. we can tie a line back to what is going on with the fed. pressing on with its stimulus cuts, the taper continues. trimming bond buying by another $10 billion a month. stocks down around the world, emerging markets under pressure. let's talk about what happens next at the federal reserve and the emerging markets. gabriel stein from oxford economics. the fed did not deliver a lot of surprises. the taper continues. the data is consistent, we will get gdp numbers with the idea we should be exiting from stimulus. anything we can take away from this that changes the way we extrapolate fed policy? willst likely, the fed bring quantitative easing to one an end this year. they will announce cuts in marc

h, 65, 55, so on. what does this all mean for forward guidance? they have collaborative forward guidance so interest rates will remain low as long as unemployment does not get above 2%. that is the most interesting thing, shifting the goalposts. it does raise a question about how useful the detail forward and the that the fed bank of england -- they also need to retreat -- how useful is that forward guidance. in my view, not much. >> a fairly strong number coming through. that is not going to change again? >> they have a good idea of what it will say. borrowing -- barring any quirks in the data.

the interesting thing with the numbers, it will show that the government shut down was almost meaningless. about how italk would affect growth. it may turn out that it did not. >> you talked about inflation, the trend with inflation -- you can draw a line between what is happening in the emerging markets and what is happening in western economies. the trend of inflation is downwards at the moment. will we see a more prolonged period of low rates? taper continues, but a long period of low rates? >> we might see lower rates than we have been used to. but current rates are abnormally low. i do not see how they can be the new normal. in fact, if they are, we are building up to a bubble. one of the greatest medium-term risks for the world economy is the fixation on practically costless credit. if we went back to

neutral rates, that would mean a fed funds rate of between 3% and 4%. that would still be lower than we have seen precrisis for a very long time. justifiably so, inflation is not an issue. it might become one in the future, not for the next few years. >> emerging markets have negative rates around the world. the aggressive move we have seen of the last 48 hours might be accelerating the process of taking those rate asked to rates -- taking those back to normal. inflation running from 5% to 10% in these countries, 30% in turkey. will they have to be aggressive? >> they will have to go back to pursuing, what one of my colleagues calls orthodox monetary policies. you have to have a positive real

interest rate if you have an inflation problem. the idea of money and credit can remain free or practically free forever -- it does not work. more to the point, in countries where you have a high inflation rate, it leads to ms. allocation of resources. turkey, theyt might have to close their current account pretty quickly. that will lead to a slowdown in growth. is there a feedback that goes back into western markets? >> to somekey, perhaps extent because it is an important economy. it is near geographically and well and enjoyed it -- and well integrated. the main impact will be on currencies. and on currencies the main impact will the dollar strength. u.s.we're seeing in the is, the economy is recovering and we have a steady trend right or above trend growth. whatever the fed says, it does kes closer.hi

the other currency that will benefit is the new zealand dollar. bank there is now talking about needing to move to higher interest rates. that is interesting, they also try to talk down their currency. >> interesting quotes. wrap the conversation up, thank you very much indeed. gabriel stein, director of asset management at oxford economics. >> coming up, the super bowl is days away. h&m is hoping for a touchdown. will its new david beckham ad campaign win over america? ♪

>> welcome back, you are watching "the pulse." let's talk to manus cranny. >> three stocks. fluffed this"ft" sachs saying that goldman and the chairmen were in talks to taking the company private today. that is not the case. that is a rumor according to the chairman. stocks down 6%. down 7%.trendy shoes, 's, the italian maker, 60% of

their business is between italy and the rest of europe. j.p. morgan downgraded the stock. ubs says it is a sell. fashion does not pay, a miss. new stores online and in the u.s., can david beckham save h&m? >> thank you very much manus cranny. >> let's look at today's post number, 3.6 billion, the number of trips expected to be made in the 40 day travel rush surrounding the chinese new year. of the horse celebration involves million returning -- involves millions returning home to china, one of the largest movements of people anywhere on earth. does not just manage packages, it stores massive amounts of data. we take you inside one of the world's most secure business.

accuses fox of censoring its sodastream ad for the super bowl. ♪

pulse,"me back to "the live from london. i am francine lacqua. >> i am guy johnson. let's talk about a top headlines. unemployment declined more than forecast in january as companies grew more confident in the strength of europe's largest economy. the number of people out of work decrease. asit is known in america motor city. detroit might file for an $18 billion bankruptcy plan in the next two weeks. the city's emergency manager has given a copy of the plan to creditors. they have been negotiating since

it filed for bankruptcy in july. >> ukrainian president viktor yanukovych said to be suffering from a respiratory illness and high fever. that is according to a statement on the presidential website. he is under pressure after two months of protests seeking his resignation. >> let's see how the markets are trading. manus cranny has more. >> the italians had just had a bond auction, they are able to borrow money at the cheapest rate on record for five years. confidence -- slips a little bit. you see that services and the consumer are not doing too badly. they are pretty much unchanged. still borrowing money in the u.k. as aggressively, the last time we saw mortgage theovals at this level, lehman brothers were still doing

business. u.s. futures, we will find out theher gdp has delivered as market expected. this growth on a structures on a strongs growth trajectory, vindicating what the fomc has done? up. equity futures, s&p 500 .25%, 1776. lloyd blankfein said do not be surprised if you see a correction in these markets, you're coming off record highs. indicating autures little higher. still, the emerging markets story dominates the agenda. it will dominate the discussions out there. iss is a fast money, which flowing out of the emerging markets. ee intothe rand and rup the dollar. that is the general consensus.

my line of the day, phrase of the day, comes from an interview economics.s rout iserging markets the subprime crisis of 2014. >> tom keene joins us from new york with a preview of "surveillance." front and center this morning. and thethe fed decision, you see the reaction in the emerging markets. the idea of the immediacy of the crisis in the emerging markets. robert will join us from pierpont securities. for years, he was with bank of america. in the next hour, ken on a

really interesting quarter for facebook. we will focus on google and one novo and the positive deal that as theyfor google jettisoned motorola over to one novo. -- over to lenovo. we will move on to discuss the super bowl as well. >> we spoke to a lenovo executive in davos. little flaketting a from the emerging market today, saying they are only thinking of the u.s. is there a thinking that with stanley fischer on board they will take a more global -- look more at the international scene? >> he will give them perspective on the previous crises and the distinction between this pending crisis and what he witnessed in 1997. no, i do not think vice chairman stanley fischer will have an

impact on chairman yellen and the other presidents and governors in terms of a more international federal reserve. it is the federal reserve of the u.s. what is so scary here, these are marginal changes. makingovements in taper for large movements as you see in the reversal of turkish lira and particularly the verbal. -- particularly the ruble. i am focusing on the russian currency structure. >> thank you so much, tom keene with "surveillance." >> dollar, your problem. from controversial ads to using eye candy. got it takes to make an ad viral. we will talk about that when we come back. ♪

pulse,"me back to "the live from london on bloomberg tv. h&m banking on david beckham, hoping he can help win over america. he is the star of the companies campaign for this year. a little twist -- let's find out what is going on. hans nichols. uniquely qualified to talk about this. >> i have been avoiding talking about the details of this ad campaign all morning. we are going to jump into it,

this is h&m's attempt to increase their 10% market share, the revenue that comes from the states. they are going big with david beckham. torre 12, they had a big hit that went viral. the question is, how did they monetize office and get people from saying that is a neat ad to actually buy the underwear he is selling? an opportunity through samsung tv to purchase directly from your tv. i have never made a purchase like that, that is their goal. that is what they are heading into. they reported earnings this morning, disappointing in part because they are overly weighted on the european market. european sales down a little bit. they are dealing with currency fluctuation. they went to go to the u.s. and to china. this is part of their ad campaign to get there. >> guy? [laughter] >> guy is lost for words.

>> you want me to pick this up? david beckham in his underwear is going to sell in china? >> without a doubt. unqualified, without a doubt. we all know that companies, marketers use sex, exposed torsos to sell products. it is as old as advertising. this is what they are going for. we will let francine decide whether or not you and i should be purchasing from h&m. we will keep it clean. [laughter] >> i will decide. what is quite funny, you two are a little embarrassed. father who is obsessed with george clooney, which is why he drink espresso. this ad is talking to men like hans and yourself. in the world -- moment, by at the

the way. >> you can click on a tv to buy the product directly, that changes the way we redefine advertising. >> redefines the way i buy underwear. >> way too much information. hans, we appreciate it. >> what does it take to make an ad go viral? we have seen what is happening with the scarlett johansson advertisement with sodastream, that has been banned as a result of the coke and pepsi comments made. goingral good? -- is viral good? essentially, it is a sales pitch to a global audience. >> brands have less control than

you think of are the messages they put in the market. clientsns us, her include virgin mobile and mcdonald's. adt is the most successful you can think of? something that goes viral -- or does that not necessarily mean -- it's translate into publicity and sales? advertising is about awareness. the thin clients love is word-of-mouth. word-of-mouth is now word of text. to say whether it is successful or not, most times we take awareness. awareness, itive is different. what you do not control anymore is whether a thing goes viral or not. you have got to hope that the

content is good enough and positive enough. when it goes viral. it is often things that are negative at the viral. a bad place. >> the funny things. >> negative, poisonous, dreadful, that will go viral. super positive does not go viral so easy. >> will david beckham go viral? to?o they need hey, from my point of view, david beckham -- he is the best sports marketing product in the world. there is not anything better. cover, uncover, who cares? it is david beckham, i am happy. >> scarlett johansson makes a point at the end of the sodastream ad, how do i get this to go viral? when customers sit down with you , what is the objective they are going for? it is highthe thing,

on the list of objectives. high awareness, we want people to see. we want it to be ubiquitous. then viewership -- this is why super bowl is a big thing. viewership last year, 108 in --n -- 180 hits one go.llion hits in bieber,ot hit by justin more hits. a lot of marketers would love to go viral, you're not paying for that. you are 49 million from justin bieber, you did not pay for that. that is the magic of viral. we used to say -- before social media -- clients would want

word-of-mouth. my view is word-of-mouth is not free. kicking off good viral or the kind of viral you really want, not always free. i think the interesting thing with scarlett johansson is much more the other two brands involved. that is a really big debate. do we really think coke and pepsi wanted that ad pulled? i would suggest not. i cannot imagine coke watching that -- >> this is the ideal scenario. it makes it go more viral. >> it has got to be good for sodastream, it is a perfect scenario. they did not have to pay the money for the super bowl, that

has got to be good. it has not gone back viral. this morning, about an hour ago, 4.4 million. the super bowl, 100 million. it has to be bad for coke and pepsi, the story is negative for them. >> is there a view that they told fox to pull it? i am not asking you to speculate, you are saying it is negative. >> i cannot get it, i try to look at everything i knew was coming on. everything i could see it looks like stocks took a unilateral decision. believe coke would allow that. >> we are speculating, we have no basis. marketer, you have to say is that a good thing for coke and pepsi that the ad that pulled? it is not a good thing that all,

it is harmful. it makes them look as though they are scared of sodastream. i don't really think so. i suppose the negative thing on the sodastream thing is that -- sodastream is kind of good for you and sugar-free. we think the great american super bowl viewership didn't know that already? they know that. johansson'slett story is actually fascinating. i have got a real problem with the attitude, god bless you all, of mainstream media that pulls that kind of content. there was nothing wrong with that, nothing harmful to anybody. >> in our defense, sometimes it is regulators. >> different story. >> thank you. i am just sticking up for

ourselves. koegel president of -- co global president of havas worldwide. >> whether your idea of celebrating the super bowl is throwing a party or tailgating, you need a place to crash. >> sam grobart checks out three of the best places to stay that will help you get closer to your super bowl dreams. the 400ou one of thousand people expected to come to new york for the super bowl? have you made lodging arrangements? everyone is looking to cash in on your stay. i checked out three places you could hole up in. a guy's apartment, three miles away from the life. -- from metlive. metlife.

chris is listing his two-bedroom apartment on airbnb. atv,mes with leftovers, and chris' movie collection. wow. you could really pack it in. $1800 one night. >> i have had five or six inquiries. nobody has committed yet. >> i am here in new jersey at nolodge, they have a special suite for $800 a night. oh, furniture, fridge, hello. [music plays] how many of the hotels have a

jacuzzi in the pattern? -- in the bedroom? ures in thecount meas dozens. wholesale fish distributor ship. the on the other end of spectrum is the new york palace hotel. is the living room, part of the 5000 square feet that make up the suite. $25,000 a night. if i was an ordinary guy, i might take the staircase. i am not going to do that. i will take the elevator. i do not want to be critical, but, where is my marble heart of the bed? where is my jacuzzi? there is a jacuzzi. on the roof.

get threeo you bedrooms and six bathrooms, you get something else -- a limo. bowl time, you can spend anywhere from $800 to $25,000 a night. that is wonderful. most of us will watch the game the way it was intended, on our tvs. at home. >> that is what i was going to say, stay at home with just -- >> crisps, chips. bedas got the dive onto the down. >> with the thread count. >> president viktor yanukovych goes on sick leave. under pressure after two months of her tests. protesters seeking his resignation. details coming up after this break. ♪

>> welcome back, you are watching "the pulse." live on bloomberg tv, streaming on your tablet and bloomberg.com. the currency markets -- the to comen is the latest under pressure. the euro moving higher. 52, we got as1. the beginning of

2012, that is when the big spike came through. the pressure on the emerging market currencies for all to s ee. a hans nichols is back with look at what you need to know for the rest of the day. ukraine is very much in focus, the president has gone on sick leave. watch ukraine closely. the fundamentals of the opposition's call is still to .ave amnesty for the protesters this might defuse the situation a little bit. until there is a fundamental change in the law and a change from what president putin is demanding from the ukrainians, i do not suspect it will alter the situation that much. >> let's talk about what we have got coming up later. google, amazon are very much in focus. togoogle will be exciting see what the reaction is in terms of their overall revenues. they are up 2% yesterday on news

they were planning to sell to lenovo. amazon is great, you see no matter what happens with earnings, it seems like investors have an appetite for it. toe warner, a crucial thing look at for time warner, how many subscribers are in paid tv and how many are in cable? they have been bleeding subscribers, it will be interesting to see what extent they have lost paid tv subscribers and how much revenue they are wringing out from cable. >> we do have a little bit of a tech theme. amazon, google, facebook cannot last night. thank you, hans nichols with the latest. >> that is pretty much it for "the pulse." is up next, live with tom keene. tomorrow. he getsll see how

greeted by the u.k. citizens. you can follow both of us on twitter. guy is @guyjohnsontv, i am @flacqua. ♪

>> this is "bloomberg surveillance." >> the federal reserve ignores disruption in emerging markets, russian and turkish currencies we can. facebook report an outstanding quarter as google jettisons motorola to lenovo. scarlet fu will watch the football game but i watch the

ads and i cried when the big forces make an appearance. i just love it. >> it's ok. >> it's great, good morning, everyone, this is "bloomberg surveillance." it is thursday, january 30. joining me as always is scarlet fu and alex steele. >> i am totally pumped up about the football game. hadhe empire state building seahawks colors. i i will be in arizona so will not have the pleasure of being in new york. >> a lot going on today -- a lot in the company area. we will look at the emerging markets throughout "lumbered surveillance." china manufacturing showed the first contraction in six months.