>> you can't stop top shop. philip green tells me about huge expansion plans for the brand and why he wants the main international flagship store in new york. we put our flag down in the middle of 5th avenue, there is no leaving. it is a commitment. we have to get it right. >> thank you, tiffany. profit at swatch surges as it gets compensation from the jeweler over a failed alliance. courtesy touches a 10 week low against the yen on that the ecb will stick to low rates.

welcome to "the pulse" live from bloomberg's european headquarters in london. i am francine lacqua. guy johnson is off today. that's get straight to my big interview with philip green, the owner of top shop which has hundreds of stores around the world. now he wants to expand the brand even further. the biggest international flagship store in new york city. >> when we put our flag down in the middle of 5th avenue, there is no leaving. it is a commitment. we have to get it right. -- our flag store bills flagship stores, we try to do something unique. it will probably be slightly more difficult. there are certain things we are not allowed to do. you move a light bulb and they want to come and see you. >> and we have more and more i am on shoppers. and yet the brick-and-mortar flagship is where you wanted the. >> i believe you need flagships.

it will build our online business as well. here, look at this store probably half our business is tourists, half local. fifth avenue i assume will be pretty similar in profile. the floor plates are perfect. 10,000 square feet. the size of this building. >> which is huge. >> if you go to most major cities in the world, there is an bestreet where you want to on that hundred meters. it takes time. >> which is why it is taking you over two years. >> every time we got to negotiation, to find the premises, we got into all these complicated different words. english, twosh and countries divided by a common line which. we were in the room on a different location with the landlord. i said, you're just inflexible. he touched his toe, said no, i am not. [laughter]

that is trying to find a shop in new york. >> that was billion at top shop owner philip green speaking to me earlier. you will hear more from him in just a few minutes. we are getting pmi figures from some of the other countries. we had france and italy. he pointed to a contraction but they were better than expected. we have the eurozone as a whole, we also have figures from germany. in terms of what we are seeing overall, they are better than expected. eurozone, they are a little short of estimates but pretty much unchanged. they still indicate expansion. it is a story that we have been telling you over the last couple of quarters. germany exceeding expectations. the only one in expansion, italy and france and contraction. this is important because of course it is among some of the factors that the ecb will look at.

pmi, just one of the data they are looking at. but the big one is inflation or the lack of inflation, the specter of deflation. will the ecb cut rates further or not? find out tomorrow. a lot of banks say they will do so by march. switzerland's biggest watchmaker swatch reported this morning. john ferro has all the details. >> eurozone data disappoints. swatch does not disappoint. profit for 2013 up 17%. the stock goes with it up 4%. they had that bump in compensation money from tiffany but the company says they have " very good sales for january this year." that is despite plenty of headwinds for the luxury goods makers. we saw a respond missed estimates. even with that crackdown on big gift giving in china, they haven't exactly had luxury sales there but swatch is saying -- mid to low brands that are going to fuel growth.

expecting optimistic numbers as well this year. >> they also mentioned currencies. how much of a problem is that? >> the ceo also told bloomberg the exchange rate was "the headache. co -- the headache." you can see it having a real impact on the company itself. the central banks, we know they put a flaw on the euro-swiss franc exchange. whether that turns into another single -- and altogether. haven inout that safe switzerland, they want a big trade surplus there. it is still strong fundamental demand for the currency. it is something that swiss companies have to get used to. >> thank you so much, jonathan ferro with the latest on swatch. that stock gaining a touch. it could be a deal worth a billion dollars. novartis is said to be drawing interest from potential bidders for human vaccine data.

bloomberg industries now joins us with the details. talk to us about the vaccine unit and what is going on with mark. >> merck is one possible buyer of that business. what is going on with merck is that there is some speculation they may be interested in doing an asset swap with novartis for the animal health business. in both divisions, animal health and vaccines, novartis is subscale by their own definition. if you look at the revenues from , it is difficult to know because that is reported in consumer health services but you can get some feel for it. they are much smaller than the rest of the competitors out there. merck is in both vaccines and animal health, much bigger than novartis. what is interesting with the vaccine side is that novartis bought -- for five $.4 billion.

the vaccine business them from there. if they get $1 billion for this, the total comes to about $2.6 billion. there was a couple other assets that they put two other divisions. one really has to wonder, when ifl we know what paper loss anything novartis is taking on the acquisition? >> the point is that it is still difficult to evaluate. that is because of the scalability. at $1.4 billion. -- it is much bigger than the animal health business. that is estimated at $300 million. it seems like from what management told us, some of the numbers they have been throwing around during the last earnings call, it doesn't make any money. or if it does, it is very small. $1 billion would be a great

price they could get for it. it comes down to whoever takes this, whether they believe in , whether there is a product that is going to make a difference to growth. when they bought it it was the fifth-largest. it is still the fifth-largest vaccine business and they haven't managed to grow the size of it. also, can whoever buys it get operational leverage? are the synergies that would make is more profitable for them? >> we are expecting figures from glaxo later on. we are speaking to the cfo. what is the killer question that investors want to know? >> with a company this large, you want to know how much impact they have help from emerging markets. we talked all about that a couple of months ago. they have made some commentary along the way. the real question for me is how successful will they be in defending the business?

there are a lot of attacks on it. they have some great new products come to market. pricing pressures, etc. that is what we really want to focus on. >> thank you so much for that. interviewing you our with glaxo's cfo later. don't miss that interview. that is at around 12:00. here is what else is on our radar. investment bankers in europe are off to the leanest start to the year in a decade. fell 22% last month from a year ago. that is according to the research firm's. rsa insurance group hired former royal bank of scotland chief executive stephen hester to lead the u.k. insurer. hester will replace -- will get an annual ceremony -- salary of 950,000 pounds.

googles chairman has received a compensation package of more than $100 million. that adds to eric schmitz $10 billion net worth. he is rising up the ranks of the rich as google's share price hit new record highs. coming up, from google last of the pebble smart watch two bit band, the fashion in tech world are mourning together. where is microsoft in all of this? we will discuss that next. also, misery for millions of london underground workers. a strike, the action starts today. is matt --ng hide caroline hyde is monitoring the action from liverpool station. >> the queues for the buses are more than 100 people deep. everyone desperately trying to avoid the tube this morning. , is theirtravel chaos opportunity to lower and big business? i will tell you why london

transport and the london underground are trying to woo some of the big retailers in the u.k. and get big sponsors all to get cash in their pockets. back to you. ♪

>> welcome back to "the pulse" live on bloomberg tv and radio and also streaming on bloomberg.com, your tablet,

phone and any windows phone as well. let's hear more from my interview with billionaire philip green, owner of top shop which has 500 stores around the world. a few minutes ago he told us he wants the brands biggest international flagship shop to be in new york. now he tells me more about his expansion plans. >> 2014 will probably be by the time we get to houston, san diego, washington and atlanta. >> did you ever think you would be expending so much? 500 stores worldwide, that is pretty impressive. >> i think it has been a long journey. overall, we have 3000 stores if we take all our brands. brand, we have a lot more to do. >> what about expansion? you have 15 new stores -- >> 15 throughout the franchise network. we are now offered in 39 countries. we have very little in europe. we have paris, germany, we are now looking at amsterdam.

andre looking at this looking at freestanding in these markets. we will see what we can do. >> you are confident about world growth? you are seeing american brands come here. i think everybody is looking for growth. of an americaauty will be, we are not starting with 300 stores. slowlyg and building exit a little easier for us to cherry pick where we want to go. >> we just heard philip green talk about plans. the fashion chain already has 500 shops. should you focus more on top shop's online presence? l.t's welcome rahuk this is one of the first

questions i put to fill up. we buy more online. why does he want to open a 40,000 square foot shop in the middle of the fanciest place in new york? he says this goes to the brand. he wants to have online presence and beautiful big stores. >> i think when you are a new brand, establishing yourself in a country, you're selling as much a lifestyle. particularly with something like top shop. you have to have something that embodies the brand physically. i don't think you are necessarily going to see a really expensive store but you do have to have flagships in key places that embody your brand. the other thing they have done is in terms of expansion, they have an agreement with nordstrom's. mosttrom is one of the aspirational retailers in america. the fact that nordstrom is looking for newness, it can bring in this new brand that it thinks is edgy and cool.

>> also, this is kind of what he was intimating. they go into the market with nordstrom and that is when they want to open more stores afterwards. they're also opening for more stores in addition to the flagship. the problem with burberry is that a kind of did the same at then lost control. -- they are really a department store. >> if you want to upscale your brand, and need to take them back. that takes a long process. the problem is when you are new in america, it is. hard to start. there are a lot of brands out there. you need to be positioned somewhat specially. you need to be visible in very special places. >> top shop is one of the only u.k. retailers trying to take on america. it is usually the other way around.

of banana expansion republic, gap, j. crew very recently in london. the factk it reflects that a lot of younger shoppers are looking for something new, something edgier. there are very few brands that play into it. zara has decided to throw in with europe and emerging markets. it is not really doing anything in america. h&m had a push on america but they have a slightly different positioning. -- thingshis space like social media make it so much easier for these brands to make their presence felt. a younger consumer is so much more connected and aware not just in the u.s. but also in emerging markets. look at michael kors. phenomenal numbers yesterday. a lot of that is the buzz they have built through social media extending across europe and emerging markets, not just their home market of america. >> i asked philip green and he said ignore social media at your own peril.

talk to me about wearable technology. we are talking about really cool stuff coming out. google, possibly microsoft. is there something for retailers to play a part of? >> i think there is still some significant barriers to entry when it comes to fashion. in terms of wearable technology, everyone is excited. at this stage you still need to prove functionality. if something is really functional, something that if you are a sports enthusiast and this helped you get better, that certain person will be an early adopter. that sets the framework for you to potentially look at mass adoption. everything else, you still have a little bit of the creepy factor. you have to prove something about functionality. things like the samsung smart watches or smart watches in general are another effort in that direction. they haven't proved that it adds exceptional value. i think fashion comes somewhat

later. again, retailers ignore that at their peril. nike is a great example of adapting that technology. --ple like technology fitness is a great point. technology can help you improve your fitness. >> thank you so much for all of that, rahul sharma. let's get some other company news now. volkswagen is said to be considering raising its majority stake in the sweetest truck maker. -- swedish truck maker. ew would have to pay nearly 5 billion euros to buy out there remaining shareholders. the company has no firm plans to do so. has a combined savings of 200 million euros from cooperation between the two divisions. airbus may set up an assembly line in india for its c295 plane. the company is planning to pitch

the plane to the indian air force next month. india is the world's largest arm importer. alibaba is estimated at $153 billion. that is after the chinese e-commerce giant posted surging sales and profit last week. the company was estimated to worry worth $120 billion. analysts expect the company to hold the largest initial public offering since facebook. yahoo! owns a 24% stake in the company. still to come, find out why one man thinks air jordan's are so dangerous they should come with a warning label. ♪

>> welcome back to "the pulse" live on bloomberg television and radio, also streaming on your tablet, phone and bloomberg.com. it is time for a look at today's hotshots. the motorcycle grand prix kicks off at the end of march. competitors are preparing. the preseason testing in malaysia this week saw some pretty impressive time scores.

the new craze is taking off in cambodia, fly boarding. it is a water sport that lets people sail across the water using high-pressure water drats. borders can dock and scam in and out of the sea. they are attached to a jet ski to maintain power. temperatures,o thousands of visitors gather to check out japan's annual ice festival. the elaborate ice and snow sculptures celebrate the country's winter olympics and re-created famous buildings from around the world. millions are expected to visit the festival over the next few weeks. pretty impressive. let's get an asset check. jonathan ferro joins us at the touchscreen. markets, a little bit frothy. >> a little bit, soaring in japan overnight. nikkei up over 1% overnight. the challenge for abenomics remains.

a 19th straight month in decline for wages. inflation, you have some of that, but that means real people, real wages are dwindling. they are getting poorer. in april, a consumption tax hike. big challenge for abenomics. how does he get those corporate step pay people more? even if you generate inflation, it doesn't matter. european stocks up on the back of that. the dax and the cac 40, but for the euro, no gains here. weaker than expected eurozone data ahead of the big one, the ecb also grappling with some very low inflation numbers. 0.7%. the threat of deflation, disinflation a real thing right now. one,services pmi, the big that if three quarters of the u.k. economy expected to come out at 59. it is well into expansion territory. that is something the bank of england has to grapple with.

will rates stay low for longer? that is a tough one. >> up next, bloombergs billionaire exclusive. we speak to the man known as russia's vodka kicking. find out. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. i am francine lacqua. we are getting data at of the u.k.. pmi services numbers are breaking as we speak. we had a little bit of figures from the eurozone and this is a tale of two fortunes. , pointing to disappointing figures. the u.k. piling ahead. pmi services were a touch below in the u.k.. , 58l a very strong number

.3. anything above 50 indicates an expansion. 58 is a pity -- pretty strong expansion. it is time for the bloomberg top headlines. the euro weakened towards its 10 week low against the yen. investors are betting that the ecb will reinforce its commitment to lower rates. that is as europe faces a slowing inflation. arts of the u.s. could see more travel delays. another snowstorm is heading the week.ast, the second this new york and boston face as much as 10 inches of snow and ice. billionaire philip green speaks to bloomberg. he is the owner of top shop which has hundreds of stores around the world. withans to expand further the biggest international flagship store based in new york city. >> when we put our flag down in the middle of 5th avenue, there is no leaving. it is a commitment. we have to get it right. stores, we tryp

to do something unique. this will be slightly difficult. with us. roustam tariko is often referred to as russia's vodka king. bloombergs ryan chilcote talked to him in an exclusive interview. >> how many cases of vodka will you make this year? >> 30 million? >> a year ago -- your sales have grown tenfold. diageo is the-- world's largest vodka producer. roustam tariko intends to overtake diageo when? >> two to three years from now. >> is that realistic? >> i hope so. >> this tenfold expansion in your vodka business is because you made an acquisition. why the change in strategy? >> to complete with big companies, you need to compete in every segment of the market.

>> you were just in the premium segment and now you have moved into -- >> economy, some premium, premium, luxury. i would like to be present and dominant in every segment of the market. >> your territory is what? >> we would like to dominate the market starting from germany to vladivostok. we are talking about central europe and eastern europe. >> a year or two ago your focus was on growing outside of that territory. mainly in the united states. >> to control the territory where vodka was born is an important task. that is why you have two tasks for russian standard. one is expansion and growth. we are now in about 85 countries. then you're talking about our homeland availability. ryan now joins us for more on

his exclusive interview. scalability is important. especially in the drinks business. how important is it to bring the business global? >> roustam likes to say. a g5 out there, five drinks businesses in the world that really control the entire market. within them, they have their stable of brands. the reason you have to be big and the -- in the past he was just in the high-end of the market. the in all segments. you want to offer them everything you can. niche he was giving premium vodka from russia. now he has more of a budget vodka as well. you need that range to be interesting to distribute is. you need to be big because you need to be able to spend to get your vodka or whatever your drink is in front of people. i know you and i think that vodka sells itself but there is so many different brands out there.

it really comes down to that. to achieve this scale in volume with vodka, 7 million cases, diageo in terms of its overall business is still much larger. revenue is about 3 billion dollars at russian standard, it is $18 billion at the as yet. you need that if you want to push into these markets. >> you make a good point there. few people understand the difference between different vodkas. very something that you rarely drink straight unless you are already quite drunk. [laughter] is it all about the market? >> you can set it. the brand is very important. some would argue that making vodka is rather cheap. obviously if you're making a premium product it is more expensive. it is about the selling. in a lot of countries it is illegal to advertise. it is about establishing this relationship, authenticity.

in the same way that you want clothes from italy or a car from -- consumers are looking for brands from the places they think they should come from. in his case, he thinks that vodka should come from russia. it is also about getting in the inside business, getting the bars and associating what you are selling with something beautiful. he happens to own the miss russia competition. >> that helps for marketing. >> he often brings miss russia into the bars and sponsors russia nights. that is the way you're going to do it, establish the vodka as the house vodka. when you go in and say, what is your house vodka? i say russian standard. i will be based on a commercial commercial marketing standard. >> attractive girl still sell. perhaps more than anything else. if you take the underground to work today, you could probably use a stiff drink.

tube workers are striking to protest changes that will see the last of 700 50 jobs. here with more is caroline hyde. how much will this cost london and its commuters? >> one lobby group estimates it could cost 48 million pounds per day. see hundreds of people are queuing for the buses at the moment. as commuters taken tell me how difficult it is to try and avoid the tube this morning. we have plunged into travel chaos as the strike continues. the strikes are all over potential job losses for the london underground. 750 jobs to go, that is about 13% of the overall workforce. the reason, it is all about modernization. it is about bringing it up today. that includes getting rid of ticket offices. more than 200 across the capital. >> as part of the modernization,

london underground is often embracing business. what plans does it have to boost income? -- there is travel the opportunity for london underground to make itself more efficient and bring in some cash. potentially make our fares lower. their aim is to bring in some 3.5 billion pounds over the coming years. lower in the big business. they are already doing it. one of the biggest grocers here in the u k is trialing with six carparks to have click and collect services. it has gone so well that tesco wants in on the game as well. even in post is looking to install lockers in some of the disused ticket offices. maybe amazon could start delivering to your local tube station. that is the opportunity. that is where the money will

come in. also, sponsorship. we have the bikes sponsored by barclays. why not more of the tubes? you have virgin, emirates already sponsoring wi-fi. why not sponsor some tube stations in -- some to the stations. in spain, vodafone has in on the game. they sponsor an entire line called line to vodafone. you get wi-fi on it. they also have a metro station named after them. it is reported it pays some 3 million euros for the privilege. also look for south korea. they are leading the charge with kia having a showroom in the subway and also some novel ways to go biting in the subway as well. it looks as though london could take the lead and earn some cash. >> caroline, thank you so much. of course those tube strikes here in london. microsoft has named satya nadella as its new ceo. bill gates is stepping down as

chairman to take a new role as an advisor. we are also following twitter this morning. it will announce its first quarterly earnings since the ipo later today. hans nichols now joins us with the very latest. first of all, how much will satya nadella make and will bill gates be more or less powerful in his new role? >> it is so hard to answer that second question. know.rst one we satya nadella will get $18 million in compensation his first year. he will get a one-off stock offering that could be worth up to $60 million. gates, his new title will be founder and technology advisor. he will spend one third of his time at the company asked opposed to 1/5. what mandela has hinted at is that he wants to be more targeted, more focused on the projects that he is looking at. that may mean seven groups like bing, xbox, the gaming division. a lot still has to be determined.

nadella has his work cut out for him. the company has a lot of cash to make acquisitions. they are a strong company. they don't have a forward-looking mobile app that companies like google and facebook have. may also not be the biggest kid on the block for much longer. how close is it to alibaba? >> the valuation of alibaba, they are a little made up. they haven't had their ipo. we do have some sense of where they are at. $153 billion. you compare that to facebook which is just $159 billion. just a couple months ago, alibaba was at $120 billion. you have seen explosive growth. .evenues were up 50% most of this information is coming from yahoo! which owns 24%. we are filtering it through yahoo!. i want to pump the stock up as well.

thank you so much, hans nichols in berlin. nike first released the air jordan in 1985. michael jordan's signature shoe is still a huge hit. a man in the u.s. state of oregon is suing nike over the air jordan. he claims it is so dangerous it needs a warning label. rachel crane reports. >> the air jordan was first released in 1985. the shoes are still in play by some of the best on the court. carmelo anthony, spike lee shot a commercial

>> in 2013, stock markets boomed. this year might be a different story. the major indices already plunged this week though they have rebounded in the past two days. could this be the beginning of a bigger pullback? let's ask neil williams. great to have you on the program. thank you so much for coming in. when we talk about the last couple of weeks, some say it is a huge correction. the market wiped off value. others say it is a reintroduction of volatility. any opportunity for investors? >> there are. it seems to me that the very soggy start reflects three great misconceptions. the first one is that the so-called rotation out of bonds was going to be swift. it is never going to be as rapid as that. the second thing is that that is the mists believe china is

beginning to collapse again. if there is one big economy that can pull certain levers to make sure it grows to target, it is china. building bridges, increasing agricultural subsidies. the third thing is naive assumption that we are now looking at a blanket on all emerging markets. it is very different to previous crises. >> as long as the markets actually differentiate. talking about the msci index and how markets were viewing them. they weren't making the distinction from turkey, south africa and mexico. i guess the market needs to be more sophisticated and realize that emerging markets have potential and the ones that need more structural reform. >> also the three big differences why this does not smell like previous russia crisis or argentina. most emerging markets no longer have a rigid fixed exchange rate to protect. the second thing is that a lot of emerging markets have used

the crisis to get their own houses in order. their external debt requirements are much lower. worse our local debt requirements but they can simply print money to avoid default. the third thing is, the fed is going to be slow to take its foot off the accelerator and move only in small baby steps to remove tapering. overblownat is still and the market should be worrying more about the eurozone then tapering. >> why the eurozone? i am worried about china. bill gross is as well. >> i lose more sleep over the eurozone then china. partly because it seems to me the eurozone is not fixed. or if it is, i was away that day. senor draghi has done a great buttaking bond yields down, no one person can address the underlying problem of a monetary union without economic union. of course the euro still being a currency of the government.

which country is going to be that government? >> we will get there eventually, won't we? >> it does take time. the longer it takes, the more ingrained the problem becomes. see the ecbed to considering taking all policy rates down to zero. much more is needed. it seems to me that ultimately for the ecb to do something like qe which i think it will, it will have to first smelled deflation andmell other countries will have to change the constitution which is fairly straightforward. the longer the ecb holds off, the greater the chance the euro goes up. >> the big problem there, it smells very much like japan 15 or 20 years ago. you made a link between what we are seeing in terms of fed tapering data and what we saw from the fed in the mid-1990's. >> we are just in the 20th anniversary for those who are old enough to remember it.

the fed suddenly raised interest rates in 1994 and there was a selloff in equities and emerging markets. inevitably, we are going to prepared -- compare now to then. things are far better telegraph. we didn't even know when the fed was meeting in 1994. thirdly, and this is absolutely critical, central banks have too much skin in the game. because of qe, they hold a big chunk of bonds. if they take markets offguard, they will be hurt. >> that is a real game changer. the user much for coming in today. up, the new eco-friendly vehicles getting tesla a run for its money. we check out the renewable car models that are slashing harmful -- ♪

>> in today's new energy, tesla's high-end electric cars have been a force in the renewable sector for the last couple of years. vehicles have prioritized cutting harmful exhaust admissions. if tesla's reputation as number one green model -- matt miller checks out the competition. ♪

>> when you think about sexy go friendly transportation, you probably think about tesla. why wouldn't you? it is a gorgeous car but it cuts about $100,000. we have five new alternatives that go for about half that price. e.m sitting in the fiat 500 it literally costs one third the price of a tesla. $31,800 and comes with an absolutely gorgeous driver. the bmw is mostly made of carbon fiber. the seeds are dyed with olive leaves and it is 95% recyclable. this is a technology that toyota is betting will knock tesla's electric cars out of the water. that is because water is all this thing produces. it is a hydrogen fuel-cell vehicle and the only admissions from burning oxygen and hydrogen together our water.

this entire car is expected to come in at $50,000. that is the amount of money that tesla spends on its battery packs alone. plug-in hybrid only takes 2.5 hours to charge with one of the superchargers. if none of those is good enough for you and the tesla price tag isn't a problem, here is another option. and it costs about $36,000 more. it has a tober charged gas engine and a 131 horsepower electric motor. it goes zero to 60 in 4.5 seconds. it is more aggressive than tesla in design and stance. >> look at these doors. >> pretty impressive stuff. it is true, when you think of new energy cars doing good for the world, do you think that

tesla? it could have a bit of an edge. for those listening on bloomberg radio, the first word is up next. for our viewers a second hour of "the pulse" is coming up. we will be going through the global market correction. will it continue? was it a correction or volatility? e-commerce, we have a great panel coming up in 40 minutes that you don't want to miss. ♪

you cannot stop topshop, philip green tells me about the brand's expansion plans and what he wants the biggest in the bigal store apple. >> in the middle of fifth avenue, it is a commitment. we have got to get it right. says chinabill gross

poses the largest risk to markets. why he calls the nation the mystery meat of emerging market countries. twitter posts its first earnings today and alibaba rivals facebook. our tech panel weighs in. good morning to our viewers in europe, good evening to those in asia, and welcome to those just waking up in the u.s. qua. francine lac >> i am mark barton, this is "the pulse," in london. a negative number, cap -- economists were forecasting a of of .7% for the month december. the drop is bigger than that, 1.6%. the previous month's gain of

1.4% has been revised lower. it is still a gain 2.9% -- >> why we care, the ecb is meeting tomorrow. a number of banks now expect a rate cut before marcus -- before march. i was just speaking to the chief economist from hermes, he is worried about the strength of the euro and the euro zone for the next 12 months. deflation or the lack of inflation will be the bigger part. andhing for pmi services retail sales when the ecb meets tomorrow. >> 1.3510. >> fashion chain topshop is planning a u.s. expansion. i spoke with billionaire owner philip green about the store they are planning to build in manhattan on fifth avenue. >> when we put our flag down in the middle of 5th avenue, there

is no leaving. it is a commitment. we have got to get it right. all our flagship stores, we try to do something unique. this will probably be slightly more difficult because of the listing building, some things you're not allowed to do. you move a libeled and they want to come and see you. lightbulb and they want to come and see you. >> there are more and more online stores. >> this will help our online stores as well. half -- half is tourists, half is local. the floor plan is half the size of this building. >> huge. >> if you go to most of the major cities in the world, there is a street -- you want to be on that hundred meters, it takes time and patience.

>> it has taken you over two years to find a spot. >> every time we got to negotiation to find the premises, they got into all --se complicated >> between british english and american english. >> countries divided by a common language. in a room with a landlord, i said you are inflexible. ys touches his toes and sa no, i am not. what a nightmare. >> he is quite funny. the u.s. and the u.k. divided by language. >> sometimes on the one on one interviews when you are sitting down, he can look as if he does not want to be there. there, the francine lacqua charm , he looked really relax. >> he likes being on the ground. there was a person with an h&m bag, what do you have h&m for? he is very playful.

also quite optimistic. one of the things i try to grill him on, social media. he says retailers ignore social media at your own peril, this is going to be the next frontier. he still believes we need all these flagship stores to basically showcase the look and the feel and also get the social media -- >> is he doing it as well as the likes of burberry, who seem to be doing social media the best. burberry is one end of the spectrum. he is not quite at that end. >> he wants to take it higher and, burberry is at the forefront of collaborations with apple, they want to be talked about. >> the outlook for 2014 retail is? i asked ifptimistic, he was concerned about correction and the emerging markets and an impact on sales growth. he said these are markets where if you get the product right,

they sell. he digs he has the best merchandise. he is a real industry is. he wants to talk market, merchandise, jeans versus waters. if you get that right, you are a winner. >> switzerland's biggest watchmaker swatch reported profits surging thanks to condensation from tiffany's -- thanks to compensation from iffany's. >> 400 million swiss francs, a 17% pop. sending the stock up another 4% this morning. the biggest pop since february last year. their outlook is still strong, having a good january. concerns, -- no concern in china right now. it is not affecting them -- the crackdown on luxury gifts. the growth could come from the mid-to low-end items, you get

the calvin klein and swatch branded product. it is selling well. >> affects, can i get away with it. >> big headache. they got a bump from tiffany's and a bash in from the exchange rate, rate cuts cut more than 100 million francs from second-half sales. the central bank put a euro/swiss franc floor there. when does the swiss franc start to weaken again? you could see this money come see a tradell surplus within switzerland. fundamental demand for the currency that is not going to go away anytime soon. >> thank you, jon ferro with the latest on euro/swiss franc and what we heard from swatch. facebook and twitter are both social, only one has passed the test of quarterly earnings as a public company. it is twitters turn.

investors will be scrutinizing numbers. hans nichols has a preview. not only be scrutinizing numbers, they will be devouring numbers. so much of what is happening with twitter's stock fluctuations the past couple weeks has been about educated guesses. what is happening inside the company and derivative guess this based on what is happening at facebook. the companies are very similar. take a look at their profiles. for twitter, 230 2 million users. for facebook, 1.2 billion users. ikea prices were similar. po prices were similar. percent of mobile ad revenue, twitter at 70%, facebook reached the 50% threshold in their last earnings. a couple things i will be looking at when we get these later today. taking a look at number of users, that is crucial. and then of course, what they

are doing with mobile revenue and how much mobile revenue they are getting per user. it is those numbers that allow us to get a better valuation and a better hold on what twitter's stock is worth right now. facebook might not be the biggest kid on the block for much longer. how close is alibaba yucc? >> who knows, we do not have an ipo or no its market cap. based on estimates, it is estimated to be what hundred $53 billion in market cap -- estimated to be $153 million in market cap. some estimates have it in the 200 million dollar range. we are going off of derivative reports, what yahoo! is saying. yahoo! owns 24% of alibaba. you have seen explosive growth, 50% growth in the last quarter. we will not know until the ipo.

then we will have a better sense of revenues and income. >> thanks. guy will be back tomorrow. >> best compliment i have ever paid you. on between going hans and guy. >> it is ok. >> hans nichols, international correspondent. later, we dig into twitter and the roundabout tech -- andy round up of tech. stay tuned. novartis drawing interest from bidders for its human vaccines business. the unit was on the table with animal health as part of a 'sssible trade for merck over-the-counter business. this artist might sell the unit separately. the business could be valued at

$1 billion. >> at&t taking a stand against russia's anti-gay law, supporting a human rights campaign that asks sponsors to protest against russia's ban on homosexual propaganda. at&t is not a sponsor of the games. could seef the u.s. more travel delays as the second snowstorm hits northeast. more -- new york and boston face 10 inches of snow and ice. forecasts call for below normal temperatures for much of the country. also,o, missouri for -- london underground workers start a strike today. caroline hyde is marketing the action. missouri for commuters. theere on liverpool street, buses are packed. every taxi is taken. commuters are coming up to me telling what a terrible time

they have had traveling across london. underground protests against the modernization, businesses are eyeing the opportunity and the underground is looking to lure in big retailers. ♪

>> welcome back to "the pulse," this is bloomberg's european

headquarters in london. let's check out the currency markets. jon joins us. pound now buys you one dollar 6273. the data, a read into three/four of the uk's economy. city 8.3 -- 58.3 is a nice number, the data misses and the trade has punished the pound. >> thank you so much. m kohl's bill gross says china's economic growth poses the largest risk for markets, calling china the mystery meat, baloney, for americans. let's get to neil mackinnon of vtb capital. we have had this correction, 3 trillion dollars wiped off. people saying it is because of china, said concerns, emerging markets.

then you have economists saying they are more worried about the eurozone than china. some say they are more worried about china. what is your take? >> plenty to be worried about, a aree list of things that worrying investors. you mentioned china and bill gross's comments. is not issue for china the gdp numbers or the growth or slowing down of the economy. everyone understands long-term challenges involved in implementing the structural therms in the aftermath of said plan of last november, transitioning away from the investment led model that has created capital misallocation and a credit bubble. credit risk is the key issue. we saw that with all the worries about the possibility of a default and wealth management,

worries about shadow banking. worries more generally about the lord abilities of chinese banking system and the leveraged situation of the economy. 200%, gdp is in excess of for is a classic red signal any country. i think those worries about china's credit, the chinese banking system are real. no doubt. you mentioned are the eurozone, that can have the potential to be next on our agenda, having been off the strains for a long time. the problemse that that the ecb faces -- policy meeting tomorrow -- in terms of disinflation, cpi inflation has been coming down. money supply growth is way off its target. >> is a time to cut rates tomorrow? >> i think so.

it would be a token. they could do that. >> to what, 0.1%? >> there's not much room. >> there is a zero balance, they are in a liquidity trap, the monetary transaction -- it is a assessment.s the ecb's balance sheet has been falling, the fed's has been going up, the bank of japan's has been going up. they have been doing qe. a part of the shrinkage is the repayment of the ltro loans by eurozone banks who want to have a clean sheet ahead of the asset quality review the ecb is undertaking. inadvertently, there has been an impulse and tightening of monetary conditions in the euro bye that has not been helped it depreciation of the euro. that reflects the tight monetary policy, the contraction in the balance sheet. the ecb faces a big problem.

whether they go down the route of buying up securitized loans from problem banks or whether they are sterilized their bond purchases, it is a possibility. then, they are walking into the territory of debt debtturization -- of monetization. they have a problem. there is always the potential for a fresh blow up. whether economic or to do with banks. i think that is clearly on my radar screen and on investors' screens. >> what is your take on the u.k., #1.6278. concerned that that will be higher and hurt export. also that the market is pricing in a spike, the spite government -- despite governor carney taking pains to say we are not tightening yet. >> governor carney has had to

take a two-step since july. he came full of forward guidance baggage, copying the fed. that has been abandoned as the inquiry comes down. no doubt the u.k. economy is recovering. the housing market is booming. perhaps in ordinary times or , weainly when i was a lad would be talking about raising interest rates. the money markets are in the business of trying to anticipate all of that. i think -- we could not rule out the possibility that we could get a token rate hike. for the u.k.. maybe later in the summer, who knows? >> many have brought forward that forecast, have you brought forward yours? what is your first hike coming? >> it could come in the summer. end of the be the world. if people freak out -- >> there is no reason for them to freak out.

for sure, there is greater interest rate sensitivity because of levels of debt, they are still quite high. mortgage debt. these are things the bank of england understands. given the wage inflation rates -- given the wage inflation rates, they have been falling and there is no need to be aggressive. the big picture argument that applies to the u.s. and the u.k., qe has created a distortion in interest rates and bond yields that is artificial. they may have impeded saving investment decisions on the part of corporate and households. what we need to do if we can is to return to a more normal structure of interest rates. he healthy. i think i can happen in the u.k. we are not in a depression. thesure we are not at pre-levels of gdp, that was all inflated by credit and consumer spending, all artificial. the new normal is things are ok,

we do not need to dramatic increases in interest rates. the ball can start rolling later in the summer. >> thank you so much, neil mackinnon, strategist at the tv capital. isery for commuters as the tube strike begins. we look at the policy changes at the heart of the industrial action. >> michael kors makes a fortune, we find out how the owner of the luxury goods brand he came a billionaire. stay with us, we are right on "the pulse." ♪\ ♪

>> london underground workers are on strike today, protesting plans to modernize. here with more is our european business correspondent caroline hyde. as part of this modernization, the underground is embracing business. what plans does it have to boost income? >> because the protesters today are against modernization, part of the modernization plan is to close down more than 200 ticket offices. that could be prime retail -- real estate. retailers seeing that business opportunity, part of the plan to bring in 3.5 billion pounds worth of investment, much of it coming from businesses. , very successful across six

different stations. they are trying click and collect services. so successful that tesco wants and on again, so do other stores. new for london. >> london would be following moves by other cities to bring business into public transport. >> maybe we can look to spain. big sponsors. vodafone not only has sponsored an entire line, they get their brand out there on the website and on the station. they have also got an entire metro station named after them called vodafone sol. maybe we could have parents at a two station -- maybe we could 's sponsor a tube

station. south korea has keo sponsoring a ul.w room in seo >> caroline hyde with the latest on the tube strike and the business -- and making business on the two. >> michael kors makes himself a fortune. his brand stock surging after reporting earnings. that made him a billionaire. details are coming up next. ♪\ ♪c no

>> welcome back to "the pulse," live from london. i am francine lacqua. >> i am mark barton, here are the top headlines. part of the u.s. seeing more travel delays as the second snowstorm this week hit the northeast. new york and boston face as much as 10 inches of snow and ice.

natural gas futures almost 10% higher on the day as forecasts call for below normal temperatures for much of the country. >> investment bankers in europe off to the leanest start of the euro in decades. from a year ago. fees have been stagnant since the financial crisis. >> philip green, majority owner topshop, speaks to bloomberg. he told france and he plans to expand further. with the biggest international flagship store based in new york city. >> when we put our flag down in the middle of 5th avenue, there is no leaving. it is a commitment. we have got to get it right. all our flagship stores, we try to do something unique. this will be more difficult the cousin of the building -- because of the building, there

are things we are not allowed to do. sticking with billionaires, roustam tariko is known as rush's vodka cane. he has just become the world's thend biggest producer of alcohol. he is bent on global domination. tariko's russian standard --duces me million cases of produces 20 million cases of vodka a year, just behind diageo. ryan chilcote talks to tariko. >> it becomes more and more difficult. television, everything is -- you need to promote products directly rather than advertising in a mass way. >> give me an example. >> in the u.s., you engage in

restaurants,mous uconn there with beautiful russian girls. offer you. online. is ae moscow mule cocktail that has been helping your sales in the u.s. >> you have the cocktail, moscow mule, ginger beer and vodka. you sell it in a copper mug. why we do this, consumption of vodka today should be not only , it is all about ritual. different rituals for different consumer audiences. >> since we spoke, not only have you bought another company and expanded your production tenfold, you won out and bought an italian winery. you are now a big italian wine producer. is the goal to broaden your offering from vodka to sparkling

wine and maybe beyond? >> i am after big categories. sparkling wine is a big category and it is growing everywhere. surprise, it is glowing -- it is growing in the same places market is growing. the four major markets for sparkling wine, same for vodka. the u.s., the u.k., germany, russia will stop >> you get your distributor to take both. >> exactly. has more on the latest. does notodka that give us hangovers. he talks about marketing. it is all about giving an image. the lifestyle is how you sell these. >> he wants to get into the on trade business, get the rant into bars, make it the house vodka. his goal is to be global. that is were he starts. he was already the biggest

premium vodka in russia, in one hundred countries outside. he is diversifying his offerings and scaling up. the second biggest producer in poland. he acquired -- i don't think he is done yet. he looks at the world as the g5, companies outk there. you have got to be one of them. >> how do you scale up? two competing with the likes of diageo? >> deep pockets. he is catching up with diageo in production. if you think about the agio in revenue, they are sixfold better -- if you think about diageo and revenue, they are sixfold bigger. it is not having a broad offering for the distributors and having scale. having deep pockets so you can invest in marketing around the in frontget your brand of people. and get them liked by the addition of readers. >> he wants the top end and also

the more affordable vodka. big change in strategy. before it was pure premium, neat vodka to be sipped. he is moving into the economy sector. with the distributors, if you vodka,er them a high-end a lower and vodka, maybe sparkling wine for a bar, that is more interesting and more attractive postop -- that is more attractive. >> tell us about him. he does not speak to the media every day. >> once every couple years. >> likes to party. >> there is a little bit of a playboy image to him. isyou look carefully, he obsessed about building his brand. there is no detail too small. until he made this big acquisition last year, that is how he built the brand.

30 million cases is a lot of vodka. atnce observed him look bottles that had one slight difference between them for four hours discussing design. importing money martini after the collapse of the soviet union. the russian market is flooded with western brands, why don't we have our own high-end vodka? >> ryan chilcote with the vodka king. >> let's see how markets are doing. >> here is a novelty -- european equity sporting higher. by .3%, at cac up goodies coming off lows and pushing higher. u.s. futures pretty flat. againstt the s&p 500 dollar/yen, chart of the day. go online and check it out. the correlation between dollar/yen and the s&p 500 was

at 0.84 at the end of january, off a record high in 2008. the closer we get to one, the inser those to get to moving lockstep. money going into the yen, risk aversion, the s&p 500 is lower. risk on, risk off. that is what it is. it, if it isind your money that is when you start hating it. surveillance with tom keene. he joins us from new york with a preview. read looking at? have the storm and a lot of our staff is delayed in getting in. thiser storm may be coming weekend. a storm and puerto rico, this is very unique to most viewers in the u.s.. a downgrade for puerto rico. an island off the shores of florida, deeply tied to the culture of the u.s.

it is one of our unincorporated territories. it is not a state, they get a credit rating downgrade. deal, michael mckee is looking to puerto rico this morning. we will talk to richard from mckinsey about the emerging markets and growing global growth in emerging markets. mckinsey doing some good work there. we will talk to rhett wallace as twitter comes out with earnings today. in one ofs a story the papers here that italian officials are up in arms because the s&p did not get the dolce vita downgrades. you have to understand the dolce vita to get italy. culturalay be, it is a thing. s&p struggles with this. no question. i love what is happening to those interest rates and peripheral europe. that has been one of the great onset stories of january.

>> how do you fight the fed? we will see what the ecb does tomorrow. thank you so much, tom. 2013 was a good year for some of fashions top names. newlydustry saw some minted billionaires. michael kors has become the latest fashion icon to join the club. here for more is rob lafranco. if you like at industry groups, a large chunk of the new billionaires of 2013 were from fashion houses. it is not going to be the same in 2014. way, theot look that luxury market has cooled off, retail stocks we have been watching are off about nine percent -- sorry, about $9 billion collectively. most of the analysts who watch the luxury sector are expecting a not so bullish year in 2014. someat sets him apart from

of the other fashion billionaires that we have come to in the last year? >> it is remarkable. he released earnings from michael kors, yesterday. they blew what people were expecting away. a lot of the expectations were built more accurately into stocks like prada and burberry. for some reason, not for him. they were expecting about $860 million in revenue, they did $1 billion. everything was off the charts, expecting double-digit growth this year as well. >> if you look at the billionaires index as a benchmark for worldwide markets and growth, where are the new crop of billionaires going to come in, what industry groups will we find them in? >> we expect a few more fashion stocks to come in. technology, of course, is

evergreen. real estate, finance are always in the background. a lot of billionaires have told us real estate is a great investment right now. we are looking to consumer products as the economy turns around. retailers and people selling top products. >> some are on the cusp like kors was for a number of years. >> he is the billionaire that could, we were rooting for him. there are at least three on the cusp we have been watching. >> not giving any names. >> don't want to give skewed to the competition, we want to see it on bloomberg first. >> tomorrow we might have some. >> keep an eye on this. rob lafranco, thank you. >> twitter reports earnings after the close of markets in new york today. will they reveal any details on the rumored move into e-commerce? we will discuss, next. ♪

>> welcome back to "the pulse," live from london on bloomberg tv. microsoft finally has a new ceo, twitter posts earnings later today. alibaba it reaches an average valuation that rivals facebook. >> a company that is at the forefront of the mobile payment revolution -- it is called zap. the cofounder is here to tell us

about it. the obvious question, what is it? >> putting your bank account onto your mobile phone. it allows consumers to pay for goods and services. >> how simple is it? this is important. i have looked at your slides, there are three things that matter, not all the competition for fills the criteria -- simplicity, scale, security. do you provide all three? and why do they matter? >> payments is quite complicated, the first thing we do, it is important because it is from your bank. the key difference with zapp, it becomes part of your bank. getasswords, you just right into the mobile banking app. instead of having long to adjust and addresses, you pay out of your account to the merchant. >> i use paypal and do everything online, why would i use zapp?

why does a retailer use zapp instead of paypal? >> your first question, you can see your balance before you pay. if you want to stay in control of your finances, lots of consumers want control over their finances. they can see their bank account balance from their bank before they make the payment. the retailers, keeping new payment providers tend to be of the transaction price. quite expensive. zapp is a much cheaper method. -- we had aok venture capitalist on monday saying she is very excited about the payment mobile systems. we understand twitter is going down that route. have you spoken to any big retailers or any big guys we talk about everyday? >> we have spoken to all the major retailers and have a deal -- a partnership -- with one of

the major acquirers in the u.k. market. when we talk to retailers, we see that they want speed, simplicity, lower fraud and lower-cost payment options. that is something that zapp can deliver. any payment method that can deliver that has an opportunity to take -- >> is there room for lots of mobile payment companies? ,ooking at some of the names who is going to end up winning? being thee recipe for technology that retailers and consumers want? u.k.ere are 35 billion consumer transactions, it is a big market. opportunities for a lot of spaces, a lot of players. the ones that will win will be the ones i can trust from the consumers. bank, it isrom your more trusted than other methods. they make it simple with nothing

new to download and note new passwords. and make it secure. that is a key thing. it needs to make sure it is secure. >> why are you safer? >> with traditional card payments, lots of numbers going around. when you are checking out online, you put your card number, your name, your address in. big companies can get hacked, target, 70 million records lost. in the new systems, zapp is one of them, they work through a digital token. just one long line, there is some of your personal details that get shared from the just oneor the back -- long line, there is none of your personal details that get shared from the retailer or the bank. >> isn't going to be like credit cards where we have four or five big players? will you be one of them? or threewill be two

digital wallets or new payment approaches through the phone, zapp will be one of them because of the backing we have with the big banks. which means that we gets scale. with payments you need lots of consumers on one side who can use it and you need lots of retailers on the other side where consumers can spend money. getting that scale is really important. the announcement of the five bank partners we have got that will be rolling out towards the end of the year gives us 18 million customers who will get access to zapp. >> when are you going to be profitable? >> payments are long-term, you have to spend a lot of money to set the systems up. will be overeriod the next few years. >> cofounder of zapp. coming up on "the pulse," another big snowstorm hits the u.s. it is the second this week. we will discuss this and what you need to watch for the trading day, next. ♪

theet's get a check on currently markets. jon ferro joins us with more. at 1.6276. trading worst-performing major currency through the morning, it is all about the services data. it is three quarters of the u.k. economy. 58.3 is a decent number, but it disappoints and is below the estimates,nth's

trading lower into the bank of england meeting morrow. much, jon ferro with the latest. nike first released the air jordan in 1985, the shoe is still a huge hit. a man in oregon is suing nike over the issue, claiming it is so dangerous he needs -- it needs a warning label. >> the air jordan was released 5, still used by some of the best on the court. carmelo anthony of the knic ks. spike lee made it clear what can and cannot be done. >> you cannot buy this. >> something else you cannot do in air jordan's, beat someone up and blame the sneakers. a portland oregon pimp, sirgiorgio clardy, is serving a

100 year prison sentence, in part for using historians to stop the face of a john who did not want to pay. for $100 suing nike million, claiming nike failed to warn him that his air jordan's could be a dangerous weapon. clardy wants a court order to fix nike to a fixed -- clardy once a court order to force nike to affix a warning label. have established just about everything can be used as a deadly weapon, a pillow can kill someone. although some receivers and hot water have been classified as dangerous weapons in oregon, they are not required to have warning labels. using them will result in a longer prison sentence. nike has not commented on the sneaker defense. in night make him think, crime and a crazy defense just do not pay. international correspondent

hans nichols is back with a look at what you need to know for the rest of the day. twitter, hans. >> twitter happens after the bell. it is really a chance to look at what the stock is worth. 150% up since the ipo. i will be looking at will twitter be offering guidance? forward guidance, we did not get that from google or facebook am a will twitter stick with the same? will they be creating more revenues from mobile? the only news we have had about twitter since the ipo is that it has been analyst reports, they do not know that much about what is happening inside the company. >> they think they do. >> hans -- >> we just flooded our e-mail boxes with nasty notes from analysts. >> the precursor to the jobs report friday, the adp is

released today. adp number, what's on the cards? >> 185,000 jobs added. there has not been a great correlation between adp and jobs, it is still fun to watch. >> that is it for "the pulse," bloombergght here on tv. "surveillance" is live from new york with tom keene. follow us on twitter in the meantime. see you tomorrow. ♪

arecalm before three days of jobs reports and puerto rico receives a downgrade. willffordable care act reduce the number of hours americans work, does that mean fewer full-time jobs? it is a snowy day on the eastern seaboard. there is another snowstorm and bonnie snyder will be along to tell me how miserable february will be. this is what bloomberg surveillance." it is wednesday, february 5. michael mckee and olivia stern are joining me. scarlet fu will appear this afternoon but will return tomorrow. if she can make it through the snow. >> hopefully, the roads will be plowed by then. >i got in ok. let's get over to the economic brief. japanese real wages fell to a global recession low of 2009 and a 16 year low.

atalso had economic data 7:00 this morning, mba mortgage applications. adp employment numbers are out today. >>