>> the world comes to europe. trade talks bring president obama to brussels and ping to paris. we're live both places. the ay and we speak with c.e.o. >> and virtual reality with a very real price tag. facebook forks out $2 billion or oculus. good morning to our viewers in europe. good evening to those in asia. a very warm welcome to those

just waking up in the united states. i'm guy johnson. >> i'm francine lacqua. this is "the pulse" live from bloomberg's european headquarters here in london. >> also coming up, a bloomberg exclusive. we'll bring you a conversation with the issues fed president. >> he talks extensively about china. first, let's get straight to our top stories. 6 jan than ferro looking ahead. >> caroline hyde is covering facebook's $2 billion bet that virtual reality is the next big thing. jon, let's start with you. new york. a very punchy valuation. >> it is. $7 billion. midpoint in the price zone. quite conservative in that sense. i'll tell you what this company

is. the stratus quite bewildering. 600 million in stores on mobile devices. 1 headline 4.. game -- 1.4 billion daily plays. the revenue from this company comes from one game. people are comparing it to the likes of farmville. does it have any longevity? is it just a fad? what comes next? you can produce a top selling game like angry birds for less than $150,000. that means competition is going to come into the market and potentially knock you off your perch. >> give us the sense of size and scope. how does it compare with some of the british companies? 2.7 terms of evaluation times sales projection this year. not that big of an evaluation.

when you look at the size of this company, everybody would have been talking about this being a bubble. this is a company that doesn't have anything that you can touch or feel. it is literally just a gale. look at some of the companies in europe. key digital. look at peugeot. look at air france. these guys have real assets. peugeot produces cars. you have a company that produces games. remarkable. >> i'm afraid of candy crush the movie. >> everyone plays candy crush. i haven't played it yet.

>> the female participation rate in that game is very high, funly enough. >> i haven't played it. >> where have you been? >> we're going to it today. >> you think about angry birds. they have extended that genre. created a movie out of it. done all kinds of merchandising the back of it. >> you have key rings. >> i'm wondering if candy crush can do the same thing. it is going to be a very exciting movie, i think. >> i'm not the only one at the table not playing candy crush. you're watching facebook and they have another acquisition. hey have $2 billion bet on virtual reality. one is $2 billion on clunky that at the moment you can fly through space in an amazingly realistic form. what is in it for facebook? according to mark zuckerberg and the reason he is spending so much on oculus is because the potential. what can you do with this? he says you can go to the doctors with virtual reality. you can have a meeting. he thinks this is the next platform of computing, trying to make up for the fact that he was pretty late to party when it

came to mobile. he had to suddenly make big acquisitions like whatsap. now he has 1 billion people using his mobile applications to facebook. now he is adding to that trying to be ahead. interesting, we were talking about it earlier. trying to diversify. what if facebook goes out of fashion. what if we stop using it?

whatsap hasn't been integrated into facebook. has instagram. >> a hedge. >> i'm liking >> i'm liking where this conversation is taking us. >> you have to remember. the c.e.o. will be speaking to bloomberg later on. the conversation coming up at 2:30 p.m. london time. >> from the hague to brussels with the morning stop. president obama continues to european tour that has been dominated by the crisis in ukraine. hans nichols joins us from brussels. the takeaway from g-7 submitted and what can we expect from obama today? >> well, the takeaway is no new sanctions unless there is an incursion into eastern ukraine. the takeaway and behind the scenes here is what's happening. they are making, they are doing a technical nall sis here in brussels, also in washington seeing which industries and economies could be affected if additional sanctions are imposed on russia. when president obama talked about his meeting here in brussels, he said it was brussels officials, the european officials that made the suggestion they need to take a close look at what they will do next. >> it has not just been my suggestion, but it has also been

the european council's suggestion that should russia go further, such sanctions would be appropriate. and that would include areas potentially like energy. or finance. or arms sales. or trade. that exists between europe and the united states and russia. >> there is a realization on the ground in the hague from european leaders that any sanctions, while they hurt russia would also hurt home economies. this is pervading the entire summit and just how you calibrate, where you focus those sanctions and which economies domesticically would be hurt. i asked the dutch prime minister about this and what he said is it is the job of local european politicians to prepare potentially their populations for some economic pain. my assessment, that

the european recovery would be broken and it would have an impact. it is my belief that we as politicians, as leaders of our countries then have to go to our voters and tell them because some of our basic principles, we as the western world want to adhere to because they are at stake that we have to do this. >> francine, president obama is meeting here will be both economic when he meets with e.u. officials and also militaryistic. it is always interesting when the president of the united states sits down with the head of nato. francine?

>> let me pick it up, hans. the trade talk story is fairly jermaine today. they are pushing on with that. the situation in the ukraine and the relationship with russia could actually maybe grease the wheels and make that trade talk story progress a little bit faster. >> absolutely, guy. there is another side of that. we were talking about trade. one of the main things was energy. natural materials. there is also this -- this is what the dutch prime ministers also talked to me about. fracturing is still pretty unpopular -- fracking is still unpopular in europe. they have to look across the atlantic to develop new technology and also for raw materials. if trade talks had been stalled for several months, and they were, the n.s.a. was a big blow, the snowden revolutions. if there is a benefit to what's happening in ukraine, it could be these trade talks have been accelerated and there is more of an argument, more of a reason for the european to come find agreement and put aside differences and go ahead and get

this up. there are holdups on all sides. it is brussels so we're allowed to be+++

airbus. cooperation on nuclear energy. and there is also -- will be the formal signing of the agreement between -- borders in peugeot. i would warn you that none of the trade deals are going to be out there. they save up deals that were in the pipeline. most of the trade deals have been very well telegraphed. >> is there any sense, greg that the french feel like they have to play catch up. the germans and the chinese, very strong relationships. the brits are trying to muscle in on that now. what can the french do to break it up? >> absolutely. the french exports only 1/3 the size of german exports. they would like to see it rise. no question. there is probably going to be a deal on helicopters. the french trying capture some of that value. they will be talking about that here, for instance, about a million chinese tour estes each year. they have a plan to raise that to 5 million. students. there are tens of thousands of chinese students that come to france. the french would like to see hat increase more.

nuclear and aeronautics and the food industry. this may not be just exports to china. that is just another way the french want to capture of the of the value. >> we'll leave it there. greg viscusi on the phone from paris. thank you very much indeed. >> shares in lloyds bank are taking a hit today. hey raised $4.2 billion. >> richard branson has been speaking to bloomberg. we asked about his newest project. the war on drugs. >> as a businessman, i have a company for 60 years. close it down after one year. i looked at the war on drugs.

portugal has a better approach than america. they have managed to reduce the amount of people taking hearn and managed to reduce -- heroin and reduce the amount of people taking all drugs. >> you'll hear more from our interview with richard branson later this morning. >> jimmy carter has been speaking to charlie rose. the former u.s. president said more must be done to stop russian aggression. >> most of the crimian people consider themselves a part of wasia. i don't think we could have stopped him there. we have to stop tim him now so it doesn't go further into eastern crimia. >> coming up, president obama has warned of more sanctions against russia are possible causing some concern amongst western businesses. we'll have that story next.

>> welcome back. president obama has threatened to impose further sanctions on russia if putin failed to deescalate the crisis. >> let's find out. let's go back to moscow. we join ryan chilcote. >> there is no one that talk about that better than andrew smers. andrew smers tran american

chamber of commerce here for 13 years. just stepped down last year. he has now founded summers and associates and told me you have advised two dozen american businesses since the crisis began? >> that's correct. >> so what are you hearing? is everybody running scared? running back to the states? >> i would not say run scared. there are two levels. those who have not invested before and are thinking about it. now they are holding back until they see a resolution. there are others who have invested heavily here who understand the russian market very well. those companies i would say are concerned, but i think they are relatively positive about going forward. >> going forward? >> yes. >> again, assuming that this matter does not get out of hand. >> just to remind everyone, the biggest u.s. interest in biggest

companies here would be g.e., boeing, exxon. mcdonald's, coca-cola, proctor & gamble. armstrong. a lot of very, very big american exeens here familiar with the russian landscape. >> and their sense is what? this is going to blow over? >> i wouldn't say that. everyone has a different perspective. what they are doing is trying to understand where this is going to go. and that is very understandable. because the situation now is kind of up in the air. is this going to be resolved or not? if you're the head of a global multinational company ready to put more money in, you want to make sure your money is safe. >> you have been here for more than a decade. you have seen other crisis. put this in perspective. we had another crisis when russia went into the former soviet state of georgia. how does this compare to that? >> this is a bit more intense, but there are parallels.

the georgia crisis in 2008 caused serious concern among american companies as to how stable the market would be. how stable would be the u.s./russia relations. would they impact business? for a month or two, things kind froze and then matters resolved themselves and peel went back to business. that is kind of my bet here. although it is a closer bet. >> maybe they wanted a little to punish american business for -- the sanctions against russia? >> i don't see any sense of punishing american business. i don't want to speculate on that. >> because they need the -- >> i haven't seen anything that says russia is going to punish american business. i don't see that. american business has significant business relationships with many russian companies. and in many ways, russian

companies and american companies have the same commercial interests and the same interest in seeing a diplomatic resolution. r >> we just have about 20 seconds. i'm in american business looking into going into russia. your advice to me is what? >> look at it seriously and recognize political relations over time go up and down. in my 13 years, those ups and downs have ultimately resolved themselvess into a normal pattern which allows business to prosper. i'm betting that is going to happen again here. >> thank you very much for your time. guy, francine. i'm going to throw it back to you. obviously a very informed view interest andrew smers there about the russian -- summers, there about a russian/american business relationship. >> ryan chilcote joining us from moscow. still to come, a bloomberg exclusive with the st. louis fed

presidents.

>> welcome back to "the pulse" live on bloomberg tv, radio, your tablet, phone and bloomberg.com. >> how are the european markets trading this morning? let's find out. manus cranny has everything you need to know. >> equity markets up for a second day. it was a nice little run on

markets yesterday. today you're seeing the biggest move in almost three weeks. today we wait for the durable good numbers that is going to really set the toll. draghi didn't say anything terribly prophetic or new. you lloyds where the u.k. government, this is the bank where they pumped 20 billion pounds into the bank in 2008. they are offloading more stock. second time. they had to discount the price. by 4.5%. peugeot, different things here on the political front in france, we're here. we're going to be active. but on the other side of this, the chinese deal looks like it is getting signed. have a look at sterling. the one more dramatic nufere currency market. -- mover in the currency market. the economy is getting better.

interest rates can't stay at 0.5% forever and we will get back to a more normalized situation. what that situation is of course is a great debate for 2015 in terms of where rates can go and how quickly they might rise. they speak. fx markets trade. 1.6531. back to you. >> manus cranny with the latest on the markets. >> are businesses more concerned about the ruble and sanctionses? c.f.o.. speak with the and we'll speak to the man known as russia's richard branson. >> we'll see you in a couple of minutes. in terms of notable data, we have u.s. durable good orders a little bit later on, but ahead of that, markets are in pretty

good shape. >> we'll have more when we come back and bring you some of that interview from mr. bullard from the fed. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters here in london, i'm francine lacqua. >> i'm guy johnson. he's these are the bloomberg top stories. china's president arrives in paris today to meet with president hollande. the meeting is an attempt to bridge the trade gap with china. they have deals with airbus to be signed today. >> qatar's air ways c.e.o. says

hey will fly to paris. al baker talked about the company's all business class service that will operate out of heathrow. >> we have seen there is a huge demand for premium travel. we decided to have an aircraft that will be fitted with all business class, 40 seats in two cabins which we will operate. unfortunately, we will not be able to operate from london because the aircraft is a bit heavy. >> and rupert murdoch's sons just got promoted within his empire. lack lan has been named as nonexecutive chairman. croon cran, that is basically,

it seals like the succession. these are the two brothers, sons. >> lachlan is the oldest brother along with james. they have two very different parts. rupe ert is 83 years of -- rupert is 83 years of age. lachlan had a long history with news corp.. didn't get along with a couple of the boys. he comes back in as a nonexecutive co-chair at 21st century fox and news corp. james comes in as co-chief operating officer. side by side with chase carey. no new role for elizabeth. i'm just reading from the news release if the father. he talks about realizing lachlan's entrepreneurial leadership. this is about bringing the children back to table. >> elizabeth is actually very

successful in her own right. she has her own media hub. >> she is very much a success. if we look at lachlan, most of the company is written about him. he departed in twen. did he have difficulty with the fox news boss, with the new york post, businesses that he ran. this is very much about bringing back -- bringing lachlan back very much closer to the father's side. >> how is this going to go down with investors? >> this has been long suspected that rupered murdoch would make this of play. i want to talk about james, the younger brother. what interesting here, is that you know, he is going to take on very much the tv side of the business. he has a direct responsibility over fox networks. he has a great deal to do with what fox is doing in the states. this is about bringing the

family really, really back to the control center. a great deal of criticism has been lobbied at rupert murdoch senior in terms of having too much power and control. now they have two siblings. let's see how this goes on. >> we have this potential family feud. we don't know. you never know what ghosn side families. thank you. >> time for a bloomberg exclusive. nown as the richard branson of russia. ryan chilcote spoke with him about the situation in ukraine. take a listen. >> there are a lot of crisis in russia. we stopped counting them in this country. >> the sanctions that we have seen so far against russia. >> i'm a businessman. as you said, i'm one of the few who is really not in politics.

it is really -- not any part of the business. right now, those sanctions never -- i'm happy for that. >> we have seen it affect some of your competitors. some other banks. the first ever russian bank to be sanctioned by the united states and another bank called s.m.t. they had theirle credit cards turned off by mastercard and visa. >> it doesn't matter. they are not big players in the market. this is -- the consumer mark. the consumer credit market has issued today such as -- etc.. there are a lot of russian consumer credit markets. but the sanctions that took place against the bank, have

nothing to do with -- those banks are very small on the marketplace. >> you mentioned overleveraging, a lot of talk about borrowing costs coming up because the central bank here lifted them. russian corporates are finding it difficult or more expensive to borrow abroad. how does that affect you? >> again, we are only consumer banks. we don't really know. >> tell me about crimea. this is now part of russia, at least as far as russia is concerned. is tinkov systems going to go there? >> the pleasure of having different businesses that we don't need any physical operation. it is only online. already in crimea. people cannot apply for the credit cards. we are not doing it yet.

when it will be possible, we might do it. why not? >> what do you think about crimea joining russia. a lot of people in the west saying the way it happened is just evil. >> i'm a patriot. i'm russian, so i have to support my country and my president. i might discuss it in the bar with my friends and i might have different opinion, but talking with the western press, i have to say i support them. >> gotcha. we have seen a lot of hacker attacks including the central bank here in russia and your own bank. what's going on? is that some kind of ukrainian hacker attack? >> i don't know. it might be. we got some attack last night. the first time it ever happened at this bank. we are doing well. not good.

it might be from ukraine. i cannot tell you. >> you expect business to get back to normal pretty soon? >> it is already normal. it is just annoying. >> let's talk about tinkov credit systems. doing very well. share price, however down 62%. what is it that investors don't understand about your business? why are many of them still shorting it? >> well, the share price was really a disappointment. nothing really changed since then. all members still there. nothing really changed. there was some speculation in the russian press about -- >> you're kind of the -- >> nothing really happened. don't know. it is irrational to me. i don't understand why it happened. as a business, we are doing very

well. we are making money. making tons of money. >> do you think the fact that you called them dumb -- which is a metaphorical way of calling people maybe not so smart, do you think that maybe got personal with investors? >> i don't know. if i will tell them they are the how intelligent person,, could you sell? i don't understand. why would you buy at 17 and sell two weeks later at 6? >> you have opened a series of businesses here. you're the serial entrepreneur. with all of this geopolitical chaos. is russia still a good place to start a business? >> for me, russia is still the best place in the world to make money. the best. even than china. you talking about china. people are not making money. in russia, you make money.

get cash out. pay the dividend. this year we're going to make $200 million. the best place to make business is here in russia with the kremlin. >> ryan, i don't know if my favorite part was where he said you can make money here in russia. i support the president with the russian press, but with my friends, i might say other stuff. >> i think it was nice how he shrugged the comment he made about investors calling them dumb. a lot of them took it personally and you saw the share price plum. the head of his personal relations have work to do. he has been remarkably successful with a number of businesses here. the one thing is of course that after that listing, the share

price down 62%. one of the big things. it is basically like the capital one of russia. they send people credit cards and hope they are going to activate them. there was a question whether they could deliver the credit cards to people or whether they would have to pick them up in branches. there was a russian law that looked like they were going to have to pick them up in branches. a very interesting guy. as he said very patriotic. just after russian forces surfaced in crimea, he said he is ready to sign up. interesting perspective. >> we call them richard branson of russia. he sounds more like the michael leary of russia. >> if he has a place in london, it would be great to have him on the set. a fantastic interview. ryan chilcote joining us from moscow. ryan is going to follow that up. he has another great guest

coloradoing up. -- coming up up. >> we have another bloomberg exclusive. st. louis fed president bullard spoke to betty liu. >> i saw the default, i admit i'm not an expert on it. i saw it as a situation where the country's trying to go more towards a market system and the failure is allowed. >> some have said it is actually healthy. >> to me that is a healthy sign for the future of the economy, because it has to be that way. not every business is going to be super successful all the time. certainly in the u.s. economy, there is a lot of -- that what you have companies doing well and other companies taking a strategy that didn't work out that well. but that is ok. it means they took a risk. they saw an opportunity and maybe for whatever reason, it

didn't work out and need to get some defaults. i would regard that as a good outcome if you have an innovative corporate sector. >> is there a possibility we could see a lehman's style crisis or bear stearns style crisis in china? >> that has long before the concern. we are watching the way the rest of the world watches china. housing has long been a concern. especially household buying apartments, buying houses just for investment purposes. and i could see as capital markets are liberalized in china, you might get a healthier situation where people have somewhere to put their savings other than speculating on land and apartments around the country. so we'll see how that develops over the next couple of years. you know, it is no secret that people are concerned about the housing market in china. >> absolutely.

we're speaking with david lee, a member of -- a former member of the people's bank of china who i'm sure you know very well. one of the reasons he is not as concerned about the crisis is that china has a high savings rate. not just among individuals but corporates and banks and all areas of economy. would you agree with that? >> yeah. they definitely have a high savings rate. that is certainly a good factor on the housing, i would also say there is a lot of cog nizzance of the issue. it is not like this is going on and no one is paying any attention. the government has talked a lot about how could we cool this thing off and get to a more sustainable outcome? >> we'll bring you more of that exclusive interview with the st. louis fed president coming up a little bit later. > also coming up, we have --

the candy crush developer starts trading today. can they continue to ride the surge in mobile uses? we'll discuss that next. ♪

>> good morning, everybody. welcome back. king debuts on the stock exchange later today. it is valued at about $7 billion. as companies continue to build their mobile businesses, what

will be the next platform? facebook just made a $2 billion bet acquiring oculus. george, great to have you on the program. first of all, let's start with this virtual reality. facebook is spending $2 billion. is it worth it? we talk about wearable technology and wide tng use of this beyond gaming. is it going to work out? is it a good bet? >> everyone is talking about wearable technology at the moment. it started in humdrum areas like how many paces have i walked? the nokia toy. with virtual reality, there is this idea of transforming a remote experience into one that has proximity and again, engagement. it is a nice idea. the headset itself looks dreadful but the smarts that is

powering the headset. >> facebook trades on something that tells you that investors are making it very clear to management go out and spend money. he is just doing what investors wanted him to do, aren't they? >> no one would give money for mark to just let it sit in a bank account. the next positive thing for the company is looking for the next best thing. is trying to change the world. goodness only knows if this clunky headset will change the world. at least it does illustrate good thinking at facebook. instagram, whatsap, we called it a natural hedge. he basically bias and it is almost a face guard if facebook were not to do so well. >> our tech handbook 101, one of the things you try to do is

not to integrate these little companies too quickly. what will happen is that the people will walk out the door. the best idea is to keep it sort of hands off for time being. >> we talked a little bit about king. you have been on the program before. you said new york, you can have this one. found the pipeline here in london is healthy. plenty of tech companies coming through. when we look at the company as it progresses from here. it is a one trick pony. the investor base may be gets what it is doing now. to draw a line back to facebook. facebook is understanding that it has got to have the conglomerate structure. lots of different ideas. king doesn't necessarily do that r somewhat disappointing are the numbers suggesting it is a one trick pony. in fairness, they have put more projects in the portfolio. they now have three in terms of

the top 10 list. in terms of where the revenue is coming from, it is coming from that one game. album number one sold. second one, 100,000. what that will do is get people thinking about zynga and the fact that you had an i.p.o. and it came out down 5% on the first day and slumped 80% thereafter. the story here is one about the title and getting that second album right. >> you're right. we did say the them thing about facebook and the share price there increased significantly. we have to leave through it. just a reminder that king's chief executive speaks with bloomberg a little bit later on. >> we're back in two. ♪

>> the ambiguity around the notion of when the q.e. program ends because what does that mean? does that mean october? does that mean december? does that mean january? sometimes you see in markets different interpretation of that. frankly the committee has not really talked about that and so i think that is what is getting the timing a little bit off for different people. want to stress this is not a

-- not a ta dar-based calendar-based popularity. what we're going to do is going to depend on the data. >> you'll hear more from him a little bit later. >> for a look at what else we're watching today, we're joined by hans nichols in brussels and ryan chilcote in russia. hans, let's start with you. you're following president obama. >> president obama is visiting cemeteries right now. later he will be making a speech here in brussels. we'll see to what extent he accepts russian control of crimea. yesterday in that press conference, he came pretty close to accepting it. we'll see how far he goes here and how many more threats and warnings he has for putin. >> you have a big interview

coming up. who are you talking to? >> we're going inside russian business. how are they reacting to the sanctions? we have the c.e.o. of russia's largest mobile services provider. they have more than 100 million subvibers. -- subscribe rs. stay tuned. back to you. >> thank you. jon, you're watching the king i.p.o.. >> let's call it the candy crush i.p.o. the c.e.o. talks to bloomberg in 4 1/2 hours time on "market makers." what is next? that is what he is going to be asked. >> how do you keep this story going to justify the evaluations. >> make a movie. >> candy crush the movie. >> actually, the little cuddly toys the key rings. all the paraphernalia that goes along with it. thank you.

"the first word is up next." for our u.s. viewers, "surveillance" is up next for for new york. in europe, we have a second hour of "the pulse" coming up. ♪

the g7 is focused on a regional power as russia acts out of weakness. president obama from belgium in this hour.

facebook, it's making the acquisition overnight and stuns the technology world. breakfast, it's a headline -- outrageous -- "bloombergg, it is surveillance." we await a speech from the president from belgium. aboutoculus with david kirkpatrick and a moment. will talk about what is happening overnight with the ham who could decide in mid-may whether further stimulus is needed to keep inflation on track for two percent inflation. , the federalister president of st. louis says policymakers have not necessarily committed. he spoke with betty liu in hong ko