>> missing the grade. citigroup fails a stress test. >> the imf rides to the rescue. a bailout agreement. bankruptcy. and technology takes on luxury. good morning and good evening to those in asia. welcome to those waking up in the united states.

this is from bloomberg's headquarters in london. >> we begin with the banking center -- the banking sector. have a report card and we are looking at a settlement and the latest on a widening global investigation. >> let's hear from was a former governor had to say. not pass wasat did close and you made a lot of progress. the question is about subjective and qualitative factors about how good the process is. they did not just want to rely on the basic model. they want to rely on the approaches that can make the banks folder hair out. >> let's kick it off with you.

who failed the stress test? >> citigroup is the big one and last week was about whether they in thehstand a crash stock market and an increase in the unemployment rate. yesterday was about capital plans and the process. it is not only a capital buffer issue. and rbs is the interesting one because they want to get rid of this one. flag foraise a red potential buyers? there is a reputational thing going on here. >> it is interesting. they have been knocked back and

it is interesting, given what has happened with management, as well. let us talk about what has been going on. >> is thatrs are -- where we are going with this? there is an estimate on the mortgage lawsuit that is a huge number. there is good news. with the stress test, they got the go-ahead for dividends. you have to balance these out. the big one they expected. the big news is citigroup. they have a share buyback. >> let's widen this discussion into the fx probes. you were one of the first to come out with this. now, you are reporting that it affects them. ubshere are for traders at

who have been suspended for the time being in jurisdictions around the world. it is in zürich, singapore, and new york. total caught up in this are at 30. at least nine or 10 of the biggest banks around the world. you're talking about oriented dollars. it would not surprise me. there is a market in the world and the behavior looks egregious. authorities are looking at this and the investigation down the road and thinking that the tail on this will be enormous. >> you have to set aside revenue to fund the wrongdoing. that seems to be where the banking industry is at at the moment.

>> we talk about this every week. give us a sense of what figures we are looking at. >> it is too early to tell. certainly, the noise coming out is that this will be larger and libor was big. iey expected to be larger and think the industry has been hit this. there are multiples of that, potentially. >> what does this mean for the job market? traders are losing their jobs. ?ow will they be replaced >> the pool is very small. there are only 100 guys to her at a senior level. >> this has been decimated. 30 individuals who have been suspended.

the head of the emerging market. we picked up on this. there arecelerate and interactions between traders on the trading floor the become less integral. will go tore stuff our rhythms on computers. algoritms on computers. look at what is going on with equities. you wonder if it is a good or bad thing. nevertheless, you wonder, as you automate chunks of the market, if there is potential for risk. >> computers cannot rig markets. >> no, they cannot rig markets.

they can be wrong. you can get dramatic fx. >> let's make a show of it. >> let us move on. ukraine has reached an agreement with the imf. our international correspondent joins us now to discuss the european reaction. loan program that needs to be approved by the executive board in washington and there are things that they need to do before they get the first batch of mine. it will be conditional. i want to lower subsidies for heating and they want currency to trade more openly to help with exports. can do on pension reform is another topic.

in terms of money, you talk japanthe euros and talking about billions for the eu. the u.s. is talking about $1 billion and 160 million in direct infusion. this is an economy in recession. this be the third a lot package since 2008. they need money. some of the forecast is for negative three percent growth. those are just forecast. we will have to see what happens when this comes. the economy is not look optimistic and it needs money fast. story.ve the are taking --als talking about turning crimea into a gambling zone. >> this is according to a person

familiar with the matter. -- russia has a surplus. the money could go into a general account. that is what they are discussing. this would mean a lot of russian torus coming to gamble. it would back up the government. that there will be worry about this band that the casinos of the rich will be concerned about people going to the black sea? >> if so she is anything to go by -- >> yes. it is beautiful and a nice part of the world. let us move on. thank you very much. that was a good bit of reporting

on that. >> 2013 was tougher watches. many are worried about a slow year in 2014. we talk about big events. ?hat is it like now >> you would not have thought there would then stagnation. there is a pattern warning and. look at this behind me. they are fabulous. they will see me cracking opening -- there is an aquarium here. no expenses paired. here are still nervous. they are nervous about china. there is weakness in demand. fell 13% lastna year and we have political

instability. sales to russia and brazil and emerging markets -- where there are sales, foreign currency weakness drags them down. there are key challenges that .dd technology affects mechanical watches that they sell hair and you have concern about swiss immigration. a referendum party one last month. >> you bring up the issue that interested me. watches are something we will see more of in the next years. we are seeing incredible ones coming out is not behind the scenes -- coming out.

behind the scenes, what are they saying about that? >> statistics say that we should see millions sold this year. what impact will it have for the high-end luxury watch market? they seem to be shrugging it off. i spoke to the president and he said that there was room in the market for both. and i think is different do not think. >> it is two different things. >> he wears to watches. to mechanical watches on his wrist.

back in the 1970's, battery-powered quartz was introduced and the mechanical watch industry shrugs its shoulders. it almost ruined the market. could this be another situation? many say it is not. the $200going to hit and $400 mark. cheaper watches may be affected. $55 million in the markets. it will not be hit by the watch. >> there is complacency there. the kind of giggle with the luxury end of the market. thank you very much indeed. caroline-joined --

caroline-joined us. >> flights are scheduled for delays. a walkout by trade unions at airports -- juste largest airline has made the biggest aircraft search and its history. overall, this is a list price. they did not pay this. a turkish court has overturned the government banned . they have restored access to twitter. the government imposed a ban after there were reports on twitter that implicated the prime minister in a corruption scandal. up, not bad for a day of work.

china's president continues a tour of france. we will discuss that next.

>> good morning and welcome back. the most powerful politicians in europe. president obama is meeting pope

francis. in paris.esident is you are looking at live pictures as the president arrives to meet the pope. haveways exciting when you live photos of the president in europe. >> the pope is taking the vatican in a different direction than the previous one. you kind of wonder if they see eye.eyes to to we will go back to the trip to rome. it will be interesting to see what they have to say. >> we help. a good segue. the french -- the chinese

president is in paris. let's get a sense of the relationship and how it works. >> you want to talk about how europe is perceived by china. thank you for joining us. it is exciting times. the two biggest leaders in the world. attract moreng to money and investment. >> it is about investment and trade. political dimension of chinese ties to the eu is declining and we are seeing a greater maturity. they are trying to attract chinese investors and the growth need support in and development. >> europe is a non-entity. >> that may be going a bit too

far. >> how is the relationship? of there any echoes dolly lama being a sore point? their relationship has caused problems in the past. they have taken politics off the table. what have the europeans gotten from that? sarkozy pay the price for meeting with him and francois hollande is making up for it. h --nping is about christy restige.ach -- p that and alot of discrepancy between brussels and

the member states. most significant partner politically and economically in the euro zone. once that is what they're trying to change. they're trying to sell more to china. will this strategy work? are going to see sharon ties in trade and export? >> it is highly likely. diplomatic relations. is moreilateral trade important. they have the capacity to move way from traditional sectors and gradually towards health care, agriculture, infrastructure, things that chinese need for the message reform agendas. frenchhe chinese see the

-- to do business with. the tax rates in french are a little penal. offero the french have to ? >> competition. they compete against each other. the chinese are coming to terms with european legislation and more stringent regulatory practices. added ins higher value the financial sector. they're putting one against another in a financial. the chinese market is big enough for anybody who can make it there. >> i would be happy. we thank you for joining us. we're back in a couple of minutes.

>> welcome back. let's check on the markets. >> thank you. we will start with equities. they are down in france and germany. -- the new zealand dollar.

up against the dollar by one percent. expected and investors wanted to go higher off of the back of more to come. in five minutes time, u.k. retail sales. a modest 0.3%. they will not pan out. one dollar and $.65. data drops in four minutes. >> thank you so much for that. next. >> the turkish twitter ban gets overturned. local elections. >> coming up, we are live at the world's to just walk show. >> we will speak to the chief executive of breitling. all of that is coming up. from whereng photos

president obama has just arrived to meet with the pope. .

"the pulse."ck to >> these are the top headlines. >> ubs said to have suspended traders in switzerland, as investigation into the alleged currency market widens. ubs open review of its currency operations last year. that is after bloomberg news reported in june that traders and industry had colluded to rick a global benchmark it. >> agreed to pay $9.3 billion over dispute.

felt18 things over there mortgage products. it alleges that falsely percent of the loans by the security. -- rupp presented the loans down the security. in the annual round of stress tests. the banks fail because of concerns about the quality of their capital plans will stop bank of america won approval for its first dividend increase since the financial crisis. we're just getting some figures out of the u.k. >> retail sales are incredibly strong for the month of february. the weather at that point was pretty poor. much stronger rate versus the dollar. the number came in at 1.7. the expectation was half of that. despite the weather, the brits were out shopping. >> they certainly were.

a court in turkey has overturned the ban on twitter. our middle east editor has more. a little bit of a blow to the ruling party just days before local elections. >> yeah, it kind of is and it isn't. it is innocence it'll add ammunition to those criticizing the government for the last few days regarding its decision to it waswitter, saying ill-conceived and probably illegal from the very start. on the other hand, in practical terms, it hasn't actually changed anything just yet. you still cannot access twitter by conventional means inside of turkey. we discussed the other day the nonconventional means. at the same time, the turkish government, although saying we accept this decision even if we don't necessarily like it, they also say they have 30 days in which to implement it. in the meantime, they might decide to lodge an appeal. there may be more legal avenues and legal globex coming.

saying yesterday, we filed petitions for lawsuits we've been working on together with our independent turkish attorney over the last few days in various turkish courts. it will challenge the access and on twitter. adding they expect the government to restore access to twitter immediately so that it citizens can continue an open dialogue at of the elections to be held at the end of the week. of course the government has intimated it may take a little longer than that before the ban is lifted. this, as you pointed out, head of these elections come the weekend. what would be the significance of these elections and what kind of a threat they potentially could pose? erdogan's name is not specifically on the ballot, but he has been campaigning vigorously alongside the candidates in istanbul.

i suppose what the significance is, if there is a poor showing for his party, that could torpedo his ambition to run for the presidency later this year. there are elections due at the end of august. at the same time, if his party does well, then he can use this as a springboard to the presidential elections. we will sit as a further approval of the way he has been governing turkey of the last two years. a significant election, more significant than local elections would normally be. is theople saying this predecessor to the role of erdogan. >> thank you very much. we will be covering the selections throughout the weekend and on monday morning. >> a london-based company is being held for providing a vital missing piece in the search for the malaysian airlines plane that is gone missing. we were invited inside the

company to find out how this lucky satellite company has seen its profits -- sorry, its profile rocket over the last few days. >> the search for missing theysian flight mh370 is biggest in aviation history. thousands of men and women scouring millions of square miles looking for a needle in a haystack. even with some of the most sophisticated search and rescue equipment available, finding the missing plane has been tough. the biggest breakthrough did not happen in the southern indian ocean. it happened here in the hustle and bustle of the east end of london. in an unremarkable building filled with people doing remarkable things. the satellite businesses 1979, and went public in 2005. it probably has 10 operational communication satellites that

are used by everything from ships to planes to broadcasters. what they do here really is rocket science, but figuring out what happened to mh370 required some radical thinking. a week of hard work and lots of pizza. >> the way they did that was with this. no, not the racing car, but the doppler effect which describes how signal frequency changes over distance. in the racing cars case, that sound. in this case, it was pings between the satellite and aircraft. what that allow the engineers here to do was not only figure out the corridors in which the aircraft could've been operating, but more critically, the direction of travel down here into the southern indian ocean. the hope now is that tangible evidence will be found that will actually explain what really happened. but whatever that is, narrowing

the search area will have proved pivotal. whether or not the breaker has any meaningful impact on inmarsat's bottom line remains to be seen. one thing for certain, this area of london has once again secured his reputation of the home when the hub. if you don't know, that part of london is increasingly known as silicon roundabout. inmarsathave to say, was first. maybe we should call it satellite roundabout. >> we've also had reports today a thai satellite has to take adobe's 200 objects near the search area for the missing malaysia in plain and yesterday france released their satellite scans that showed indications of objects in the indian ocean. we will bring you any relevant breaking news. >> ryanair is known as the

no-frills airline. it is revamping its rough and ready business model and looking to create a flying experience that lures may be more executives, families into the mix. we caught up with her outspoken ceo -- they're outspoken ceo to learn about more changes to come. note are actively looking as ryanair, but the sister company. ryanair will always be low fares in europe. we are talking to boeing and airbus. there is a real shortage of long-haul aircraft availability out there, partly because of delivery delays with the planes. >> norwegian, they're coming in. are they had of you? >> they are, but if you look at norwegian, they have two aircraft for the long haul raise and -- race, and two small. if you're going to take advantage of the open skies, you

need a fleet of 20 aircraft so you are a real credible challenger across a range of european to u.s. routes. with the inefficient and corrupt, the only work with the ultra sort of competitive end of the market, you compete with the ultracompetitive aircraft? >> you to get old, secondhand 747's but what you need is a fleet of relatively long haul, narrow gauge, fuel-efficient aircraft where you can pick off the secondary cities in the u.s. and connect them to many of those in europe. doing what tony fernandez has done with air asia. a low-cost regional carrier, the new set up a separate company -- then you set up a separate company that runs the long haul. michael thinks he needs dirty aircraft may be to set that up. his problem is -- >> and we don't know who he is buying from you. >> no, no, he can't find the

airplanes and he can buy them because they're such a long list of people who want to buy them. he noted the middle eastern carriers have been a problem because basically, they're sucking up the opacity out of boeing and airbus. tour ofdent obama's europe continues. use meeting pope francis at the vatican right now. later, he needs these are prime minister. we have the very latest. it is quite a trip because i guess all three of them in different shapes and forms are reformers. >> yes. right. exactly. obama is the man of hope and change -- at least he was 24 started off as president. that is dampened a bit due to reality setting in in many ways. and yet pope francis was a man of change in the catholic church. in his own way and he promises revolution, promises italy change. these three men are meeting.

there will be a lot of symbolism involved. there will be a lot of trying to recharge their images with the meetings. obama is trying to recharge his image by meeting pope francis and ramsey by meeting obama. that is sort of the framework within we are working. then you have obama as we speak meeting with the pope. it is a historic moment. in a way his try to recall the old days when reagan met with pope tau, who is also a very cap -- pope john paul, who was also very charismatic pope. some people have spoken about iron curtains. i don't want to get too far into that, that it is a very historic moment and both obama and the pope has spoken against what is going on in ukraine and putin's annexation of crimea.

we will see how that goes. it is a meeting that is both symbolic and important politically. -- heis interesting that is basically in rome to meet the pope. he is not there really to meet the prime minister. the pope is the draw, not the prime minister. symbolically, the pope is the draw. that is what obama wants to show. he was to show he's meeting an important person. also right now, pope francis vrable ratings are very high and he is the man of the poor, the man of social change, which is something that is very dear to obama's heart as well. quickly, there are a couple of things an agenda that are practical, business that he will discuss with renzi. about that we'll talk energy needs. italy gets a lot of gas from ukraine and north africa, especially from libya in which right now is in a lot of trouble , libya. this means italy will have less gas and have to buy gas somewhere. many analysts are saying the

u.s., shale gas. so this is business that he may be discussing with renzi. on the issue of security, you will probably discuss investing more or spending more for nato. renzi wants to reduce italy's defense budget. i think obama will say it needs to be increased. >> thank you so much for that. live at to come, we are the world's biggest watch fair. we will be speaking to the chief executive. stay with "the pulse." ♪

>> welcome back. you are watching "the pulse." >> five banks have failed the fed's annual stress test. they include citigroup and the u.s. units of rbs and hsbc. they missed the grade because of concerns about the quality of their capital. >> for more, let's bring in markets.com chief economist. is this negative for the dollar? >> i don't think so. it is a situation where we have known let's say post-lehman brothers, too big to fail, etc., so the banks are under a terminus amount of looking at each and everything. one thing you have to look at, is it a question of, are they keeping the capital and not lending it?

therefore, their capital base goes up never want complaints about banks not lending. at least two of the banks has a "readjustment." submit their documentation police two or three times to see if it is a situation. lend ratherob is to than just to keep the money. that is what they been doing. >> are not going to have the same problem in europe? we're just months away from the aqr. we need much more lending in europe. it is very fragile. >> anybody from the bank of england down and u.k. says, yes, we are having a nice recovery. but it is not a consumer-led recovery. the simple fact is, if you're starting to worry about our interest rates going up, and i think we have 11.2 mean people in the u.k. that of mortgages. if interest rates start going up, are they going to be having to spend 200, 300, 500 pounds

more? if we are going have any legitimate recovery and u.k., it has to be consumer-lead. one thing we're seeing now in the last two years, more and more people spending less and less of their savings. so we are having a reduction in the savings rate, consumption is not going up, and although we see a narrowing between inflation and wages, is going to have to be consumer-led recovery . it will have to be the banks willing to lend and the people willing to borrow at competitive rates. >> let's talk a little bit about ecb. softening of the line when it comes to maybe a negative deposit rate. maybe the possibility of qwe. >> probably after last week's janet yellen, if your disable under, i think six months, i think the happiest person in the whole world was mario draghi

saying i've been trying to verbally intervene in the europe. the bundesbank, talking about negative interest rates. will we see the possibility of another rate cut? as you mentioned, quantitative easing. i've spoken to two people in the last 24 hours saying, could quantitative easing be the ecb buys u.s. treasury's? that could also adjust the dollar rate. it is interesting. take a look at the euro. one of the four countries, slovakia, that has negative 1.35,ion, and the euro at is a killer effect on their economy. something has to be done. in the last 36 hours, we have had four major people from european central bank and the bundesbank is saying, we need to do something to bring the level of the euro down. >> but they've been saying for

years. thank you so much. we will see if anything happens. >> let's get some company news. toyota buying back stock for the first time in five years. toyota is growing cash pile up in fueling calls from analyst return money to shareholders or should have been investing in new factories. >> the country's finance police investigating trading in shares of want to pesky the past few months. the biggest shareholder said inspection started yesterday and it is fully cooperating with authorities. for the second time air berlin had to delay its earnings schedule. the second-largest airline says it will disclose numbers before the end of april. next, microsoft's new ceo makes his first appearance today. we will tell you what he is expected to unveil when we come back. ♪

>> welcome back to "the pulse." microsoft's new ceo makes his appearance today. satya nadella is expected to unveil plans from microsoft office on the ipad. >> how would you like to follow this act?

the good news for satya nadella is, no one expects him to be steve ballmer. or for that matter, wanting to be. -- want him to be. satya nadella is happy to deal with the tug-of-war over strategy. initiallybill gates disagreed with steve ballmer's plan to make mobile devices. it did not help that microsoft surface tablet was a dud. satya nadella microsoft promoted to manager on the business and tech side of the company. >> i'm a lifelong learner. >> is an electrical engineer from india. at microsoft.ars he ran the company's r&d unit before steve ballmer named him the head of the server group. he reengineer that business into the unit known today as cloud and enterprise. under his leadership, it is risen to number two worldwide in

cloud computing behind amazon. the dela is seen as someone who can help microsoft innovate faster as it tries to navigate the post-pc world. in the meantime, he can still count on microsoft's two biggest money makers. windows and office. >> it is time for a look at what we're watching for the rest of the day. we're joined by jon ferro in the studio to mcallen high to, and hans nichols. >> satya nadella takes the stage. are you excited about that? >> i think it is a big deal. >> i'm excited. how the mighty have fallen. that you need to take a platform from apple. >> a lot of people dis microsoft but it is still a hugely profitable business. if they can tweak it a little bit and tune it up a little bit, it will be an uber profitable business. >> rising from the ashes, that's

what i love. if he manages to do it, it will be a great story. >> a properly, let's go to caroline for what to watch. toappropriately, let's go caroline for what to watch. >> the biggest watch trade fair in the entire world. caution were chinese sales are going, where technology is going. the smart watch, will it take a hit? this is in a time for caution. this is a time to flaunt your wares. just look behind me at the most amazing stance that they produce. absolutely beautiful. back in a moment with an interview on smart watches. >> you're watching ukraine's imf bailout loan. >> do have an agreement where we are watching a brussels how quickly that 1.6 billion euros gets sent to ukraine. and how do they do it? today walk up there or send it electronically or by train? i want to know. >> very, very good angle for the

story. for our u.s. viewers, it is "surveillance" with tom keene. ♪

is not jpmorgan. flunking the stress test. satya nadella must convince the world of apple to use microsoft office. , young urban males

do not shop at jcpenney. the morning, this is "bloomberg surveillance." it is thursday, march 27. i'm tom keene with scarlet fu and the well-dressed adam johnson. good morning. ralphmy traditional lauren sue today, thank you very much. ukraine's tenure dollar bonds rose to a two-month high for pledging up to $27 million over two years. president obama is going italian, meeting with the pope this morning as well is the president and prime minister of italy. economic news, gdp is the big one. we will get initial jobless claims followed by the ending home sales. earnings, a theme, fund companies, gamestop, winnag