>> turkey's prime minister points to a crackdown. he seeks to avenge for a series of corruption scandals. victory ineclares local elections. francois hollande expenses a shakeup in his government. >> plus, feeding the frenzy. as european ipos have their best start in years, we will tell you what is driving companies to market.

good morning. i am guy johnson. >> and i am francine lacqua. excusesp is a bloomberg -- exclusive with former tesco ceo terry leahy. >> it is the watchmaker that is just dripping with innovation. we will head to the world's biggest watch show to see what makes one start up take. k. tic >> turkey's ruling party has come out on top in elections. our middle east editor elliott in istanbul.ve >> a huge victory, francine. gone was once mayor here

was once mayor of istanbul. more than it got in the last elections. the only crumb of comfort for erdogan is that he didn't win as many votes as he got in the last general election. that could give them some sort they come ton fielding candidates in the presidential elections due to take place in august in which ise minister erdogan expected to run himself. >> he spoke to supporters partye of his headquarters in i'm kara -- in ankara.

a slew of corruption allegations have been dogging his party and him since september. he says that he is going to go off with them. trusted the prime minister and his stewardship of the economy, which we saw this morning. it grew 4.4% in the last quarter. they chose to trust him rather than the allegations in social media. >> what else is on the agenda? economically speaking, guy, things are expected to continue much the same way they have before. that is something that has reassured investors in the short term. the turkish lira has strengthened to a 10 month high. the stock market is rallying as

well. many people think foreign direct investment will trickle back into turkey. the fourth quarter of last year was good for the economy, it is slowing down. it is not expected to grow by much more than two percent this year. that is half the rate that turks have grown accustomed to. if that slowdown begins to hit turks in their pockets before the presidential elections in august, that could spell some trouble and bring a few problems to the prime minister if he does what many people expect and runs for the presidency. for now, he feels he is in a very good and solid position. in all likelihood he will run and he will see this election as a vindication not just of his policies, but of his competent attitudes toward his enemies, particularly twitter and youtube, which remain blocked a conventional means in this country.

turks off on a multitude of ways around these blocks by prime and his erdogan administration. the full day in istanbul. let's continue our special election coverage. france president francois hollande. bloomberg reporter has been following the elections from paris. the socialist party took a beating across the country. other than that, it was quite a sweep of cities across the country that shifted from the socialist party to the right wing party. two points i will make. one is that the party that benefited from francois hollande's unpopularity was the

unp, it was not the national front. there were fears of the anti-european union party. in the end, they won the mayorship of two minor towns in the south. they did not make the breakthrough that was expected. this is to be expected. is not a popular government. in general, local elections in france are used to punish the government in power. we saw that under jacque chirac. swept.ialist party now, it is the reverse of that. >> is probably easy to dismiss it and a protest vote. nevertheless, all we're hearing is that we are going to see a significant reshuffle as a result of this. use this asnde will a way to shake up his team. >> that is the other great tradition in french politics. there is almost definitely going

to be a cabinet reshuffle. it has been in the works for quite a while. several ministers are either unpopular or squabbling with other ministers. there is not the greatest amount of discipline over this cabinet. francois hollande will definitely use that to put some discipline into his cabinet heard it may also involve shrinking the size of it. come up with numbers somewhere well into the 20's at how many ministers there are. you may want to bring that down, which is in the -- which is the case in most european countries. the visit -- then there's is the question of what he is going to do with the other party leaders. lacking a bit of charisma and authority and character. francois hollande may decide to sacrifice them. who replaces him. a huge number of candidates out there don't come with their own set of handicaps.

areregory viscusi, bloomberg reporter on the scene. joins us nowote with details from these talks. >> the main take away from these talks, the main conclusion, is that the two sides agreed to talk. the second would be an observation for me. you have two cold war powers discussing a third country, in this case ukraine. it seems an awful lot like the old days. what do they want? this meeting happened that the initiative of the russians. it was president putin you call president obama he was in saudi arabia. the russians want three things. one, they want to see the russian language on equal footing as a state language in ukraine, along with ukrainian. they want to see devolution. thee, they want to see ukraine will never be part of nato.

the u.s. wants pullback of russian troops from the ukrainian border. there are about 40,000 according to u.s. estimate. they are potentially ready to move in. secondly, the united states elected to the russians deal directly with ukrainians, which of course the russians have refused to do thus far areas they say the new government is illegitimate. where does this bonus? the two sides are talking and maybe we will see some kind of august on the road. ukrainians say it is outrageous that the russians should try to dictate what they do with the constitution. give us some details on the company said it made some statements against the sanctions. beene german ceos have whingeing about how the different entities have been handling this conversation. russia is germany's 11th biggest trading partner when it comes exports. 36 billion euros of german goods

sold in russia in 2013. ceo.entioned the siemens said we are not going to let the short-term volatility affect what is a very important trading partner for us. siemens. just we saw the same with decent crop en-krupp. guessing their share price come down by 15% over the last few months. not because of the threat of losing business in russia, but that weakening of the ruble, which is itself a byproduct of the geopolitical tensions. >> ryan, thank you very much, indeed. >> inflation numbers will be released in under an hour. we will keep pressure on the ecb to take action. >> manus cranny joins us now. an important piece of the jigsaw puzzle. prince -- this

number is not great. is outright deflation in spain. the retail sales declined. this is something we were talking about this morning in earlier shows. is it locked in? are we in what some people are --ling a self fulfilling stop transacting, stop buying. are we self-fulfilling at home. do you know what? the one thing everybody wants to know. let's talk about two of the biggest protagonists. he is saying look, don't worry about this deflation at the process -- deflation process at the moment. unprocessed food. mario draghi has a thing or two to say.

don't worry, our actions will taken quite soon. haven't quite kicked in to the extent that one would expect. he stands ready to act. the backdrop is that there is a lot of talk and a lot of chatter, but there's very little action. >> are we expecting anything this week, either qe or --? >> the market is ordered with oyed with hope? >> take a look at the euro-dollar. traders have cut their positions , their long positions for the first time in over a month. , they needve here is to act, but they're not actually delivering. goldman say that a rate cut is potentially on the cards, but only really if you see the currency above $1.40. it triggers an alarm bell. it is not triggered -- it is not positioned yet.

goldman sachs is the key issue is liquidity. you cut the deposit rate and it could have quite an effect. >> they are panicking. >> thank you, manus cranny on produce.ecb can >> to talk to there were several european officials. michael lewis and high-frequency investors have made lots of money by taking advantage of legal loopholes in the u.s. stock market. the author has a new book out. he showed that his research for will makeill be --

some stunning conclusions about the traders. ,> united states stock market the most iconic market in global , by whom?, is raked by a combination of the stock exchanges, the big wall street banks, and high-frequency traders. the general manager for china has left the firm. chief executive elon musk is said the chinese sale story should match american levels as soon as next year. it is announced it will only use raw material source in north america for its proposed u.s. factory, the giga factory as they're calling it. >> we will head back to istanbul as turkey's prime minister vows a tract on creators -- on the aitors. on trader

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>> turkey's prime minister is pledging to proceed traders. elliott gotkine is live in istanbul. you, guy. social media dominated the selection. not in the semi that it dominates others around the world, for example the united states. saw on of the blogs we twitter and youtube in the run-up to these elections. i'm joined by the editor in ofef of turkeys equivalent

tech blog. did hinder them i have no impact echo i had impact. wanted tominister stop those allegations being distributed through social media. people were using social media less than the general or middle or high middle level. it worked to some extent. >> was her way for him to flex his muscles for his own people, who may or may not use social media? he has to show that he's powerful and when someone attacks me with to attack back when someone attacks him he will attack back. when it is allegations, they

need -- they feel the need to show it to their own people, to their voter base which is around 45 are sent. there have been at least two court rulings ordering the government to lift the ban on twitter. they're saying no, it is not doing it for now. they have five days in which to do so. they will probably appeal anyway. do expect official blocks to be lifted anytime soon in turkey? >> personally, i believe it is early to do any predictions. there will be larger time given to those companies like twitter and google. they may be blocked, but you have to remove those accounts and posts from your platforms because we have support of 45%, as you see. , we haved reason is

another election coming in 2015, the general election. many people here in turkey expect more allegations and more voice recordings and videos to be published to the platforms. it is really critical for the government to keep control over those platforms. >> who have throughout this campaign. as one of the few countries spne everybody knows what a is. veryal private network twitter users could come under attack if the government can't stop twitter altogether. some 20 people, especially those accounts holders who distribute the allegations, i also expect that they will be attacked or least prosecuted.

>> a lot of them are anonymous. they'ree other hand, just starting a widespread campaign, collecting everyone that uses twitter. putting them all into jail would be really dangerous for the government itself, in terms of >> thanks for joining us this morning. stumble -- we he are in east istanbul. >> elliott does look stunning there. elliott gotkine joining us from istanbul. thank you very much, indeed. as we head into break, let's get today's pulse number. >> 3 billion euros. that's how much money to con men were caught with as they tried to enter the vatican bank. they had a suitcase stuffed with fraudulent certificates. this is straight out of a

hollywood movie. >> were going to do 3 trillion euros worth of fake bonds. that is not going to raise eyebrows. >> i love this story. >> are going to take a short break or eight seed in a moment. ♪

>> is time for today's hotshots.

took lace in race virginia. lastbattle it out over the three laps. djokovic beatovak out number one ranked player rafael nadal. game, --ominated the djokovic dominated the game winning in straight sets. let's see how art european markets are trading. manus cranny is that the touchscreen. >> equity markets building on last week's gains. quarter, it is the u.k. that is down nearly two percent. you're looking at germany up one third of one percent.

the real storm of this quarter has been done italy and spain. italy up over 13%. a little bit of breaking news in the past half an hour involves the banks. the foundation is selling 6.5%. a foundation holds a great big paschi.f banca monte banco popularity is also available. it is a day for italian and thai and banks it in moving higher. on u.s. futures. janet yellen speaks a little bit later today in chicago. that is going to be very closely watched in terms of the equity markets and in terms of the dollar. s&p 500 up one third area back to you. >> manus cranny with your asset

check. >> european ipos have the best shot for years. >> we have a bloomberg exclusive with the former tesco boss.

>> welcome back to "the pulse." i'm francine lacqua. >> and i'm guy johnson. these are the bloomberg top headlines. >> turkey's prime minister is vowing to chase so-called traitors behind corruption allegations. >> belgium is looking to position in china.

>> deutsche bank is considering whether to refrain from working on a nuclear power group ipo. >> let's stay with the ipo theme. it has been the best start of the year for european ipos since all the way back in 2007. let's find out what is been going on and was been driving the trend to market. caroline hyde joins us now. 18 billion dollars per it up significantly on the previous year. triple what we saw this time in two thousand 13. a flurry of deals is coming. there is a euphoria that the recession is virtually ending in europe. we have seen big that smit on the consumer. consumer focused companies have been the center of a flurry of deals. the discounts are -- the discounter, cyclical companies

-- up 27% since -- pound land up 27%. real bets for the consumer. interesting that that theme is going to continue. we understand just eight online takeaway retailer could be valued anywhere up to 1.5 billion pounds. keep an eye out for saga. old. are over 50 years it could be valued at 3 billion pounds. still, pipeline big for europe come particularly london. that is a stock exchange for many people want to be left -- it is a lot of u.k. companies. how is the u.k. compared to europe. how do they both compare to the u.s.? economy has been exiting the recession quicker than european rivals. maybe the turnaround will be coming forward in the peripheral

countries. interestingly, europe is way ahead of the united states and ahead of asia as well. china opened up its market. we have not 48 companies come from china. that really helped the pace in asia. $15 billion raised in the first quarter. the u.s. is the outlier. we saw a drop in share sales. maybe the federal reserve is rating that stimulus. europe has been leading the charge. we will see how the rest of the year pans out. certainly, the first quarter has been a strong one. a great coupleen of years. we have a lot of catch-up. dynamic.an interesting thank you, caroline hyde. >> breaking news this hour. the world's oldest bank, the

foundation will be selling 6.5% -- what do we know about this? was it anticipated? wasn't the breaking news this morning. the deal is subject to regulatory approval. up as muchhave shot as 10% in trading this morning on the news. are also watching barclays. is been 19 months since anthony jenkins took the reins at barclays. some investors are quite disappointed. , the target that he said, particularly on profitability and cost cutting compensation in particular seem to be getting more distant instead of closer.

hence, investors are telling us what they want to see is more detail, more information as to when he is going to be able to turn around and deliver those returns. what they're saying is look at the industry. a lot of banks of had to reconsider their model because of the demands on business. see're saying we want to how this can be achieved at barclays and which business area may no longer be core to the bank. leeza martino see, chief european financial correspondent. are chiefrtin ritchnucci, european financial correspondent.

>> what is the latest? what is behind the latest recall we are seeing? friday was cause for a lot of head scratching in the u.s. when gm recalled the number of cruise -- the number of cruze models. they were recalled for problems unrelated to the ignition switch that is the region -- that is executive will be testifying on capitol hill. they also recalled a number of sport utility vehicles and trucks that are fairly new models. before when as carmaker comes under scrutiny from regulators. you really don't want to get caught having trouble with recalling vehicles again and being hesitant. of runningphenomenon

into trouble and taking precautions. ane gm saying they're taking abundance of caution in recalling these vehicles and adding to their tally, which has gotten bigger and bigger as you mentioned. how're gm's sales expected to be affected by all this? we are finishing up the month of march here. gm is supposed to have a small increase in the u.s. in march. this'll be about in line with the ford is expected to do in march. that would suggest that the recalls aren't doing too much harm. there's an time, expectation that march might see a rebound because they had such crummy sales in january and february when snow really impacted results across industry. >> greg, thank you very much.

>> larger class sizes pose a challenge to teachers, but technology may offer a solution. in one los angeles school, instructors are combining laptops and lectures. >> take a highly trained teacher, laptops loaded with education software, and 36 students rotating through three activities and you have a new way to teach kids. it is called blended learning. smith tech school in los angeles, she teaches romeo and juliet to her high school students. in the classroom, students are divided into groups of 12. it is hard to teach 36, but a station of 12 is easy.

lesson,she teaches a another group uses their laptops for collaborative work. >> are you working independently right now or together? others work independently, using software that helps their concentration level. >> you start going into bigger grades and it gets more complex. the questions are more complex. he really have to become a better reader. what does blended learning allow you to do in a classroom that you couldn't do before? >> with this model, it forces you as a teacher to structure your classroom in a way that no kid falls by the wayside. >> technology also helps keep these digital natives on the right track there it works i'm wondering about a couple things.

the principal uses remote desktop to keep an eye on her students. >> to come all of mr. romero sunscreens. romero's screens. that and send on say, are you i can supposed to be watching this video? the staff -- >> the staff believes teaching and technology will develop skills critical to future students. is not what we had as kids. >> are member they were teaching is calligraphy at school. it is different now.

>> i might've been in that class. still to come on "the pulse," it is the watch tripping with innovation. we will tell you more about this start up and what makes it tick. >> a bloomberg exclusive with , terry leahy.eo we will discuss one of his future ventures. ♪

>> welcome back to "the pulse."

check out the global videos channel on the free bloomberg tv plus cap or on apple tv. >> french voters have spoken and their president is listening. francois hollande is prepared to shake up his government. the far right parties are gaining ground. the business -- should the business community be concerned? >> great to have you in the program. give us a sense of whether -- two businesses now need to step up and counter? >> good morning. i think that the reason is

clear. the reason for this growth of the far right is that people are not confident in their future, either young people are not so young people. they're fearful about their jobs, their employment. poverty has been growing increasingly. in the study that we did last year with the support of a consulting firm, we found that eight point 5 million people in france are living in poverty. this is very real for these people. of livinge equivalent on about 18 euros a day for a family of three. imagine having five euros for housing and four euros for food. it means that people need to make choices. population last year renounced or delayed health expenditures.

>> the problem is that businesses need to be given incentives to be able to do this. i appreciate there is a social element to all of this. the problem is that the government at the moment is taxing business so brutally in being seen as is antibusiness by many people in europe. how do we get businesses to get on board when they are really having to deal with the situation is pretty aggressively negative for them? i think businesses can look at societal challenges as an opportunity for growth and innovation and to engage collaborators and employees in a more vivid way. as a lose-loseit situation, but we have seen that businesses can actually tackle societal challenges in very concrete ways.

date can also be more inclusive employers. , anking about people over 50 single matter that may have an issue getting into the labor people can have a competitive strength in the position they are in. i think businesses can develop when people change major skills. the situation of fear and lack of trust in the future is also linked to people being resigned. it trained people and encourage people to be creative about problem solving, propose solutions and take action, if you train your employees to do this, you will be a more competitive company being able to thrive in a society where the pace of change is accelerating. we have seen companies taking these constructive and positive actions in the midst of the a fund was008,

created to protect the fragile ecosystem. working withnk is social entrepreneurs to identify clients at risk of overinvestment in a very early stage. for them, they are actually saving money. these companies have repaid their loans and prevented a social crisis. >> what you talk about is all very nice in principle, you're talking about big companies are at france needs is innovation. brothers two sisters to friends deciding that they want to set up the company and feel comfortable with legislation and tax in the country. this is something that has not been tackled. what can businesses do now to tackle that? think businesses can look at their own core business and the products and services to be

more inclusive. we has a successful example. this is an emerging trend, companies have shown that they can be successful and being proactive and innovative like the one i just cited. big utility companies are working now in fragile neighborhoods with totraditional partners re-create a social link with the population that is isolated now. in a situation where government alone cannot solve the societal issues, so social organization can do this. business is a responsibility as well as a way of doing this, being one of the biggest economic layers in the world today. , thank you. schmitt >> election theme continues. her alive in istanbul. turkey's prime minister pledges

to pursue traders after his election win. elliott gotkine joins us there for a quick review. -- wages to pursue trade towers itors after his election win. >> they're certainly seeing this as a victory all around. bank is saying that now turkey is more polarized than ever. it could be more trouble to come third citigroup saying that rdogan could use performance in these elections to bring forward next year's general elections to this year. using his current popularity to play on that, but also as a bit of an insurance policy encases -- in popularity starts to slow down.

considered big boat blocking the view, we have a nice shot there of one over my right shoulder. it used to be a church and then a mosque and now a beautiful museum.

and him and him himhim and him and him and and him and him

him and him bloomberg tv. we are streaming on your tablet, your phone and of course on bloomberg.com. world's largest watcher is entering its second week. amongst the brands show king third -- showcasing the new models is a start up making a splash with its liquid watch. >> when you go home tonight and , that yound and wife can explain to them you are -- you have seen a watch that is combining liquid and mechanics. last been trying for the 300 years to avoid liquid inside a watch. here we are working as a friend with a liquid.

innovation is the key thing. hrt is based on innovation. we didn't want to create just another watch. it is all about the design and the marketing. here, the innovation is the key driver. it is all about innovation, mixing liquids and mechanics. i can move my liquid. hours by the liquid and minutes in the center with the analogic hand. if i go backwards, my liquid goes backwards. we have something which is easy to understand. making it happen is three years of work and a huge effort -- and huge effort of engineering and chemistry tond -

make it happen. >> i would be a little bit clumsy. >> i think if you bang your watch anywhere generally, it would be a bad thing. >> i would rather not have liquid in there, but that is just personal. we're going to take a break for those listening on bloomberg radio. bloomberg, the first word is up next. >> turkey's prime minister vows retribution. we will discuss the situation in fromy with timothy ash standard bank. >> the exclusive with the former tesco box terry leahy, looking forward to the conversation. we would be talking retailing and tires. bet you can't wait. it is going to be a great conversation. >> you can follow both of us on twitter. be back in just a couple of minutes.

>> retribution. turkey's prime minister points to a crackdown. his party declares victory in the local elections. we are live in istanbul. -- president speak speaks and his people listen. >> we are live with former tesco boss terry leahy. find out about one of his newest ventures.