>> smartphones lowdown. demand for higher devices ways on arm as apple braces for its first flat sales in a decade. china worries the world. asia'sfalls when second-largest economy fail to respond to stimulus. and u.s. troops arrive in eastern europe as the crisis in ukraine escalates. welcome to "the pulse," live from bloomberg european headquarters in london. i am francine lacqua. is actually

moderating a speech by former u.k. prime minister tony blair right here at bloomberg headquarters in london. it live in the studio shortly for an interview. arm posted slower sales growth. it is another weakening sign for smartphones. point isice unsubsidized. in some places, below $50. that means more and more people will access smartphones. that will drive these services and products. we think smartphones have a lot of growth ahead of it. smartphones have a high degree of arm content. >> apple releases earnings today. facebook also offers up results. joining us for details are caroline hyde and jonathan ferro. once you talk to arm, they are

concerned about royalties. they design the chips. >> the market is a little worried about royalties. they are selling licenses and that means more royalties in the future. shares are off a bit because of iss worried, but arm understated, to say the least. their cambridge headquarters, they do not feel glitzy. they are not building a spaceship headquarters at the moment. 4 million people touch and arm-designed product every day. they say that the growth ,otential is not just in mobile of course we are hitting a saturation point with a very high-end. they can charge more for the artful chips that go into those things.

less royalties coming from those. in the future, the internet of things, this buzzword, basically bening your living room will connected. you could have a chip inside the stomach of a cow that would tell how much it needs feeding. our entire lives are going to be changing with the internet of things. arm is going to design the chips that connect everything to the internet. buzzwords.hese the internet of things is exactly where facebook wants to be. what are we expecting from them today? we understand that they might become more of a banking stock. >> a lot of buzz about facebook and apple. could they potentially go into banking? the question everybody is always asking is what is next?

could it be the first national bank of facebook? the numbers are there. you look at the user base and you have apple with over 500 million credit card data stored on the iphone store. you compare that to a massive multinational banks like hsbc, 50 million customers. the numbers alone, you can see the potential. you get forensic about it and ask the question, can facebook convert those users into customers on the financial side of things? that is going to be difficult. >> apple has the fingerprint technology where they hope you will use your phone as a debit or a credit card. >> they are looking at getting an electronic money institutional license. you could get a migrant working in europe sending money back to africa, india, at a fraction of the costs banks would charge.

markets,arget emerging they could target the very people who are not even facebook users. so the potential is there. wallet, a couple of other companies -- >> the phone companies currently connect the emerging markets in asia and africa. emerging market phone companies allow you to send money via your mobile phone. this is what mark zuckerberg has been talking about. billion to beext connected. he wants phone companies to offer facebook initially, for free, so that they can use facebook for free and the emerging markets can be connected. >> facebook is basically trying to go after amazon. do they know that there is one click where they have everything stored and they have a lot of users? it is a lot more convenient. >> amazon may well be the one competitor. if you see the share prices,

facebook at 100 times earnings. amazon at 400 times earnings. then you look at apple, 25% off of its high in september of 2012. a lot of people are asking the question, where does the growth come from for apple? you can see the price of the stock. where does it come from? you have two products delivering big numbers today. can deliverts that almost 20 million units saved. they are huge numbers. the problem for them is you can get flat revenue delivered for over the -- for the first time in over a decade. to be ae, it has got product. is it going to be the watch? is it going to be the tv? once -- oakes pretty nes. thank you so much. coming up in the next hour of "the pulse," we will continue the conversation on tech with

the ctl -- the ceo of a real-time analytics company. ukraine is on the virtue of resuming operations to oust military operations from eastern cities. europe editor, david tweed, joins us with the latest. this situation is really deteriorating day by day. >> there are a lot of moving pieces, actually. one of them is that the united states is sending 600 troops to 4 countries in eastern europe, the baltic states and poland. it is something to watch out for. they need reassurance that nato will be fine with any action in the ukraine. there could be more conflict in the ukraine since the acting president ordered the resumption of special forces to get the

progress and separatists out of these municipal buildings. we are watching the situation very closely. that was sparked after two dead bodies were found, pro-kiev people. one of them was not identified. the other was a member of the acting president's own party. both of these bodies had been tortured. that was the flashpoint. we are watching to see whether we have any movement, any successful movement from the kiev forces in the eastern ukraine. if we have success there, what will be the response from the russians? they are putting pressure on the u.s. to get the ukraine to rescind its order. at the same time the u.s. is saying they are ready to consider sanctions in the coming days. it is like a tinderbox over there at the moment. >> it certainly is. u.s. threatened sanctions. the russians threatened to cut off the gas supply.

how much damage would that do to ukraine and hungary? >> it would do a lot of damage to ukraine's economy. 60%-70% of their total energy needs. not to mention, the gas comes through ukraine into west of europe. medvedev saying yesterday it is either cash or gas. what he wants to see is the commitment from the ukraine to start paying for their gas. that is why this imf loan is so important. we expect to hear something about that in the next few days. much.nk you so our europe editor, david tweed. european manufacturing data came out a few moments ago. manus cranny has been crunching the numbers. what is the take away? >> things are getting better in germany. a little bit worse in france. overall, in europe, the purchasing managers index are

strongly what is behind the numbers, they are cutting prices. this is not what european central bank wants to see or hear. for france to try to sustain, keep yourself at the same level as you were in february and march, they are cutting prices and this is the rubble of what the european central bank is most concerned about. the headline is great. germany's headline beat. the french numbers disappointed. a modest recovery that mario draghi has conducted. unemployment is just off record highs. ar producers are producing little bit more. the greeks are back in the bond market. ever so incremental moments of change. months --does, wi-fi

25 months of cutting prices. it has not stopped. >> and that is not sustainable. at some point, you are not going to make a profit anymore. >> correct. behind those numbers, disinflation. the european central bank is trying to fight against. it is going from 2.5% down to 15% -- down to .5%. food and energy prices being dropped. we have the real risk that the has aan central bank reprieve from having to take action and go through nonstandard measures. you are looking at a 40% possibility of a raincoat -- a rate cut. consumer confidence is rising to the highest level since 2007.

tick on the headline. on ther confidence, tick headline. do we need to take some action? >> not so much. problem is, will he have the tools to deal with it? >> it is getting more and more difficult to come to those measures. >> thank you. after a recall and layouts, is the future still looking as healthy? we will discuss those tech trends next. and a bloomberg exclusive. tony blair is giving a speech right here at bloomberg european headquarters. he joins us in the studio shortly. ♪

>> we are not a consumer company. i do not think it helps consumers to be thinking too much about the technologies and their device. all they are focused on is the experience. we believe technology should be seamless. their lives better through using technology instead of worrying about the geometry of the process. who cares? thes important in making devices, but the consumer should not have to worry about that.

ceo.at was the arm with more technology trends, let's bring in the ceo of an agency who specializes in strategies. great to have you on the program. thank you for coming in. and we talk about the next trends, what are we looking at? when we talk about virtual reality, what will be the next thing that will be life-changing that we will not be able to live without? yet.am not sure we know it i think apple has a good chance with the iwatch. a well-created piece of hardware combined with a killer ecosystem. >> we have the galaxy gear, the pebble. what does this need to be? is it more the way it looks or is it the technology? >> it is the technology but it is also the role that it plays.

the combination of apple's watch and its proposed payments approach, that technology is a real killer proposition. to a basic extension of a handheld device. missr, we have had hit or attempts. >> do you think apple will actually deliver? it has been so successful, it is easy to say it does not have it anymore. at the end of the day, they have a new ceo. will they be able to manage the next big thing to become the apple that it was five years ago? >> they are going to need to be. it has been four years since they lost anything in the big categories. my hunch is they are holding off. i think the iwatch will be just that. reg christie left very recently. the combination of him andjonathan -- of him and jon

athan will there are some real fruit. >> consumers talking about facebook or apple being a possible banking stock. some of the largest banks in the u.k. how feasible is that? that would change the business, the nature of what they do? >> if you look at apple, they have millions of users with itunes accounts and credit card details attached. what they have not done is take that to the till yet. be the firstcould positioning in that space. i think that is apple's big moment to start to drive massive options of payment. facebook is a very different story. facebook is about being able to drive direct purchases in line with their advertising. it is an opportunity and it really drives the effects of the advertising and the popularity

of their network. after amazon,ng right? it is a different vibe and feel that you are buying into. >> you could argue that. is something that exists in our everyday lives. into that space, you can see how they could do something really big there. >> thank you so much. coming up, a bloomberg exclusive. tony blair has just finished giving his speech at bloomberg european headquarters and he will join us very shortly in the studio. ♪

>> the morning, everybody. welcome back. you are watching "the pulse." i was downstairs listening to a speech that was delivered by the former u.k. prime minister tony blair. it was delivered right here at bloomberg european headquarters. he was talking about how to engage the middle east. he very kindly joins us now on "the pulse." good morning and welcome. the speech centered on the concern you have about this ideology and how it is incompatible, in your mind, with modern democratic society. you are asking us to take sides. how dotion really asks we know we are picking the right side? if you are taking serious, --

we know we start to intervene in this process? >> what we are trying to achieve, the future of the middle east is in religiously-foreign societies. majority,robably the but they are squeezed between an authoritarian dictatorship and various islamist groups on the other. right across the middle east, the same fight is going on. for us, it is massively in our interests for those more open-minded people. >> you suggested there was a possible chance for a short period to lead to a peaceful transition. >> i certainly agree. two years ago, i said we had to take tougher measures, otherwise syria would disintegrate. right now, the options are ugly

and difficult. the best option is one that allows us to evolve with some sort of peaceful transition to a new constitution. that is the best we are going to be able to do now. a couple of years ago, we could have handled this differently but we did not. that is now gone. across the middle east, everywhere you look, there is the same fight going on. you look at the middle east and say there is something amiss. to do it bym themselves, that is very dangerous. in look at what happened libya, that is now destabilizing. the northern part of saharan africa is pushing weapons across to the eastern part of the region. central tof, it is get behind the new government and help them reach a better future. is,purpose of the speech however difficult it is right now, this is the moment not to walk away. you have got to engage.

>> how does saudi arabia fit into all of this? central to theology and the factors of islam being the two holy mosques. there is a whole group of people around the eater ship that are trying to get the country in a new direction and it is in our interests if they are able to do so. it is not in our interests to destabilize, particularly by the muslim brotherhood or islamists. >> you mentioned egypt. what do you do in egypt? >> we should back the new government. they actually threw the muslim brotherhood out of power. there was a vast uprising. he experience of that muslim brotherhood government is very confusing to us in the west. if you talk to egyptians, their

problem was not that the muslim brotherhood was a bad government. we argue about whether a government is good or bad. he muslim brotherhood was systematically taking over the institutions of the country. a were systematically trying to change the way that egypt worked in a fundamental way to render it unchangeable for the future. what has happened now is the new government has come in that will be a presidential election. it is essential that we get behind the new president and realized that if he can succeed in taking egypt towards a reformed economy, that is the best outcome, not just for egypt, but for the west. in my view, we should not look at the middle east and say we are indifferent to this. you might have the muslim and it matters dramatically to us. in society today, we have an issue that -- with the way these

groups are operating. >> do you advocate intervention? where it is necessary. you do not need to do iraq and afghanistan. we were calling from a no-fly zone. that would be a limited intervention. with respect to egypt, intervention with support financially to help the new government. in each case, you can engage and commit for me. the point is, you are committing to a strategy that involves the whole region. you do not say it is just a big mess, stay out of it. you say, there is a big fight going on and there is a side that we should be on. >> in general, the west needs to have more guts. one was to get closer to russia so that they can now temper. not having been the wisest of choices. view, ukraine is a

separate issue. i favor taking a strong and clear approach with russia to take over the eastern part of ukraine. that should not blind us to the fact that, with respect to this battle around islamism, we have a common interest with russia. over 15% of the russian population is now muslim. russia has major issues and challenges around this. we have a common interest with them. even china recently, there have been terror -- terrible terror attacks coming out of the northwest province. whatever differences we may have ,n the world on this issue which i think is still the biggest threat to global , none of that means you can succeed and reflect in the ukraine. >> should we think of this as a

similar model, paradigm that we saw in the 1950's, 1960's, 1970's? we need to think about communism, rollback, containment, some of the theories back in those days. >> i think essentially we should. it is essentially a totalitarian block. totalitarianism before by a commendation of things. we were prepared to be strong militarily when necessary. we did that in respect to the old soviet union. secondly, we defeated a bad idea with a better idea. the better idea in the middle east and elsewhere is open-minded societies and rules-based economies. if you think of the way the world is today, an organization like bloomberg represents connectivity, open-mindedness. that is the way it works today. if you want young people to have opportunity today, they have got to be educated.

islamist theat the altar stands for is the opposite of that. in my view, it is good to be tough, but it is in it is also in part being prepared to say we are going to help countries root out this intolerance within their education systems formal and informal and put in place a better idea, which is open minded inclusive education. >> the former prime minister there, tony blair. >> let's shift gears completely. and has a look at cars, they say it could top sales in the u.s. next year. >> elon musk has said model s

sales in china could top the u.s. by as early as next year, but he admits he is not really sure. this was just day one of deliverries. >> what we see now is pretty strong demand. probably more demand than we can fulfill this year. in terms of the absolute figure , i think it is going to be quite a big number over time. my instructions to the team are spend the money without wasting it. >> will a dearth of charging stations kill the initial buzz? can it fulfill its order book from china quick enough not to tick off its investors? >> tesla is still at the very early stages. at the crawl stage.

we're only putting out our first cars in china today. in a year from now we will still be extremely young as a company. i think we want to hit puberty before we start dating. >> one of the ouners is generally happy with the car things like in the cramped backseat are not ideal. >> it cost over $2 hoopt but he backseat is that of a $ 15,000 to $20,000 car. >> i'm really disappointed. >> sorry. >> the woman claimed to be a buyer of the car. >> we have delayed some of the customer deliveries in china just for a few months in order to ensure when they get their car, they will have a great

experience. some of them have been upset about that. i met with them and personally apologized. >> i think tesla is a mitch product. it is expensive. it is essentially a luxury car. it is beautifully designed. i think they can sell quite a few here in the market. there is a lot of talk about tesla. the numbers are not huge. elon, are you getting any indication that the government here perhaps is not encouraging a joint venture? >> it has been very supportive, actually, yeah. support has been great. i really have nothing bad to say at all. >> were you expecting this kind of crowd here today? >> no. >> do you have a clear china

policy? >> i think we just want to do everything that is needed to encourage electric cars. we just want to do the right thing. >> i don't think they can make them because musk doesn't understand the chinese market. >> it is likely to be a sharp learning curve in china for the 42-year-old behind the wheel at tesla. >> he doesn't understand the chinese market. this man can do no wrong. >> the front seat is quite an experience. i can tell you that. >> i know. i still remember the package. there.eal surprise clearly unemployment has fallen below the 7% threshold. a significant factor for the u.k. the pound has been strengthening. let's see how the european markets are faring with all of this. manus cranny joins us now. >> hey, guy, fran.

equity markets around europe rallied the most in europe. a little bit of a pause today. china still contracting. we see more stimulus. europe cutting prices for the 25th -- 25th straight month of where this map, the businesses involved in the european equity story are cutting prices. when it comes to the united kingdom, i think the more interesting fact that came out is about the borrowing retirement. it came in at 6.7 billion pounds. that was estimated to come in at 11 billion pounds. so a pretty dramatic change there in terms of dollar/still sterling. no huge impact. the data came out and no real changes. we're trying to make up our mind. year to date, the overall trajectory of dollar/sterling. sterling on the warpath to the

upside. equity markets, where will they to? according to david einhorn, he the nasdaq r two, stands at 3,585 unchanged. a little more data. ,7430.0 indicate an 18 >> thank you very much. manus cranny with the very latest on the markets. >> the botox maker is trying to take over a bit from valeant pharmaceuticals. ironically, considering we're talking about the pharma sector here, a poison pill defense. that would be the obvious thing to choose.

we see this in american takeovers occasional. it makes you think about bar berrians at the gate when you hear about poison pills. what it means is allergan putting in process where its own shareholders with buy more shares. who may that investor be? of course it is bill ackerman. hey have just taken doctor they are just shy of 10%. clearly everyone is getting ready for this to be the graun drawnout battle. allergan does not look like it wants to be bought now. it looks like we're going to have a takeover battle here. >> what is at stake? >> valleant is an interesting company. it is a exeand company. hey were doing general air,.

-- generic. he is doing that through acquisitions. bauch and hey bought lomb. this is quite a bit larger. that is what is what is at stake for valeant. for ackman, making up for this herbal life snaff . they ended up locked in with carl ai kahn and others. >> -- icahn. >> this is a hostile takeover. the two don't necessarily or normally fit together. >> well, the activist generally wants a company to get bought. he has taken out that step. yes, this is a bit new.

new to see an act vibs. typically you would think of activists in the corporate world being almost in opposition. vator as ckman, ino always. >> if you enjoy 3-d films, check out what could be the next frontier for movies. 4-d. the technology bringsfects like moving chairs, smoke and wind to theater goers. ut will audiences like it? john erlichman went to get a taste for himself. >> welcome o the movie theater of the future. if you thought 3-d was cool, try adding moving chairs. bubbles, water, strobe lights, a feet tickler and smoke. > let's do it.

>> shaking. >> exactly. > the company behind this 4-dx olled out chains and now it is live in downtown los angeles retro fitting one of its theaters which can cost $700,000. rb to be competitive and relevant in the movie business, you have to constantly be evolving. >> all of this magic can be controlled through a tablet. >> you this total environmental control. you're not just chewing the movie out at the same time but you have these effects timed with the movie. >> smells like gunpowder and freshly brewed coffee are stored in canisters and piped in at the right time.

>> smell some burning rubber. >> smells like burning rubber. >> it is raining. we're in a theater and it is raining. ere are 4 d experience costs $6 more a movie ticket. >> we anticipate that there will be a strong demand to roll out into other movie theaters. >> flying through the air. >> you're moving with him lake-effect? >> yeah. you get a sense of like floating a little bit. >> whoa! that was crazy. >> he looked a little bit scared, jon erlichman. >> i can see the future in this. i think this is how people should watch "the pulse". it is ra roller coaster ride and should be experienced as such >> it is a little bit stressful. we're more relaxed than that, guy, at certain times in the

show. let's stay with the u.s. markets heading to america. the budget department store chain is looking to operate in the northeast of the country very soon. charles, first of all, why is it going for the u.s.? a lot u.k. retailers have failed. succeed?k going to >> it is difficult to see. i think we're looking at they are trying to follow the trajectory of h & m. they in particular have been very successful in the u.s. thes the next step to eck panned its growth there with a regional presence in the u.s. it is not going national immediately. >> how big could this brand get? how should we think about it? we think about it kind of as a u.k. phenomenal at the moment. the western family clearly have

pushed it as far as it will go here. should i be putting this next to czara? next to h & m? does it have the same potential in reality? >> well, at the moment it seems as if it does. 39 snorse spain all going very well. the potential to do very well in germany as well, which has affected h & m's home country as well. at the moment, if you're looking at stock market evaluations, people are looking at pry mark as the next. > you can put it on similar -- >> one has to make assumptions. f you look at the a.b.f. multiple as a whole and where it is trading against h & m and zara, you have to look at what are the come opponents of

a.b.f. worth? it accounted for 60% of operating profit in the first half. it is the fastest growing part of it. you have to feel it influencing -- evaluation of a.t. a.b.f. >> coming up, mrs. moneypenny is on a mission to help am birgs women.

>> she is known as mrs. moneypenny. she has written a column and in the last 14 years, she is an entrepreneur. she just released her sixth book, "financial advice for independent women." thank you very much. just tell me first of all why you felt the need to write this book. it is true. we have a lot of entrepreneurs on top of the way they handle their finances. is there a concern that women still lag behind? they think they can't handle it or they are too bored by it? >> they are too bored by it. a reason why they don't know what rate they are playing on their mortgage or credit cards. i call it an outrage. i thought more women knew the

price of the dress they were buying than rate of interest on the credit card they were trying to buy it with. there are reasons why we should take more notice. we are likely to live longer. that is a statistical fact. we are in r likely to be on our own. we have taken the backseat if you look at who your bank manager is, they are likely to be a man. we have taken the back seat for a time. we have taken breaks to raise our children and earn less than men. >> ok. how much of what is in there is applicable to everybody? >> a bit like my previous book. of it is relevant to you.

you would not be seen dead reading it on the tube. >> we'll get you a cover. >> there is an argument to say, if you're married, have a girlfriend, have a wife that is more financially incorporate, she can help you out sorting the mortgage and stuff like that. >> yes. my experience, men, rather like women, actually, -- people don't want to talk about money very much. it is the last taboo. people will talk about their sex lives in my experience more readily. >> in the u.k. more than the u.s. >> yes. in the u.k. more than the u.s. but in the u.s., there is lots of female role models talking about money on tv. ere are lots and lots of example in this area. i was inspired to write this book and i was told i should spend an hour a week on my own finances. 52 hours a year. 52 hours a year?

really? i went to write is book and went you know what? that won't even cover it. there are so many things we ought to review. so many people just accept that car insurance renewal. > is it really having role models? >> there are different -- yeah. we're reasonably kind of -- we both take part in the family household in terms of understanding the finances but i would have said that is probably different from my parents' generation. as we educate our children now, how do we think about what should happen next? all encouraged to make sure our family are financially literate. >> you know, you can have children's pensions. you can have children's pensions. children can have a pension from any age. if you put money into it, the government will put money into its. that is free money.

i know almost nobody who has opened a pension for their child. >> quite a long jestation period. > yes, but as you well know, organization, you know jolly well the next -- put it in early, it will be big later. >> do you think people are put off taking a more active role in their finances because of the role of -- one of the things i talked about with all kinds of people is they mind so often, s change that understanding the rules becomes increasingly difficult and that is something that puts them off. >> yes. this book can only be sold in the united kingdom. i will have to write a different edition for every country where it comes out. there are now different rules on pensions. the big point of this book is not to say these are the rules and regulations and that is what to do. the big point is to say you can

take charge of your own finances. there is nothing difficult about it. here are all the routes that you can use to assimilate that information. >> what is the one thing that surprised you the most by doing the research on this book? >> i think i was surprised from three years on -- channel four. that was my research for this book, actually. what really surprise me is that when, for instance, i interviewed groups about their finances, young people getting married, for instance. they will know the price of everything, wedding dress, cars. they won't have a clue who were the there is a penalty for repaying their mortgage early. it strikes me that they know the price of certain things and not other things. actually money suspect boring. it is linked to things that are sexier and funnier and more interesting. money is what gives people their freedom. researchers rang me up last

week and told me she went swimming err week and paid every time. if she bought a pass, she would save 500 a year. >> stick around. we're to have lots more onversations about that. >> people get scared about it sometimes. heather mcgregor also known as mrs. moneypen combrism we're back in two minutes. ♪

>> well, for those listening on broob radio, bloomberg first. on tv, the next hour of "the pulse" is coming up. >> we're going to be talking tech trends. what is next for google? we'll talk with the c.e.o. of gosquared. it is going to be a great conversation. that is coming up. >> we'll also have highlights of our exclusive interview with the former u.k. prime minister tony blair. we spoke about the middle east of course the need for the

west to take sides and get to grips with the situation in the ukraine. >> you can follow us both on twitter. i'm at guy johnson. fran seen is at flaqua. see you in a few minutes. ♪

>> smart phone slowdown. apple braces for its first flat sales in a decade. >> gosquared c.e.o. james gill joins us live to talk about the future of tech. >> china worries the world. stocks fall across the globe as the second largest economy fails to respond to stimulus. meanwhile, in europe, the economy continues to strengthen. >> u.s. troops arrive in eastern europe as the crisis in the ukraine escalates. >> good morning to our viewers

in europe. good evening to those in asia and a very warm welcome to those just waking up in the united states. i'm guy johnson. >> i'm francine lacqua. this is "the pulse" live from bloomberg's european headquarters in london. >> coming up, the fourth dimension in film. how 4 dcinemark could be the ext big thing. >> we'll find out next. let's find out with tech earnings. another sign of weakening demands behind the smart phone. >> the price points, unsubsidized are down in some places $50. meaning more and more people can get access to smart phones and that is going to drive more services that use them to engage with them. even entry level smart phones have a higher degree of

content. >> the c.e.o. of arm. apple release earnings today. facebook will also report results. joining us now with the details is caroline hyde and jonathan fero. we're starting to see a little bit of a slowdown creeping through. and the turation point high-end smart phone. where arm gets money from is licensing. you license several hundreds of millions of dollars, a design for a chip. then you get a little percentage. get a little bit from that particular phone that is sold. a small am. because you have seen high-powered phones, they have been using more powerful chips. they have been getting bigger royalties. we did see royalties slightly slow. we're selling licenses. 26 in the first quarter.

even the very low end phones use a chip design made by arm. he doesn't sound too nervous about it. he says look at the second half. it is going to be stronger. there is no glitz. there is no glamour. no headquarters that look like a spaceship, which apple is designing. these people are integral. 4 billion people. now they are looking at the internet of things. we're going to have our bins connected. our cooking utensils connected. our smoke alarms connected. all because oover that chip. >> do they want to become our next bank? what is apple going to do? what will they be able to deliver? >> the big question is probably more so for apple. they are going to deliver flat sales for the first time in a decade. that is a pretty big deal. when you talk about the likes

of apple, that is massive. because they are generating so much revenue, to get that extra marginal percentage pointor revenue, you need something big. also revenue comes from two products. you need this next big product. it is one we're waiting for. what are wea waiting for? where is the watch? where is the tv? investors have started to lose a little bit of patience with this company. >> what about facebook? they had a little identity crisis. it is buying up things. what will facebook be in three or four years from now? >> they are planning for future. they brought the drone company to target these emerging marks. this big blue sky thinking. what they can do with banking ties into that concept as well. they are talking about getting a license from the central bank

island. it would enable them to go out there and market this to migrants that want to send money back home to india, africa. the images you see on the screen, you have over 500 million credit cards. you can see the potential. hsbc, retail customers, just more than 50 million. when you get forensic, really can they translate some of those customers? you're going to get some of them. but it is not as easy. >> agreed. agreed. nevertheless, the thing about facebook is it is -- it can operate on an detroit. android. matter -- >> apple has a great number of credit cards. i don't know. it feels like a logical layer.

you and i communicated. the transaction involved. the potential for facebook is maybe bigger than anybody else. this is why mark zuckerberg and mobile world congress is calling on the companies that work within the emerging markets is saying give the internet for free in the emerging markets so they can use facebook initially and start to communicate. then if he is going to start of the pie ts because the merging market telecoms company already offer this way of transacting money by your mobile phone. facebook b wants a bit of that. they are going to find that a harder pill to swallow, to offer the internet for free because mark zuckerberg is asking them to. >> they have the credit card on file. you put your finger on it, you can start paying for things.

that is not far away. amazon with are in that game too. >> they want to compete with amazon or they want to be -- they didn't say apple or facebook. >> we had a guest on yesterday who said we're done with the platforms. you know who they are now. azon, facebook, apple, android. everything is going to fit around that. we know who has won. those guys. >> thank you so much. coming up on "the pulse," we will keep talking -- >> the c.e.o. of realtime an litics company gosquared. he has some really interesting things to say about how all of these different companies are performing now. let's turn to the crisis in the ukraine. fears that last week's international agreement on easing the crisis is

unraveling. >> david tweed is there and that is latest on the situation. david? >> yeah, francine. what we're looking at is to see whether that military operation has begun in the earn ukraine and the question is -- eastern ukraine and the question is whether they can be successful. they put this tpwhan place what was part of the geneva agreement. that seeps to have unraveled because if the ukrainian forces move into these eastern towns, that is going to breach the cove nationals of that agreement. then the question after that look like -- the russians have said they tried to pressure the u.s. actually to get the ukrainians to rescind their order to move the troops into the eastern part of the country. that is the area we're watching, the hot spot. there is an area too, the fact that the u.s. has moved doctor is moving 600 troops into the

baltic countries and also poland just to back up and give those countries a better sense of security. a better sense of security given the situation in eastern ukraine at the moment. the u.s. also saying that it will consider sanctions. everything depends on what happens with these special forces at the moment, guy? threat, ook at the the potential that story has. the russians are talking about cutting gas off. we're talking about unpaid bills that go back an awfully long way. clearly it is going to have an economic impact unless we can figure out a way of supplying them. >> absolutely. which is why the i.m.f. talks, which are going on at the moment, are so important. we're talking about $27 billion worth of loans. $18 billion coming from the i.m.f. the latest that we're

hearing is that the i.m.f. should get a report into the executive board in washington and they are aiming to actually unlock some of the funds from the beginning of next month. i just want to bring your attention to a note that came in from fitch. just pointing out that europe would suffer if the gas was turned off, but in the view of fitch, that would only take place over a short period of time. interesting report. i'll tweet what i can. and yeah, we're keeping up with the situation. back to you. >> swerm are. -- we certainly are. a very close eye. there are more signs that the european economy is strengthening. >> they are expanding faster than anticipated. our markets editor manus cranny has been crunching the data. what is the takeastpwhape >> the blockbuster p.m.i. at the top for germany.

head. a the whole of europe is doing quite nicely. a modest recovery. france, the numbers were disappointing to say the least on services and manufacturing. to achieve that in france and that acceleration in germany, actually companies are having to cut prices for the 25th strait month. cost of services slowed to their lowest in 44 months and in france, you're seeing services and manufacturing cutting costs. that is not what the european central bank want to hear because their complete focus is of course the disinflation story and this piece of data in itself is probably reassuring from a survey if i have to european central bank. does it let them off of that moment of action in terms of spurring them into more aggressive action to bring the euro lower and boost inflation.

>> let's move it on to china. the slowdown continues there? >> yeah, the slowdown continues. when you look at this set of data, the purchasing managing index from hsbc, the question is what more stimulus is this set of data going to bring? the consensus is it is not a huge enough slowdown to invoke a huge or substantial stimulus. when you look, let's just tie the two things together. you look at the european data story and the chinese data story, it is very simple. both banks are making it very, very clear, currency of the yuan is at a 16-month low. the euro is the no behaving as they would like it to be. to be clear, these central banks are laying their cap at the currency evaluation door. >> manus cranny with the very

on these p.m.i. numbers. >> still ahead, as the crisis in the ukraine escalates, we're going to get some insight into putin's playbook. >> plus looking for the next big thing. we'll speak with the c.e.o. of gosquared about the future of tech growth innovation. stay with "the pulse". ♪

>> good morning. welcome back.

you are watching "the pulse." let's turn our attention to what's happening in the foreign exchange land. there was one big mover. that is the aussie. this is the two-day chart. there was a slump earlier on. the reason for it? there was an expectation that maybe actually the rising inflation story in the australian economy would lead to central banks -- down the road. hat is not the case. it has taken the wind out of the sails of those who expected the aussie to go higher. as tensions mount, the west struggles to anticipate putin's next move. let's bring in the managing director of trusted sources. great to have you on the program.

they have so much gas that runs through the ukraine and europe. it is holding us hostage which may explain sanctions have gone up a notch. can they survive that? >> if the gas didn't flow through europe, it would be extremely serious for the european economy. the further east you go, the worst. even for major economies, germany, italy and france, it would be extremely serious. the u.k., there is going to be a market for russian gas. of course the opposite also applies. for russia, it would be a disaster if it lost its major market for european gas. stakes are extremely high on both sides. if the ukraine doesn't pay, he will seize to supply ukraine. the gas will continue to flow through the pipeline to the paying commerce.

ukraine helped itself to the gas meant to be going to the european customers who therefore didn't get the gas. of 2006 n the winter and 2009. this time things are warming up nicely weather-wise. if there were to be a repeat of that episode, putin's indication, his big q & a with the russian public last week, nothing would be felt until the cold come back in october and november. the problem is not there. it is just swept under the carpet for a time. >> i'm really struggling to nderstand the situation. we're playing a game over ukraine which could result in both sides losing out. i don't understand how this ends. putin clearly wants something to happen in the ukraine. the west does not want it to

happen. somebody is going to have to make a decision, that that they are putting gas before the stability of ukraine. at some point this is going to come to a head. once it does, it is going to be very difficult to backtrack from. >> the stakes are very high and the damage, very unnecessary in my own view and my own humble opinion is not unique, it would be very grave. the gas element is the single largest, but it is not only. russia is a large market for european industry. there was a large deutsche bank report that said the recession of 2009 would knock half a percentage point off german g.d.p.. >> i think you put it very well. europe, especially the united states, does not want to oncede to russia especially in

ukraine. president putin is determined to that. it will cause huge damage to the european economy. it will condemn russia to isolation and decay and destroy the ukraine as well. >> we have wisened up. we have been through a gas crisis before. we have better stockpiles. we have taken better precautions, have we not? the european union, italy, germany, where the gas flows to. >> better than was the case in the last decade to be sure. he supply has gotten larger. l.n.g. has slowed into the european gas houses from qatar in particular. russian gas remains extremely important. it is still 1/3 of volume.

europe is in economic trouble. asia's gas pricing is more buoyant. the pricing has recovered markedly in the last year or so. the trends you mention are there. but they are still baby steps. so that mutual dependence, the mad factor as we just mentioned is very much there. >> thank you very much for your time today. we're back in just a couple of minutes.

>> welcome back to "the pulse" live on bloomberg television and also streaming on the ipad and bloomberg.com. >> botox maker allergan is bid g to bust a takeover from valleant. let's get details on what happens next. let's talk about poison pills. >> wonderful term in any pharmaceutical takeover. of course we don't see them very much. it is a bit of an old-fashioned thing. makes you think of past takeover booms. what is going on here is that allergan do not want to be taken over or at least so they say by this combination of valleant pharmaceuticals and the hedge fund investor bibill

ackman. they have produced this plan where their own shareholders can buy new shares at a discount in the event of an acquiring. who might that be? bviously it is bill ackman who whose fund owns 9% of allergan now. that is the idea to block this bid to allow them to discuss an offer without time constraint and to get valleant off their back in terms of making a hostile bid. >> where does this leave the two bidders? >> what happens if this fails? bill ackman has made the biggest commitment in the history of his fund to this acquisition. he has done a very unusual thing in teaming up with a corporate acquirer directly. for valeant, the c.e.o. said he wants it to be one of the top five pharmaceutical companies

in the world equivalent to pfizer or sanofi. if it fails, i think investors will be asking questions about the risk of that strategy. >> we'll leave it there. >> as we head to break, let's get to today's "the pulse" number. 450. how many years to the date that william shakespeare was born. >> the first celebration of the birthday was in 1769. i magistrateford on avon has a pennsylvania today. >> festival today. just a reminder. you can follow us both on twitter. i'm at guy johnson tv. francine is at flak wa.

we're -- flaqua. ♪ .

advocate intervention where it is necessary, but let me go on record, you don't need to do iraq and afghanistan, but in syria when we were calling for no-fly zone, that would have been difficult, but limited intervention. in respect of egypt, the intervention which gets support financially and help to the new government. >> tony blair spoke to us exclusively in the last hour. he is saying the west needs to take sides in the middle east. >> time for the top headlines. ukraine is considering resuming

operations to oust militants from its eastern cities. the government says the move is dated after the discovery of two bodies or possibly killed and tortured by pro-russia militia -- militants. a new push to dissolve militants solve a peace deal. >> violent protests have broken out in rio de janeiro following the death of a young man allegedly beaten by police. streets were closed as angry demonstrations set things on fire. we have some amazing pictures coming up. it is less than two months before the world cup. >> chinese manufacturing data signaled contraction for the fourth month. manufacturing data came in better than expected. >> take a look at the european markets. of their bestone

days in seven weeks yesterday. the china data shows contraction. expansion in terms of services and manufacturing come up but it belies the canada. price cuts.een the story is perhaps a little more disconcerting for the european central bank than the headline tells us. the budget deficit in the u.k. contracts better than estimated. later today, we will get futures in the u.s. datae waiting for little in terms of david einhorn's view. he is saying to get ready for the nasdaq market for potentially a second tech bubble. interesting take. -- stockspo stakes

are using the buzzwords. could be a rerun of 2000. sap, data 91 making that big call. -- david einhorn making that big call. be theogy seems to laggard in our market in europe today. more competition from the asian competitor names. along with that, things will get better post up trust it. that was the message from the ceo when he came in and sat down today. technology is just coming off the top and european session. back to you. >> manus cranny with the latest on the markets. tom keene joins us with a

preview of "surveillance." guests an output of today. >> and they will be joining us across the day on bloomberg television to talk about any number of things. i'm most interested what mr. bill eichman has to say about allergan. i would urge everyone to read matthew levine. he is a terrific writer. we're going to look at the economy. ellen sittner will join us from morgan stanley with her optimism on april job permission. james glassman will join us with jpmorgan. we will talk not only about investment in america, but a .etter tone to the economy

let's see if the good news in the united kingdom translates -- a lot of people said we are going to have sea salt growth in the next couple of years. >> it is an interesting time. you have quite in the market, central bank stew. within that, you have some tangible signs of a better u.s. growth. real mystery is, where will you be in the summer and the autumn? that is the major ministry as we close out april. let's stay in the united states. department store chain aiming to be operating in the northeast toward the end of next year. joining us now, charles allen. why the move to the states? >> i think it is the next up and

growth. sort of the international business you may be looking at. >> the opportunity is how big? this is a company that seems to go from strength to strength. how should we perceive it? how should we be thinking about what ultimately primark will look like? >> that is how the market is beginning to perceive it, sing a company that has grown exceptionally well in the u.k., margins are slightly ahead of the u.k. ones, expanding the germany which is effectively h&m 's home market. looking at a part of the u.s. as the next logical step. >> charles, it is difficult to make money when you are a u.k. retailer in the u.s. many people have tried and failed. why is this time going to be different?

>> we don't know for sure it won't. , they're looking at a market which is very, very promotional, where there is a singers in the market with a lot of bread after brendan the same -- attractively can work there. they may be looking at their anotherompany which is part of the western family. they're making that sort of impact in the u.s.. >> thank you for joining us, charles allen. >> let's move on. coming up, will facebook beat apple to the mobile payment punch? we will ask the ceo of ghost where coming up. ♪

>> welcome back to "the pulse." apple and facebook have been explained expansion to the mobile payment space. >> what will this mean for consumers? james, great to have you on the program. give us a sense, basically, just to remind viewers, go squared is basically about crunching data. the gives you a sense of what

people are spending, what kind of people are going to use their credit card more. does it make sense for facebook to become a bank, a retailer? >> i think facebook, from what we have seen, they are in a great position to be a place that enables transactions to happen more easily online. they're in a great position along the same lines as google and people like that. i think facebook's keyvalue population is that a good idea of true identity online, which i think is a huge win for anyone in the payment space. >> does it matter they're not tied to a specific platform or is it almost in advantage? >> i would say it is one of the strongest advantages right now. when you look at apple going into the payment space. apple has a strong position as well in that sense, but it is only on apple devices. anyone with an android phone, it

will not impact a large portion of the population. whereas facebook and across these different mobile platforms comeereas facebook can across these different mobile platforms. android phone, windows phone, ipad, iphone, maybe even a future smart watch or whatever you have that is coming out wearableball -- in the space. >> the fact i have real friends on facebook, why does it make me want to --lazy, right? i love the one click. how would you transfer that to facebook? >> a lot of people might view it as a website where you go to post funny cat pictures. [laughter]

itually, you have to look at as a platform. you look at the number of services tied into facebook. you connect with facebook to use all sorts of apps and services whether they are web apps or iphone apps or whatever. facebook is this underlying infrastructure around the web. it has all of these different services connected to it updatese various status and friend connections. facebook has a very good idea of who is a real person and he was just a spam account. that in turn leads to being able to build a lot more trust between merchant and consumer. >> trust is critical. want to step into the financial realm, trust takes on a whole new meaning. there are risks associated with doing this. there is going to be a spillover effect if things don't go quite as planned. when you're trying out new things, things can go not as planned. what is the danger? >> for the moment, facebook has

released a few bugs and it annoys people that their timeline shows the wrong cat. when you go into the payment space, the risk is so much greater. but facebook has had some experience in this realm. a lot of the facebook credits and being able to buy the goods. it is still real money exchanging hands. i think they are in a good position. i think i'm the scenes have been registering with a lot of authorities around the u.s. to make sure they can roll out payments easily across the u.s. and across the world. maybe not even in such a strong position as facebook, already doing it like square. the card swiping. and striped who has taken on paypal with online payments and making it much easier to make payments happen over the web.

they don't have anything like the capsule of facebook. it is a risky space, but i think strengthen.l >> talk about demographics. because you have access to big data, who spends the most? i thought when you're young, kid-free, you may have a salary that starts to increase around 25, you're starting to spend more. many of kids, probably less. but then when you're older, right, 50, yet much more money, and my right? as a demographic also on facebook? >> it is hard for me to pinpoint the demographics, but i think the interesting stuff we have seen -- a lot of companies have seen in the spaces, just in terms of the social platform and how they compare, definitely facebook is driving very high conversion compared to say, twitter, google plus -- google plus really isn't anywhere to be seen on which platforms convert well.

but in the platforms like instagram, converting quite well, but also much higher average all the values. you have to look at the different social platforms into the different demographics of people and the different use cases. you are on instagram probably to relax and see pretty pictures and you might find a beautiful handbag or something where you're willing to spend a lot of money. whereas facebook, my the lower value items that people are linking to, but at the end of the day, it is the power of those friendships and connections that are really causing purchases to happen, which is quite exciting. rocks why is facebook doing this ? is it simply about trying to get better conversion rates? >> it is a huge opportunity. i almost think -- >> what is the potential? >> i guess for facebook, there's the opportunity to take a slight cut of any payment happening.

just as paypal transformed online payments years and years ago, i think facebook it in a similar position. they are ready have facebook connect buttons and like buttons throughout the web to bring out the same simplicity, but online payments. one click payments on any site, that is usually disruptive for the payments industry. i think facebook is in a grid position, but there are a bunch of other companies as well. when compared to apple, apple has been much more closed and will only happen on apple devices whereas facebook is it a great position to do this across any platform. >> has heartbleed changed anything? it has made me think twice. >> talking about the risks. valid point. i haven't thought about it for five years, and suddenly, it is a real risk. >> is exciting report were hardware like apple --

and software, but the fingerprint engine, they have a huge impact on people's trust and security. doing away with passwords that relies on a fingerprint. the hardware and software combined in the hole experience can be potentially more secure. there's a lot to be said for the closed an integrated approach and also the open approach. we will have to see. >> it is an exciting time. thank you for coming on. marks to be the next big thing. ♪

>> welcome back to "the pulse." let's go down under and talk about the aussie dollar. under little pressure. softer inflation data coming out. there was an expectation the number was going to be a lot stronger. midyear rally is being talked about. that has been taken out of the price with a softer data. you can see how it happened. maybe the chinese story as well playing into the mix. the point in time was the inflation story, more of a central bank story, the china story. let's talk about cinemas. du enjoy 3-d films?

what about 4-d films? that can be the next frontier, maybe even the final frontier. it brings effects like moving chairs, smells, smoke, wind. the theater will never be the same again. but will audiences embrace it? hollywood to is in get a taste for himself. welcome to the movie theater of the future. if you thought 3-d was cool, try adding moving chairs, bubbles, strobe lights, a feet tickle her, and smoke. >> let's do it. >> feet shaking. the company behind this in itsogy rolled out 4-d own theaters first, then europe and mexico came calling. angeles isn los

retrofitting one of its theaters. -- it can cost $700,000. >> to be competitive and relevant in the movie business, you have to constantly be evolving. magic, it canthis basically be controlled through a tablet. >> the effective digital is you have this little environmental control. you're not just shooting the movie out, but you have these effects that are timed exactly with the movie. >> they engage four of the five senses. smells like gunpowder and freshly brewed coffee are stored in canisters behind the theater and piped in at the right time. rubble --like burning rubber post. i'm in the theater and it is raining. the 4-d experience costs about six dollars more than a 3-d movie theater. >> we anticipate there will be a

strong demand to roll it out into other movie theaters. >> flying through the air. >> moving with them a little bit? >> yeah, the sense of floating a little bit. >> whoa! that was crazy. you are in, i'm probably out. >> it depends on the movie, really. >> if it is a good movie, i'm transfixed anyway. i'm focusing on the movie. >> 3-d has been a mixed response so far. anyway. i'm in.out, and now for what is coming up. are you in or out? >> i'm out. get ingrained on?

-- getting rained on? i'm out. >> you don't like theme parks are roller coasters. >> a bit of popcorn and beer, kick back. >> it would be fun. >> i'm definitely out. >> growth, where does it come from? : a bubble in tech stocks. they need to start delivering some growth in earnings. with that call, they're not even going to deliver growth in revenue if you look at some of the forecasts today. that is the first time in some 10 years. 13 times earnings?

pretty low valuation. >> we are also focusing on asia with president obama. >> he takes a week going around four nations. he kicks off with japan, south korea, malaysia, philippines were president obama is touring. he wants to talk trade and the transpacific partnership trade deal. --. he will talk more about maybe he will talk more about the asian relations. >> ukraine? >> if russian citizens are attacked, the russians will take action. that is the message we just got from an interview on state-run russian television with the russian foreign minister sergei lavrov. the situation is getting even more tense and eastern ukraine. we will be watching that. >> thank you very much. david tweed joining us from berlin. that is it for "the pulse." "surveillance" is next with

tom keene and his team. to billl be speaking ackman and warren buffett. ♪

>> the global factory confront economic weakness. china considers growth on a downtrend. what is the quality of growth at apple and facebook?

they report after the bell. yogaet, step up to luxury stuff. good morning, this is "bloomberg surveillance." is wednesday, april 23. i am tom keene. joining me is the well-dressed scarlet fu and adam johnson joins us as well. did you survive your birthday? >> i did. we were out incredibly late last night, 9:15. for those of us that get up early, that is late. >> it's not like you can get up at 10:00 and wander in at noon. here we go. a mixed picture of economic data. signalingi was 48.3, economic weakness persists. it helped set the yeuan