tv The Pulse Bloomberg April 30, 2014 4:00am-6:01am EDT
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>> we are not exclusive. approves talks with ge but leaves the door open for a rival offer from siemens. the shares are surging this morning. tumbles to the lowest since its ipo. >> and crazy for kate. the supermodel at top shop -- topshop. we are live with its billionaire founder philip green. good morning, everybody. you are watching "the pulse."
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we are live from bloomberg's european headquarters in london. >> also coming up, we test drive the scooter that is redefining vehicles. you could do with that today in london with the tube strike on. have a super blend that is to be used as a spy craft, among other things. alstom has approved talks with general electric. it is keeping open the option of talks with siemens. , david, let's start with you. what exactly is ge proposing? ge has been proposing that it takes over the energy business forlstom and leaves a rump alstom of the train business.
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which would be a good thing for the french truffle business, the french train business, because it would have this wad of cash that would come from ge. ge'swhat was interesting, comments that it would increase jobs in france of any company that it buys. sense of who is ahead. it looks like alstom is ahead. theyease the government, are keeping -- >> this was a slightly odd announcement. they are entering into negotiations with ge, but these negotiations are not exclusive. as we have been discussing, over the weekend, we saw the french government scrambling to put together this alternative bid from siemens, which is actually an asset swap. siemens gets the energy business tom gets the rail
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business. there are constituencies in france who would like to see that deal go through. within the next four weeks, siemens can still make an offer. at the beginning of june, they make a final decision. the also understand possibility of a third option, the surprise option. that could be an all-french solution. ge first, siemens second, and a very different -- a very distressed -- a very distant third. arnold talkingd in the national assembly, the energy minister. he has been talking about the proposal he has been making and also proposal being made by siemens. letters being sent by siemens to the alstom boarrd. he said the offer is ambitious for energy and transport. he also said that siemens has proposed setting up a global
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nuclear and steam unit based in france. i assume that would be a nuclear and steam turbine manufacturing equipment in france. very interesting because it does inw that he is not entirely charge of this process. he is talking about how the french government favors alliances, not takeovers. he said they would like to see ge in some sort of 50-50 alliance with alstom, a little bit like the venture that general electric has already got in another french company. i want to leave you with this. he said that germany and france share similar social and political economies and it would be much easier for france to intervene with a german company then it would be with a u.s. company. that says a lot about his attitude towards what they call
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anglo-saxon capitalism. >> this is something we have seen over and over again. the left-leaning side of the socialist party. how should we take these comments? >> for readers and viewers who are not familiar with french politics, it is important to note that the socialist party has always had a business wing and a hard left wing. universe, nate montebourg is very much on the left. there are competing strands in the socialist party and we saw that on monday, when the government tried to walk back much worse comments over the weekend about favoring siemens. there is a concern about being seen as close for business, hostile towards investment. the fact that ge has gone far enough to announce what they have announced today suggests that the business wing is one that is round, at least for now. >> thank you very much.
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>> shares of sale are coming this morning even after europe's biggest oil company said rockets fell three percent. -- said trough it's -- profits fell 3%. let's start with ryan chilcote. >> no one expected shelled to do as well as they did in the third quarter of last year. profit came in at $7.3 billion. that is down from $7.5 billion. $5 street was looking for billion. it is a real beat on those grounds. one of the things they will be looking at carefully is what the ceo of shell has to say about russia. oil -- likeg, like all of the oil companies, interests in russia. they have a plant in the far east where they have partnered up with gazprom. they went to russia 12 days ago to meet with president putin and
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say it is really important to us, that plans. we would like to up capacity there by 50%. he got president putin's endorsement for that. that is good for shell. late last night, resident putin saying that if they ratchet up sanctions against russia, there are no need for any retaliatory measures just yet. russia may eventually have to re-examine, as he put it, cooperation with western energy projects. that will give all of the oil companies pause and it is something mr. van burden will be asked about today when he talks to investors. >> give us an update about shell and the ukraine. >> they really cannot beat this geopolitical situation in the ukraine. they were talking to the central government about developing gas in the east of the company -- of the country, exactly where the separatists in ukraine are now operating.
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there, lateright yesterday, we had pro russia militias seizing government buildings. the whole eastern ukraine is obviously really fraught with turmoil at the moment. that is not good for shell in terms of its expansion plans. they do not have any substantive operations there yet. obviously, everyone is looking for more gas. so much.you ryan chilcote on the latest for the implications for the oil majors with these sanctions on russia. >> twitter has disappointed. revenue is up but user growth is down. the stock was punished for that in after-hours trading. hans nichols has the numbers and what we hope is a little more than 140 characters worth of analysis. it in haiku and you will have to test me afterwards. twitter has always been a popularity contest. they have always been judged on how fast their user growth is
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growing. it has slowed down. it is a basic story. they are not adding users as fast enough. 25% quarter on quarter. chart,u look at the bar which is hopefully up right now, you can see that it has slowed down. the other numbers i was giving you are year-over-year. dick costolo knows he has a problem. he has hinted at changers to the user experience to make it easier for users to share photos. here is what he said yesterday with bloomberg. we are working to increase the value of the login experience. they need to find new users and have the users who are there be a little more active. when you look at their advertising, they have most of their users outside the u.s. 80% of their revenue comes from inside the u.s. one part where they did have is 80%,d numbers -- it excuse me. i got those numbers confused.
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facebook is just 50%. overall, disappointing numbers and we will see what happens when it opens later today. >> give us some of the good news. gettingmentioning eroded by the instagrams and snapchats of this world. >> the good news is that if you look at where there is opportunity for growth, that is sales growth, that is a broad. most of the revenues are coming in from the states. they can hire a sales force to sell more ads, but fundamentally, people are not staying on twitter longer. if you do not add more users, it is a losing proposition, which is why they may get a low -- dip below their ipo price. do they have a strategy for adding more users? journalists love twitter. we are all full of ourselves and we have our egos. we like to count how many
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followers we have. when you look at the actual numbers, the growth is not there. i will not ask you how many you have. francine win that competition by a country mile. let's not get into that. we will be back with you a little bit later. if you want to follow me on twitter, do not worry about fran. twitter's ceo will be joining us later on in the program. here is what else is on our radar. >> let's talk about the other stories we need to pay attention to. a senior u.n. officials said rio de janeiro's preparations for the summer games are the worst he has ever seen. he called the situation critical and said the preparation is even worse than in athens. japan addingf extra stimulus as it sees the pace of inflation picking up over the next two years. consumer prices will rise 2.1%
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starting april 2016, up from 1.3% in the current year. vice president said lenders are preemptively boosting capital ratios to reduce the risk of failing out balance sheets. he told bloomberg the sum of the cautionary measures have been "spectacular." >> based only on public bank, sincethat the july of last year, has strengthen their balance sheets through several measures to an amount of 104 billion euros. >> we will hear much more from him later on this hour. >> still to come, kate moss mania. the supermodel and style icon is teaming up with topshop after a four-year hiatus.
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is the most favorable and alstom will likely take up the offer. great to have you on the program. give us a sense of your thinking. is it a done deal that ge will get these assets? >> good morning. i think -- it is more likely that ge will take over alstom for sure. siemens, it looks quite difficult. especially with the issues in europe. we look at how the deal is structured, tell us why the ge deal -- we do not know why -- what siemens will be putting out there, but why is the ge deal better than the potential siemens offer or any other offer we are likely to see for this business? >> with siemens, it will be more difficult because it involves an asset swap. it is more complicated and they
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will end up having a 30% market share. in europe, that is too much. , they have a workforce in france already. some of the sites are close to each other in france for ge. employeesoying 10,000 in france. the businesses are very competent three. -- complement three -- compl ementary. >> if alstom chooses the ge option, does that mean that french companies are not open for business, that they do not even listen to what the government says anymore? >> i think the government cannot really say anything because it is a privately-owned company.
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the french government has been disposed a few years ago. i think there is a bit of frustration in the french government. the disposal of alstom, we talked about vivendi a few weeks ago. but i do not think the government will have any sway on this. maybe just talking to ge employees, they cannot do much about it. >> i understand they cannot do much about it. certainly, they have been vocal on what they would prefer, that the european solution would be best. they do not have a stake anymore. their biggest clients, the train business of alstom. >> yes, sure. theif you look at commission, this involves new issues.
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so-called antitrust issues. is not all about the french government, but also european. the french government would love this deal to happens with -- to happen with siemens. siemens, there are some issues there. it would be a more complex deal. it is quite tricky. >> thank you so much. up ,kate hits topshop once again. her latest collection hits stores today. caroline hyde has a sneak preview. >> i am indeed. it is the calm after the storm. the crowds were enormous yesterday as, once again, the british powerhouse retailer teamed up with the british style icon, kate moss. i will be back with an interview in the next hour and to discuss the business that is topshop kate kate moss -- meets
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>> welcome back, everybody. you are watching "the pulse." we are streaming on your tablet, your phone, and bloomberg.com. now, have you ever wanted to fight crime? have you ever wanted some kind of superman suit? the british police are looking for experienced managers from other industries, including business and finance. a little bit more, we joined a police raid in london to find out more. >> these are private bits and usually they are individuals who have tens of thousands of pounds. people have lost up to and above -- >> before the victims, police after just a few months
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he was thought to have begun. , these peopleress are said to have been selling fake investments in $36 billion of largely-nonexistent californian gold. >> you're all under arrest for attempts to defraud. >> you are looking at the heart of london's financial district. you may already be working here as a banker, a broker, a lawyer. if you are, the u.k. police may bring you to work for them, starting this year. the first time, somebody who may have reached a position of importance in another field, maybe the army or business, will be able to transfer those skills to the police. >> would you be up to the task? you might face opposition from within the ranks. you might have to take a pay cut. you might also be in charge of the next grade, -- raid, uncover
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the next financial scam, all in a days work. >> it is amazing that we got access. i did a talk a couple of months ago and they were saying that the bankers and lawyers do a lot of the hard work and it is only through bank accounts that you realize this is happening. that is just the cool stuff. masked things. >> let's talk about what is happening in the markets this morning. jonathan ferro has your asset check. >> thank you very much. look at the map he low you. we are struggling for direction. frankfurt in germany. we have a busy 24 hours. euro zone inflation data, the federal reserve, and chinese pmi data comes out overnight. the bank of japan did not move overnight. the bank of japan did nothing. they revised their growth forecast for the year slightly.
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they did nothing for their inflation forecast. they are holding their cards close to their chest. dollar-10 giving up a little bit. -- dollar-yen coming back a little bit. euro-dollar down by almost .1%. the big news yesterday was german inflation data. was slightly below expectations. spanish inflation data today, bang in line with expectations. the big one comes out in 35 minutes time. euro zone inflation, can it take higher from the rigorously record low -- previously record low? that is going to be a big deal for this one. we have not seen inflation this low in the eurozone for years. or do we come in short of expectations? we could well be disappointed if that inflation number beats. >> jonathan ferro with your asset check. >> as we had to break, it is time for today's pulse number.
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>> welcome back to "the pulse" live from bloomberg's european headquarters in london. johnson and these are the bloomberg top headlines. >> russian president warns that further sanctions against russia could jeopardize deals with u.s. and eu companies in the energy sector. he says for now russia won't retaliate. poised to overtake the u.s. as the world's biggest economy. this could happen next year according to new calculations. a group including the world bank
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and u.n. issued the report. most radical politician of mario draghi's time at the helm of the ecb could hinge on a single piece of data. the latest euro zone inflation numbers come out in half an hour. a week reading could see draghi facing calls to impose negative interest rates. >> let's talk about that data. ferro is pretty excited. >> i am. i think a lot of other people are too. what are we looking for? 0.8%. germany missed yesterday. are they going to move? do miss, let's say we had 0.7%, 0.6%, is the pressure going to build on mario draghi to act? doubt it. a lot of other people do too. listen to mario. listen to what mario draghi is saying. caseiew is that the best
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scenario, low inflation, a gradual move back towards target, qe is not imminent. in his view, that doesn't look like it is imminent. >> he has different conversations depending on who he is speaking to. he is saying one thing to german lawmakers and hinting at another thing in an interview or press conference. >> qe is not imminent for now. i think he was very clear last week. he gave quite a comprehensive speech on what scenarios would need to be. what he needs to see for qe to happen is a worsening in the inflation outlook. that is going to mean a series of numbers. is pressure going to build ethanol per is weak today? it probably would. he is going to have to do a number of things but are they going to act based on one number today? highly unlikely. lower.ds edging let's talk about the stress
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test. we are running out of time. , seems to imply something, doesn't it? >> they need to be stressed. >> we got some of the parameters yesterday. a 19% fall in stocks, 13% unemployment, some pretty drastic falls in growth and spikes in yields as well. banks have been preempting any move to say, you guys raise some capital. we spoke to the ecb vice president. theird they strengthened balance sheets by 104 billion euros since last year. out will beound less than what it would be -- we are not concerned with that fact because the market is aware of what is happening. they are preempting, they are
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raising capital. yesterday we got ecb lending data. it contracted. you can't raise capital and boost credit growth at the same time. those two things are in conflict. you are talking about record low yields, a euro that is surging higher. contracting credit growth in the euro zone, that is really the number one thing the ecb has got to address. they have also got to conduct stress tests as well. inflation is part of the wider puzzle. i am excited about the number. constantly told us there was a single needle. for how long? >> we have been below target for a long time. sincethat is the lowest 2009. times in aaid, 19 speech, that inflation was from the anchors. that was his favorite catchphrase.
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thank you so much, jon ferro. >> jon will be back when those numbers come out. profit jumped by five percent at bnp paribas. that beat analyst expectations. >> we spoke with the chief financial officer. consider this a solid result. it is up five percent versus last year. on the back of progressing topline retail and investment solutions and in brazilians. resilience. cost of risk is somewhat impacted by a provision we took out a precaution for the uncertainty in eastern europe. all of that leads to 1.7 billion. resultider it a solid and it gives us comfort in further implementation of our development plan. >> even though your presence in
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russia is not as big as your rivals, do you believe there is a risk of a domino affect following the sanctions against russia? >> we took a collective provision for the uncertainty which is not identifiable. i do not think there is a domino affect. we will have to keep monitoring the situation. >> do you believe there is a sovereign debt risk in europe? >> if we look at how things have evolved, i think that problem is probably one of the best and has been addressed in the appropriate way by the authorities. >> what are the challenges in fixed income? incomeou say, for fixed the results have been a little bit subdued. there was very little demand by clients and so we saw that as a generic trend. nevertheless we have been able
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to increase our market share in several domains. that bodes well. >> what is your general outlook for france? >> we anticipate there will be a pick up that will take time to evolve. a lot of measures are being put on the table. i think these will all support the hope that is there. >> that was the chief financial officer of bnp paribas. we are going to carry on the conversation about the banks. >> we will be joined by one of the experts here in london. after a four-year hiatus, fashion icon kate moss has teamed up with top shop to unveil an exquisite range of clothes and accessories. here to tell us more is caroline hyde live from top shop's london flagship store. caroline. >> good morning, francine. it is the calm after the storm.
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here, last night, we had see every for lens -- we had celebrity friends such as sienna miller. the crowd was enormous. now i have to say it is a pretty nice shopping experience. all the rails have been restocked. you can find yourself a gold embellished tress for 600 pounds. numbers also a leather down in theunds flagship store is already on ebay for 350 pounds. this is what they want, the social media frenzy to build on their relationship. >> let's talk about how this all works. this is designed to generate revenue. it is meant to boost the bottom line. it seems to be a collaboration that works.
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>> it is. feels it isip green a collaboration that works. it is a british style icon with a british retail force. his growth strategy is very focused internationally. he is pushing hard into the united states, unveiling more stand-alone stores, not just those with nordstrom. he needs the brand that is kate moss to help them drive off the competition. a u.k. retailer is opening its first stores in the united states. he wants something to set it apart. he hopes kate moss and her iconic brand will do that. she has designed for other labels as well. we will be talking to philip green in a moment to see how much sales have gone already.
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the rails are already restocked here downstairs in the flag shop. internationally they go live this morning across 40 countries worldwide. able to get your mitts on some 40 different designs. guy, i am not sure how many they made for you. friends. caroline, thank you so much. it is amazing how iconic eight moss still is. i was reading somewhere, every time she is on the cover of a 20%zine, it outsells by anybody who would have been on that magazine the previous month. >> good for her. let's go from top shop to transport. increased density is ushering in new vehicles designed for commuters. in london we have a rail strike underway. they are called last mile
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vehicles and they are made for people who need wheels to get them from the bus or train to the office. b-e, the world's most compact electric scooter. >> i am the inventor of the urb-e/ . this is an all electric vehicle. it has a range of about 20 miles and you go about 15 miles per hour. one of the things i wanted to design into the urb-e was the ability for it to fold up incredibly small so you can keep it on a train or bus. you open it up, it takes about half a second to become an actual vehicle. the whole thing weighs under 30 pounds. i came up with the idea based on the need for people to have a vehicle to get to and from work
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if they choose to take public transportation. it is called the last mile scenario. bicyclefferent than a because it is a short wheelbase and the wheels operate small. your feet are connected to the steering on the front wheel. it really isn't ethical to ride. most people go maybe a few feet and they get it. >> would you? >> is it practical, yes. is it ugly, i am afraid so. a kind of works. >> if you are above 70, it looks ok. our age, not so much. that is my statement of the day. with all going to stay things wheels. we go from two to four.
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>> welcome back. daimler posted a 95% surge in the bottom line. top line up a little bit less. shares are trading lower. we need to figure out what is going on. let's go to our international correspondent, hans nichols. ofk to me about the middle this. what is going on? , mercedesexpectations own expectations were at 10%. they came in at 7%. that appears to be why the stock is trading lower. overall, these are remarkably good numbers. to grow that quickly, you need to spend a lot. that has hurt their margins. you look at the plans for the future, 30 new models in development. 12 are entirely new vehicles. they have had great sales. the s class coupe selling very well.
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that is getting the stock a little punished. >> margins are tough in this kind of environment. volkswagen has also extended the offer period. does it mean the deal is now less likely? >> it is close. 90% is the threshold for scanty and shareholders. they are at about 88.2%. volkswagen has given themselves another two weeks to find that 1.8% of shareholders and then this deal can go through and you can decide whether or not you want to buy a volkswagen bus or a new mercedes coupe. we know guy is an suv man. >> and i am obviously an italian barrel. just -- we will get you a nice german car. that is probably the way to go. hans nichols joining us from berlin.
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our european car analyst joins us now. very nice to see you. walk me through what is going on here at mercedes. 10% versus 7%. they should be doing better on margins given the cars they have got out there. >> that is what is disappointing the market. mercedes has a very strong new product cycle. the single biggest product for mercedes is the s class. s class is doing reasonably well. year on year, almost doubled in sales. to be doing only 7% margins is really a little bit disappointing. given that expectation, the question is what is now going to drive 2015 and 2016? that is what is disappointing the market. >> do you think expectations will have to go down for this company? >> the company is still guiding
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to 10% margins. the market is questioning its own credibility and its own belief in that growth. i don't think analysts necessarily will downgrade immediately but there are question marks regarding that. >> what to do about it? what impact are they having? how is he going to get the margin up? >> he is doing all the right things now. mercedes is catching up with the small cars. the problem is the smaller cars vs andluting the su probably diluting margins. he needs to cut costs. he is still significantly behind audi and bmw in terms of margins. >> he is also not helped by the currency swings. what are the chances that things will turn around?
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1.38 euros/dollar is really tough for all the car manufacturers. after aerospace, the car sector is the most exposed to currency swings. on a longer-term basis, 1.38 is tough for them to work with. too many cars are still being produced in europe relative to global sales. the strong euro is hitting margins at this stage. >> when you look at the product story, when you look at what the mix looks like, is it better for china? waiting for the chinese story to get even better? of the macro data in china isn't as good as we are hoping. >> but they have got smaller cars. >> mercedes was almost half the size of audi and bmw in china. part of this was a distribution agreement where they didn't have
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as good an agreement as bmw did. you have now got new cars coming through. first-quarter sales in china are up 52%. mercedes is catching up. again, mercedes is behind its peers right now. atare we going to see growth 6.5% to 7% which will help mercedes? if we have a collapse, these carmakers are going to be hit even more? >> total volume growth in china, we think the lower end will held up. wage growth at 15% to 20% should drive low end car sales. mix and overall pricing may come under pressure. >> ok, thank you so much for coming in. meet the air lender. we scope out the super blimp
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the u.s. army has spent $300 million to develop it as a floating spy center. it then ran out of money. a british company is giving the airlander a new lease of life. sam grobart reports. it is the world's biggest flying machine. airlander is larger than a bowling 747 and 24 feet longer than the previous title holder. shift -- this air blimp-like airship uses helium to get off the ground. it can hover in the same spot for five days straight and land on sand, water, ice or snow. british aeronautics company hybrid air vehicles developed the original model for the u.s. army but the program ran out of funding. later, hybrid air bought back
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the airlander project for $301,000. the company plans to sell the massive airship for $40 million to oil and mining companies that need to transport cargo to remote parts of the world. the airlander has attracted some unusual fans. bruce dickinson, lead singer of the british heavy metal band iron maiden has invested $450,000 in the project. worldts to fly around the and stream the trip over the internet. the maiden voyage is scheduled for 2015. >> love it. you know me, anything that flies is pretty cool. it is big and it flies and it is really cool. >> and it looks good. for our bureaus, a second hour of "the pulse" is coming up. >> crazy for cakes. -- crazy for kate. we're going to talk to philip
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we are not exclusive. a freezing talks with ge and leaving the door open to an offer from siemens. #fail, twitter tumbles to the lowest since its ipo. >> crazy for kate. teams up with topshop. we are live with its founder philip green in a couple minutes. 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 u.s.
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i am guy johnson. >> i am francine lacqua, this is "the pulse," live from london. coming up -- >> the airlander, the super a spythat was once craft. talking of inflation -- area april consumer prices, rising zero .7%. we were expecting a 0.8% figure. this is what mario draghi is watching. >> as is jon ferro. >> let's talk about the euro/dollar. 1.3796. about 20 minutes before this number. many people expected this to miss, we were looking for 0.8% and we got 0.7%. this is mainly because the german number yesterday became -- came below expectations.
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credit suisse put out a note this morning saying 0.7% is not enough for the ecb to act on it. what96, euro does not know to do. next week is a big one in the ecb for mario draghi. >> jon ferro with a look at the markets. kate moss is back. her new collection for topshop goes on sale today. it has been four years since her last collaboration with the chain. topshop is planning a u.s. expansion, lansing a -- launching a store in new york. caroline hyde is at topshop in central london with the man who helped bring everything together. billionaire philip green. >> i am joined by sir philip green, the man behind the powerhouse that is topshop and teamed up with kate moss. philip, the 15th collaboration with kate moss. how does it feel like it is
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going, the sales have opened. >> in the first two hour it was very strong. seen isrt i have just significantly better than the opening last time. have nearly sold out. >> why do you think it is better? >> i think it is the best collection we have done. a lot more work in one collection, which was always the plan. everybody was just focused on getting this one right. or 10 been nine months months in the making. i respect us to be better prepared and better organized. we were not rushing. is end result -- the product really good. >> what is kate moss like to work with? she is a supermodel and a business model. >> it has been really good. way to a decision to have a separate building, kate had her own building.
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she has been working in an office. regular planning meetings, it has worked a lot better. she gets nervous and having her own environment to work and has been better. >> she is the british style icon but that goes internationally as well. you are looking to push the topshop abroad. you have been making inroads in the u.s. how much does she help with expansion? >> she has appeared on every cover all over the world. that is quite interesting. the coverage everywhere that we are getting. we launched this morning in 30 countries -- poland, china, australia, canada. reach, 20big years in the making of doing what she does. she is well recognized. pieces from this collection that are quite expensive, 600 pounds.
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you are teaming up with a luxury online retailer, are you looking to go that much more luxury? >> the idea was it was the first collaboration with net a porter, they wanted a few pieces, three or four pieces, in a slightly more premium area. i think about that particular dress, we made 40 dresses just as something special. just to show what we can do. i'll hand down. it is important that we reach a bit further. net apartheid, is it about porter,ne push - - net a is about the online push? >> the customers who blend topshop and other brands together, we felt there was a market. it would be very interesting to see whether customer's response is. >> give me a sense of
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international growth, is it going to pace you want it to? >> we have got a lot going on. in mexico.t to start we had talks going on in latin america. we signed another two stores, we have not quite that china. we are testing india. we are still developing australia and opening more in australia. south africa. the onlineis business, generally. you have got to have different systems. how do we get more efficient to execute delivery? that is a learning curve but that is how the market is developing. >> you mentioned emerging markets, are you in russia? >> we have 25 shops. therehope for everybody is a resolve. we're doing business in all these markets. >> it has not affected business
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in russia? >> it is probably a little softer. >> what about manufacturing? india and emerging markets to source clothing. are you bringing any of it back onto u.k.? >> we have been trying to come ofrer, giving us flexibility speed and time. i went to be as near as we can be. it is a speed to market and how quickly we can get back into goods. i do not want to be thousands of miles away all time. we need a blend. seven-year high in the u.k. for consumer confidence. 0.8%.p >> you have interest rates near zero and it is always going to be slightly easier. people have been more financially aware. it is still a long way to go but
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it is certainly more stable. much improved and people are feeling more confident. we have got to get on the same track. >> sunshine always helps. >> last year we record the weather. last year at the end of march, we had heavy snow. hopefully we expect it to be better when the sun shines. yeah, the weather helps. one -- yle and >> if you could have any wish -- everybody would be happy. thank you very much, indeed. >> good luck with the rest of the collection. philip green talking us through the collection with kate morris. a british style icon teaming up with a british powerhouse in retail. >> our thanks to caroline hyde
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and sir philip green. >> she sells more than any other model. let's bring in our guest host, davide serra is the founder of algebris. going to talk about inflation, banks, and technology. a quick reaction to that consumer prices. 0.7% increase on the year for april. how much will the ecb focus on this to decide what they do next in terms of interest rates? >> the plan is very clear. inflation is falling, it keeps falling. 2% is the upper band in the new reality give this -- given this economy, you would expect a pickup and inflation. particularly in germany. we know southern europe is in deflation and has been for three or four years as part of the adjustment process. face a they will have to
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reality. we made the euro at 1.18 in 1995, we lost $11 million from europe to the u.s. -- we last 11 europe tobs from u the u.s.. we have a currency which is 1.39 to the dollar -- 3820 as we speak. time for action? what happens now? fort is time for action people within europe. the european election. i think the anti-euro movement will get around 20%. that means eventually it is going to get fed up. >> is there anything mario draghi can do? have 250 million people in europe, if one man had the power
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to solve the problem of 250 million people, that would be too easy. havecb and the bundesbank to come to terms. how can we keep the euro project together. the euro is clearly overvalued on any metric. and theyindustrialists will agree. people around the world say how can that be possible -- it is very simple -- you have to fed, bank of england, the bank of with their own balance sheet. europe is contracting. the euro keeps shrinking, today money are putting laess . the european balance sheet is shrinking and we are in austerity. we are printing less money. that is why we are basically getting hit on both sides. we are not as competitive because of labor laws.
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>> welcome back, you are watching "the pulse." highero is trading post-inflation numbers. to821, we are continuing climb. you had a lower-than-expected reader of euro zone inflation. you would have thought that would mean the ecb would be further down the road towards qe , which you would have thought would be currency negative. what do i know? the euro is trading higher despite the weaker than expected figure. >> answers on a postcard with guy johnson. let's bring in davide serra, founder and ceo of algebris. we were talking about a high euro and the problems facing the euro zone. i don't know if you are pessimistic or realistic on markets right now. given what you were saying, we are still not competitive and
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there is a clear disinflation problem for the moment. you also suggest mario draghi is not going to act soon. what does it mean for the markets, are we going to see a correction that takes everyone about? >> no. it is a question of time. in europe is about a timeline. if you are a central bank, you are going to engage in quantitative easing the day you know the pipes are clear in europe. the central bank has to put the water inside each country or within each bucket. you want to make sure the pipes, the banking system, is clear. there is a process called the asset quality review that is ongoing. yesterday, the stress test. they are going to check inside each bank. each central banking system, is it clean? put some capital in size. clear it out. secondly, let's stress the pipes. are the highest strong enough,
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that is the stress test. once they have done both, the system is good to go. is there enough water in spain or france? can i as a central bank do anything for monetary transmission on the ground -- people buying at shops, sme's watching their own businesses. at that point we still have indecisionof monetary transmission. at that point, the ecb will be ready to do nonstandard measures. which i do not think are going u.k.,ycat the u.s., the or japan. quantitative easing in the u.s., the u.k., or japan is difficult. it is one country, one currency, one government bond. you need to buy one instrument and just decide how much. situation is more complicated because what happens if you buy too much in germany, you might create a property bubble. at the same time, you might want to help small and medium
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enterprises in spain and italy because they are not getting credit to perform good businesses. german demand for spanish goods, a spanish entrepreneur sets up his own business. you might not necessarily want a bubble in real estate in spain. you need to choose the instrument. the ecb is looking at targeting specific segments. securities,r country by country. it is not just lets buy $1 trillion of government bonds. xcode the quantity in qe is less of a factor. stay with us. we need to move on and talk about ge, making a formal offer for alstom at $17 billion. a rival is open for deal from siemens. our deals reporter, matt campbell, joins us now.
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one of the proposals -- what are the proposals? who is ahead? that it proposing acquire all of alstom's energy businesses, basically the entire company. 70% 80% of revenue. that would leave a rump alstom focused on the transport industry. this is really the end of alstom as we know it. siemens has proposed an asset swap, siemens owned rail ofinesses would come out siemens and alstom sends its energy business to siemens and his two companies specialized, alstom with rail and siemens with energy. the ge offer has been accepted for now and so we have to proceed on the basis that is the way this is going. alstom, probably under pressure from the french government, has the door open to siemens. >> matt campbell with the latest on alstom, ge, and siemens.
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if you look at the m&a pipeline, it is huge. does it mean the ceos or more confident about the future question mark >> yes, if you look at cash deployment in the u.s. and europe over the last five years, it has been buyback stocks. people said i do not see incremental demand, the future is uncertain. what i know is who i am so i and not adding new capacity, i just buy more for myself. that has been what i call tightening of the belt and getting fitter. everybody had excess fat, excess capacity. cut costs and buyback your stock. i think five years active the crisis, we can now see a clear destabilization of developed market economies. the u.s., japan, and europe. destabilization still counts for 50% or 60% of existing gdp stock.
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we can now invest back. people are doing -- after whichning the belt -- business line should i add? in the case of ge, ge is a fantastic industrial. , a great ceo, has made a decision. they want to shrink the ge finance business. they do not want to be a bank, they want to give you a loan if you buy their refrigerator or an engine. they do not want to give you a loan if you want to go on holiday. surprising -- supply and climate -- supplying credit for the company. if you want to add the business line, as well. it is complementary to what they have. >> the one thing we are waiting for is ceos to start investing.
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they are buying companies now but that is a zero sum game. when do they start investing? i will feel more confident we are not in a credit boom. >> the start of investing is happening in some sectors. in the farmer sector -- in the pharma sector, investments in biotechnology. pharmaceutical industry said we cannot do rad internally. the smartest kid is going to set up a biotech company, a large pharma company finds it cheaper to buy the company and ipl rather than hiring accountants and physicists in their own department. the pharma company buying biotech companies is like investing, the equivalent of external r&d.
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top ing over the internet infrastructure, not just the fiber cables. >> content? >> content, people keep investing. third, i see there is investments having in robotics and mechanics. taking out costs. what is happening is you have a laborpact in terms of because the skills that are required are changing. ats should be said, we are the beginning of a third industrial revolution. we have already been it for the last four years or five years. how can 12 people setting up what's out generate $19 billion of value. you can make a product that can be massively scaled over the top. you are creating value but this is being distributed to many jobs. >> thank you so much, davide serra is staying with us.
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to "the pulse," live from bloomberg's european headquarters in london. i am francine lacqua. >> i am guy johnson. >> vladimir putin warning that further sanctions against russia could jeopardize deals with u.s. and eu companies in the energy sector. he says russia will not retaliate for now for the latest round of sanctions. >> china poised to overtake the u.s. as the world's biggest economy as early as next year. new cancellations take exchange rates into account. a group including the world bank u.n. issue the
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report. or francek of japan from adding stimulus as inflation picks up. consumer prices will rise 2.1% in the fiscal year starting april 2016, up from 1.3% in the current year. >> inflation data out from the eurozone, consumer prices up a little less than anticipated. pressure on mario draghi continues to grow. let's find out how the market is taking this with manus cranny. >> equity markets are a little softer this morning. the conversation you have had this data bad is enough to galvanize the european central bank into action? credit suisse says no, it would take the euro to break $1.40. where the conversation you have been having, what type of qe do you need in europe to have an impact? the euro/dollar at 1.38.
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off thoseking numbers. a couple numbers to come through, the federal reserve, the chinese data -- purchasing managers index overnight. you anat does, it gives indication of what is going on with china and the stimulus program that might be neede d. u.s. equity futures, a little bit of it dip in the s&p 500. the curtainadp, raiser for the unemployment numbers. 57 is thehi- chi- number to keep an eye on. >> manus cranny, let's move on and talk technology. twitter shares could be down at the get-go this morning. user growth that is slowing.
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the lights to turn back on, we paid the bills. hans nichols joins us now to break down the figures. in what we hope is more than 140 characters. >> we hope i can shed some light on it, a morning full of puns. the challenge of twitter in our own twitter feed. growth ofe met to the your twitter followers. you want to see twitter's beenenge, since i have coming on your show, has the rate of new followers increased or decreased. if it decreased, throw me off. that is the challenge of twitter. their user base is not growing as fast. it has slowed down, 25% year-over-year and it was ready percent. hopefully we have a chart that shows you how slowly they are growing. no one likes slow growth, the stock is down 36%, down 10% on trading.
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twitter is trying to rectify the problem. dick costolo is aware of it. here's what he said in interview, we will speak with him later. here is what he said, we are in the process of working to increase the value of experience. you,n the question for opening myself up to criticism, has the rate of your growth increased or decreased? >> 100% increase, why would it not increase? for threes been away weeks but he is back now in our ratings are going to go up. hans you very much indeed, nichols joining us from berlin. --ittle later on, bloomberg twitter's ceo, dick costolo, will be joining our u.s. colleagues on bloomberg. growth, how doth you grow? for more on twitter's hashtag #fail, we are joined by eileen.
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, isguest host, davide serra also with us. founder and ceo of algebris. how do you grow this business? this is something we have talked about. the business model -- it is difficult to see where it will go. growing,venue is engagement is growing, advertising potential is growing as well. mobile users and all those things are growing. but the growth rate is not growing. it is not that they are not adding new users, but the rate that they are adding users is not as fast as people would like. this is the first uptick in user growth in six quarters. the glass half-full viewpoint would be that that is a good thing. it is not as strong as you would like, so you are still worried. it has only been the second quarter they have released results. stockse of the markets, was still up 5%.
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for patience, two quarters is not enough to decide a company is dead or overvalued. it does have a lot of ground to make but i think the region has the-- the reach it has and engagement is strong, you cannot ignore it. >> talking of influence, davide, you are on twitter, do you see the value? i can see it from a personal point of view. >> i am on twitter, not on facebook or anything else. for the bester is service professional. if i want to have the same , use twitter. follow the 200 people i respect. i think it is like a free bloomberg. not the same content. >> that feels very elite.
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you make it beyond that 150 people. >> that is what i was thinking. i use what that -- i use whatsapp. or sms.eap, not paying from [laughter] i can see why it has whatever billion users. how can whatsapp make money from me? if they ask me to pay five dollars tomorrow, i will switch. i found an alternative. hehe is generally used -- genoa. >> it will not have the same number of users as facebook and whatsapp.
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the value of a twitter account is much higher because, for me, twitter has something that i want, the value of the community. how many smart people are on it, i value more than whatsapp. people i ten or 20 need to engage with, they are on twitter, not whatsapp. >> we say instagram or snapchat is a rival to twitter, is it? you consume it for different reasons. if youree with davide, look at whatsapp, that makes twitter seem cheap with a market cap of $24 billion. if you compare and contrast it that way, twitter is undervalued. i do not think you can compare it. the other services do not have the stickiness or the engagement or the community. they are anti-community for
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person to person messaging. let's brainstorm on what twitter can do. should it change the model? how can i monetize these influential people that are influencing other influential people. lot of money to spend but you wonder how you get elevated this kind of -- >> the fact that it is going to monetize more aggressively, it really did not monetize at all a year ago. the fact it is going to monetize more aggressively is what i think the streets should concentrate on. user growth is a bit of a vanity metrics. it would be great if there were a billion monthly active users but do we care that every person on the street is using it? that is not where the volume lies. -- that is not where the value lies. that is that why people are engaging. they could keep pushing user
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growth and that seems to be what people focused on yesterday, which is why they are suffering a decline today. i do not think that is a fundamental you should vocus on valuing it as a public company. >> thank you very much. eileen and davide serra. >> what else have we got? company biggest oil beats estimates, will shell's exposure in russia take a bite out of the bottom line? that story is up next. ♪
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anybody. we are doing business in all these markets. >> it has not affected your business in russia? >> it is probably a little softer but you have got to give an eye on these things. are wondering what sir philip green was talking about -- in russia. he is the founder of the arcadia group and topshop. he was talking about the impact ukraine and russia are having. europe's biggest oil company beat estimates but will shell's exposure in russia take a bite out of its bottom line going forward? we ask this question to ryan chilcote. the numbers might disappoint in some sense. if you think that profit is down year on year, the first quarter of last year they did seven point $5 billion. this year they did 7.3 billion dollars. the street was expecting $5
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billion in the first quarter, that is one of the reasons why the share prices is up. the big question is what about russia. shell has big interests in russia. they have a lng plant in the far east. producer inly lng all of russia. a project together with gazprom, the world's largest natural gas producer, to send gas to asian markets. that is one of the reasons why the boss at shell went to russia 10 days ago to meet with , to remind him shell is committed to russia despite the sanctions. and ask for his support for a plan to boost capacity at the plant by 50%. as recently as last night, president clinton said if the sanctions keep going up, russia might have to examine deals with western countries when it comes to energy. >> we will pick that point up in
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a moment. talk to me about what is happening with ukraine. >> ukraine was another place that shell was looking to expand its business. and had an agreement with the central government of ukraine to explore for gas and a stable country. that part of the country is controlled by separatists. not something -- is going to be able to work on any time -- that is not something shells going to be able to work on in the future. on shall incote russia. should we be worried about the situation? davide serra is ceo and founder of algebris. tap on, so got the we should not worry about the russians turning the tap off. >> the market is underestimating this. ukraine, i cannot see a win-win, that is not what worries -- that is what worries me.
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, mistakes from geopolitical points of view. pushyas been a bit too with the anti-ballistic missiles in eastern europe. from a putin perspective, he lost the empire in russia. the last thing you want to see is lots of missiles around neighboring countries. >> think cuba. >> why are you looking for cuba? that is the same mistake the west made. clearly rush's mistake has been as soon as you feel threatened, you attack. which is a sign of weakness. they do not care. had they waited on the referendum, 99% of the population is russian.
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they would have said we want to go back to russia. market as a result, the is underestimating this. we cannot see how you come out with a win-win. it is lose lose for everyone. it is not just in terms of faith, it is lose lose in terms of trade. as a result, i think -- we have green shoes in europe. my fear is ukraine could be a drought. , whichinto the economy we cannot afford. >> is a demand story or what do you mean by that? disruption of energy supply, a small energy shock. people on top of the recovery in shot in europe -- a energy prices. it goes back to the mistake made
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for mainly populist reasons. if i think about it really cutting nuclear plants, -- italy cutting nuclear plants. you cut nuclear, you need to have a backup plan. the backup plan cannot just be i take 40% of my energy supply out of russia. russia has made it clear that not just an energy company, it is only a foreign policy tool. >> to read to think of the environment we see as a nuclear -- they will have a similar impact on policy disruption? this is not yet a nuclear war but it is a war that could have a nuclear effect on the way europe sees energy. how should we see this in terms of scale? together gets its act
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when it is on its knees. when the party is on, everybody is enjoying percenrosecco. it is obvious that europe needs to get together and come up with an energy plan. where do we get our energy supplies over the next 15 years or 20 years on a sustainable basis? can be turned off. you remove the threat of each supplier, that has to be valid for southern europe. ,rom the african point of view the middle east, russia, and the u.s. the four or five key supplies, each tap these to be equally weighted. but all of them in price competition. have eacho .ndividual company competing
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my big fear -- if we look at the street, europe has one of the most advanced telco industries in the world. let's cut prices. we started under investing. we created a network that is very cheap. helping the over-the-top companies, google and amazon. guess what? we put the infrastructure and who made the profits, the americans. that was not right. in energy, i hope we do not do the same. the only thing we're going to end up doing is basically creating the pipes. now to fill them up with u.s. favorgas, then we might the u.s. gas industry and jobs in the u.s. at the damage of new companies. if you want to create an eu policy, you have to think of consumer price and how much your company is getting stronger or
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weaker. the advantage of being populist -- >> shale gas in europe? >> yes. the reason why -- i cannot see, in 2020, the energy prices in america are going to be half the average of europe. that means lots of industries are going to relocate to the states. >> they already are. >> they know the prices are coming in five years foster free time. you cannot keep exporting jobs to america. we are already losing them to india, africa, and china. now you will de-localize because of cheap energy. then you keep having bureaucrats setting up red tape and it is game over. as a result, people have to take that decision. we cannot be what i define -- the walt disney of the world. --are here and good looking protections,elfare
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go down but it has gone up, a push towards the one point 40 level, 1.3826 is where we are trading. tough to get through the 1.39 level recently. the ecb is not going to do anything, let's wrap things up with davide serra from algebris. we have not talked about btp's, italy. in italy, do they believe the spread with germany has come down? the you level -- the level on down becauseome the italian economy is back on track or is it something else? >> the italian population, i think back to the panic of the anglo-saxon propaganda, europe would have collapsed. lots of decisions since then have been taken, on the eu level and the country level. in the last two months, they have seen reforms.
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ins government has done more two months of then all the politicians in 20 years. that is quite impressive. activity has improved. in the age of a prime minister helps, he is 39. he does not even have the age to be in the senate. you have more than 300 senators not doing very much for the last 20 years and a 39-year-old guy does more than all of them. you get financial markets rewarding it because reforms are happening. first of the financial level, the job markets. he is introducing public administration reform. >> this is italy specific? >> this is. what happens, if you look back -- the bank of italy, the panic for the correct spread should have been 200, we are now at 150. even the central bank for the spread -- this is basically pricing the expectation of reform. at the same time, there is a
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25%, not 30%. the fed meets as america confronts a growing income inequality. is "bloombergthis surveillance." live from our world headquarters in new york. the final day of april, i am tom keene. joining me is scarlet fu at adam johnson. a busy day. here is adam johnson with our morning brief. >> overnight, german unemployment falls for a fifth month as the economy expands. good news. the bank of japan refrains from expanding stimulus as board members forecast that the pace of inflation will quake and in each of the next two financial years. they will ultimately reach 2%. a slew of economic data. >> a seattle slew! >> listen up. 7:00, mortgage applications. a: 15, adp employment, a: 30, personal consumption and gdp. 9:45, chicago pmi,
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