>> david cameron, angela merkel debate who should head the european commission. >> a call for peace. resident putin says a cease-fire between russia and ukraine must happen immediately. >> plus, piling the pressure. to dig intoe fifa corruption allegations surrounding qatar's world cup bid. good morning. you are watching "the pulse." er live from bloomberg's european headquarters. >> also coming up, a bloomberg

exclusive. we are live with vueling's ceo alex cruz. we will talk about the future of low-cost airlines and consolidation in the sector. >> the world cup kicks off in just days. is brazil ready? find out why the nation isn't up to speed. but first, let's get into our top story. the european commission candidacy may be smothered in sweden today. angela merkel and damon cameron and the dutch prime minister are in sweden to discuss who will take the eu's top job. hans nichols joins us from berlin. party won, i guess you could call it, last month's european elections. what are we going to get over the next few hours? we have a press conference scheduled. merkel is broadly on board. others aren't. the swedes are backing out a

little bit. read the tea leaves for us. >> here is what you want to look for, look for help publicly angela merkel embraces the man who comes from her own party. if that is a firm embrace, his candidacy might have a fighting chance. in a lot ofks countries are lining up against him. the british are talking about gender parity, about there being a female for the top job. over the weekend we heard from christine lagarde. she took herself out of it. let's listen to what she has to say. >> i have a job. i am not a candidate to any other position. i think it is a rather important job. we are not done with the crisis. we need to continue helping countries out of the crisis. the imf, i believe, is a strong institution that needs to go forward. i intend to participate in that.

>> yonkers's case is broadly along the lines of what you were saying. his theory of why he should get it is because his party won the most votes, they changed the rules, he ran as an actual head because of that reason. because of that, he should be ratified by the actual heads of state, heads of government. the longer this goes, the more he twists in the wind and the more likely it is that additional candidates will a march. -- will emerge. >> there is a reporter in luxembourg trying to dig up dirt on him. what is going on here? sunday published a report over the weekend that in 1941, his father was constricted into the german army when they occupied luxembourg. juncker is saying this is foul play. hereuggestion of a nazi --

is what his spokesman sent out over twitter. it is just simply disgusting. what you may end up seeing is sort of a juncker-cameron battle. that could bode better for cameron in the long run. in the short run, at what cost? at what cost is he willing to prevent john claude juncker from becoming the next president of the european commission. >> all kinds of angles coming out there. thanks very much indeed, hans nichols from berlin. let's go from juncker to ukraine. the peace talks between the nation and russia began over the weekend. president putin's envoy to ukraine sat down with diplomats in a bid to establish a cease-fire. ryan chilcote has all the details. >> ukraine's freshly and operated president once in and nd the violence -- wants an e

to the violence this week. that is a good question, whether he can promise that. that is a question i put to the russian president. have a listen to part of that exchange. >> now that you have had this meeting with president poroshenko, you have met president obama, how likely is a cease-fire in ukraine? what can you and will you do to achieve a cease-fire? how quickly do you think a cease-fire can be achieved? >> they need to immediately stop punitive operations in the southeast. this is the only way to create conditions to start real negotiations. far, no one has said anything to them. no one has proposed anything concrete. people don't know how they are going to live, under what

conditions, what the parameters of the new constitutions will be. there is no conversation about that. there have been arguments and debates between presidential candidates but no one invited any representative from the southeast. that situation needs to be radically changed. the presidential elections in ukraine is over. we need to move to start working with people. >> what are the odds that a cease-fire can be achieved in ukraine? >> i think the ukrainian leadership must show its goodwill and wisdom. they have to immediately stop ,he military operation

immediately announce a cease-fire. there is no other way to create the conditions for negotiations. >> notice the russian president puts the onus on getting to those peace talks entirely on the leadership of ukraine's central government. i asked him what he was prepared to do. he dodged to that. he didn't mention what the separatists could do. i think his answer is not one that is going to be something or the west is happy with. >> a lot of people in the west are saying that putin is responsible for the violence on the ground, that he does have control of the separatists. what is your understanding? how much influence does he have? >> that is another telling thing. he doesn't draw anything between himself and the separatists. we have heard from the beginning

from the kremlin that the separatists are their own entity. but clearly, he could have said the separatists should lay down their arms and they would at least know they don't have overt support. is exactly what the obama administration would like to do, to use that influence. they think that he does have the influence. >> thank you, ryan chilcote. we will be back in the next hour with more. looking forward to the 2022 world cup, fifa's backers have expressed concern over new allegations against the governing body awarding the games to qatar. elliott gotkine joins us now. fifa to hold a full investigation. >> very much so. if the money is talking, it is the corporate sponsors without

whom event's like the world cup aren't going to generate the kind of money they do, then fee going to act when they are calling for action. what they are saying is that fifa needs to carry out a thorough investigation and publish the findings as well. the allegations emerged in the sunday times, talking about the most senior qatari football official allegedly paying bribes to get more votes for the to host the 2022 world cup. the latest allegations say he has a $5 million slush fund, that he helped use the influence of qatari royals to broker-deals in exchange for getting more support for qatar's right to host the 2022 world cup. the qataris and i any impropriety. deny any impropriety.

he said that he had nothing to respond about. sponsors think that something needs to be done. sony expects fifa to adhere to its principles of ethics and fair play. adidas says the negative tenor of the public debate around fifa is neither good for football nor for fifa. sayingnheuser-busch, all that a proper investigation needs to be carried out. >> is that what is going to happen next? the guess it all depends on investigation that fifa is doing. he have a former u.s. prosecutor, michael garcia. he has to file a report next month. it will decide what sanctions if any, if there is a case to answer.

in the meantime we may get more revelations. other sponsors may say they are not happy with this or that. certainly, the head of fifa says they are doing everything that needs to be done. he took to twitter saying, never ignoring reports, but left the the ethics committee work. responses, at the you will find that not everyone finds the comments convincing. most of those responses tend to include rude words which i can't broadcast here right now. >> i sincerely hope not. elliott gotkine joining us from tel aviv. >> still to come, a bloomberg exclusive. new revenues and new business models. vueling's ceo alex cruz joins us live to discuss whether the airline sector is actually taking flight. ♪

>> welcome back to "the pulse." ava cameron and angela merkel are in sweden for an eu summit. on the agenda, the next eu president jean-claude juncker's bid has been dealt another blow. the swedish prime minister is voicing his concerns about the process for filling the position. we are joined by the head of macro credit research at rbs. the queue for coming down. opposition to candidacy seems to be growing here. what are the prospects for him

actually getting the job? >> a lot of investors underestimate the importance of european parliament. i think the decision in the end comes down to who decides which is the most important legislative arm in europe. juncker is the leader of the leading party. his country says you should take that into account. >> take it into account. >> if you pick an external candidate who has basically just a phone line to berlin and paris, you underplay the real decision power of the eu. i think we need a stronger europe going forward. i also think the you k's card in this is a little bit in domestic politics. the weakness of the conservatives versus ukip. or is this referendum about a possible eu membership.

is it realistic that the u.k. could just leave the eu? 60% of imports and exports are from continental europe. the u.k. is the biggest trading partner of europe. you cannot undermine that without losing a lot of growth. i think it is very important to have a strong candidate that is able to lead on reforms. maybe a common budget or potential eurobonds in the next five years. , hehen you look at juncker is old school. i have been covering eu summits for 20 odd years. he has been around for the bulk of that time. he knows his way around the mechanics of the european union. nevertheless, the winds have changed. there is clearly significant political ground that needs to be protected and gained. when you look at a more compromised candidate that is

going to keep everybody on board, keeping everybody on board is really important right now. is there anybody else that springs to mind that could fill that? >> there has been a lot of external names. epp -- there has been external candidates. there has been candidates from other parties. i think it would be interesting. in any case, you need to reflect a strong leadership. i don't know who would be the candidate. >> external or juncker? there is nobody else? >> i think merkel is not a viable choice. there is -- but he has very few votes. these policies are some of the most interesting from an economic perspective. he is proposing to use economies of scale.

the economic policies that he proposes are some of the most interesting. but he has less than 10% of votes. that could be an interesting choice. >> the mandate issue here is a bit fuzzy. as we were saying earlier, what the obligation is, is to take into account the elections. you think that if they don't take them to account, if juncker doesn't get it, who is going to vote going forward? is it going to be even less popular than it already is? talk to us about the politics here. we know david cameron is going to have a tough time selling juncker here at home. what is in it for chancellor merkel to compromise? >> there is a clear importance to keep the u.k. -- it is important to keep the u.k. in the european union but it is also important not to undermine parliament going forward. today, weic situation

are starting a recovery. the ecb has just done a quasi-bazooka last week. they will do more next year. what they always say is, governments need to do the right reforms for europe to be resilient through the next recession. theeed a banking union and parliament is doing that. we need a mechanism for a stronger budget, these countries are going to have a problem again. >> let's say juncker gets the job. how should i price that into assets? is there a way you can think of? >> i think if you get a very weak president, somebody with a phone line to paris and berlin -- and you have anti-euro politics in france, in the u.k., then three or four years from now some of the week countries may have a problem again. i don't know if it is going to

be priced in now. the investors just look at what the ecb and the central bank are doing. we are going to go lower in spread and higher in european stocks. a portuguese ten-year bond or a greek ten-year bond, this is a very important choice. we need somebody who is pro-europe, who is not afraid of making steps which are sometimes in conflict with france or berlin. >> so we need a federalist? >> i think for the viability of europe, we need somebody who is pro-europe. the u.k. will have to decide whether it is in or out. >> we believe it there. thanks so much. >> let's find out how markets are trading this morning. caroline hyde. >> it is risk appetite on the table. we have got optimism about growth in japan. you saw gdp rise more than a speck it over there. optimism in china. exports driving up higher even though imports were weaker. we get european sentiment data

in just 10 minutes. stoxx 600 up 0.2%. but stillts are shut optimism is there in the currency markets. we have seen money going into the riskier assets. the reference rate in china was raised by more than in a year-and-a-half. currently it is 6.238. you can also see the desire to get into risky assets with the aussie dollar trading up 0.3% as well. risk appetite also being shown in the bond market. i will lead you with just how close we are in terms of borrowing costs between the u.s. and spain. u.s. currently 2.6%. we are seeing yields go higher as many are expecting bond buying will continue to ease. we are getting a tapering of stimulus but we are getting far more stimulus in europe. spanish borrowing costs at a

record low. italian at a record low as well. it just shows you the divergence in policies across the atlantic. >> caroline, thank you very much indeed. >> coming up, another bloomberg exclusive. vueling airlines ceo alex cruz joins us live right here on "the pulse." low-cost travel, consolidation and doing business in europe. ♪

>> good morning. welcome back. 25 minutes past the hour. you are watching "the pulse." bloomberg exclusive now. we are joined by the ceo of vueling airlines. they are one of the fastest growing in europe. the market is also seeing a lot of new capacity from ryan air and easyjet. alex, good morning. it is pretty competitive out there. what is it like for you? >> it is the right time to have a lot of capacity. summertime, there are more planes, more seats being flown. the problem normally is the winter. too many seats in the wintertime because people don't travel as much. we are not just expanding in spain. our big that is grown as well as brussels. we are slowly becoming -- >> what is this going to do to your pricing? do you have to bring down prices

to compete with easyjet and ryanair? >> summertime get you a bit of room to play with prices. we shouldn't have to be bringing down prices. bringing down prices is dangerous. ultimately, it does have an effect on your profitability. >> the market is coming to you though, isn't it? ryanair is becoming more friendly. bells and whistles are being added. there is a hybrid model at work. are we taking the low-cost model a bit higher cost? >> you would expect us to say that we knew this for years. we believe the key to success is to have a very low cost base. there is not enough. you must serve the business passengers. you must have some frills. people are willing to pay for them, particularly in the main markets. >> we have to take a break. 90 more time with you this morning. we will come back with alex cruz. he is going to be staying with us. we are going to be talking about

what is happening in the european environment. we will talk about the economy and also what is happening with airbus. see you in a moment. ♪ .

>> welcome back to "the pulse." i am olivia sterns. >> i am a guy johnson. these are the top headlines. security personnel are dead. pakistan's security forces continue to search. it was late last night. the taliban have claimed responsibility for the attack. >> jean-claude juncker to be president of the european commission has been dealt another blow. voicing concerns about a process for filling the position.

today.ed the leaders david cameron has threatened to say britain out of the eu if juncker is appointed. french open championship. he beat djovick. the spaniard has 14 grand slam titles. this was the most important of the years ahead. those numbers. right. let's get back to alex cruz, ceo of vueling. >> you are telling me rafael nadal flies? carrier ofis his choice. >> or does he get a special seat? >> we have a lot to special scenes from front to back. >> we were talking but ryan air. business class.

do you think it can be competitive in that space? >> it can be. having the mindset of a low air base. it can build up. you can argue that somebody has all they need to downsize and do something smaller. absolutely, they can. moving up. at some point, do the markets emerge where you are allocating seats in a priority boarding? allows us to differentiate. airports allow us to differentiate. or four have three different choices within europe. each one is going to offer smaller differences. >> ryan air and easyjet have been avoiding each other. the vent diagrams are slowly beginning to cross. what does that mean? try toink anybody would avoid a long competitor in any given time.

frankly, we have been competing quite a bit with ryan air. we have over 40% over down. we have been able to survive and very low cost as well. they will have a challenge. they will probably revert to the basics. very low cost and try to build from there. we will see. an interesting battle for sure. toto make it work, he has get into some of the hub airports. as you point a on friday we were chatting, he has been a great europe.to those around we have learned where some of the little airports are at we do not know existed. as he starts to make its way to the hubs, how hard will it be? revenues, you need a fairs and bigger airports. most of the bigger airports are already full. land isake off the full. however, if you take your time and perhaps go through partnerships are strike deals with the airports themselves,

you may be able to slowly build up a presence at other airports. some other airlines such as ourselves have been working on it for a great time. it will take some time. >> which do you think will be the most competitive markets, the potential for growth? does noter the airport have capacity constraints is where more airlines would try to come in. even though rome is beginning to get control, ryan air has been able to get in and we increase our presence there. it is very difficult to get into. development further from minute airports. some still have capacity. -- munich airport. >> how competitive does ryan get? everybody was a piece of that high right now. -- pie right now. >> at least five or six

different options to travel. we are not there in europe yet. we still have time to have more options. >> you mentioned the competitiveness of eu slots. i was at runway two. >> is a very complicated manner and we do not operate in london. >> you must have a view. >> i am sure. [laughter] >> you can ask my boss for the view. wallace allocate long-term -- we will always allocate long-term oral else we are -- long-term or else we are lost. baig angle.into the what is the relation like at the moment? an incredibly positive about how the relish of works. you get huge synergistic

benefits from being part of the group. at the story working for, what will it be? is it becoming an increasingly large part within aig? what did you see it being, 5, 10 years? mergerhear horrors about stores. that is not the case with us. we continue growing and doing our own thing. iag sees the value. it is hard to see what the picture is. we are profitable and we have the means to continue to grow and we will consent to do so. toy're on their own paths recover into profitability and maximize. oles. our own r we are set to develop. >> it is between iberia and iag . you must see some pods or holes where there is possible m&a.

>> there are also -- there are always opportunities. we are focused on running the business. 30% is a huge challenge for us this year. as what we will be focused on primarily. will he tell you more about that. >> will ask him. your name has been mentioned in the past for successor to the top job at siberia. you are putting a face. does a man you are interested, would not be interested? -- it does it mean you are interested, would not be interested? started in> we have 2006 together and he is the boss. he is the best person. he has been dealing with labor issues. i cannot think of anybody better for the job. else.ot think of anybody >> ok, fine. low cost, long haul.

a vested interest from new york. can it work. norwegian trying. ishistory says it challenging. there are a number of people were tried and failed. there are number of players. isin norwegian which probably the only independent carrier right now trying to do long-haul. we are watching from afar. its looks like the dynamics and economics are vastly different. >> the economics are really different. aircraft, economy for doing this type of a model. airbus, you mentioned. india on thursday. he is pushing very hard for a a30 new engine. wooden aircraft like that make a significant difference?

do you see the value in airbus doing that? >> he wants a more range. he wants to be able to fly with two engines. it makes us from that perspective. [indiscernible] it to scale and will be lighter and allow people to fly longer. it will help industry at large and players -- >> it would not make any sense for your? -- for europe? >> i do not think it would make sense for europe. >> alex cruz, ceo of vueling, stay with us. >> the pules number -- this how many number facebook can't reach. -- can reach. they are sure to visit the upper hand taking on twitter which has been dominant and in the already know. facebook cause it stadium on

art. >> stay tuned to "the pulse," and we will stay on the world talks. is a brazil ready? why it is not up to speed? that is later on. ♪

>> welcome back to "the pulse." now for some company news. hasest corporate partner

concerns about more allegations of corruption a connection with the world cup. issuedd adidas statements. the company is taking on facebook. sony is developing its own headset and a hopes for the playstation 4. they will unveil the project after the electronics entertainment expo today. >> israel's second-biggest bank said it is in talks to settle an investigation of whether it helped america's eve ate taxes -- evade taxes. the deal will not include a guilty plea. it would be the first israeli bank to settle a tax problem with the u.s. ,> let's get back to alex cruz ceo of vueling. low frills carrier.

we do not about low cost anymore. low frills. >> sounds great. >> we talked about rome and what is happening with liberia and spain. can i go back to a macro point of view? what is happening in these economies? we seem to be in a low growth, low inflation environment which will keep them tugging on the way we are for an extended period of time, is that your takeaway? >> unfortunately, we only have a 3-4 month horizon. in anyely, being a base country like spain over the past few years, we have seen hardships. we hear lots of noise and chatter about recovery especially in the mediterranean. we are not there yet i do not think.

the summer will be crucial in terms of the overall attitude of consumers to spend discretionary money. for somee are still in higher years. recovery, i think, may take longer especially as we look at the evolution of travel in spain. spain people love to come. lots of travelers coming in from all over europe are right now, planning to be -- [indiscernible] that would continue. little bit of recovery. >> are you confident that the economic reforms in thing for me to be put in place are going into action was mark -- action? fore are always looking stimulus packages of many sorts. unfortunately, many of the words we deal with continue to look at taxation as a way to generate funds. we are look at the local government that are insisting on adding passenger taxes. we do not think that's the right

way to go about. anytime we see the fair going down, we see stimulation of the passengers and more jobs being created and hotels are built. this a formula that never fails. >> that was last week. >> that would help. we need to change the perception of customers are buying trips. if they want to go to for a weekend. maybe they want a little less. flightely, the attendants are important. >> what about the business community? >> that been able to weather a little bit better. seem to have been weathering better the overall instability speaking. we have not seen a tremendous downturn on this is travel. we are dealing with a short trip at a low fare. >> what is the outlook for italy?

>> i have to look at the spain extended over that way. we see signs of recovery. i think we are seeing consumers in italy politically tired but about much more product coming in. rating and a cheaper stuff, cheaper airline tickets. this summer will be key to show every something that will work out are nothing. >> fuel and buying. would a more expensive the euro euro?pful or cheaper >> we have a spin on dollars so we are tied to the dollar, euro exchange. anything that they hoped the euro will help. >> you by aircraft in a dollars. >> fuel in dollars. aircraft in a dollars. -- >> you are quite happy.

>> i do not have many complaints. we will have to see how it develops. >> aren't significantly? >> [indiscernible] that policy changes. >> is it an advantage being part of the iag group? when it comes to hedging? i know it is advanced. >> there is more power and experience. in volumes, it does not make that big of a difference. quick have a fleet plans? >> we had 120 aircraft. further options. we are set in terms. we are working on engines. those need to have engines to fly. the next part. >> where are you on that? >> a few suppliers. we should be finishing that

soon. >> ok. i am curious. a lot of inches. >> perhaps a good time to complete this long process. >> do you think -- just to wrap things up and turn our attention back to the aviation industry. due to your blog it to the point where the united states is in terms of consolidations -- do you think europe will get to the point where the united states is in terms of consolidation? >> we have a lot of nations that -- that do not want to give up their airports. there may be more coming off. createseems to additional obstacles for that consolidation. some will happen i am sure but not to the degree the u.s. is.

>> how big of a bump is the world cup for siberia? >> i think they're all linked together. they are winning teams. and your expectations for the end results of the world cup is? >> and no doubt. there is one winning team. they are doing fantastically a feeling great about how they are performing. and they fly liberia as well. chris thanks to alex cruz -- chris thanks to alex cruz -- >> thanks to alex cruz. >> we talk about shifting policy. a new risk facing investors. that is next on "the pulse." ♪

>> welcome back. we look a european energy policy. on theored a report policy landscape that has fundamentally shifted. here is part of a consulting group. thank you for coming. describe the conclusions of your reports. how are your reports changing? >> it is shifting from carbonization moving to low carbon economy and more renewables to wear one increasingly on these standards. consumers are worried about their bills going forward. german -- germany is a great example. it looks like it will go to 300 euros her year next year and

potentially further. the u.k. is moving from support of were nobles that is 2 billion pounds a year to one that can be 7.6 billion. that increases is coming through. the policy landscape is about customers and government responded with a new policies making a renewables more affordable. >> it sounds like moving the goalposts here. is it good for the government to pick winners? >> it is a challenge. the good and bad examples. governments are adopting which will step up for investors. increasing competition between a globals which allow different technology at different times. solar and wind is getting calls comparative. how can they move forward? good products and bad products? consumers can see really good projects. good value for money. >> a market-based approach

bringing in tenderness. what are the implications of this? usedvestors needed to get to the new world. they cannot understand a new risks. not that they cannot understand analytically, in terms of what it means for their investment alive. , fortutional investors example, getting comfortable with the renewal bulls. we need a new type of investor coming in. -- and getting comfortable with the new roble -- renewables. toonstruction phase in order get the underpinning of the risk early on. it may not be there later on. >> how do we attract the investment? will they get what they need? >> there's a huge amount of money out of there. how do we channel into the right place and right time for different project we are taught about? germany, the thermal. you look at german prices, they

are down to 30 euros per hour. very low levels driven by high levels of solar. a stable system. how is that going to be attractive? investors need to respond to that. >> ilesh patel, we will leave it there. now, more of what is coming up in the next half hour for some critics of focusing on bloomberg radio. the first word is up next. what have we got for you? the war of the words. making analysts is going to be joining us to talk about what is happening there. -- a banking analyst is going to be joining us to talk about what is happening there. l ofill be behind the whee the new tesla and they have moved the steering wheel for one

side to another. we will be talking to elon musk about that. the grid of charging stations. we will be taught by what is sponsors with fifa, under pressure. all of that is next. ♪

>> david cameron and angela merkel about debate over who should headed the european commission. >> a call for peace. a cease-fire between russia and ukraine must happen. >> the pressure. sponsors urge fifa to dig into allegations. the world cup bid. >> good morning. good evening for those in asia. i am guy johnson.