>> the leaders upset to speak this hour. >> made in italy, made for asia. prime minister renzi looks east for investment. we are live in hong kong. >> and cashing out. wilbur ross shares his remaining -- sells his remaining stake in the bank of ireland. shares sliding on the news.

good morning, everybody. you are watching "the pulse." we are live from bloomberg's european headquarters in london. up, danger zone. we will take you inside the world of five-star security in brazil. what is the price of protection? >> ready high, i think. >> first, the fight over juniper -- uecker -- juncker. the prime minister of sweden said at a summit that his country will not support the selection. hans nichols joins us from berlin. >> time is certainly not an ally. the foreign leaders were all in a rowboat, rolling around. we can all make a variety of jokes, but there is the central

question of who is going to decide who the next european union commission president is. this technical dispute has consequential outcomes. will it be parliament who decides or will it be the heads of state? david cameron is clearly in the heads of state camp. he may be doing this as a ruse to block juncker, saying it is his prerogative. but he is saying that the heads of states should be the ones making this decision. junckery, bad times for in sweden. the one thing that came out of the meeting, angela merkel seemed forceful in her defense of saying she would use every opportunity to lobby for juncker. point, from angela merkel, basically lukewarm support for juncker. that was a slight shift. it is cutting against a lot of things, namely nick clegg and the opposition in the u.k. all saying juncker is not the man.

>> if he is not the man, who is? who is the man or woman to lead europe? >> the last point you made is a good one. it will likely be a female candidate. that is what you are getting from the british. telegraphingn some from other countries that it is time to have a female that is a fresh face to take charge of the commission that has this massive say over rules and regulations. responsible to be with you and throw out all the names we are hearing, but before we throw those names out there, we should do our due diligence and try to confirm them and be vaguely responsible, at least for a brief, fleeting moment. this tuesdayl morning? we could have so much fun with this read but we are professional journalists. >> i will give you a hint. selfie.

there is your hand. >> i think that points me in the right direction of a potential female candidate. i will take it that far. >> david cameron stands firmly asinst jean-claude juncker the european president. so does nick clegg. he spoke to anna edwards but he disagrees with cameron about whether the u.k. should leave the eu if juncker gets the job. nobody is perfect. he needs improvement. but by golly, we need to stay in it to deal with all of the things that you cannot deal with . borrows also pledging to money to build new homes in the u.k. he says he wants to "rake the over statees taboo support for house building."

>> now for a bloomberg exclusive. but she olivia's gig, has been talking to mark mobius. >> i asked him who impressed him most this year and you are not going to believe it. have a listen. >> maybe -- he has shown a great deal of control and restraint, being very logical in his decisions. >> we pushed him on this. i asked if he was concerned about the business environment in russia. goes on.o, business he thinks the market has been oversold. we asked if he was selling out of equity positions in russia right now. he said absolutely not. he said the recovery in russia has a long way to go. >> there are a number of generals on both sides of the atlantic who have had to amid their respects for what putin

has done. you are getting it from the financial community as well. >> you hear so much about capital going out of russia and the selloff of sovereign bonds in eastern europe, but here is a man who sees this as an opportunity. he is a contrarian investor. when times get tough, he buys in. >> franklin templeton was one of the big early investors -- a nice trade for him. >> it took a lot of nerves. >> that is probably the biggest corporate story of the morning. shares in bank of ireland are under a lot of pressure this morning, understandably. wilbur ross is selling out his remaining 5.5% stake. he has almost tripled his investment in less than three years. what is ross saying about the move? today ore is saying last night is that this was a terrific investment. back in 2011, wilbur told the

ireland he was watching as it went through the horrors. he got a call saying they were going to buy a stake in the bank of ireland. thestors signaled to international community that ireland was a place to invest in. that strategy has worked. shares have tripled and he has tripled his money. no wonder he is calling in a terrific investment. >> what does it look like to you? where does the bank of ireland go from here? does is its underscore the challenges facing bank of ireland. his entry underscore the opportunity for investors looking to get into ireland at rock-bottom price. his exit highlights the challenges going forward. thee is a perception that irish economy is in reasonable shape. if you look at some of the numbers, things are not quite so great. they are still anemic.

unemployment is still 11%. people are facing massive mortgages as a legacy from the crash. where do you get loan growth going forward? based on the fact that the economy is anemic. and we are still dealing with the fallout from the crisis. there are real challenges for the bank of ireland going forward at this point. remain a problem. the economy is not exactly back on its feet. still significant concerns. we have stress tests from the ecb coming up towards the end of the year. they have not always been the best editor of the capital requirements of irish banks, but what are they going to say this time around? banks needed 64 billion euros as a result of the crisis. that is about 40% of gdp. that figure pushed ireland into needing an international bailout in 2010. the good news is the yields are

actually rising. that is good news and gives them some comfort as the stress tests go forward. what the policy makers are saying is that they probably will not need more capital after the stress test. there are no guarantees. hopefulink they are that they will not need to find another wilbur ross at the end of 2014. in fairness, bank of ireland shares are only down about 2.5%. sold ahe fact that they significant stake, it is probably reasonable. >> thank you very much indeed. >> and the possible tie up between french mobile carriers looks to be struggling amid a huge difference of opinion in the price tag. here with more is caroline hyde. thinkss like bouygues they are worth a lot more.

>> almost double the amount that iliad, the new kid on the block him a the one who came in 2012 and started price wars, it is analyzing bouygues telecom unit. it thinks 4 to 5 billion euros. we understand that bouygues thinks it's telecom unit is euros, to 8 billion thank you very analysts think that iliad is right. socgen, credit agricole have all telecom unitygues' and said it is only worth about 5 billion euros. it is a conglomerate. it has huge construction units and general construction as well. 17% of its revenue comes from telecoms. 20% of its business. it is worth 11.5 billion euros as a whole.

bouygues as an entirety was worth 5 billion euros in just two years ago. many people are trying to match up the math and wondering how upygues telecom can be worth to 8 billion euros. >> it depends on how big the conglomerate discount is. they could take the business private because they do not think the parts add up to that -- the parts add up. quite at martin was catch, but at that point, you have the cash to take the rest of the business private and realize the volume -- the value. there could be a justification that theluations family think the individual parts are worth. it worksmily thinks better on its own with us. behind the scenes, they are doing much maneuvering. ,he number one player in france

really, regulators are going to say, number one, number three, get together? it is more likely they will sign off on number three and number four getting together. the industry minister in france said that maybe three players is what we need in the telecom space. why do you need fewer players? because you need so much cash. you need to invest. we have data-hungry tablets, mobile phones. we need more and better networks. these companies have to upgrade them. it is no surprise in the united states and they have two or three key players. in europe, they have 20 or 50. they want to start seeing consolidation. so far, 169% increase year on year in m&a. the reason is they have to start cutting costs. >> caroline hyde, thank you so much. guesting up, why our next

thinks the chinese government will need a major stimulus package within the next couple of months. ♪

>> i am very optimistic. however, you are going to get a lot of bad news coming out of china if you have a freer economy. obviously, there will be

failures along the way. , ever ans mark mobius optimist about china, telling me he plans to buy into chinese regional banks and perhaps property. thes not concerned about bubble popping. >> let's stay with china. italy's prime minister is in china today to boost relations. andrew is following the visit from hong kong. this is his first major international trip since becoming italy's prime minister. talk about the significance of why he is there and what he is hoping to achieve. >> it is significant in the fact that renzi came to power through parliamentary maneuvering, as did a couple of other prime minister and before him. he did not have a high-profile on the international stage. he just enhanced his image at home and it is him a bit more legitimacy. he is coming off a big electoral win in the parliamentary elections. this will probably be more wind at his back.

>> china seems to make logical sense read it is an enormous market for italian luxury goods in particular, but why did he choose vietnam, china, on -- cap accent -- kazakhstan? piageo factory. he visited an appliance factory and i assume there are some textile deals he is looking at. he pledged to boost italian trade two $5 billion a year. -- to 5 buillion a year. in kazakhstan, he has a huge investment. there have been a lot of problems with that investment for many of his international partners. >> thank you. we will leave it there. interesting insight. now let's stay in china.

the country's inflation accelerated to its fastest pace. >> the economy is projected to go -- to grow by the most in two decades. will the government introduce more monetary easing? let's ask the founder and managing director of the china research group. thank you for joining us this morning. let's get your reaction to these inflation numbers. is he going to make it easier for the government to continue easing? see you.great to inflation went up 2.5% last month, up from 1.8% the month before. because we have a lot of the inflation coming from food, it is going to hamstring the government from being able to open up the coffers too much and increase too much quantitative easing. there is a danger of having prices get too high for everyday chinese, which could cause social instability. i do not expect a major stimulus anytime soon. i think you will see a lot more stimuli going forward,

where they reduce the reserve requirements to get a little bit more liquidity pumping into the system. >> can i ask you the difference and thethe poc government right now? are they seeing the story through the same lens? reports directly to the council in china. it is not like in the united states, where the fed is supposedly legally separated from the white house. right now, the people's bank of china is doing what the council is directing. that is why you are not seeing a major focus on stimulus. the reason is because wages are still fairly strong at the blue-collar levels. and unemployment levels are still fairly low. i do not think you will see the government panic anytime soon. peng will continue

to focus on consolidating power, which he has been doing by becoming the head of the new security and military apparatuses in china. he will continue to crackdown on corruption. he is more worried about building legitimacy and power for the party than he is about short-term economic growth. >> talk to us about the health of the chinese consumer. the italian premier is on his way there. it comes at a time when we had some disappointing results out they see acause slowdown in china. how healthy is the chinese consumer right now and how big of a concern are these rising import prices? >> i have been in china for about 17 years. this is the worst consumer confidence i have ever seen from middle-class chinese. even housing prices are dropping. most middle-class chinese feel like they cannot buy a decent home. wages are not going up much. they are really quite depressed. i expect the next quarter to be rough for the retail players.

i expect negative numbers from countries like prada, louis vuitton, gucci. consumers are down spending on what they go for and they are changing product categories. one area that can benefit is tourism. we estimate 20% growth in tourists to about 115 million this year from china outbound, going to countries like italy. i think it will be a rough time for apparel, luxury, and footwear in the next quarter. >> what about the carmakers? was it extend to them? >> i think carmakers will grow about 12%-15% this year. people still want to have a car. that is one of their major aspirations. art of it is that it's the -- part of it is that pollution has been so bad, people do not want to walk outside and they would rather have their own car. the second reason is that consumers are worried that the government will implement license plate restrictions. only about .2% of the people who

applied for a license plate last month got one. evil want to buy cars before more draconian limits go through the entire country. very bullish on autos for the remainder of this year. ask you a quick question about the difference in terms of the regions that have an export bias and the ones that are more affected by the domestic economy? is that spread going to widen? if you look at the data coming out today, it is clear that the export story is strong and the import story is weak, pointing to a weak domestic market. how big a gap will we see between the coastal cities and the internal cities? >> that is a very good question. the i am more bullish on is third, fourth, fifth tier cities. the government is trying to push urbanization. they have a 52% urbanization rate right now. they want to hit 60% in the next five years. they want to do that in third, fourth, fifth tier cities in the

internal part of the country. they want to limit the growth in the large metropolises. the real growth story is going to be on the inside part of the country as long as the real estate is not collapse there. i am al estate sector, lot more nervous about than any point in the last five years. >> director of the china market research group. stay with "the pulse." ♪

>> i just want to get a check on the markets for you. they paused for breath is what we are seeing in the stock market at the moment. a sickly flat across europe after we have hit record highs in the united states with the s&p 500, six-year highs on the stoxx 600 in europe. we have a few in the red. the lowest trading in the u k, off by .5%. let's have a look at the bond markets. theme, aeing a similar little bit of caution and risk aversion today. money coming out of italy and spain and going into germany. darling cost down 1.38%. costs remainwing below the united states on the 10-year. it will costmuch spain tomorrow on the 10-year. we are going to have a look at the euro, currently trading flat today as well. a pause for breath on the currency market after we lost

.3% yesterday. ecb storm, of course. let's have a look at the industry groups. we are basically up across the board. financials the big winner today. back to you in a couple of minutes. that is your check for the assets. ♪

p welcome back to "the ulse." >> looks like industrial production coming out of the u.k. increasing. numbers in line with expectations. the pound dipped just before the numbers came out. let's show you what is happening right now. we should have this on the screen any second now. or on the floor, actually.

you have -- that is the cable rate. we are absolutely unchanged. sureything else, i am not anyone would be able to tell what that graph was signaling. accelerated inon made to the fastest pace in four months. consumer prices rose 2.5%. the reading is still below the government's target of 3.5%. it may leave room for more monetary using. >> the prime minister is in shanghai today. he is meeting members of the financial community in the city. tomorrow, he meets china's president and premier. >> ukraine says peace talks with russia have yielded progress.

the parties agreed on priorities for de-escalation in the eastern regions. the army is fighting for -- the ukrainian army is fighting pro-russian separatist. merkel on the u.k. prime minister david cameron are set to speak this hour about the standoff over who should head the european commission. they are in sweden right now along with the prime minister's of sweden and the netherlands. a lot being made of the politics surrounding this. what about the economics? this in terms of tracking the future path of europe? >> it will take a long time to change europe. look at it as a very slow-moving

ship. -- it will not have a short-term impact. it might have a long-term impact. the issue does come back to the politics. how does this affect david cameron's chances of because any you with written inside it is a farmer -- is a far -- with britain inside it is a far different than without. for that reason, i think it is one of the fields were cameron has to go down the line. >> do you think cameron will have to pay a price? >> of course he has to pay a price. looks what will that look like -- >> what will that look like? >> i haven't the faintest idea. i think this is one where he has

to do everything to block him. the chances of renegotiating further down the road? >> much more difficult. the european commission has the only right to propose legislation. they set the agenda. juncker presidency would be geared toward an attitude toward mirroringrrying -- the attitude of a lot of brits. a lot of people saying, we are much better off without written. -- britain. do not use thees euro. how does that factor into this? >> that should be completely irrelevant. course, he used to head the

euro group and did pretty bad job of it, by the way. course, who feels that all eu countries should eventually join the euro. there should be no difference between them. written and denmark -- britain and denmark has an official opt out. from that perspective, it is important. it is for the entire european union. >> we are starting to get that press conference taking place. all speaking. hopefully, we will be able to get that for you any second now. these are the live pictures coming from sweden as we watch -- there is a sense that angela morning -- is in

a minority of one in her view is that juncker is the man for the job. let's listen in. >> we have great on the necessity to take action to abolish remaining barriers on the internal market, to improve , and to start discussions with all member states. we have agreed that we will contribute along these lines to the european council discussion of political priorities at the end of june. we have agreed the future policy priorities of the eu must be decided before we can decide on appointments of different jobs. it is fantastic to have all of you here. please come back again.

much.nk you very i would like to thank you for inviting us here. this is my second visit here and i cannot but agree it is a beautiful place to be. we have a sense of the opportunity to focus on the agenda of the upcoming five years. that we have fragile growth and in order to maintain our position in the world to hold our own in the world, it is important for us to use this opportunity to talk to the members of the european parliament. we need to improve our competitiveness. we need structural reforms. we need to have a consolidation of our budget.

when he to further develop the internal market, especially in the area of mobility of employers and employees in the sector of services, in the sector of the single market,. these were topics discussed by us yesterday and today, topics we believed to be important. if we are to think about where we will generate millions of new jobs, this will be in the area of the digital economy in the services sector and this is why the topic of free trade is a central topic for us. we all use this opportunity to present our own thoughts and ideas. the mandate to consult on behalf of us with the council, with the parliament, and we will make clear where our priorities are. the weight is equally

distributed amongst the four of us. we are not in any disagreement. opportunityse this to focus on content. what we have witnessed is the council and parliament have focused on different priorities and if europe is to continue to be successful and that is what we want just as much as the members of the parliament want us to be, we have to reach agreements of these priorities. we do not have that much time. we have used the opportunity to explain our views. had some excellent discussions and i would like to thank frederick for bringing us altogether. will build stronger and more competitive economies. the european union needs to change in response to voters concerns. that was the clear message from

the european elections and that is a large part of the focus of our discussions. i have already said that i believe the european union needs to change to become more competitive, more open, flexible. we have an opportunity with the new european commission taking office to put it firmly on the path of reform. the european council is the european council is a group of democratically elected name -- of nationstates in the driving seat of this agenda. the overriding priority of promoting jobs, growth, and prosperity. add is that we have been discussing and that means completing the single market from energy to digital to services. stopping unnecessary regulation. pursuingruthlessly ambitious free-trade deals with fast-growing countries and regions around the world. it is also vital the european union does more to listen and

address the concerns of people across europe. we have agreed that we should work together to address the abuse of free movement. it is right that people should be able to move across europe to work. we are willing to confront the challenges facing the eu, to address the challenge that stir disillusionment. by working together, we can reform the eu and make it stronger and more successful. much for getting us here and bring us together. i do believe we had a very good exchange of views. we all agree that europe has to concentrateand must on core tasks. promote growth and jobs. we need to see a new kind of europe. to create growth in jobs, we

need to deepen the internal market and we need the ambitious trade agreements in order to preserve free movement of labor. we need a level thing field in the labor market. that means tackling abuses. policy they sound energy -- we need a sound energy policy . we also have to work differently in europe and this is a vital for my government. we need to keep a close eye on reorganized commission. european -- in short, we want to move forward together towards an --nda for more operation cooperation and to go back to the core tasks.

first, we need to focus on what the next commission is going to do. the policy priorities. only then we will come to the question of who is going to do that. >> thank you. >> we have a couple of questions. please speak into our microphone. swedish television channel 4. to german chancellor, you have succeeded to win free elections -- three elections in a row. what is your advice and your comment on that? prepared to press junckerthe name of despite the fact that many

countries are against him? mr. cameron, is there any compromise that would make you promote him as the president of the commission? the only advice i can proffer is to be yourself and that is -- he willick is an find the right answers for himself and his country for sweden. thatve all made the point the personnel issues were not the focus of art discussions -- of our discussions. we wanted to focus on what was so important. it is important for the citizens of all of our countries. i have made a few comments on the personnel issues in germany and i can repeat that here. for me, he is the candidate for the president for the commission

and i want him as the president of the commission. i made that statement in germany. that has not been the main focus of our discussions here. i do not want to speculate against -- about hypothetical situations. to discuss the policies and the approach we think the commission should take over the next five years. thatt the, you need people are able to carry out those policies -- obviously, you need people that are able to carry out those policies and the approach. the rules of the european union, the european council, the body of the elected international leadership come together and recommend a candidate. i do not think that process should change. --the next question

>> madam chancellor, we are not only talking about the right personnel, it is also a question of power, the decision of the council of the 28 heads of government, and to insist on that -- what about the parliament that has fought for more rights and us try to exercise the right by setting up a lead candidate and that to theent -- a question british prime minister, have you threaten meeting to the united kingdom leaving the european union if you were to be made president of the commission? i made myself clear by saying

uncker.am for j we asked in a european spirit because otherwise, you would never reach a compromise. threats are not part and parcel of that spirit. everybody in the european council is in favor of adhering to the right procedures. clear ontion is very the basis of the treaties. they do have to abide by the treaties, which say the council of the heads of government submits the proposal and the heads of governments are quite aware that the parliament would make a majority decision.

we are aware that we can not move things on our own, but the european parliament finds itself in a situation where they cannot act on their own. i know the council has to make a proposal and if we are well advised, we respect each other as different and independent institutions. threats would be the wrong means to be used here. day, it will the need to have the votes of the parliament. have talks, to have the respective discussions with the parliament and to talk about possible candidates. there have been enough public statements on the part of plenty of people. let's get down to the responsible work.

>> [inaudible] as far as the timetable is concerned, we need to talk about the end of june. that continues to be the case. in theliament will meet first decisions will be taken and we will have to bear those in mind. i've a very straightforward approach, which is i want britain to stay in a reformed european union. that is my goal and that is what i think is best and it is best for europe as well. as a decision about whether to stay in europe or to leave europe will be for the british people in a referendum by the end of 2017. the approach the european union takes between now and then will be very important if we can achieve reforms, if we can demonstrate openness, flexibility, less interference. people capable of taking the

european union forward in that direction. plain -- very obvious. candidates insuch britain. there is no legitimacy for that process in written. -- in britain. the european council has the job as the elected heads of state and government to come together and to recommend candidates that are capable of carrying forward the reform program necessary in europe. chris, where are you? >> thank you very much. there is a huge debate going on in the united kingdom about whether scotland stays as part

of the united kingdom or not. toyour view, if it decided leave, would it be able to retain its membership or would it have to reapply? do you think it would lead to the balkanization of the british isles? i would be interesting in the views of the prime ministers on that. mr. cameron, if you're german allies will not listen to you on juncker, and you have been quite clear that you simply do not want him, the person, what chance for the more thorny issues? extremism in schools, british schools teach british values. what you think those british value should be? rule, i never respond

to hypothetical questions. never, ever. >> angela merkel saying she never responds to hypothetical questions. i am sure you will answer those. let's get our reaction from what we just heard and the growth story moving forward. thoughts? >> it seems to me, they still have not reached an agreement, but i'm getting the impression takethey are now trying to the issue of the president of the commission into the long grass as long as it can be and instead try to pin down what the next commission is going to do. whoever becomes the president, if cameron has to give in on juncker, they will still have

tried to outline the direction of the commission. so each of them can claim victory, even in defeat. >> it is very diplomatic. --is a sequence seeing issue sequencing issue. >> i find it amusing, david cameron is talking about the openness and the need for europe to improve its competitiveness, and that is all true. but part of that is the free movement of people. we know that free movement of labor is good economically. what david cameron wants to do is he wants to control and clamp down on immigration and has promised to do so. he has to at least sound a

little firm on that. can i get your take on where democratic authority lies in europe? interesting about where we go from here. >> it is a tricky issue because the european parliament is elected by the people. it has democratic legitimacy. ashas a claim to see itself the repository of democratic legitimacy. on the other hand, it is equally clear that most people who vote in parliamentary elections do not vote from a european perspective. they vote domestically. , they also have democratic legitimacy based not on the popular vote, but in the

pop -- but on the popular vote in their countries. moment,say that for the the council still has the upper hand, but i would also say that if you go 10, 15, 20 years forward, i would not be surprised to see the parliament successfully championing itself as the main repository of democratic legitimacy. or influence on the commission. -- more influence on the commission. >> it looks like they bought a little time here. what do you think of the other candidates out there? >> if not juncker, bearing in policye european peoples is the biggest in the parliament. i would've thought the prime minister of finland, who has stepped down, and said he is

stepping down because he wants a european position. as the scandinavian or nordic, ,t he would appeal to cameron but he is also relatively integrationist. that would appeal to angela merkel. there is never been a nordic commission president, so that would go down well. i would have to think that he would be good. point taken. we will leave it there. gabriel, nice to see you. >> for those listening on bloomberg radio, "first word" is up next. standoff.r we will be speaking to them about what this could mean. david cameron saying the european council should be in the driving seat. angela merkel saying democratic

authority in the european parliament. >> we will take a break. ♪

>> the elephant in the room. for --.s bid >> made in italy. renzi looks east for investment. >> cashing out. wilbur ross sells his remaining stake in the bank of ireland. good morning to our viewers in europe.

a warm welcome to those waking up in the united states. i am guy johnson. >> i am olivia sterns. this is "the pulse." youe are going to take inside the world of five-star security in brazil. what is the price of protection? cameron and angela merkel been speaking about who should get the ee's top job. -- spoke to anna edwards. cameron.ees with >> europe is not perfect. what is? we need to stay in it. in order to secure jobs, posterity, deal with the environment and all of the things that you deal with in the modern world.

is planning to borrow money to build homes in the u.k.. he wants to break the taboo over state support for house building. >> to a bloomberg exclusive. i caught up with mark mobius. him who impressed him most this year. have a listen. [indiscernible] he has shown a great deal of control and restraint. logical in his decisions. let's talk about what we were talking about a few minutes ago. to theere listening press conference in sweden. merkel defending her support of juncker and david cameron saying

things like european union councils should be in the driving seat. what is going on here? let's bring an hans nichols. he has more. breakdown the headlines for us. i think we are having a few audio issues. guy johnson and i were listening to the press conference live. >> we will talk about that. we will get it fixed. let's talk about our top corporate stories and what we are focusing on. -- wilburf ireland ross selling his stake. he has almost tripled his investment in less than three years. -- what does he say about this and why he is getting out of it? this was a terrific investment, which was fair

enough. he has made about half a billion euro profit on his investment. a phone call saying about what about investing in bank of ireland. his logic was yes. this is a good idea because investors go into ireland in that sense an important signal to the rest of the investment community. that strategy worked. his shares tripled and he has walked away with about half a billion euros profit. >> where does the bank of ireland go from here? >> i think it is interesting. 11 --try into thousand shines someaybe he light on the problems facing ireland as he exits. the economy is in reasonable shape after the bail exit at the

end of last year. a number of things are not rosy. the economy is growing at an anemic pace. mortgages are struggling to get paid. backdrop is difficult to see how the banks can grow their loans going forward. there are real challenges facing the bank of ireland as ross exits. earnings are not going to be great. it is not generating capital. we have plenty of nonperforming loans out there. any sense that we are going to be seeing more capital required further down the road? ok. i think -- >> having a few technical mixups.

we have caroline hide here. >> i am assuming she can hear us. >> we are talking about the tie up between iliad. they have only been in business for a few years. fourth biggest player in the telecom center. withare trying to merge bouygues. bouygues thinks they are worth a lot more. is made byits money telecom. it has construction, road building. this is what the family is focused on. think their unit is worth about 8 billion euros on the top side. they are offering up

to 5 billion euros. analysts agree with iliad. it is a 3 billion euro gap. they all tend to think that only worth about 5 billion euros. there is a disparity. they are stalling in terms of talks. if you drill into the numbers, it is fascinating. greek telecom is 70% of the company -- 17% of the company revenue. there is a discount because of all the other businesses. stand on.valued to >> exactly. why they areting looking at the telecom. it is about consolidation.

iliad is sparking a price war when it came into the market in 2012. vivendi looking to spend off that unit. iliad had been looking at picking up some of the assets because regulators were unlikely to allow bouygues to buy fsr. >> it would be number two and number three. >> it is a very confusing store. number three and four more likely to get the thumbs-up from regulators. orange, there has been talk from bouygues telecom and orange. those discussions are ongoing. these are the things on the table. telecom toygues

iliad. iliad only wants to pay 5 billion. do they team up with orange? it might pay up more, but will regulators allow that to go through. -- the interesting minister has said he is happy for consolidation in france. isre are four players and he happy to only have three going forward. there is a chance for bouygues to work out who he gets into bed with. does it get in with iliad or orange? will regulators allow that? doesn all, what bouygues after that. >> it is a bit of a surprise he is thinking about getting out of it. maybe there's something else going on here. decided to spin this

off, take the money, take the business private and they are getting money and realize the better values that should be ascribed to the company. >> you have to think of the heat. the reason this is going on is because iliad came in, sparked a price war and the companies are happening -- having to invest huge amounts to build up their network. we are data hungry. we need better pipes to be filling all of this. this is the awkward circle that they have to square and square that they have to circle. how did they manage to push out in terms of profit, but also push out in terms of investment? one thing that is extraordinary, we might be unveiling work cuts. we understand they thinking of slashing about 1/5 of their

workforce. they want to talk with the unions. they have to find 300 million euros from somewhere. industry and problems because they have to consolidate. >> there will be a lot of changing as they try to consolidate. caroline hyde, thank you so much. >> high-stakes security at the world cup. the challenge of keeping one of the most dangerous nations safe. >> we will be talking all things football. italy has a chance. ♪

>> good morning. we are live from bloomberg's european headquarters. let's talk about before exchange market. morgan stanley, do not bet on low volatility. a number of asset classes. -- it should push the yen higher. that is the trade coming out of morgan stanley. socgen, talking about the lowball. if they -- the low vol. volatility isthe low now, just wait.

which direction next four dollar yen? >> the fight over juncker. angela merkel is defending her support for him to head the european commission. for more insight, let's bringing gabriel stein. gabriel, merkel says the new appointment is worth the focus of the talks, but we think they anyway. it looks like they're doing the sequencing thing where they are going to decide the priorities. as you hear anything that changes your thinking about who will get the top job? >> i heard more of a willingness from merkel to sacrifice juncker at the end of the day. >> that >> was the phrase she used. >> she has been wavering. she initially said it was up to council to decide and then

she got criticized in germany and she went back to supporting juncker. i do not think her heart is in juncker and she will ditch him. the question is what she gets instead. what do you think -- it is a big compromise. much is, but there are more important issues for the eu. there is the trade and intellectual property deal with the united states. that is far more important than this. it is affected by who becomes president of the commission. european competitiveness. 14 years ago, they agreed on the lisbon row graham. by -- the lisbon program. this is where they need to concentrate and they cannot

afford to waste more time. merkel does compromise here, what might she get in exchange? >> i haven't the faintest idea. i do not know which you would consider important enough. course, possibly should the president of the na li stand down because he is an old man and mario draghi becomes is timet, perhaps it for a new resident of the ecb. >> he has always been pretty close to her. you said wade us nicely onto the ecb. we are in a situation where market asset classes have low volatility right now. is the market reaction that the moment thet the

right one? we are at low volatility. it is continuing to bear down on asset prices or market volatility by central banks is going to continue. sent outl banks have will remain they with current policies, which means keep on as long as we can. that is actually good news for equities. thatthey actually do ultimately? it depends which central bank. the first major central bank to raise interest rates will be the bank of england. is probably not surprising. janet yellen, like alan greenspan, has never seen an interest rate increase she likes. volatility can only be temporary. at a form ofback

great moderation. long-term stability in financial markets breeds instability. there is a search for return and that leads to riskier behavior and sooner or later, something pops. low volatility for now. it is not going to last. >> gabriel stein, thank you. >> buffet's 15 billion-dollar bet. we look at the sunnier side of his portfolio. he is going long energy and we will tell you why. ♪

>> good morning, everybody. no longermakers are relying on dealerships to sell cars. ferrari, audi, and now are enticing buyers at the racetrack. how prospective buyers are turned into customers. >> these cars will put you in jail as soon as you get in third gear. to drivell learn how some of the fastest cars in the world. class in aeck out a region to some of the wealthiest people in america. >> talk to me about what we are

experiencing. is an opportunity for clients to get a taste of lamborghinis. over the course of the year, we're probably looking at having anywhere between 400 to 500 people that have the chance to have this experience. that is a small number. >> we are talking about a $500,000 car. how many people reach for their wallets on their way out? >> quite a few. lamborghini recently began hosting classes in the united states. key becauses more the money is here right now. the biggest sales, number one, north america. high-end competitors, lamborghini is trying to turn clientele into a group of well groomed gentleman racecar

drivers. for enthusiasts who know their way around the track, there is a series that you can enter. you need a basic racing license and a whole lot of cash. >> how much would it run me if i wanted to get into racing? to $35,000 a weekend. >> are you going to time this? >> of course. >> what do i get? 9.5. >> off camera? >> fail. >> my skill set and my wallet will keep me in the beginners lane. who has the someone luxury of life and who is looking for performance and edge. i know you have driven a few

lamborghinis in your day. is it worth $30,000 for a weekend? >> that is a punchy price for the weekend. >> i was on the road. i kept to the legal limits around lamborghini's headquarters. the acceleration goes very quickly. the smile lasts a lot longer. >> it is time for new energy top headlines. -- has already invested $15 billion in infrastructure and anewables with plans for additional amount to help cut carbon editions. has $70e hathaway billion in assets. --a quarter of the capacity

in the works will be finished if the levees are enacted. taxes double the the cost of solar power in the country. largest utility plans to invest $5 billion in mexico's energy structure. the agreement between the company and the mexican federal -- as well asion renewable projects. >> brazil is one of the most dangerous companies in the world. security will need to be tighter than ever. we are going to look at the challenge of keeping football fans safe. >> we will be speaking with gianluca vialli. he will be joining us live on set. >> you can follow us on twitter. @guyjohnsontv. olivia stearns is @oli

viasterns. will continue. ♪

>> good morning. welcome back to "the pulse." i am olivia sterns. >> i am guy johnson. accelerated inon may. consumer prices rose 2.5% from a year ago. we may get more monetary easing. >> matteo renzi is in shanghai to promote is this resolute --

to promote business. tomorrow he meets china's president. this is his first international trip since taking over as prime minister in february. >> -- is not moving its payment ukraine. if they do not pay, ukraine could be cut off. >> let's look at how european markets are trading. >> the u.k. is trading at the moment. we are at a six-year high. we have had record highs over the united states in terms of equities. yesterday it was about risk. you wanted to get into riskier assets. today, but of a pause. let's have a look at the bond market. equities are just off about a

10th of a percent and a stock. we are looking at the bond market. similar themes. yesterday it was about getting in the periphery. we saw record lows as bond prices rose. spain is at one basis point in terms of the yield. overall, we are still seeing a little bit of positing on the bond market. the euro is trading completely flat. trading a little bit lower. off by 2/10 of a percent. maybe mario draghi is starting to see the stimulus filtering in for the euro. let's have a look at the stock six under. up 1/10 of a percent. health care is winning out.

let's have a look at a couple of the key movers. it is all about particular names. -- up by almost 3%. china telecom is pushing near field communication. paying for coffee by your mobile phone. makes the simco cards that you put in those phones. bank of ireland down 4%. wilbur ross is exiting that trade. 1.8 billion shares going on sale. euro in terms of value. by 5%. off look out for the platinum miners. south africa.

still no consensus. >> thank you. names from the video gaming world are gathering for the annual electronic entertainment asked oh. -- entertainment expo. let's take a look at the tech trends in europe. let's bring in milo. he is a tech and media rights are. writer. i had a guy earlier on from the body and he was raging about how great the european gaming story is. how european tech is really becoming resurgence. you are less convinced about the

european tech story. a slightly different issue to say the tech industry is booming. one thing we are not good at, consumer internet businesses. s, in other words. we have never been very good at it. this is the tech city thing you hear about. technology that this country is not good at and thehe one that gets all of looks at. the gaming is good. we have just never been very good at building apps. we can't fight silicon valley of that. begoogle is said to

considering opening up an 800 million pounds venture capitals division in london. you think this is a bad idea. start ups going to google is like turkeys going to christmas. has one. berlin is about to get one. these vast co-working spaces set up by google. >> i'm curious to get your views on this. google says they provide -- they do not get involved.

>> you have the road to campus and you walk around. is a nice guy. he is great at his job. google isd me that not aware of everything that is their startupde home, please, give me a break. google has a close relationship with -- in this country. we have to see what they do to complement government initiatives. reducing their exposure to tax. they have never been aggressively pursued on that. these things have to be considered together. >> they are trying to keep a larger position in europe so they do not have to bring the cash back to the u.s. 800 million compared to the tax that google does not pay in europe is peanuts.

when you think about what google does effectively as marketing in europe, getting themselves into asition where they are benevolent type, it is money well spent. borscht johnson, only a few weeks ago was here in london, banging the drum, making it clear that there was a triangle that existed between oxford, cambridge, in london. he was very keen to make sure all the tech was reaching its full potential. it is kind of doing nothing. dave and cameron said if we have silicon valley, it is the m4 corridor. he has done nothing for those businesses.

there are invitations to buckingham palace. majesty, having to pretend to be interested in all of this nonsense. there is a lot of smoke and mirrors and noise. it only has the effect of driving rent up for start ups. it is primarily focused on the industry we are not good at. if you speak to founders of serious businesses in cambridge, what help they have from the government, they will not have a long answer for you. >> a lot of people say berlin is a tech of, bucharest, how do they stack up to one another? >> i am skeptical of the next big tech hub in europe. these things come up periodically and they are driven by whoever paid for a tech bloggers flight last.

>> i have been to bucharest. there is a thriving internet -- >> there are some startups everywhere. munich, anywhere you care to mention. if we are talking about a in anal mass of investors ecosystem of healthy start up activity, it barely exists in london. the sort of businesses you are going to see exiting or closing down quietly -- there will be some middling success stories. they are businesses that were founded five years ago. everybody thought they could build a startup. inis going to result disappointed people and lost investor money in the next five years. >> i want to talk about investor money and valuations. people believe there is a bubble in this sector.

comparative advantage is important. silicon valley does some things very well. nevertheless, u.k. does have --. --.have raised the issue of why aren't we seeing more in the thin tech environment? >> we never hear about them. tech bloggers do not understand what they do or how the technology works. they do not understand what the point of it is. there are loads of them. -- they have 22

phd's on their team. incredible businesses that no one writes about. >> we have to ask you about uber. $17 billion. describe what they are thinking. >> it works different in silicon valley then on us. is basedtion on uber on the potential of the business. it is a high in the sky number that has more to do with -- >> it is a logistics company, not a transport company. if they licensed the technology to other businesses, the way they can distribute cars around the city, they have built amazing technology there. they are not worth it. further.extend that

how are we in a situation where the market is giving valuation metrics to companies like etc., thatwitter, allows them to go out and consume other start ups and drive the egos of those that are running these businesses. them --.t is giving is this the way that it should not work? >> is the way it should not work. it is dishonest. in 2000 andthat 1999, if the valuations crash now, most of the outrageous deals have been done on secondary markets. bear relation to reality. that cannot be healthy. it is obvious why it would be a

bad idea, saying something is worth what it is not. it is a bad news for everybody else. the people who process -- profit from this are this. as soon as it hits the stock market, it crashes and everybody loses. >> you said viral marketing is a hoax. there is no evidence that social media drive sales. in short, there is no upside. -- ian you say that when am looking at campaigns like your pants.p that was yount by cannot make a youtube video and expected to get 22 million views and sell lots of your product. the pepsi campaign that was a disaster that resulted in then resulted in them

losing 10% market share. campaign, that cost $20 million. very traditional, very expensive ad spend. there is no evidence social media converts to paying customers. thereis no evidence that is any meaning. it can supplement large tv expenditure. that is the only way these things work. it is not a replacement. out theve been tweeting whole show. >> it is different for journalists. content does not market other products. >> nice to see you. we're going to take a break. we will be back in a couple of minutes. ♪

>> two days until the world cup kicks off in brazil. for more, we are joined by gianluca vialli. he played in the 1986 and 1990 world cups. to talk about --

feared we need to talk about the world cup. how are you feeling? >> i am excited. i cannot wait for it to start. -- played in brazil is special. 1950 did not go well. brazil is the home of football. the grass smells differently. there is so much interest worldwide. you support england, united states, italy. it brings everybody together. hopefully there will be no incidents outside the stadium. >> and number of things under the microscope. let's start off with brazil. not ready, not on time. difficulty around security. potential to not

be much better. i want to be optimistic. i do not want to think about things going wrong. before the london olympic games. they are always late with finishing the building sites. there are problems in that particular country and people want to demonstrate. there is a lot of talk about things potentially going wrong. hopefully, things will go well. appears to be mired in corruption. the latest is what is going on in qatar with allegations they rigged the bidding to win the world cup. far-fetched that a country that is 40 degrees celsius should host the games. what are your thoughts on fifa

and the bid? >> everybody is losing confidence in them in organizing the tournament. at the moment, i have a sense that something has gone wrong. allegations might be partly true. i cannot wait for the world cup to start and go back to talking about football matters and not about big government body being involved in some sort of strange allegation. it comes to what you are here to talk about. at one end of the section, we have problems surrounding fee for. allegations that they are so out of touch with the fans and people love football. you can see that in other parts of football.

it is designed to put football fans in touch with the clubs. does football need to regain its ability to reconnect with fans? >> that is one of the biggest problems. the other problem is to make it a sustainable business. strengthen the relationship between football clubs and football fans and local communities, is what football is all about. tifosy.com allows fans to support and fund sustainable football projects. basically, it reconnects with the football class. it is a crowd funding platform, footballfic related to clubs and communities. as a fan, you can contribute and fund a football project, which

will create a legacy at the football club. charitableso a aspect. we run charity projects. we support charity projects in football communities. lot to football. i have had a successful career. i am lucky. i am always looking for ways to make the game a better game. i have been thinking long about tifosy.com. and notly see pros const. , thank you vialli for joining us. stay with "the pulse." we're are going to be back in two. ♪

>> dollar yen, morgan stanley saying do not count on low volatility. the yen --.g to see you think the volatility is low now, just wait and see. >> that does it for "the pulse." coming up next, live from new york with tom keene and his team. >> you can follow us on twitter. i am@guyjohnsontv. >> if you follow us on twitter, we will tell you who gianluca vialli thinks is going to win the world cup.

an♪

>> this is bloomberg "surveillance." >> mary barra faces general motors shareholders. she will recall the recall. harnesses social media to

mint a 17 billion dollar valuation. good morning, everyone. this is bloomberg "surveillance." we're are live from bloomberg world headquarters in new york. it is tuesday, june 10. i am tom keene. with me scarlet fu and adam johnson. we begin with an optimistic brief. >> absolutely. we found that industrial output rose the most since 2011. .> it is like a big deal >> in china inflation accelerates to the fastest pace in four months. the u.s. a couple of data points coming out today. is ms. optimism. -- business optimism. same-store sales. are people buying? >> i don't think i have been biting all year. i have been missing out.