>> and insurgency in iraq. this is oil prices continued to climb. >> megamerger monday. top of the two medical device makers join forces. >> logging on to london as tackle week kicks off. exclusive conversation between boris johnson and michael bloomberg. >> just technology is not enough and tech people see that. of fashion and education. and medicine. you have to have the whole picture to be successful as london does and so does new york.

there are other cities that do. london and new york have great time zones and big chunks of the world. ♪ >> good morning. warm welcome to those just waking up. i am guy johnson. >> i am olivia sterns. this is "the pulse." >> we began with the escalating violence in iraq. the military has stepped up its attacks on insurgents. they got a larger territory near baghdad. the insurgents said they have killed nearly 300. graphic images online that shows execution of iraqi soldiers. the countries on the brink of civil war if not already. clear is that the iraqi military is trying to push

back or fight back killing up to 300 militants using air power and fighter jets north of baghdad. the insurgents control much of the biggest city in the country and tikrit which is the hometown of the former and now late president of iraq, saddam hussein. the other thing that the insurgents control is a small chunk of the pipeline that is oil from the north to turkey and the mediterranean sea. tore has been no big change the supply picked her over the weekend from iraq. it is as it was. however, you see it remains jittery. an interesting picture. we have had it come down a bit. both are at elevated levels. there are people who are saying the international benchmark without as high as $120

major chain to the supplied picture just because people are factoring in a risk. -- withinherent inherent all types of things about isis saying they are too extreme for al qaeda. what more do you know about the photographs? are they to be believed? verify them. what we can say is the military says that they are legitimate. the fact that the organization that put them over has a history of doctoring the images that it disseminates via social media. often exaggerating audley enough the brutality that it uses. again, the iraqi military said they appeared to be pictures all their troops in the city of thatt that were taken looks like shortly after the troops surrendered an iraqi military base and saddam hussein's former home town.

as you can see, and looks like executioneing glad to foot -- as you can see, it looks like they are being lead to execution. most of them are too graphic for us to show here. it looks like they were taken after shooting. they are very disturbing. the big question is to what extent do these photos and alleged massacre there have the ability to change what is at the moment a conflict between an al leda i'll shoot and a shia or shia back to government in baghdad? more sectarianme than it already is. it is not also needs that support this al qaeda offshoot. if these pictures in a rage shiites and you now more rallying against sunnis, of course, they could become a much larger problem with in iraq itself. the likes of which we are getting into thousand six and

2007. it could be a much bigger problem throughout the entire golf rate you have a real challenge or quest -- entire gulf where you have a real challenge. >> we will leave it. ryan chilcote. >> let's turn our attention to another top company stories. it is megamerger monday. medtronic has agreed to buy covidien. is it enough to take the number one player, johnson & johnson? ofit just another case trying to move to the u.k. to pay lower taxes or is this strategic business? >> that is what we were saying before the announcement. saying they will not be paying lower taxes. one thing when we are listening to keep in mind is that they

have about 21 billion dollars in cash overseas. that is one of the estimates we have a. the company is probably not the $21 have to pay a billion. it will be cash and stock so maybe they can use some of it to pay part of the huge tab. brought the money back to the u.s., it would be higher taxes. >> and he is but coming increasingly aware that it is problematic on capitol hill. we can only speculate. we definitely know congress is not happy about this. aree is legislation they considering to stop companies from doing this. we would not be surprised if they said it is not just any merging dell. one issue thing to note is we have seen about 20 of these deals, these emerging deals since 2004. around half of them, you're

going to ireland because the tax rate -- >> very happy about that. is they will not run afoul of the competition because there is not that much of an overlap. >> they made different products. reforms and the american health a lot, act, they want to scale so they have more negotiating power. doctors not only just pick which device they want. they now negotiate. >> they do. past companies over the couple of months and what they are looking at is a u.k. and ireland and these kind of tax havens. you do not have the same kind of concerns here. chris they said they are high cap the with the prices -- chris they said they are happy with the prices. .> let's stay with m&a

the board was scheduled to meet last night. in paris following the story. what do we know about siemens bid? >> and that is right, guy. siemens is waiting until the last day, june 16 to finally come. we shall more details this afternoon. what we know is that siemens would get -- and inject cash in order to reduce debt. on the other side, you had japanese companies, mitsubishi, emerging and hiding assets. couldt of the process, buy a 10% stake. phase on topecond

of that, they could combine their well business. withuld make sense antitrust issues. according to people familiar with the matter how mom this deal at -- with the matter, this deal is too complex. and not a separate. it has notof that, resolved the issue of energy independence. towould ultimately go japanese companies. >> caroline, what might it mean for ge's offer? it has gone to the french to promise that were not be massive job cuts. could they make more assurances? >> that is right, olivia. bid on accesson

does not include any deal. it could be one of the and theents that alstom french government would be seeking from ge. they have one week from now, date, in order -- next monday in order to approve. that wed on the radio are still waiting for improvements from both sides. overseas, the main concern of the french government is job creation and whether the siemens' bid would create jobs. the siemens ceo has guaranteed that one thousand jobs would be created. back to you. carolina, thank you very much. joining us from paris. technology. the resurgence of the economy has taken many by storm at closing the bank of england.

mark carney. the thriving tech op has propelled the turnaround. caroline hyde. surprising findings in this report, what stands out? >> the pace of growth especially employment. due to tech. terms of thein rate of hiring. faster than hiring in new york and california, which is the hub of silicon valley. and of course, technology -- a nuclear reactor a you bring the

talent, the pool of talent and universities. complementary industries. also, the demand the customer base. medical companies. government with a big data and the analysis of a big data. all of the cultural diversity. >> boris johnson was talking about it. very excited about that. >> i had not heard about that he. >> i had heard of the tech old. -- hub. chris is not just a u.k. thing. there are hotspots. >> there are.

it has been discussed at every big web summit i have gone to. berlin on the agenda. new york, of course. founder of bloomberg, michael bloomberg talking about the emergence of new york. what london needs to do to foster the growth is making sure we have the infrastructure. they are doing that with the crossrail. .e need broadband broadband is not quite fast enough. and also mobile. we have dead spots. how can you not have signals in parts of london? we needed to catch up. already timeout visas. the lack of talent that gets in. >> if you go to a company, go to google. portuguese are here, americans are here. we are managing to entice because of the growth.

are not the problem. it is bringing in asians. >> america is talk about a huge problem. mark zuckerberg lobbying. siemens may be prepared. against ge bid. we will discuss the that story, next. ♪

>> 17 minutes past the hour. less of the currency market. the pound. what is going on. this is the cable rate. on the back of comments from charlie saying he felt of the rise was signaled that they economy is returning to normality. this is the five-year picture. you can see the depreciation in the pound we have seen over the last year, 1.5 years. thead a guest to said that market is overreacted to what the governor has said. >> siemens may unveil a new bid to putrtner, mitsubishi, pressure on ge to raise its bid. good morning. thank you for joining us. why do you think ge's offer so far is better than what siemens

is going to come up with? remind, 70%have to is in energy. and our transporter is at 30%. that gethat -- we think andut coming -- becoming, can be a better offer. we have mitsubishi and the siemens offer is too complex. we have several bidders. alstom.een siemens and between -- because of siemens activity and so general

electric, their offer is more simple and clear. and so him -- and some improvement. notable, creating jobs. created withinbe the next three years and -- [indiscernible] >> let me break in. do you think ge will raise its offer and the french government would prefer to see alstom as one company? >> yes, i think ge can improve its offer. regarding siemens and mitsubishi, the french government asked for the french

toister who once to -- wants see siemens offer. ge's offer is better. assets is not -- [indiscernible] >> thank you. we'll be back with more in 2. ♪

>> good morning and welcome back. time for our new energy slot. our guest said we are in a decentralized reality. he produced the inability to react will leave it to the same fate as the big music labels of the 1990's was a digitalization of our world. the first crowd funded website. bruce, good morning. walk us through. a simple business model. we allow people to invest directly into the u.k. and across europe. and today invest by the venture which allows them to get return based on a share of cash made. in this case, clean energy. 7%-9%.between

that, getting some of the money back. very long-term, 20 years for people investing. >> out of curiosity -- >> we are regulated by the fca. these are investment products. they are transferable. and from the energy side, it is up. we are trying to support the independent producers of energy which tends to be the were knowable. competition and the energy market. investors want access. >> your sins is a good company, the energy companies, are not yet fully of twos need that we are heading to decentralized world power? together, itt it was a centralized world. a lot of technology has changed. what has happened is that the

energy company's have not adapted to the new reality. the model is based on large-scale power. what we're seeing now is 500,000 reateholds energy -- c their own energy on their roofs. is very hard to do in the current structure. >> are we in a world where demand will outpace supply by considerable margins? >> there are two sides. we are looking to make investments in energy efficiency. pricesf talk about rising. we are looking around. how we use energy and generate it. useeneral, the way we energy now is more decentralized. we use it more in our homes and lead in factories and so on. the idea would be that interesting and were noble energy in your own local area and pay for the energy produced and in the long run, have a more

energy process. >> the cost will be? chris at the moment, it is subsidized. it is more expensive because we are trying to build up the technology. it's a very sharp decrease in the price of the technology and energy. that is where it comes to the energy companies. in the long run, it will be competitive with coal and gas and nuclear. that is when the decentralized producers will go to people directly with the companies. >> we will leave it there. bruce, nice to see you. ruth davis joining us from abundance. has cut gas prices. we are staying with the energy theme. that is according to the ceo. what have a more on that breaking story. ryan chilcote is following the story. you can follow me on twitter. olivia sterns is even easier. we will take a break and be minutes time.

will analyze and the news out of russia and the ukraine. we will be back. ♪

welcome back.g, you are watching "the pulse," live from london. i am guy johnson. >> i am olivia sterns. breaking news out of russia, russia has cut gas supplies to ukraine. according to the ceo of naftogaz . ryan, what are you hearing? is ukraine's gas company. they are saying the russians have turned off the tap for gas meant for ukraine. there is still gas going to western europe at normal levels. we get comments from the russian

prime minister, meeting with the ceo of gazprom. he said the talks have no result and the ukraine's created this crisis. that the price that the ukrainians were looking for was an artificially low level that only russia's closest economic allies get. this was akin to blackmail with the ukrainians were doing. he is saying he is open to talks. time since the third 2006, has turned off the gas to ukraine. ukraine relies on russia for half of its energy needs. because, the russians say, ukraine missed at 7:00 this morning london time a $2 billion to cover a four point $5 billion payment. both sides are suing one another and the eu is saying maybe we can find a deal. >> in the past with the ukrainians have done is --

across that border, we can do whatever he wants. we will turn a few taps on here and there. >> a couple differences. the western europeans have been party to the talks. they probably will not let that go unnoticed. they will certainly pay attention. the second thing is that western europe is awash in gas. eu western europeans, the have talked about how we can help the ukrainians prepare for the winter. they have stockpiled a decent amount of gas and ukraine. the question is how much of that gas are they going to use of the couple months while they are not getting from russia. we do not know. basically it is hot outside today do not needed for heating. industrial activity is down because they have lost their industrial heartland in the east of the country. those are negatives but good for -- yeah, you know.

the eu is already saying we are going to figure out a way to help the ukrainians. the eu energy commissioner has flown to slovakia in the last hour. he is going to say you are pumping gas eastward right now, which is a very novel idea. basically spare russian gas that have after a warmer than expected river. >> reversing the flow. >> presumably the commissioners can ask him to send more to the ukrainians. the russians and ukrainians have a couple months to argue about this. if the eu is concerned that this could -- the uncertainty of it could take a little bit out of the fragile economic recovery europe is looking out. >> it wouldn't be taking this to the brink in the middle of january. >> in 2006 that is what happened. right now, it is more rhetorical. you.an chilcote, thank

>> market reaction? let's find out. quite in the fx markets, what about energy? >> there is a reaction in the asset classes. political issues. why would you want to be in progress assets with everything under consideration. equity markets are softer. final reading for may inflation in europe comes in at barely .5% will stop local risk is rising. the ecb's next move, is it already priced in? that is the question you have to ask. in terms of stocks, that is what we do, we talk about companies. what you have got at this media. is in dublin, taking some of the heat away. perhaps they are not the next one. jp morgan saying buy -- you had us evaluations are the dax

since 2003 at this level. hastive to europe, the dax underperformed. if you believe you are going to see an uplift in emerging markets, buy dax relative to msci and stoxx 600. inflation is negligible, equities. this, handed to the fx. they wanted to see 170 and they got $1.70. absolutely. they got it. they wanted to take it up there through that level. trade higher or is it in the price? you had a conversation with adam and he said he was surprised by carney's speech. he says the market has got it wrong, overambitious.

citigroup say november is the first hike in rates. >> thank you. >> london's thriving tech scene taking on silicon valley. a study commissioned by bloomberg shows the u.k.'s southeast now has more tech jobs than california. this was the topic of a conversation with bloomberg founder mike bloomberg and the mayor of london, boris johnson. they sat down right here with a bloomberg businessweek editor. why cities are so focused on technology. you createextent, jobs that people can start businesses in and get to work when they are young. we'll have the problem of creating jobs. it does not require the space that big cities do not have. if you want a steel mill, you do not do it in the city. if you want people to work together, you go to london or new york. those are the two major cities.

these are the two that are predominant at the moment. >> the interesting thing, the other day you might have spotted angela merkel saying something about britain's robin connections. it was striking and unusual. she is normally very suave. she does not bash people. i wondered why she said this. actually, there is something extraordinary going on in london that germany has reason to think might be competitive with what is happening in germany. you look at the industries in which london and the u.k. is leading in the tech sector. in 21st century technology. we are coming back as a great manufacturer. we're going to be the second-biggest manufacturing country in europe soon. you can see the whole area

suddenly being of concern. economic concern to germany. this is something that london, the u.k., is leading in europe. we have the biggest tech sector in europe. >> not only does london need technology, this is where technology wants to go. one of the reasons is the diversity of the two cities. if you are going to build products to sell to the world, you have got to know about the world. ask the world what do you want? iny live here and they live new york. more so than any other cities. >> you raise the issue of national concern about technology. what in technology makes it a good issue for local government to attack versus national government? >> local government can provide that make ittions attractive to technology entrepreneurs to come to the city and live here. the crime rates are very low in

london. i would not make any comparisons with the city of my birth, new york. -- >> we are doing ok, thank you. >> you moved out of the crime rate went down. >> i moved out long before that at the age of five. mayoral termour began. there is mass transportation, lots of things that you can do in a city to make it attractive. and then there is stuff that you cannot do and politicians try -- divide is what people come for. -- vibe is what people come for. >> creative people want to have a diversity of interests. the fact that london and new york are cultural centers is attractive to them. if you go to places that are of versions,list you would think it would be more productive but that is not where

you are going to get the best and the brightest. the best and the brightest want to be a big fish in a big pond. they want to be able to have access to different cultures and different cuisines, different religions, different languages, different ways to address. in places want to be where there are lots of other industries. just technology is not enough. the tech people feed off the media and entertainment. off fashion and a lot of education, medicine, you have to have the whole picture if you are going to be successful. in all fairness, london does and so does new york. there are other cities that do but not to the extent. london and new york have great time zones to deal with big chunks of the world. i was in istanbul and they were worried about being a tech sector, they had a big geographical area to themselves. the problem is those are not areas that are at the moment peaceful and growing. there will be some time when that happens and they will be

well positioned just like new york and just like london. big, diverse, secular cities with lots going on and lots of excitement. was london mayor boris johnson speaking with bloomberg founder and ceo mike bloomberg. conversation, pretty wide ranging. on the same page. cities are great tech hubs. some breaking news. it relates to michael shoemaker, the 45-year-old world champion racing driver. a spokesman has confirmed that coma and hasa left the emergency center he was in. he is now being moved to a rehab center. the 45-year-old suffering a afterskiing accident just christmas, i think it was on the 29th. as soon as we get more news on that we will bring it to you. we will be back in a couple minutes. ♪

>> good morning. you're watching "the pulse." oil prices hovering at nine-month highs as fears grow violence in iraq could escalate. let's get a sense of the ripple of facts. the chiefned by economist at arabia monitor. >> how are you? well, the situation

in the region is not very well at all. a series of conflicts within the region that present problems long-term and short-term. they go back generations. let's deal with iraq first. what happens in the next week? has got ahouse problem, london's 10 downing street has a problem, the iraqis have a problem. >> everyone has a problem now. in the short term, it is all about stabilizing iraq and transitioning the government. these two objectives are often at odds with each other. stabilizing the situation, you often need to deal with the devil you know. here it is widely recognized that part of the problem is the current government and it needs to be transition. of the next few days, how this happened will be very delicate and important to watch. containing isis is what needs to

be done in the immediate terms isup the spread of isis stopped over the western borders. >> can we contain isis? the things we have seen have been horrible, we are hearing they are too extreme even for al qaeda and have support in syria. can they be contained? >> is going to require a lot of effort and a redrawing of regional and international alliances. going to havee to deal with, for example, is coordination between iran and the u.s. on the containment of isis. there's going to be a redrawing of the cards in terms of regional alliances. what is required here is not just a stabilization of iraq but alliances withof the goal gulf. for example, the sunni gulf states and iran are going to

have to coordinate average and with -- courtney over dealing with -- coordinate over dealing with isis. the argument in syria is removed, the bad type of rebels have weapons. these arms will be shifted back and forth between iraq and syr ia. that argument is removed, everyone now has to intervene. these guys have no friends. there's not a single government in the world that are supportive of them. governments that have been enemies in the past now are going to have to coordinate in order to push down the sectarian force that is ripping through the middle east. >> what does that mean for syria ? >> more instability, i fear. the borders are porous and arms can go back into syria. it means that all of a sudden

stabilizing the middle east begins with iraq. for two years or three years, syria was the place that stabilization. we warned this would spill over iraq. we saw isis take over anbar, that is dangerous because it is on the border with saudi arabia. now it is a free-for-all. it is going to require a lot of wisdom and a lot of maturity on the international scene. i think it is probably a useful: systems that at this time iran -- i think it is a useful coincidence that at this time iran and the u.s. are negotiating the nuclear issues, that gives them more of a reason to cooperate. >> analysts are saying there has been limited impact to oil production because 50% of oil production takes place in the south of the country. there is concern about what is going on in kurdistan. guy was in turkey, everybody is

concerned. do you think there will be an annexation of kurdistan? some people say that what is going on actually strengthens their hand. >> they have already shown that by taking kirkuk. they took it and 24 hours. >> that is amazing. oilhat is also amazing, prices have only risen so far by five dollars. it has a lot to do with supply and demand of the oil and energy markets. the conflict spreads down to the southern part or iraq, there will be further pressure on oil prices. quite a lot of the exports out of iraq go from the south. annexation of kurdistan and i do not think is in the cards. it would -- who would annex it? it is not there for the time being. it is not clear if kirkuk will ever go back --

they probably do not want to jump into the fray. i think turkey went stability and containment on its borders. >> how do sunni governments in the gcc deal with their shia populations as lines start getting redrawn and the relationship with iran starts to change? >> a very good question. there are minorities except in thbahrain. in the rest of the countries, they are predominately sunni. bring downward is to the level of sectarianism across the region. 10 or 15 years and find that this conflict was the hay that broke the camel's back in terms of bringing sectarianism to the forefront,

that would be the silver lining of this episode. it is creating a mess. we are the dual purpose of stabilizing iraq and transitioning under a new government. that is going to create sectarianism. there is a risk that in iraq we see a civil war develop. the cost is extremely high. if we get a lesson about the importance of being non sectarian, iran is ready to play that card, the reduction of sectarianism, now that it wants to come back into the international fold. >> does this impact hamas? >> eventually it will impact all radical and sectarian forces in the region. what is happening in the region, it is no longer contained to one country. it is generalized across the region. dealing with radical movements the arab andnge muslim world has to come to terms with. it can only come to terms through what is happening now,

which requires regional coordination. >> if this is the climate. >> and international coordination. we do not know, it could be a climax of many. it would be nice if people realized this is something that needs to be dealt with across the sectarian divide. otherwise the impact on markets and stability is serious. >> thank you, chief economist at arabia monitoring. time.next, gas russia cut off ukraine's supplies. more on the crisis there. ♪

>> good morning, welcome back. a quiet morning in the currency markets but a few interesting stories. one of them is what has been having with the cable rates, the pound versus the u.s. dollar. this is the chart, $1.70, we retreated off that of the comments of charlie bean, saying if rates go up it is a sign that the u.k. economy is getting back to normal. >> we are joined tonight that -- we are joined now by ryan chilcote. watching the crisis in ukraine. tois this going to lead further escalation? it possibly could. this is two things that have been intersecting points for russia and ukraine. fighting in the east and then gas talks. now that gas talks have broken

down, you could argue that there is less room for compromise or less need for the two sides to compromise now that it is going to go to arbitration and be decided by a third-party. news fort be bad fighting we are seeing in the east of the country. >> technology -- >> i met the cloud world for them -- i am at the cloud world forum. talking to the head of the car and the head of an app that organizes your stuff. like an inventory so you know where all your belongings are. >> i need one and my kids playroom. >> lego. we will be talking to a driving force behind london's technology week. vid from microsoft, front and center on the cloud. envisioning the

future of the cloud. great things to be talking about. much for joining us. that doesn't for "the pulse." "surveillance" is coming up from new york. ♪

>> this is bloomberg "surveillance." >> baghdad strikes back. forces try to halt rebels who captured large forces of the country. medtronic escapes the u.s.

system, taking a legal address in ireland. siemens gets ready to take on general electric, making a bid assets.om's energy this is bloomberg "surveillance," live from new york. monday, june 16, i am scarlet fu. joining me, jonathan ferro and brendan greeley. is on location in washington. tom, you are in the capital because of a conversation with an imf managing director. >> speaking to madame lagarde about the u.s. economy, front and center for the international monetary fund. before that, and important update from ian bremmer of eurasia group. yous not a washington that know is quiet. forget about quiet. john,