>> carney's credibility questioned. the bank of england's governor gets grilled this hour about his u-turn on interest rates. we'll bring you his testimony live. up exclusively. santos recently explored a $40 illion deal. good morning, everybody. welcome. you're watching "the pulse." we're live from bloomberg's

european headquarters in london. i'm guy johnson. >> we're going to get some breaking news. the german business confidence coming out. >> the headline? s come through at 109.7. the median estimates 110.3. let's take a look at how the euro is reacting to this. we have a situation obviously where everybody is watching carefully to see how the german economy is going from here. crucial really, the next step from the e.c.b. dipping on the back of this one. 1.3597. this is a survey, a mere gaugor investor sentiment. we'll break it down for you in just a moment. the headline number certainly something of a miss. >> of course it follows weaker

p.m.i. numbers. germany and france yesterday. >> i missed that yesterday. a bit of a catchup. >> you poor thing. at least you caught some tennis. >> it follows the p.m.i. numbers. we're more likely to seeing draghi moving toward full blown q.e. . >> let's get a breakdown about what the numberings tell us on the state of the german economy. hans nickels breaks it down for us. >> last month the miss was explained as being mostly about ukraine. it was in the rear view mirror not looking forward. it is a month behind. overall business confidence, we're starting to see a trend. the third bad number in a row. initially when they talked about the first two bad numbers they were explaining them as maybe a little statistical noise. maybe a little bit about ukraine. now we have a third one keeping

with all the other soft monotony of other bad data that we have seen. we saw p.m.i. yesterday. the french? , not very good. the question in germany is can it remain strong if it is the only strength, if it is the only robust economy in europe? it is so export driven. yes, they are a diversified economy. they also trade wheavel france, their number one trading partner. it appears to be weighing on german confidence. guy, olivia? >> hans, thank you very much indeed. our international crorpt. time for our bloomberg -- correspondent. time for our bloomberg exclusive. we talked about mull laly. he said why he thinks he is leaving the company in great hands. >> this team created not only the product scradge but also the production plan and

business plan review process. it has had wonderful success. it has served everybody well and i think mark is going to continue those major processes going forward. >> do you think mark is going to do something different from what you did? you came here and it was kind of a revolution. now the best thing for him to do, i'm sure in the eyes of the board, will be to continue your administration, but does he have his own changes to make? >> well, mark and the entire team, as we talked about, created the process that created the strategy. we're just getting started. serving all the markets around the world. we're restructuring europe. we're going to be profitable there next year. the u.s. is growing well. the fastest growing brand in the asia pacific, india. >> you say we're just getting started. even though the end of the smopt officially -- >> oh, yes. >> i did say we. i have a few more days for the

we. >> how many more days? i mean, you still have a sizable position in this company. assume you'll be coming back dearborn once in a while. >> i have fallen in love with ford. it is a great company. i'm going to stay close to ford going forward. >> mark will be able to call you up if he needs to? >> absolutely. any time. >> you know, it really has been an incredible few years since alan mulally joined ford taking them through the crisis, turning the company around. matt asked him what he is going to do next. he refused so say. there is speculation he might go to microsoft and replace steve ballmer. obviously he is not going to do that. he will probably be at starbucks. >> a starbucks? that is what he is going to do

on day one? >> he is looking forward to kicking back and having some coffee and hanging out in a coffee store. >> he is going pick starbucks? >> his words. not mine. >> he has done amazing thingsed a ford. the first thing he does kick back at a starbucks. the man has highs operations. >> i think he is looking for a little time to enjoy. to taste the coffee. shares rallying this morning coming off the knees of a deal between the company and monosappetto. it is a sign that u.s. firms are looking to avoid tax by moving their companies abroad. genta.ke over of syn more is s with

caroline hyde. just tax? >> i think there were some other things at play here. you don't splash there are 40 genta was on offer for syn if it was only going to be tax. maybe it was the primary reason. they would have been the largest seed company in this world. a really strong competitor to the likes of by aers. competitive strength has got to be an underlying driver here as well. maybe it was tax, by and large, that really was the attraction. switzerland had about 18%. moving itself to switzerland was a key area that the management team was eyeing up. that was slightly concerned to syngenta. we understand it has fizzled out. it could come back again. that's why shares have bounced the most in three years.

they were worried perhaps that maybe the corporate tax loop would be ruined by the u.s. congress by 2015. that is what has been speculated. they were worried about regulators. that they were going to make the biggest company in the world joining a u.s. jauger knot with a european giant. >> there are going to be some ntitrust concerns. they are not that easy. this is a huge theme for 2014. >> unbelievable. $117 billion pfizer astrazeneca deal was also put on ice. that was largely to do with the attraction of the the u.s. tax ate. its u.s. announce address as well.

all because they can -- the amount of money they have what $40 billion medtronic has. they don't want to bring it back to the u.s. they want to use it on acquisitions aboard. not just pharmaceuticals there. we have are you noors b.p. is eyed up by the u.s. oil giant. wall green in the u.s. you know it well. you go there shopping. -- the u.k. pharmacy brand could offer it a better corporate tax rate. congress could come back and say, look. we're going change this rule. it is starting to bug us about it. they are running out of targets. if you look at the pharma

space, six of the top 10 in the u.k. have already been tax inversion deals. all of those, some of the three of the six have already been by u.s. companies coming and want make the most of the u.k. tax domicile. the shrinking pool of targets going. since 2013, they all reincorporated in the u.k.. on average save themselves 8% in terms of corporate tax rates. that is why it is such a thing to eye up. >> an even lower rate of took profit that comes from i.p.. >> you don't have to -- the cash that you have knocking around. you can use that productively. you get a double whammy on this as well. my my question is what will happen when actually u.s. authorities do reverse it. at some point they are going to. >> caroline hyde, thank you so

much. appreciate it. here is what else is coming up on our radar today. on iraqi is calling leaders to unite. the u.s. secretary of tate is urging leaders to cooperate with baghdad and help form a government. ab certain holding a news conference to unveil the tails of his abenomics >> and mark carney will appear before u.k. lawmakers this hour. they are set to question the governor about the bank of england's recent change of tone on interest rates. the hearing will begin at 9:30 u.k. time. >> we will continue the conversation on carney in a few minutes. pimco's mike d by

amey. ♪

>> welcome back to "the pulse." we just got the latest snapshot on the state of europe's .iggest economy german business confidence data coming out showing it declined for a second month in june. gorp, mike. taken with yesterday's weak

p.m.i.'s what is your reaction to this disappointing number? >> i guess the underlying theme is that growth looks like it is leveling out at 1% in europe. doesn't look like there is that much momentum. it is quite interesting when you look at the relative monetary policy stance. everything coming out of europe suggests it is going to continue to ease. i don't think there is anything in yesterday's p.m.i.'s that would challenge that. >> what form is that going to take? >> they have got one bullet left. >> q.e. ? >> some say that. that's the way they have got to go . obviously they are doing with going wait to see how things pan out. see whether that unlocks things. >> so they are going wait for the a.q.r.? >> that is at the end of year. it will be odd to go through that set of packages and then immediately go for something else. it would seem quite strange.

i suspect you'll see three to six month where is we'll stick with the current policy stance. if things continue to look challenged, i guess we go for asset purchases . you can argue they are kind of in that game already 368 >> concern the already. >> the question of supporting risk assets rather than further stimulating. if you look at what they are doing. that's ultimately what they have to do. if you look at the 10-year bond at 130. >> you think they are going much lower than that? >> no, i think they are going to carry. it is pretty tough to say there will be a big rally. >> what's the situation with the policy 1234 -- policy? you can probably see that, beyond that, middle of the curve, back end of the curve, not much reaction. >> if you look at what is pricing the curve, if you back

out of the forward rates then the long dated forwards get too -- if you look at the one-year rates, they have converged to japan already . to some degree, part of the secular stagnation is caught in a vice. you to buy the belly of the curve and just roll down the yield curve. >> draghi has said, he is not finished. you're expecting q.e. . mark is expecting q.e. . the tltr o. he targeting ltro. >> they are striking signal rates are going the stay at hese levels for a normal level. you have an indication what the next steps are. this whole thing about buying asset backed securities. that's the next game in town, to buy assets. look at the prices for the next

few years, looks like pretty much a done deal. it is all a game of supporting asset prices now rather than further stimulation. what they hope is that places like to fed start to raise rates and then the euro comes down and then that's how you get the next round of stimulus. >> do you think it is going to get lending into these small and medium size businesses? >> it is tough to say. it is pretty hard to believe why any bank would want to accelerate their -- the loan, the f.l.s. supported loan growth and lower spreads, but it didn't accelerate the volume of lending. i suspect for now, it is all about lowering the cost of funding rather than increasing the volume. it doesn't get you ultimately out of the game. bonds are trading 1.3.

how wide does that spread get when it is the first rate hike? >> i think november is absolutely -- if you look at what he said, what carney said in the speech, i think the easiest way to think about the speech given it was quite a been monetary policy has getting more hawkish since the inflation report. increases hawkishness. that house speech was a classic example. the biggest turn was the february inflation report and then you have another round in this mansion house speech. >> is this a signal he thinks it is going to improve? >> i think that is right. that is also what they said in february. what they said in february was broadly speaking, we expect the -- has to be quickly rather than over a three-year period. by definition, they have already become quite bearish on productiveity growth at that point in time.

you can argue it is a great story. the total level of output is -- there are good angles and less good angles to this. >> much more on carney. the testimony today on inflation. the mngs house speech. we're coming back on "the pulse" in two. ♪

>> >> good morning, everybody. welcome back. can we talk trash?

we're going to do it literally now. one israeli start-up is making garbage or as we call it, rubbish. it is biodegradable within 180 days. elliott? >> thanks, guy. i'm joined by the c.e.o. and co-founder. great to have you with us. 180 days to biodegrade. i know you have some of the packaging here. that we can all see. how does that compare with normal packaging? can you just chuck it out in your garden and within six months, it is gone? decompose within 180 days. don't throw it in your garden. if you throw it some place se, for example, a land fill it will biodegrade faster than

regular plastic. >> what is in it? what is this made of that allows it to do this faster? it is made from biodegradable poll mers. it decomposes like to orange eel within 180 days in compost. >> what is the business model here? are you planning to build a massive packaging company or are you planning to license it? >> we plan to build a big company. with very good stability to sell these packages all over the world. >> you raised some $10 million just a few weeks ago. t was led by hong kong's richest man. what is that money needed for and are you going to need more? >> it is for increasing the

sales force. building the operation. working more on the i.p. more in new packages. we'll see about the future. we have enough money for now. going to see drink pouches and -- >> we'll start to see packages and we'll take it from there. >> the cost is going to be similar to what current packaging is currently used or is this a premier yum product that -- >> in the beginning, the technology costs more. when it starts influencing the prices, we're aiming to reach the -- prices. > is it just drinks? >> we're startinging with dry ood and increased -- granola

bars. fresh foods. bakery, etc., etc. the next generation, liquid foods. >> your back ground is a software industry. how do you go from making software to packaging for soft drinking? >> when you're thinking of innovation, you're thinking of making new things. you their best people in the markets and build a strong team and then takes it from there. the fact that you don't know all the barriers helps you moving forward. >> we wish you the best of luck. guy, olivia, i think i'm going to taste these crisps and see what they taste like in a few minutes. back to you. >> thank you. elliott gotkine joining us there live from tel aviv. coming up, carney's -- carney is about to speak on his u-turn on interest rates. >> as we head to break, let's get you today's "the pulse"

number. $54 million. the second highest price for a monet piece. ♪

>> good morning, everybody. you are watching "the pulse." -- shares are rising today and hitting a five-year high. talks of the possible deal are dead. abe plans to shoot his third arrow today. he will formally unveil the details of abenomics.

governor isand about to testify before parliament treasury committee. lawmakers will question him about his recent change of town on interest rates. >> but we are expecting from dr. carney. >> some people are calling this a moment where his credibility comes into question. flip-flopping from the unemployment rate, you have caught up with mike. aboutis going to be clarity, -- communication, clarity. normalization will come before the end of his tenure. the cafferty talking about how

it is prudent to remove stimulus. -- the got a text areas people i've spoken to in the marketplace say they have looked at that speech and their questioning whether the central tenant of the governor was to change the expectations on a rate hike. inflation is still low. -- as it to get us marketplace to readjust the risk premium? people in the marketplace say the market was already pricing in a higher probability. >> what is the most important western the committee needs to ask carney today? the market isnk

so mispriced. what is a big driver of the change in your thinking? isn't that the risk growth is substantially moved to the upside. more people showing signs of dissension? or is it the housing market? about clarity. what did you mean? what have we got so wrong? mike amy is still with us, managing director at pimco in europe. what triggered this change? >> the committee is more hawkish than carney is. as a result of that, he wants to

front run the june minutes. that theome concern market is underestimating a rate hike this year. benign, butely employment growth is very strong. the last 12 months, it scares them a little bit. it is ahose to do matter of some conjecture. if you look at what he said, i suspect the interpretation of -- i think it is a natural tendency. deliver as you things -- you see things as opposed to what the committee sees.

>> let's talk about the committee. >> he was the last guy to be voted for more kiwi -- for more qe. it is a big turnaround. he always said you can let the recovery run. as long as the inflation output looks benign. it looks very benign. weak.gs growth is very the inflationary pressures do not look at strong. >> policy in the u.k. is so heart to gauge. -- hard to gauge. >> relative to the fed, the fed has been straightforward on what they are doing.

they've made it clear what the game plan is. to my mind, they have one economy. the u.k. does not have the world's reserve currency and has a more volatile central bank. intermediate yields are the same. -- do you think that forward guidance is less substantive? >> forward guidance is more substantive. if you back it up with cash, the fed is in the game of qe. when they think about hiking rates, they are still engaged in monetary easing. >> pressing the pedal down and,

forward guidance is more comfortable. >> forward guidance in the u.k. has been more successful in hiking expectations. it is an amazing journey. stay with us. i am looking at bars coming out of the wilson room in westminster. as soon as we start to see a picture, we will bring it to you. >> we will tell you about the big deal that is bound to be struck between the two countries. ♪

>> welcome back. you are watching "the pulse." this is the wilson room down in parliament. where is the market mispriced going into this hearing? >> the markets underestimated the profits downstairs. he gets the first series of questions. >> to produce something like that. it is appropriate to have a little bit of a gap between me

producing something like that. it would not be fair to those coming in and taking my place. is that reasonable? >> does this approach have support? >> it may be useful for me if you would highlight any particular themes you might like me to dwell on? obviously.time, some future juncture. i came by asking you whether

you think any of your reservations about the quality of data the difficulty of powered data. both with done respect to staff, individual members of this committee, a fair bit of work on this puzzle. i will summarize it. to precrisislative trends, the productivity gap is about 16 percentage points. article -- a recent estimating that a quarter of represented by measurement. a few aspects on that.

the first would be missed measurement about foot. we would expect to be with revisions of data. some of more -- some are more substantial. that is a secular underestimation of output. we expect to be adjusted in the revisions coming up. , financialenges services is a famous one the -- it isworked on quite challenging. 70% of output is from the services sector.

it is less likely there is mismanagement around the labor input component. that is more readily measured. thatast point i make is 16%, i am quoting relative to a precrisis trend. some things have changed. in financial services, one of the toughest areas to mention. that would affect it as well. issuest estimate of that is about a quarter. it is not -- it does not explain the majority of the puzzle. >> thank you very much. latest --

>> there were many aspects to that data. in terms of the pace of job creation, it continues to be strong. employment growth is running at a record pace. what was weaker and notable was the wage data. it was softer than our expectations. arounda run of hard data wages. that has been softer than we expected. our expectation is that there will be acceleration in the second half of this year into 2015, which would help support consumption. presentgether, the data in crosscurrents.

itlet me ask you whether will affect your judgment? the developments on the wage me, that thereto has been more spare capacity in a labor market than we previously had thought. not equal.are what has also happened is that the economy has performed a little bit better in terms of actual overturns. than weore momentum

would have expected. the combination of the two, greater momentum in economy and greater momentum into the second half of this year. we need to balance that again. >> what is your view? >> i think i would say that i still believe that is very risky -- we have suggested there is a range of existing spare capacity. i do not dissent strongly from that. there are ranges around that, depending on the level of uncertainty. in addition to looking at the quantitive measures of star ir capacity. star

we need to continue to monitor the price indicators. those areas of potential price stress that start to emerge as the economy starts to approach full capacity. it is an indication that there remains a significant degree of spare capacity. this degree of hidden unemployment among the self-employed. they are working and they like to work a bit more. i am probably at the upper end of the range.

>> can i ask you about how we of , how long itbed will take to absorb that spare capacity? >> there is a really dangerous viewers precision hand. capacity, relative to some unobserved output would be. mistake tois a real try to get concrete numbers. that is my way of background. growth may be pay

lower for other reasons. also things that determine pay growth. there are some indicators there going in another direction. ,ome of the server information signs that you are seeing some of the skills on the west to observe. it is a completely picture in one direction. policymaker is waking up a couple of educators. i would like to see pay growth

edging up during the second part of this year. and into next year. shrinkingting the labor market. looks you'll have to move on. -- we will have to move on. the medium-term equilibrium reading of unemployment. affected be materially by the new job pictures -- job figures? relying too much on one data point. looking across the job performance, there has been evidence some longer-term

unemployed have been fighting more rapidly than in previous -- them previously. it would suggest the medium-term could be lower. it could be coming down. our current estimate is that the or 6.5%.s about six there is a possibility which suggest that he did not come to this conclusion. indicates that some support that could be lower at present. only one possible explanation.

>> the employment data seems to people that work. which is close to the second 73%. that was the high peak in 1974. the total number of people who work is going up year over year. allow them to sit down. youth unemployment is dropping. news,ll of this good there does seem to be coming down the road a challenge with capacity. that it isch a point

going to be tough to find people to fill jobs. do not see that as a challenge? unemploymentthat is still 6.6%. >i am trying to square the circle. unemployment, when i speak to people in my constituency, there seems to be not just a skills gap but it is tough finding people to kill those jobs. fill those jobs. the best collective judgment additionalis there

spare capacity concentrated in the labor market that can be of zork further before we would look to begin to normalize interest rates, in other words, raise interest rates. we outlined this in some detail in the may report. people who want to work for -- full-time, more hours. >> the governor of the bank of england being questioned by the treasury select committee in westminster. >> a couple of things. he acknowledged early on that he is more dovish than the committee as a whole. the challenges they see the economy has more momentum than

expected to have. you would start to get traction and quite a big bounce up and growth. you will level off to this two or three quarters. they are not seeing the leveling off. the economy seems to have more momentum than they expected. they do not see any wage growth. they see these very strong unemployment numbers. problem.art of the >> 6.6%. how healthy are the labor markets? focuseded is much more upon getting inflation back to target. itthe inflation rate is low, it is less of an issue.

.> thank you very much mike amy joining us from pimco. we will be back in a couple of minutes. >> we will be limited. ♪

-- moremomentumthan momentum than expected. mark ernie says -- mark carney says the economy has recovered more than expected. the stock jumps the most in five years. monsanto recently explored a $40 million deal. good morning to our viewers in europe.

good evening to those in asia. they were welcome to those just waking up in the united states. -- a warm welcome to those just waking up in the united states. speaks his mind. as we have already mentioned, u.k. lawmakers are questioning the bank of england governor mark carney and his team on the latest inflation report. he said the british economy has more momentum than the bank expected. let's get the latest headlines and analysis from manus cranny. >> you have hit the rub of it. mark carney started off with his view. his view was about wages. committee are the there with him. , so far,d moderately

when it comes to spare capacity -- that is the great debate. the rate of slack. the momentum we expected to see in the second half -- spare capacity was 1% to 1.5%. he doesn't dissent. -- miles says that this spare capacity is at the upper end of the range. that there is saying is a danger in being precise, overly precise, but there is more spare capacity. , forwardsue of slack guidance is now. forward guidance right now is the debate about slack. let's have a look at the markets right now. have a look at dollar sterling.

also, you and i have looked at this on a more regular basis, we have looked at short sterling. the price of money on a three-month guide. it is a contract table. the price of money in march, june of next year. is not a radical shift. but we are seeing futures moving. but seven look at dollar sterling -- let's have a look at dollar sterling. we are seeing a bit of reprieve in these markets. that is the issue with spare capacity. euro sterling also moving in the same kind of manner. the follow-up to the spare capacity issue was how much scope is there out there to fill the jobs? are there gaps -- skills gaps? he said, of course there are skills gaps.

but there are more people out there who want to work. particularoff this match, this particular yarn, this particular discussion about the minutes on the monetary policy committee -- >> but there is this spare capacity, wage data softer. people wanting to work more hours than they are. >> don't just look at the numbers. >> absolutely. do not just look at the employment numbers. i had a couple of conversations yesterday afternoon with a variety of much more knowledgeable economists than me. they said, look, mark carney is going to clear it up today -- did you intend to move the central expectations or did you just want to get the markets to waken up to the risk of better momentum? thus far, it is the momentum story that is carrying through. >> that is what we heard from

the managing director of pimco. >> they are trying to front run the minutes this week. take you so much. >> let's move on. we are going to leave the bank of england. let's turn our attention to another economy that potentially has a housing bubble. that is to buy. -- dubai. well known for having such problems. bankngs from the central that the emirates are starting to overheat. some stocks are down very heavily. take a look at a longer-term chart. you will see the extent of the climbs that we have seen. dubai has seen quite a lot of volatility in the past. stocks -- look

at the rally we have seen since the end of 2012, 2013 -- we are unwinding in a little bit, but by no means are we completely unwinding it. >> the market entering a bear market yesterday. lowest.down to the >> ok. let's move on. alan mulally. >> an exclusive. he opened up to matt miller about his successor, mark fields. us why hely told thinks he thinks he's leaving the company in great hands. >> this team created not only the product strategy, but the manufacturing plant, and the production plant, and the business plan review process. wonderful success that has served everybody well and i think mark is going to continue

those major processes going forward. >> do you think mark is going to do something different from what you did? you came here and it was kind of a revolution. now, the best thing for him to do in the eyes of the board is to discontinue -- just continue your it ministration. >> mark and the entire team created the process that created the strategy. we are just getting started. we are restructuring europe. we are going to be profitable there next year. the u.s. is going well. we're the fastest growing brand in the asia-pacific, led by china and india. there is lots of room to grow this great corporation. >> you say, we are just getting started. even though the end of the month is officially -- >> oh yes. i have a few more days to be part of the we. >> i assume you're going to be coming back once in a while. >> i think i will maintain many

of the great relationships i have made. i have fallen in love with poured -- ford and it is so important, what it does for the economy. close to ford. mark can call me anytime. >> alan mulally speaking there in an exclusive interview. shares a rallying this morning. -- are rallying this morning. it is the latest sign that u.s. firms are increasingly looking to avoid u.s. corporation taxes by moving their headquarters overseas. detailsus now with more is caroline hyde. just tax or something else? >> this is basically the biggest maker of seeds in the world,

monsanto, looking at a small arrival over in europe, one that has been pumping money into being quite a strong competitor. it is starting to encroach on monsanto's territory. so maybe they thought, let's take it out. let's make it better, formidable competitor. having athe idea of seeds juggernaut kind of tickled their fancy. switzerland's corporate taxes 18%. over 30%. is there were initial discussions that were put on ice. they could come back. >> but there are a few big

concerns. already the world's biggest seed company, there are always antitrust issues. there are threats that the u.s. can act. taxave had some an enormous inversions proposed, congress could proposed -- close the loophole. tax inversions are not that easy to do and are politically difficult to pull off, if it involves staff cuts at home. despite all of these difficulties, this is a string in the latest line of the very big trend for 2013. >> i am surprised we have not been hearing and ringing in our ears for several years. ceos are happy to vocalize now. now, six of the top 10 pharmaceutical companies based in the united kingdom are because of inversion tax deals. u.s. companies wanting to get in on lower corporate tax rates here in europe. six of the top 10. when you look at the math, since

october 2013, all of these companies have managed to cut the average level of tax by about 8%. no wonder we saw pfizer eying up extra zeneca -- astor zeneca earlier this year -- astor zeneca earlier this year. we have medtronic. all of these companies are still very much attractive. speculation much about the pharmacist walgreens looking to buy a bigger stake and alliance -- in alliance. even bp is being talked about as a bit of a target now. this is a trend that is going to run until congress closes that loophole. >> thank you very much indeed. unrestng onto the latest in iraq, the nation's army is

reporting that iraq you forces have regained control of the refinery. john kerry is in the kurdish city. us withgotkine joins the latest. what are you hearing? have whatsay, we seems to be a rare victory for the iraqi armed forces. they lost the refinery, the largest oil refinery in the north, yesterday, but they are now saying that they send more troops there and that they have recaptured that. it is a good victory for the iraqi armed forces and also comes at a great time come oil u.s. secretary of state john kerry is still in the country. he is up in the autonomous kurdish region in the north. he is set to meet with kurdish leaders. he gavet a message that to the iraq he government in

baghdad. a more inclusive government that rules in the interest of all , sunnis, andes kurds, is the best way to the islamistrt for insurgents. he is also there to remind the kurds that the u.s. is not in favor of an independent kurdish state in northern iraq. not only would it destabilize iraq, but it would potential he -- potentially destabilize neighboring countries. certainly, this is the kind of thing that the iraqis would want john kerry to see while he is in the country. john kerry saying yesterday that if the iraqis do form this more inclusive government, u.s. support would be intense and sustained. one can only assume that that might involve air strikes on the islamist insurgents. thanks. elliott gotkine, our middle east

editor, joining us live from tel aviv. we will be back in two minutes. ♪

>> good morning. welcome back. you are watching "the pulse." the u.s. dollar is under pressure following the mark carney testimony in london. thantle bit more dovish

the market had anticipated. if you look at the wage data and unemployment data, the weakness in the wage data suggests there is more slack in the economy than the employment numbers would suggest and that is maybe why we are seeing the pound under pressure. >> let's get back to one of our top stories. the latest unrest in iraq. is the oil market analyst. thank you for joining us. it looks like john kerry is trying to get the kurds on board. oil is falling today. how secure at this point do you think iraq oil assets are? >> it is interesting because the north and the south are having very different dynamics. the north is where people say it is a positive because the kurdistan region has engulfed most of those northern and western fields. and are trying to ship at least

two turkey. the only other concern is the baiji refinery. if you control it, you control refined fuel in iraq and power. for invasion, it is very conducive. that is one of the reasons why they have been fighting over it for the past one or two weeks. the real question is the south. that is the real fear of the market. if baghdad goes under ices control, we may start losing that. >> if you were running an oil how closeght now, would you be to removing key personnel? --bp and exxon have missed moved most of their central staff. the rest of the country -- company is still playing the waiting game. the south has so far been insulated.

there have been isolated cases of bombings, but it has never been a case of an all-out attack on the southern installations have ever happened. on the very important iraqi situation is the game changer for oil. it is not like the libya situation. we did see oil go high when libya was happening. when iraq happened, the whole curve has moved up because the market is reassessing the whole back end of the curve. that is were oil companies are very important. bp has a field that produces close to 1.7 million barrels per day. they have reduced half the staff there. one production be affected if the staff does not return within the next 2-3 months? >> can the saudi's fill in the gaps? paper, they have mentioned

they can do 2.5 million barrels per day. the potential loss of iraqi supply could be in the range of 2.5-3 million barrels. that itself is in doubt. they have never done that before. the oil they can produce would be very heavy, as well. refineries potentially don't really like that because of iraqi oil is very light. the other important things that we are having the summer in the middle east, where they use a lot of oil domestically for power generation and it has a feedback effect on what they can export as well. >> what is the absorber downside here -- upside or downside here? >> we will see a bit more downside as we see a bit more

stability in terms of new flows. baghdad is the key. if it remains in the central government control, it is fine. is the long-term median implications for oil that are very important. 60% of oil production between now and 2020 is to be from iraq. if that is not there, you have a very tight market. >> we will be back with more in two minutes. ♪

>> welcome back to "the pulse." it is time for the new energy. the green investment bank announced a one billion pounds fund to invest in offshore wind farms in the u.k. joining me is the cfo of the green investment bank. thanks for coming in. your earnings are in line with estimates. you are raising a new one billion pound fund. who do you tap -- intended tap to raise the funds? risk intended target low investors. people who are looking for access to long-term low risk investments. the money will you put in? >> our target raising his one billion pounds.

we expect to contribute up to 20% of that target. in terms of timeline, we are about to formally launch the fund. we hope to achieve a first close on the fund in the first calendar year. backed by the business secretary. how are things going so far? you are not profitable. when the you expect to be? >> i think we are making a real difference across the u.k. months since we set up, we have brought forward financing for 4.8 billion pounds of new investment across the u.k. that is 28 projects throughout the u.k. that would not have gone ahead without our funding. these are findings that are delivering -- products that are delivering new infrastructure, creating new jobs across our current portfolio, we are supporting innovative new technologies, and ultimately, we are looking to lower the cost of capital.

>> i know you are trying to lower the cost of capital. but this is not necessarily all truism. you -- all truism. when we be profitable? >> the portfolio we have invested in, 90% is in the construction phase, one of becomes operational, we will deliver an annual profit of 10-15million pounds -- million pounds of profit to u.k. investors. >> your main priorities? >> three main priorities. continue to invest in green profitable projects throughout the u.k. raise the capital investment. that is a key initiative. and continue to deliver on our green objectives. lower carbon emissions, produce

green electricity. thet sounds like you are in right direction. stay with "the pulse." a generation of job hoppers. a40% of today's youth start job well arty planning the next one. ♪

>> welcome back to "the pulse." live from london. i am olivia sterns parade >> -- i'm olivia sterns. sergean of syngenta rising. >> mark carney said that u.k. wage data had been softer than expected.

the pace of job creation continues to be strong. japan prime minister of plans to formally unveil the details of a third part of abe-nomics package. >> manus cranny has more. that, olivia. you have one main market that is managing to turn it to green and that is hardly a robust move. france's up by 0.8%. you have the lowest confidence thisdustry in germany year. we are winning for the consumer for thece -- waiting consumer confidence numbers and the united states. strongest are the since october of last year. equity gave up some gains. futures indicated that it is down 1/8 of 1%.

there is a parliamentary hearing that is ongoing at the moment. at the bank of england and a number of his cohorts are there. all saying that spare capacity, spare capacity, plenty of spare capacity, nobody is dissenting. i think you got the message. literally, in the past couple of minutes, mark carney has gone on -- he is the governor of the ,ank of england -- to clarify why did you make a speech? i speak pretty much whenever and wherever i want to and there are intended consequences when i speak. deliberately, did you want to deliberately get the market to move their expectations? yes, that was the intent. market expectations were relatively in varied and most important in the medium term is where rates go. i just to the data just as we

adjust our views. that is what carney wanted to achieve by speaking at the mansion house and good for him. he will speak wherever he wants, whenever he wants. back to you. >> a lot to think about surrounding that forward guidance. do we believe it or not? let's get breaking news that came out this hour. a continuation of a trend. let's find out exactly what is going on. the latest on dubai. ring us on do -- bring us up to speed. another big down day for the market. >> absolutely. the stock market entered bear territory after falling about 20% from the peak in may. that was triggered by the news that came out out of a big construction company here, the biggest construction company here.

abouts were talking hundreds of employees being terminated. were atthe management the helm of the company being fired or resigning last week. the news came after so much drama in the market and that seems to suggest some fight for control between the various shareholders. that triggered some kind of doubt that even hit other stocks , including the biggest developer in the uae and the developer of the world's tallest tower in dubai. >> do you think it is really just arab dragging the market lower? where do you think the market is going from here? other analysts are saying it could be that the markets have reached unjustifiable levels.

some people are saying the drama in iraq and the issue that is andening with the isil the prospects that there might be some intervention from the u.s. could also be scaring investors away from the market. there are other factors, obviously. we are in the middle east. >> ok. we will leave it there. thank you for the update. >> later today, president putin will arrive in austria, his first trip to europe after the d-day commemoration earlier this month. it will be talks over the gas pipeline that connects russia to western europe. ryan chilcote has more. >> russia supplies that you with eu to heat -- tggehe 80 million homes. russia is in a dispute with europe over the price they pay

for gas. the reliability of the supply is a concern. what if the accident was not an accident? what if russia wanted the dispute? is a russians it ploy to convince the european union that it needs another solution. russia is planning a new pipeline to europe. it would travel under the black sea or equitable gary a, serbia, and beyond. serbia, and beyond. the european union has not blessed us -- south stream yet, but that could change youe. >> ryan chilcote spoke with the energy commissioner of the european union. the european position is the following -- we don't think that

good and acceptable .ector for tensions a nobody is using energy as weapon, as a political instrument, we are not willing to do this. we have long-term relations. since the 1960's. , we don't see that russia is using gas as a weapon against our european union. signals more, there are that gas prices and gas relations in general can be an instrument between and against russia and ukraine. ukraine is our partner. an agreementping , giving them some

systems. it is an ongoing -- so we cannot accept, if in fact russia more and more is using gas and gas prices and gas deliveries as a political instrument. your meeting with ukraine's energy minister tomorrow, what you expect to come of that meeting? to discussd continue our open points, looking to unpaid bills and market prices. tomorrow will have a supply,enda looking to tocking what can be done fulfill ukrainian storages before the end of october and how and when we should continue to discuss after my meeting with

ukrainian minister. can becheck what developed with russia and i will phone the russian minister because i think we should not -- if there is no compromise and if there is no interim solution, we are all losers. the european union, ukraine, and russia will lose if no pragmatic compromise happens before the end of summer. >> that was the european energy commissioner speaking to our ryan chilcote. with few days coming up this subject. switch employers 32 times in their working life. how do you manage them generation of job hoppers? ♪

>> good morning. welcome back. we're live from london on bloomberg television. 90% of millennial's spend less than five years with an employer. staggering statistic. our average, they will have more than 32 jobs in their working life. that is according to a five-year survey. how do you manage the generation of job hoppers?

let's figure it out. good morning, gentlemen. >> good morning. >> are they that constantly in motion? is this something that is going to get worse? will get better? -- will it get better? how do we gauge a generation that is so constantly in motion? how do we get decent data? >> first of all, we have to accept that the era of the long job is gone. they look at people like me from generation x of the baby boomer generation, they think we are crazy. they are taking command of their own careers. they know that they can't trust one single employer to answer their needs. they will look for a portfolio of opportunities. >> what works to retain talent? >> the most important thing is to it knowledge what these people really care about, what

this younger generation really care about. they care about balance. flexibility come off -- flexibility, variety, opportunity to advance. don't necessarily want to get paid more. in fact, social currency is more important than financial currency. when they were asked what kind of company would you leave, financial worth was 1% of what they attributed to being important. 43% was doing something that would make the world a better place. they are purpose driven people. technology has changed. has technology generated this generational shift? >> it is self-realization that they are looking for. today, there are just more ways to self realize. when you're young, you no longer need to ask for permission to

innovate. it is free or cheap and you are able to scale infinitely with cloud technology and enter the market quicker. the technology is the key driver for this newfound freedom. it is the market working in a way that enables more people to do what they want to do. >> and how do you manage this? how do i invest in a generation of people, as the company, look at it from the other end of the telescope am i want to invest in you and improve your skills, how to what do that if you are out the door? >> it is a two way deal. responsibility very early. you want to scare people with the amount of challenges you are prepared to give them. if you don't challenge them, they are off. you want to give them recognition. not too much, but you do want to say thank you occasionally. deep learning, consistent deep learning, so that you invest in their skills and make them more valuable. you want to give them some joy,

too. you want these guys to reveal more of their generosity. they appear to be quite selfish. that is the myth. that is because they are manic during their image. they need to take their own responsibility -- manicuring their image. the need to take their own responsibility. >> what does this mean for management stock shares? google has recently gone into berlin with the google factory. doesn't mean that a traditional vertical hierarchy -- does it mean that a traditional vertical hierarchy -- do you want more fiefdoms? were people can operate their own shops? >> we work hard to support entrepreneurship around the world. the factory in berlin is one of those. believe is giving people

the experience and the ability to impact these projects. within google, which is a company that constantly disrupts itself and believes it's entrepreneurship, we give people the opportunity to do 20% projects. if you use your skills 20% of the time in an area that you are not hired to do -- this kind of experience motivates people, gets a great result, and health with retention and happiness. >> companies create the problem themselves, in this much as they are over analyzing come over checking, you have got to be in the top or tile to get this kind of production. you have to get this bunch of people in the bottom q uartile. >> many organizations are not dealing with the inconvenient truth that these talents are simply going to move around. there is no good seeing the world as he wanted to be. you have got to do with the

reality. most of these companies are not giving enough critical development opportunities to gillooly enough. , i talk about leadership opportunities. it is going to take an age to get to the top rung. you have to give emerging leaders the chance to develop their leadership talents on projects. >> we need to give them time to be a will to do that. this can be very debilitating for people. >> there is no point in micromanaging this generation. make them responsible. get out of the way. >> generation y, i just discovered i was part of it, i thought i was too old, are they less productive or less hard-working than generation x before them?

i can imagine having the conversation with one of my parents saying, i want to have a job that offers me more flexibility, that is more stimulating, that is more interesting. they would say to me, get lost. it is work. >> technology means they are every bit as productive. this idea that flexible means lazy is just unacceptable. alexa bold means they can pack more into their life. they do not see work and life as set of things -- separate things . it is a life of opportunity and adventure. >> what about the next generation? how does this process progress? my kids are tiny, they're growing up. i have no idea what generation they are. [laughter] how are they going to see the world differently to the generation that we have at the moment? how are the millennial's going to crack this story? >> the most popular jobs today did not exist 20 years ago.

technology will continue to change the world. your kids will hopefully have many more opportunities to impact and enter industries that today may feel obsolete or irrelevant for them because everybody is flocking to a certain number of industries, whether it is technology, finance, banking, consulting, etc. in the future, they will be able to enter the fashion industry. >> is that a psychology difference? is it something that is going to change a lot? when you look at the startups that exist on your campus, some of these old guys, young guys, there is a whole different range of people. how are they going to differ to the next generation that comes through? how are they going to be different? how are they going to operate differently and see the world differently? >> it is a great question. what they will say is that right now we are trying a lot of things, but we are going to develop certain levels of success in different clusters.

in london, you already see the emergence of think tank, fashion, commerce, advertising. willf the next generations be able to piggyback on that and have a whole industry of new jobs or create their own. they will continue to come down all the time. in the past, if you needed to innovate, you needed to get the permission and get the funding. today, if you want to create a new gadget, you can come up with a prototype, come up on kickstart her, and the crowd will fund you and in a month you will have your product out. this new freedom is something we are just starting to learn. we are only scratching the surface. the future looks really bright and exciting, in my opinion. >> les selfies. >> what do you think we're going to be during during the break? >> ok. on that note, we are going to wrap it up. we believe that there. ♪ -- we will leave it there. ♪

>> welcome back. you are watching "the pulse." we are streaming on your ipad, we are on bloomberg.com, we have pretty much everything covered.

let's talk about where the currency markets are. the pound is one of the main movers. dr.ially, it seemed that carney, the governor of the bank of england was a little but more dovish than anticipated. we subsequently popped a little bit. the governor knew what he was doing when he gave the mansion house speech and addressed the issue of the market when it comes to the issue of the rate decisions that will come out of the bank of england. rate is reasonably where it was the day before we started this. nevertheless, the timing of the first rate hike is probably still in question. we are looking at a november -- we certainly cannot rule out a november rate hike.

david miles has been addressed this morning. they have changed their position significantly. >> we have been following headlines coming out of the japanese prime minister's news conference. cycle ishat a virtuous appearing in japan's economy and he says that their economy depends on delivering a growth strategy. he said the company must work on collective self-defense rates. .his is the third arrow the second part was the stimulus. part,omes the third business reforms. the key pillar is going to be reducing the corporate tax rate, which he wants below 30%. currently it is the second-highest, just after the united states. he wants to see changes to labor regulations and female participation rates. he wants to shake up heavily protected industries, particularly agriculture. the market moved overnight.

that is it for "the pulse." we will be back tomorrow. bloomberg television continues. "surveillance" is up next. ♪

>> this is " bloomberg surveillance." housing him that i work. a conversation with alan mulally .n leadership transfer

steve ballmer adjust the value of the clippers, the cowboys and the miserable chicago cubs. good morning, everyone. this is " bloomberg surveillance." it is tuesday, june 24. i am tom keene. joining me a scarlet fu and anna -- adam johnson. mark carney tells british lawmakers he still sees enough slack in the economy to keep rates at a record low. actually happening in london. the governor of the bank of england. business confidence and germany fell to the lowest level this year. a very busy day in housing. s&p case shiller coming out a new home sales. the richmond fed manufacturing index slightly after that.