>> portugal under pressure. government bonds fall further as concern grows over the future of the owner of one of the country's biggest banks. >> flying high. airbus is in talks with indigo. >> big box for bailey's. burberry beats estimates. is its new ceo worth the price tag? good morning. you are watching "the pulse." we are live from bloomberg's european headquarters in london.

i am guy johnson. >> i am olivia sterns. also coming up, a porsche for the people. we take the new family car for a test drive. >> argentina advances to the world cup final but you don't have to wait to find out who will be the winner. we will explain later right here on "the pulse." first, we begin with markets. a referral government bonds back in focus today especially portugal. its shares lower after parent missed a payment, we need to focus on this story. manus cranny. santo, is owned by a holding company. they have about 25% holding. look at both of these stock prices. the issue is that the espirito santo financial company missed part of their bond payment. what is the one nightmare scenario in europe?

sovereign bonds, governments linked to banks. that is why we care about this story. there has been an interest payment missed. the bank of portugal says, fear ye not. it is far enough away. we are not worried. don't worry about it. >> one of the owners. there is a whole series of owners. >> there are a variety. it goes back to a family owned vehicle. there are many vehicles in the espirito santo family. i am just dealing with the end product which is the bank. the issue is this, look at subordinated debt. it is dropping. the concern is that they will ultimately miss further debt payments. the is where we are seeing cost of insuring against default on banko espirito santo.

what is possible here is about 2.5 billion euros worth of bonds. >> what kind of impact is this having on the rest of europe? >> exactly the scenario we almost had five years ago when i walked into this building. sovereign government bonds in portugal are ratcheting higher. seven year government bonds are on the move. it is having its desired contagion effect. greece is coming to the market. greek government bond movement. the highest since january. i am not trying to evoke any sense of emergency or dire straits. what you are seeing here is one bank, one pass to debt payment and it is having a ripple effect. more importantly, have a look at what is happening to how the market is pricing peripheral bonds relative to the core.

record lows if i am correct on the likes of spain and italy. >> 10 years trading below the u.s. 10 year. >> pretty noisy. the risk is not priced in properly. >> ok. >> manus, thanks so much. >> interesting trajectory. maybe that trajectory starting to change a little bit. keep an eye on some of these credit indices. >> now to a topic dear to your heart. jen's for airbus's eight 330 and a fresh order for a330neo. a strong airbus showing. hans nichols is back from left to talk- from lufthansa planes with us. who is placing this new order? >> it is indigo which is india's

biggest carrier. they want to order some 200 planes. the catalog price is $100 million. that gets you to a $20 billion order. it will probably end up lower than that. this is all according to a person familiar with the matter. it is about heating up the market in india. other carriers have tried. you look at the numbers, the number of flights people on the subcontinent take. 1.8 flights per year per american. 1.0 for a german. zero point two in china and 0.1 in india. the last hour, we were talking about rail may be making a comeback. but planes are clearly going to be part of the future. if they can get the financing, the infrastructure and the safety clearance there is going to the a massive market. you will see a competition they're just like you have seen elsewhere. at least with indigo, airbus appears to be winning.

>> it is going to be fascinating to watch. the point i was trying to make was the point that tony fernandez makes. he recently got his license to take air asia into india. if you can get a fraction of the people off the railways -- and the railways aren't great in india -- you can make this market absolutely huge. that is why these aircraft are going to be critical. we will be seeing many more of them ordered out of india. it has been a depressed aviation market. one of the things tony fernandez is also keen on is an a330neo. he has been pushing really hard for this. if he can make this work, that is going to be great for the low-cost carriers in asia. he told me this would happen about 2.5 months ago. he may get his wish at the air show. goi -- then is

a330 is going to be offered. these are double aisle planes. they could get better mileage. they could get that cost per flyer down. it is also going to fill a bridge. that 787 which is more expensive, it is really hard to get those. they are not going to come online before 2020. the new retold a330neo could fly in the gap if you will forgive me for mixing metaphors. that provides some sort of bridge. >> i have to ask you about the world cup. after germany thrashed brazil, they are going to the final. after last night's semifinal, we know they will face argentina. 2010, 2006, germany knocked out argentina both times. does this mean you and the rest of the german public feel like

you have got this in the bag? >> no. here is the german mentality right now. think of yourself as an englishman. mark barton or guy johnson before andy murray plays in a wimbledon final. germany is successful in getting to the finals. they also lose a lot. they have lost more than anyone else in the finals. they have to seal the deal. -- hans, thank you. >> let's move on and talk about burberry shares. they are very much beating estimates. this may take a little pressure off the ceo, christopher bailey, and may take pressure off that talk about his paycheck as well. let's find out what is going on. caroline hyde joins us now. let's dig into the numbers. it is hard for bailey to take all the credit. >> it is more of the same.

it is trends that have been set in place by his predecessor. kthe reason they are winning is asia, america, digital once again. they have been way ahead of the game in terms of their digital presence. they have ipads in the store. you can click and collect. many things that competitors have been nervous about doing. you can even buy the beauty brands that burberry has on amazon. alibaba as well. it is pretty phenomenal. helping like to like sales grow 12% ahead of analyst estimates. profitability a little bit hit by the great british pound which is too strong. that is going to eat into profit by about 50 million pounds. sales outperforming. whether or not this is a team

istopher bailey did join in 2009. he has been at burberry since 2001. he helped set these trends in place. >> maybe you are getting 2-for-1 and christopher bailey. it looks like a lot of the strength and sales is coming from a marketing initiative that and allow rents shepherded through. ahrendtsngela sheperded through. >> there have been a number of shareholder advisory boards saying, examine these numbers. examine the pay deal. they are slightly worried about the package he got before coming ceo. he is due to receive 20 million pounds worth of shares from 2015

to 2018. they were granted regardless of his performance before he became ceo. 20 million coming his way. then he became ceo, potentially another 10 million coming his way. even if he underperforms, he will get close to 2 million pounds. if he over performs, he gets 200% bonus on top of that. he gets four times his salary in terms of incentive shares. the man is set to earn an awful lot. >> you haven't talked about the clothing. >> i just want to point out, he is obviously not playing retail. really going to work for him. >> they did give a reason for this cash allowance. it raised many an eyebrow. her hats your jealousy kicking in there from many a woman i think.

it stops you having to increase other parts of room in a ration. -- remuneration. so they are just saying, extra cash helps boost overall incentive without having to boost other areas. >> i guess it stays in the business as well. >> if he doesn't spend it on his own clothes. but let's put this into context. it is an awful lot of money compared to the rest of the ftse 100. ahrendts was better paid than all of the ftse 100 last year. but not that much when you look at other luxury brands. prada's chief executive is paid more. ralph lauren, michael kors all being paid more. clearly they are not the standout when it comes to luxury. if you look at some of the other , these arehmont

companies that are really outperforming. you have to dig into these numbers a bit. >> it is interesting to compare how much they make when they are founder and designer as well as ceo. caroline, thank you so much. and as olivia says, we have some great guests coming up. >> we are talking about the fed. tap?hey turn off the the end of qe appears to the insight. we are going to tell you all about that and why janet yellen things investors may be too complacent about volatility in the market. ♪

to "the pulse." india is getting its fiscal house in order. narendra modi's government is keeping the budget deficit target unchanged. he was speaking today, unveiling the terms of his budget. here to discuss is the head of asia at mabel kroft investing. thanks so much for joining us. this has been hailed as the budget of hope after modi got this huge mandate and a resounding victory in the election. how hopeful are you about what we are hearing? >> i think you are absolutely right. this budget is being very closely watched. wasmain reason modi

selected is that he is expected to turn the economy around. the mandate that modi has got means that he can get away with making some unpopular decisions. the most unpopular would be cutting subsidies. india spends an enormous amount on fuel subsidies. we can also expect incentives for foreign direct investment. >> the problem with the subsidy story is if you do it too quickly, you increase inflation because you are raising prices. he has got this honeymoon period but he has got to implement some of these policies carefully as well. >> absolutely. in thesigns of that budget released separately a few days back. the government has announced some increases, but they have left a lot of the lower segments pretty much untouched. we will see a gradual move with cutting subsidies. the honeymoon period you are talking about is not going to be

very long. >> for so long, one of the big barriers has been the strict rules around foreign direct investment. big international companies need a local partner to do business in india. what are the prospects for reforming fdi? >> the prospects are pretty good. within the first couple of weeks, he announced they would allow fdi. as i was mentioning earlier, he said the government would consider allowing fdi on railways. railways are considered a national asset. where the story is more mixed is retail. walmart had a lot of problems. they are pretty much ready to pull out. modi still opposes fdi in retail but we think he will take a more pragmatic view and allow walmart to come back. can have change if you

a more efficient food transport system. i was reading some stats on the amount of food that gets lost through waste. it is amazing. taking -- is this him taking regional economic policies and trying to put them on a national stage? >> yes. absolutely. he does want to replicate the success story at the national level. gujarat has turned out to be one of india's richest states. investors love it. he has a great record of approving projects himself. regard to the story, the case for fdi retail is pretty much made. india has an extremely inefficient food supply chain. a vice liken have grip over the small mom and pop stores. modi will be able to implement fdi in retail but it will take one or two years. this 3% deficit

target, is that the right move? >> i think yes. there have been -- he will be very cautious about raising the expectations so high that he will not be able to meet them. in the short-term term, the primary concern for india is crude prices. india is extremely dependent on crude imports. that, we can't see anything more than 3% in terms of the target for the fiscal deficit. >> when you look at how long this journey is going to take, when you look at the opportunity india presents, modi is talking about the fact that every journey starts with a single step. he sees this budget as one of the first steps. how long does he need? how long is it going to take to get some of these reforms bedded down, gaining traction? you talk about the mom-and-pop

stores and the two years it could take. what is the duration we should be thinking about? >> we need to look at the first one to two-year period. the most immediate impact we will see is the kickstarting of infrastructure projects. a number of them have been stuck under the last tenure for various reasons. corruption scandals, bureaucratic mess left behind by the last regime. the second thing is cutting india's power shortages. india is extremely power deficient. that will take up to two years to fix. --hink modi will be able to things like the infrastructure corridor he is planning to restart. >> we do wish him luck. thanks. >> ok, as we had to break, time for today's post number. 10.3 million pounds. that is the proposed pay packet

that christopher bailey is going to enjoy. shares in the company are rallying. that offset the debate surrounding bailey's pay. ♪

>> welcome back. you are watching "the pulse." how are the markets trading this morning? caroline hyde has more details. >> we are resolutely in the red.

it is trading in europe for the fifth day of stocks trading downward. we have pretty poor data. french industrial production well below estimates. down 1.7%. italian down 1.2%. may was not a good month for industrial production across the region. portugal trading network. a slight concern about one key lender. espirito santo. what about those debt payments? let's look in on the stoxx 600. off by 0.3%. financials being dragged lower by espirito santo. on the green, telecoms standing out. a little bit of risk aversion. we have u.s. jobless claims coming out later today. central bankers have been speaking. saying, there needs to be centralized powers within europe.

he can't do it alone. monetary policy can't do it alone. he needs governments to toe the line. that is going to be a concern for david cameron. we have the u.s. coming out with -- perhaps saying, you are not taking the risk seriously and not. that is as we get jobless claims leader today. one key market i wanted to cover as well, oil. we are on track for a 10th day of declines when you are looking at u.s. traded oil. this is wti crude. 10 days, the longest losing streak on record. currently off by 0.6%. we see it 101.68. let's have a look. i will leave you with the british pound. off currently, just trading lower. 1.71 for the pound. burberry, they are going to be liking that the pound is

weaker. >> caroline, thanks. also coming up, bailey's big bucks. is he worth his pay packages? sales are surging but the stock is stalling. ♪

>> welcome back. you are watching "the pulse." we are live from bloomberg's european headquarters in london. >> here are the bloomberg top headlines. espirito santo is one of the biggest losers on the stoxx 600 after its parent company missed debt payments. fellgal's government bonds further as concern over the future of the thanks owner. >> concerns that oil and food prices will rise. narendra modi's first budget after being elected prime

minister took place this morning. >> more than one million public-sector workers are striking in the u.k. today to protest over pay, pensions and job cuts. and tax libraries offices will be affected. the government says 75% of civil servants are going to work. only about 100,000 will be going on strike. you can expect some disruption. >> that is either good or bad depending on your view of whether you are passing the test. at my kids school, they are all there working. >> david cameron has come out today. he said that he now wants to have tighter rules around striking civil servants when they do and essential services because of things like the coast guard, firefighters.

that puts the whole public at risk. he now says these tighter rules on strikes will be part of the conservative party's manifesto for elections. >> just rolled out onto the trains. that would be great as well. i see that as an essential service. let's stay in the u.k. and talk about retail. burberry shares rallying after it beat estimates this morning. the positive figures could help the ceo justify his massive pay package. for more, we are joined by the founder of the luxury brand agency. good morning to you. the numbers this morning are great. they have something to do with family but as much to do with ahrendts and all of the team. in a largelts are corporation brand like this, almost automatic for a while. it is a result of the whole team and what has been happening in

the past 10 years that drives the results now and probably for the next few years. it is not reflection on performance per se. >> a bit of a fuss is being kicked up. the investment management association, the parent company of british insurers, they represent a lot of british shareholders. they are picking up a fuss about this 10 million pound pay package that christopher bailey is getting. do you think he is worth it? >> the simple answer is no. context, if you look at the him out of profit they have to generate to cover his packet, it is probably the amount of sales of the entire burberry children's line. it is quite a massive impact for the business. this,ge corporations like usually the creative process is driven by lots of people and lots of actual creation happens is outsourced.

his involvement in the creative process itself is probably not as great as when the company was smaller. >> his pay packet is comparable with others in the sector. do you think others in the sector would want to employ him? if burberry said, we are not going to pay you, he would go, i think i am worth more than that. as a result of which, i will work for somebody else who will pay me. >> that is the key question. he would have to demonstrate that he is able to drive a brand or create for a brand that has a completely different identity to burberry. when you have spent so much time , i think it has been 13 years, to embodye quite hard another brand. it is a bit like famous actors. on friends are only remembered for friends. you have this syndrome there as well.

he may find it very difficult. >> i suppose it is also a question of whether george is worth as much as a director as he is as an actor. you are really getting 2-for-1 here. maybe he is worth it. it is unusual for the had created to be the ceo. you only see it when the person is the founder. what do you say to those people who say he is doing two jobs? >> i would doubt that it is possible to do two jobs in such a large organization. for the founder of the company, things are different. if you are giorgio armani or ralph lauren, everything comes to you. have a large team around you to help make decisions. probablyk on screen is the biggest problem facing bailey. shares are flat, down 5% over the past year. up.r ahrendts, they were that is really a case against

his performance. what is the future of burberry? picke share price going to up? >> it is going to depend on a lot of things. mostly it is going to depend on china. it is going to depend on how saturated is the chinese market with burberry products. what happens when every single chinese woman owns a burberry trench coat? they are going to reach some kind of plateau in china and that will affect their ability to grow. a creativerry business or a marketing business? >> that is a very good question. i would argue that burberry is a marketing business. if you look at -- from the creative side, you look at the products. they are branded by the burberry pattern. if you remove the burberry howern and the environment, well do these products stand on

their own? iphone and remove the apple branding, it is a unique product. if you remove the branding on -- ifry, how does that you were to put that on ebay, would people buy it without the burberry brand? if the answer is no, you are in a marketing-led business. this is from my point of view where most of the growth of their product comes. it is very clever. >> that was ahrendts. ok, let's wrap it up there. >> it is time for today's world cup news. argentina has secured its place in the world cup final. the team beat the netherlands last night 4-2 in a penalty shootout. the july 13 world cup final will take place in rio de janeiro.

it will be the third between argentina and germany. argentina beat germany in 1986 while the germans avenged the defeat four years later in 1990. germany knocked out argentina in 2006 and 2010. >> the past may not be a good teacher. the world cup ticketing operator says the arrest of a director was arbitrary and illegal. police detained we learned earlier this week as part of an investigation into a ticket scam. they say we haven't did not complete any illegal sales. pundits,ports fans the not many could have predicted germany's record 7-1 defeat. an irishers with betting firm did. one of the gamblers won money 500 pounds. the odds were 500 to one.

who saw that coming? >> these guys did. >> apparently. four goals in the first six minutes. painful. it was very uncomfortable to watch. a stadium full of brazilians crying. my concern is, what happens if argentina does win? how will they get the players out of the stadium? >> helicopters. up next, turning off the tap. the u.s. central banks expect to end bond buying. details on that story when we come back. ♪

>> good morning and welcome back to "the pulse." have investors become too complacent? the latest fed minutes reveal concerned that that could be the case in the u.s. we are also watching other central banks as mario draghi pushes for more oversight and the bank of england gets ready to release a rate decision. nobody is expecting big surprises. here to discuss this is gabriel stein. good morning, gabriel. thanks for coming on. jobs scorer the big last week a lot of big pranks bringing in their forecast -- a lot of big banks bringing in their forecast. when will we see a rate hike? >> our view is the second

quarter of next year. my personal view is that it would have been a good idea to have one hike this year as a signal we are going to normalize interest rates. they are not going to do that. we think the starting gun will be in q2 2015. >> after that? >> difficult to say. if you assume the future is like the past which it never is, the fed funds rate would peak somewhere between 3% and 4%. if inflation does not take off substantially, that is probably still the most likely. the new normal will be lower than the old normal. >> given what we are seeing in the unemployment data, the numbers have come down significantly but if you look at the broader measures, you look at participation, still incredibly low. >> it is incredibly low. there are a number of different factors at work here.

one is, the economy has to improve further for people who have become discouraged and left the labor force to come back in. that will eventually happen. that being said, the rate has been trending down since before the crisis. well before the great recession. also, i think you will find that the baby boomers who should have started to retire a few years ago, they continued to work because they need to save more for retirement. we are seeing a rising participation rate in the above 65 age group. way, perhaps the picture is not quite as dismal as it seems. as the unemployment rate comes down, you will see more people coming back into the labor force. the very lowve participation rate we are seeing now is actually a permanent feature. >> is inflation as strong in the

u.s. right now? >> still short of the fed's target. in our estimate, there is quite a bit of slack in the economy. estimateuld exceed the which is probably somewhere between 2% and 2.5% for a couple of years. riskshink one of the big with fed policy is in fact that not just that investors are too complacent but the fed is too complacent. >> that they are behind the curve. >> and ultimately, that does lead to inflation moving up to what today would be unacceptable rates. they would have to actually tighten monetary policy much more. >> the big headline for the minute is the fed is worried investors have become too complacent and volatility is too low. that could perhaps burst some asset bubbles. >> not in my view. not yet.

not even equities which people are worried about. the only bubble i might see would be bonds. seen some selloff in the past. -- it is difficult to imagine a future where in a year's time, bond yields are not higher than they are now. >> 10 year at 2.5% right now. issue with where the spanish first is the u.s. is right now. >> it is an issue. >> let's talk about that. we will stay on the iberian peninsula. we have concerns around the banking sector in the peripheral eurozone. are we underestimating the problems below the surface? >> it is difficult. i can't comment directly on what is happening with espirito santo. i don't know enough about it. what it does highlight is that the banking system in pearl

river role europe is still pheral europe peri is still fragile. is is a substantial amount of nonperforming loans. it is still a struggle. you have huge debt problems. what we have seen over the past six years is that if the nonbank sector has huge debts, it becomes a banking problem. the extension of that is if the banking sector has problems, it becomes a non-bank problem. perhaps markets have been slightly too optimistic. the ecb made it clear they are going to stop the breakup of the eurozone. "do was draghi's famous whatever it takes" speech. maybe the view is they will always be level and i don't

think that is true. the asset quality review when it is published will fail some banks. it almost has to fail some banks. otherwise it won't be credible. there will be a shock. maybe what we are seeing is a thought of, maybe we need to step back and take a closer look at what is going on. >> maybe spanish and american debt shouldn't be priced equivalently. >> i don't think it should. >> did you hear that, guy? >> there is one reason why spanish and american debt could be priced equivalent. deflation,oes into which there is a risk, one of our main risk scenarios, they shouldn't do it because it is possible to diverse deflation. if they do that, the initial reaction would be lower bond yields. the reaction after that would be, this is a real problem for countries like spain. >> i never thought i would be so

excited about sovereign debt. gabriel, thank you. >> ok, coming up, unlocking the u.k.'s natural resources. we will take a look at a coastal project giving renewable energy a boost. ♪

>> in today's new energy, the crown estate is making new areas of u.k. coastline available for offshore wind projects. this will help unlock more natural resources and boost renewable energy output. joining us to discuss is rob hastings. good morning, rob. -- why do us why this we have to lease out more of the seabed? >> the crown estate manages the seabed around the u.k. we are opening up new areas of seabed for the development of this new technology. wave and tidal technology. the idea is to provide the opportunity for developers to find a way of reducing the cost of technology, make it more reliable, more deployable. the u.k. is blessed with a vast resource of this natural resource.

can we get that deployed? can we make a material contribution to the u.k.'s energy mix going forward? >> what is the potential? >> the potential is quite huge. the projects that we are doing right now in terms of policing process that we are doing, is to understand exactly what that potential is. the natural resources last. vast.ource is can we deploy it in a reliable way? we believe we can. we believe we could have an energy resource which matches any other renewable energy generation. >> where is the greatest potential? u.k., the bristol channel? >> it is relatively distributed around the u.k.

there are two types of technologies we are talking about. one is tidal energy and the other is wave energy. tidal energy is located in specific locations where the title ranges are greater. if you look at areas around the southwest of the u.k. and the north, around scotland, there are locations. locations of high tidal energy. for wave, it is different locations. generally they are in places where you would imagine. southwest and maybe in the north atlantic regions. some of those areas are highly energetic and potentially quite useful. >> is one more affordable or cost-efficient than the other? >> they are relatively similar in terms of the cost of energy. tidal energy is probably more advanced. it is early days. we are trying to understand exactly what that looks like. there is an awful lot of energy

going into making this happen. it is a great story. if you went to places like the north of scotland, you would see lots of energized people looking to develop this technology. some very big corporate enterprises are coming in behind it. companies like siemens and alstom. >> so those are your plans? >> in some cases, yes. there is also energy generators such as scottish power, edf, the big names are all actively engaging in the process to understand how they can -- >> how does it work from a revenue point of view? what is the relationship in terms of the revenue and how it is generated and distributed? >> the crown estate is effectively the landlord. we lease the seabed to developers. our income is dependent on the value of the power that is produced from the generating assets that may be on that

seabed. it is relatively nominal. valueve to the generation , the asset for the investor. the crown estate doesn't invest in these assets. we are the landlord. we make the seabed available. our income is relatively modest in the scheme of things. but these are -- generally the expectation is, if you compare it to its predecessor, offshore wind, these are infrastructure assets which are very high-value assets. typically measured in billions of euros and pounds. you would imagine the returns that investors would require would match up against investments necessary to make this happen. >> interesting, thank you. >> we are going to take a break. for those listening on bloomberg radio, the first word is up next. for our euros, a second hour of "the pulse" is next.

bitcoin, beware. the legal and regulatory challenges facing this fast-growing digital currency. we are talking more about andrew bailey as well. ♪

>> portugal under pressure. government bonds fall further and concern grows over the owner of one of the country's biggest banks. >> airbus in talks with indigo about $20 billion worth of jets. beatsres john as burberry estimates. its eyeew ceo worth watering price tag? good morning to our viewers in europe, good evening to those in asia, and a very warm welcome to those just waking up in the u.s. good morning, i am guy johnson. isi am olivia sterns, this

"the pulse," live from bloomberg's european headquarters in london. a porsche for the people. the new family car for a test drive. , argentina advances to the world cup final, you do not have to wait until then to find out who the winner will be. we will explain later on "the pulse." stay tuned. backheral government bonds in focus, especially portugal. shares in one of the country's biggest banks are lower after its part owner missed a payment. markets editor manus cranny joins us now. santo missing a bond payment, does that set them up to miss more bond payments? this is an issue for sovereign debt --

>> the bank's sovereign link. >> five years ago, this is what they were trying to stop have thing -- stop from happening in the periphery. missing a debt payment, it is important and wrangle with the debt instrument of banco espirito santo. let me show you the stock price of banco espirito santo, that dropped this morning. i think we were back to down 7 %. other instruments as well, there is a financial part of it. have a look at the debt instrument. seeing movements there. peripheral government bonds in portugal ratcheting higher in yields. that's permeating higher into the rest of the area. greek bonds, spanish government bonds. xscape -- >> it is not just this morning, it has been for a while. >> let's tell the viewers. 10 year isish

trading below the u.s. 10 year. i think it is surprising they are pricing risk in spain. gabriel of oxford economics confirmed that it does not make any sense. >> if you assume deflation, it does. finish thiss conversation about portugal. it is contaminating greece, spain. back to the issue. banksish build out their and you feel it every time you go hum, the banks are holding blobs of land -- lumps of land. being missed in portugal. all is not smooth in the periphery. bond markets might be somewhat overoptimistic. >> i like this story because of where i was when i left. when i left new york a year ago,

i will talk about spanish bond yields at 7%. in 18 months, they have collapsed to 2.5%. that is big news. >> it clearly annoys you. >> manus cranny, our markets editor. planes.ll talk about new engines for the airbus a330 and a fresh order for the a320 n eo's, a strong showing for airbus at the world's biggest air show. let's bring in hans nichols, back from wolfhounds up -- back from lufthansa's training center to talk with us. neo,body wants this a 320 it is the fastest selling jet in history, there is tons of backlog for it. here comes air indigo. >> i like the color, part of the spectrum. i had never flown it. 200 planes, these are

fuel-efficient, the list price is $100 million, that gets to own order of around 20 billion dollars. dollars being the denomination that is used -- to the great consternation of the french. let's look at actual flight numbers. your average american takes 1.8 flights per year. 1.0, pointman, china, .02, india, .01. , indiane like trains trains have their problems, but once indians start switching from trains to planes you will see explosive growth. that is what this order is about. guy, olivia. >> one of the guys who wants to take advantage of the growth is pushing airbus to develop a new plane. they want to take what happened with the a 320, a narrowbody, and take it into the a 330, this

is tony at air asia. could be announced at the farmer air show. he has been pushing for it. walk us through why it is important. ,> according to our colleagues according to a person familiar with the matter, they will put a fuel-efficient engine, the rolls-royce engine, underneath the wings of the a 330 for an a 330 neo. getting a fuel-efficient jet that is a double aisle and can make long-haul flights into the market faster than boeing can ge t their carbon fiber 787 dreamliner. it is remarkable but there is a backlog, it takes a while to get there. for companies that want to grow more quickly, the a 330 neo with a new engine might be a better option. guy? >> new wings as well. it is the winging that is

difficult. >> we have to ask you about the world cup, you are in germany. they are heading to the final. i am concerned about the security of argentina's team. if they win, i am worried what brazilian fans might do. how is germany feeling about the match, do you think you have it in the bag? >> quiet confidence. germany loses a lot in world cup finals. just getting here is not enough. concertedbeen a effort for the team not to celebrate prematurely. they want to bring this home. germany has made it to eight finals and only won three. they know how to lose, but the question is do they know how to win? after every german victory in a world cup, you see massive amounts of growth here in germany. you saw that in 1952, 1974, 1990. they be growth for germany if they end up winning. >> i thought you're going to say

that you see massive amounts of water usage. in one of your stories you explain how every time there is a break in the world cup, everybody who has been drinking beer goes to the loo. seriouse talking economic growth, nothing as trivial as beer drinking. we only do that during the group stages, now we have serious data. >> a big spike in german beer sales expected around the final. hans nichols, joining us from berlin. >> hans will be here on monday. that will be interesting. i will be at the air show. >> is germany does win, you want to be there. >> good point. @bsurveillance -->> you don't want to be an argentine fan in rio de janeiro. >> some sort of camouflage will be required. talking of fashion, burberry. rising after beating estimates. this might alleviate pressure on

the new ceo, christopher bailey, and concerned about his hefty paycheck. let's talk more about the story with caroline hyde. the numbers were good, let's ru through how good there. like 12% on a le to as. that is far ahead of its peers in the luxury sector. this continues to outperform on reasons that have been well trodden for the last few years. on asia, china and hong kong, the americasand the digital push. thecompany has broken barriers and digital compared to riva. it has embraced digital, got on social media. it has far moretwitter llowers y other brand brands. they have set up new ways of selli come particularly tir beauty products, they have gone directly to azon and alibaba t

o get on there, start competing. make sure other, faux burbry brands do not sell. the youngeraced generation, locking in the a $20tional buy perfume, move them up to the $1000 trenchcoat when they are older. studnt welin terms of sales, not in terms of prof. tm, 12% hurting versus the dollar in 12 months, hat cld hit their bottom line by about 55 million pounds. in sales they e outperforming. paget isdmr. rberry a marketing company or a creati compy, that sms to what is driving sales. it is the changes angela ahrendts put inplace thats

feeling the top line. >> they teamed upith iphone 5, ey were able to focus in and buy coats and dressegoing down i'll. -- down the aisle. >> where angela has ne. >> she installed ipads into the burberry stores, you can do clk and collect. able to access and buy garments maury julie vi digital. re easily via digital. chrispher bailey joined i 2001 fm gucci. bberry was was copied. it became