>> russian rout. ruble slides as the u.s. and -- europe ramp-up sections. john malone buys a stake in i-tv. plus, every cloud has a silver lining. sap shares rally. we bring you an exclusive interview with the ceo. ."warm welcome to "the pulse also coming up on the program,

daimler doubles down. find out why it's smart cars are getting bigger. and it sounds like science fiction but jets that break apart and reassemble midflight could soon become reality. but first, russian stocks are taking a hit today. . ruble is sliding the u.s. has imposed new sanctions on companies to punish president putin first up porting rebels in ukraine. ryan chilcote joins us. what exactly are we seeing? before werenctions personal, they really targeted individuals in putin's inner circle, then these are much broader. they have gone corporate, going after some of russia's biggest companies. rosneft has been sanctioned. rosneft is not just russia's largest oil company, it is the world's largest quickly traded oil company. bp has got a 20% stake. its gdr's fell by 5%>

novatek, russia's largest independent gas producer. shares traded here in london and fell by more than seven percent. promm which that gaz is the world's largest gas producer that provides europe was not of its gas session. perhaps the u.s. decided maybe that would be too much for the european union. then we have got the financial sector. bank, russia's third-largest lender sanctions. another bank you do not hear about very often. the country state development bank. it is everywhere. in on almost every deal. affecting it could have real problems for the entire russian financial sector which is exactly what we heard from the ceo of russia's second-largest they called btb who said this could harm russia's financial system. they are really ratcheting up

the pressure. inwhat do sanctions mean terms of doing business with these businesses? are a u.s. individual because these are u.s. ages, you can still own the stocks, still do business with the company. you can still get dividends. do, forneft cannot example, the sanctioned company is access american capital markets. they have been locked up. so they cannot raise equity in the united states and they cannot raise debt unless maturity is less than 90 days. short-term funding. so they've really done that. obviously, in some of those cases, the companies of other sources of funding, like russia's state development bank gets a lot of money from the central bank. it does not need american capital markets to raise debt. having said that, when you take one source of funding away, that

makes the other sources more expensive. just in general, case the picture. we are seeing that in the share prices of other banks. which said that this is bad for the financial system. there shares that are down 4%. the country's largest bank has bank innches than any the world. there sure is also down by 4%> >> thank you very much. the u.s. dimension to this. the eu is escalating sessions on russia. let's bring in caroline in brussels. what exactly did the eu agree on? eu decided in brussels does not match the u.s. sanctions but it does go beyond individual sanctions. the eu sanctions so far were mostly targeting individuals, 72 people, with asset freezes and travel bans. nighte first time last

they mentioned entities, meaning they will target russian companies. we dor, unlike the u.s., not know exactly which companies are going to be targeted. they are going to leave that up to the diplomats to negotiate in the next two weeks and come up with a blacklist by the end of this month. the second interesting measure off the eu took is to cut public funding to russia from the eib, the european investment bank. leaders canthing eu do directly because there are shareholders of the bank. they say they will use their influence to try and restrict funding from the ebr, the european bank for reconstruction and development. is mostly as a politician because russia does not rely much on this type of funding. the eib says the financing is

500lly between 300 and million euros. the russian foreign ministry reacted on their website saying that they were disappointed that in to what they call u.s. blackmail and that the eu agreed on sanchez against their own interests. >> thank you. in brussels. breaking news from the ecb. they are giving us an update on their comprehensive assessment. the results of that assessment will be released to the markets in late october. this will have to do with the stress test and the asset quality review. stress tests will be strengthened by the addition of the asset quality review results. so the stress tests rule include the results of that quality review. the are saying the ecb, results will take account of any equity raising since the end of 2013.

they're also going to take account on the other side of things of any litigation costs in 2014. those have been a substantial. we know for some european banks. the results will show a breakdown of nonperforming loans. we will have more details on this and we will get more details from the ecb in august. i-tv.kyb bids farewell to tosold its 6.4% stsakake liberty global. campbell is here. matt, untangle all of this. what is in it for liberty? >> they are getting a stake in i-tv, which is six percent but it is an important producer of content. "downtown abbey" and the "x factor." as john malone tries to get

exposed more to content, this is not such a bad place to be. does this turn into a full takeover? "taking stock > an analyst that said if all you want us to build a relationship with a content producer, that is 6.4% stake might be enough. what other things are at play? >> there is always the possibility to suggest a strategic alliance away -- a way for john malone to get his foot in the door with i-tv. this is what i-tv did with z-go. they built a small steak over time and it turned into a full takeover. there is skepticism out there when liberty does say this is not intended to be a takeover. >> because that is what they said. is happening in media consolidation, because this does link to some of the developers we have seen on the other side of the atlantic? >> just yesterday time warner and fox 21st century foxx

confirmed they had been in discussions about a deal which has now ended, a takeover of time warner. 80 billion.$ the broader theme is consolidation. eight media companies trying to become bigger and bigger and also what is interesting is that content is king. as netflix has shown. if you own the distribution network and the content, netflix developing its own series, that is a lucrative place to be as people's viewing behavior change drastically. >> what other regulators going to say? one of the analyst was saying that putting two news channels together and the united states might be controversial. what is the regulatory picture? >> in washington that huge amount of work to get through in the media space. we have comcast buying time warner cable which is not related to time warner the content producer. we have at&t buying directv.

and we have a local mercer coming for at&t mobile -- we coming.obile takeover think, is have to this an antitrust question or broader question of access to content? net neutrality, media concentration. a very thorny set of issues. >> not even a monday. matt campbell. fiat areswagen and exploring a takeover deal according to manager magazine. fiat shares are up. hansen nichols joins us live from berlin. this is all based on one magazine report. it is having an impact on shares this morning. >> a very good way to put it. manager magazine, adjourned publication -- a german

publication. the fact that this is that the shareholder level -- i do not mean to diss marriage of their reporting -- i do not mean to disparage the reporting. deal could make sense. the article goes on to say that vw's interested in alfa romeo and for our he. -- ferrari. in the the luxury part of the space. where does not make sense is because when we talk about volkswagen, we talk about their profitability being some of the lowest in the industry. they are south of 3%. you look at hyndai. they have a 9.5% profitability. where fiat and chrysler are in the middle. volkswagen is all the way down at 2.9%. workersen has 575,000 across the globe. this is a company that is talking about being more efficient. that is why does not make sense for them to assume, take control

of part of the fiat family. andhareholders are talking, that is the crocks of the report, we have to take it seriously. we'll try to find out more throughout germany and italy at detroit. how series this actually is. >> thank you very much. hansen nichols with possible mergers. coming up on the program, growing pessimism on your. investors that the eurozone's economy is deteriorating. we will have the results of the newest bloomberg global poll. ♪

"taking stock > breaking news from the ecb. comments coming out from the european central bank rate the results of the asset quality review and stress tests. review anduality stress tests will also take into finds andterial it litigation costs. we are joined by the director at a consulting firm. we will talk about the european economy but briefly, you would expect the ecb to include in their analysis money that banks have raised and fines they have incurred. >> absolutely. it strikes me as an odd thing to make a big hill about. what else are they going to do?

no news, but we're reporting it anyway. >> they are giving us information on the timetable which is of interest to people. more details on some of these tests in august. let's move on to what else is on the agenda today. we have got inflation data due out later on this morning. we are expecting euro zone inflation to stay at 0.5%, which is exactly what it was last month. this is not a deteriorating picture. should we take heart? >> no. the issue in europe is a highly indebted economy in the round. the peripheral countries, including italy, highly indebted. the trouble with debt is when you run into low rates of inflation or deflation it becomes a toxic mix. it turns out that for italy, you only need inflation to be running sub 1%, and it is on an unsustainable path.

whatever happens it interest-rate environment. >> and for consumers in terms of their debt as well. >> private debt has the same arithmetic attached to it.. italy is running sub 1%. it is going down. the last few months, the last couple of years, and has been trending downward across the euro area. we see that process continuing because we are in a recessionary environment. >> do you think the ecb should be doing more? that governing council has said that quantitative easing is a last resort. >> indeed. there is a great deal of resistance to q.e. we think their hand will be because of the inflationary environment getting worse and worse. it's bad and off as things stand and getting worse.

twomately, we see q one, q next year, they will be forced into full on sterilized q.e. as they undertake it in the u.k. and japan and the u.s. >> could the effect of sanctions or further sanctions that come effectson russia, the of those on the german economy, could that be one of the swing factors that will dictate when and if q.e. happens? >> that is an interesting question. yeah. in a way that might play through if it starts to have an effect on oil prices and gas prices. then competitive global economy. one the issues we thought about is the risk, the way markets are pricing risk now. it says that the implied volatility of oil prices is at an all-time low. you might not think the risks are much more pronounced than

the past. reflecting on russia-ukraine, icing --geria -- pr >> we are set for certain fiscal realities. you have been doing a lot of work on mario draghi and his declarations to do whatever it takes a couple of years ago. he said he will do whatever it takes. you been trying to put a cost on that. on what that has done for the eurozone economy. >> draghi has written a put opti on on euro area sovereign debt and has issued the top option free to the banks. an option has a value whether it is exercised are not. we try to calculate that using -- what the value of what that option is. it runs into right now with

asset prices where they are, 20 billion euros or so. the period when the risks in sovereign debt markets are highest.e the it is more like 700 billion. that,n see the impact of that that has had on the narrow and the spreads between the peripheral sovereign debt and the german sovereign debt. >> structural reforms on the periphery? >> no. i do not believe that. it is all to do with draghi. >> thank you for joining us. let's get some company news. ore pricese iron trading close. >> we are seeing a reduction in prices which frankly we are running at artificially high levels. we have seen the prices have come down to a more normalized level, which reflects really the

point at which supply and demand cross. >> novartis posted second-quarter profit that missed analyst estimates. the world's largest drugmaker is preparing to transform itself by selling its vaccine and animal health unit. the company confirmed it will grow at a low to mid single-digit percentage rate. bribedithkline employees and took kickbacks in 2011. it confirmed it according to "the financial time." the truck maker fired 30 and ploys. -- the drug maker fired 30 employees. how smart is the smart card? why that brenda tried to make a virtue of being small is getting bigger. brand that try to make a virtue of being small is getting bigger. ♪

>> welcome back to "the pulse." let's shut down the markets. manus cranny joins us. -- let's check in on the markets. >> janet yellen clarified that asset valuations were not stretched. then russian sanchez came into play and that trumps all of the sentiment in the markets -- then

russian sanctions came into play and that trumps all the sentiment in the markets. quality review is going to take into consideration capital that has been raised. that is good news. threeerg poll, one in people see this economy as being in a worse state than it was last year. 77% say that the biggest risk is disinflation. mario draghi is more popular than janet yellen. not that that matters. dollar-ruble that is where the move is. dodllar higher. people are concerned on the fx side. that is where you see the biggest demonstration of russian risk. when it comes to the global equity story, reflecting back on lobal poll,rg glboal 47% of global markets are close

to unsustainable levels. 14% say we are close to a bubble. people are more concerned a bout the americas. polls are telling us that people are questioning valuations but that we are not overstretched. foreign exchange is one of the biggest movers. some of the corporate said bigger pieces of news. we have good news in terms of sales in the ca industryr. -- 10raight sales o straight month of sales rising. that is the state of play. equities under pressure. moving.uble is >> thank you. the elevator that will lift your mood. the digitalok at technology giving passengers a virtual reality check.

details next. twitter. back in a short while. ♪

>> welcome back to "the pulse." here are bloomberg's top headlines. russian stocks are falling after the u.s. and eu have imposed more sanctions on russia. president obama is targeting banks, energy companies, and energy firms. is the we are expecting russian leadership will see, once again, that its actions in ukraine have consequences. a five-hours agreed

truce at the request of the united nations. the cease-fire will allow civilians time to resupply as the israeli army prepares its troops for a possible ground invasion. the ecb says the asset review will take into account the equity raised by banks this year. bank,, including deutsche banks,ised equity -- including deutsche bank, have raised equity. it is time for a bloomberg exclusive. sap is one of the biggest gainers on the stoxx 600 this morning. online applications help boost sales. we spoke to the ceo an exclusive interview. stepe cloud is a logical in simplifying your business. and we why a group 39% raised our guidance for the cloud for the year.

one very important point for investors is our core business, the traditional software services, grew eight percent in constant currency. the core is still growing and it is holding solid while the cloud is really taking off. >> you mentioned about the foreign currency concerns. it hit by about two percentage points. what are the major -- what are the main currencies? would you like the euro to become weaker? >> i would, actually. the fact of the matter is, when you look at our business and the investors judge our business, the tendency to look at things in constant currency because that is what we can operationally control. we are running a very profitable

business. we have made the transition to the cloud. 38 million users in the cloud and we are the fastest growing cloud company at scale in the world. at the same time, the court is solid. i think what the investors are seeing, we have moved the company. i do not know if you spent much time at the world cup, but the german national football team be the 12th man. if you can have this real-time insight, radically simplify the way you run the company, and have a combination of assets and all of that is beautifully integrated, you can win some things. the german national football playeroved that at the and team level, but companies are proving that the world over. i've never seen more tailwind behind the business model than

right now. >> that was the sap ceo. airbus has received another order. hong kong aviation ordering. they had a memorandum of understanding about this in paris and this has turned into a firm order. let's get back to the technology theme. aerosmith,are writing in an elevator -- riding in an elevator can be adult experience. -- can be a dull experience. ceo andve got the cofounder joining us now. exactly what your

company is doing. >> we invented user experience and elevators. elevators have been around for 150 years. one of the things that has saved -- stayed the same is the user experience. nobody has ever attended to the elevators.ence and -- we arecided opening a window in every elevator. >> some of the types you seems -- the scenes you get, you can be in an aquarium, or rising above a meadow. what you are doing different? >> the screens are relevant for three percent of the market. attend to theto

rest of the 97% of the market. design-- another way to your cap. we are opening a window. unlike a panoramic window, we can create virtual scenes. you can go underneath the ocean. we react in real-time to the elevator. it analyzes in real-time the movement of the elevator. you are feeling the mode -- the movement. >> sounds like next-door is trying to install an elevator. where they been deployed already? introducedglobally products at the beginning of the year. we have initial installations in israel, italy, the u.s., and

china, greece. we are in talks with the big elevator companies. we have been deployed in like intel and other residential buildings. to create the user experience in residential buildings. messages to the building, messages to the floor, social media. it depends on how much the client wants to spend. you're looking to raise $3 million. you have raised $2 million already. >> we are providing the operatingyou're looking to systd the sensor. depending on the size of the installation, some companies have inserted our system as a

standard in one of the models. not the high-end model, but in entry level model. raising another $3 million in order to expand our market penetration and keep on building the platform. >> we wish you the best of luck. you,g to an elevator near i guess. >> it might mean me -- it might make me feel slightly unwell. a company doubled down on the line up with the unveiling of two new smart models in berlin us night. hans nichols was there. are you able to fit into this slightly larger smart car? you are not the shortest person i know. itwould you be able to park on one go? i am not questioning your

parking abilities. >> yes, you are. that is shocking. i can park on a postage stamp. >> well done. cities willt that be huge growth areas. that is where the growth were be. -- that is for the growth will be. another concern is what the strong arrow -- the strong europe is going to do. take a listen to what he had to say about a strong euros. >> we need a strong economy based on efficiency and not supported by a week currency. i think it is fine. >> mario draghi does not need to do more? they have lost 3 billion in the last few years. they do see huge growth in the small cars.

6.2 million vehicles. daimler has made some other bets in the past. sponsoring the german national team. he was pretty pleased with that investment. >> nothing which would top the german national team. european auto sales out this morning, up 4.2%. 10 straight months of increased sales. it only means that you are denting a lot of cars when you are parking them. i am not buying your postage stamp argument. this is our next package, anna edwards parking in london. >> you do not want to take on somebody from london on their ability to park. it is a fine art. to german businesses wanting

boast about their connections to the german football team. sap was doing it earlier. brilliant. buber has expanded into hong kong -- uber has expanded into hong kong. >> hong kong is a stylish city. people express themselves through fashion. they go to nice restaurants and they have a choice in a most everything you do in the city. in transportation, we've either can go to mcdonald's or you can have your own private chef. very little in between. uber is looking for the fairway right in the middle. >> how important is the asia-pacific? >> it is massively important. it is all about people living in cities and being able to get around the cities efficiently.

>> people are still getting around in cars. if you're going to be in a car, you should do it most efficiently and most comfortably. a lot of people in asia. >> you are trying to unlock a key demographic. you are going for the upper-middle-class. uber always start with our black product, a high-end product. nice experience. we work our way down into more affordable cost effective choices. when you open the app thomas you can choose the mode of -- open the app, you can choose the mode of transportation that you want. taxidrivers? hate >> i do not hate taxidrivers.

>> you do not dislike them at all question mark >> a lot of the drivers on uber are former taxidrivers. it is a way for them to make a much better living than being in the taxi. there are choice words i have had for the taxi industry. that is significantly different. >> why do you hate taxis? >> i don't hate taxis. in many ways, they do not provide choice for consumers and they often lobbied city governments to restrict choice and restrict supply and restrict convenience for people who live in the cities. .> that is the ceo of uber behind th the science

love.ts you how to engineer an unforgettable scent. ♪

>> welcome back. let's talk more cap. -- let's talk more tech. --me the robot by intel

, you the robot by intel will be able to build and program the pint sized machine to do whatever your imagination comes up with. here is how it works. >> i am jimmy, a 21st century robot. > he can walk, talk, tweet, take pictures. >> i am not the best dancer, but maybe somebody can teach me name names. moves.each me some new >> you'll be able to load different apps onto your robot and give you different functions. we are standing on the shoulders of giants and taking a lot of the work that takes a

tremendous amount of man-hours to get up and running and we are open sourcing it. everybody can start with a running start, having a fully capable humanoid platform. they can focus on the more advanced functions and behaviors of the robot. intelng him inside is an nuoc. it is something we have never been able to do until recently. >> the global flavors company profit the estimates today. nts forpany makes scet companies like marc jacobs and armani.

much for coming -- thank you very much for coming to talk to us. latinian business and the american business have been boosting your sales. >> good morning. we benefit a lot from the development in the emerging markets with double-digit growth. that is correct. >> what about m&a? from wild flavors, there is some overlap. are you interested in doing deals of your own? we have an opportunistic approach to acquisition. we made a small acquisition recently on the ingredient sides.

we have a very disciplined approach and we would only do something if we are convinced that we could create value. these price levels would be a bit questionable. think they are paying too much for wild flavors? >> they are different

so you are looking at a company that is getting much bigger and stronger and more sustainable than ever before. >> with our exclusive interview with bill mcdermott, sap shares are one of the biggest gainers on the stoxx 600. online applications helped boos t sales. breaking news. ecb governing council member says that asset purchases are not imminent or needed now. fore is any information those wondering if the ecb will do quantitative easing. he's saying they cannot rule out interest rate adjustments. the estonian economy is less balanced wages wise. he's the central bank governor

of estonia. says they are not needed now. laying down -- p[ >> a second hour of "the pulse" is coming up. euro stoxx 50 will be here to talk about the cross channel operations and beyond because they have ambitions and other parts of europe as well and products in other parts of europe already. novartis missed estimates just by a little bit. we will talk about the expansion plans and the structural changes that novartis has been bringing

about. we will talk about their growth products and their deal with google. you can follow me on twitter. stay with us. ♪

>> russian rout. drop in moscow is the u.s. and europe rank up sanctions. john malone buys a stake in i-t v. every cloud has a silver lining. sap shares rally. we bring you an exclusive interview with the ceo. a warm welcome back to the program. good morning to our viewers and europe. welcome to those waking up in

the united states. i am an edwards. this is "the pulse." coming up on the program, it sounds like science fiction but could be a reality. a jet that breaks apart and reassembled midflight. daimler doubles down. find out why it's smart car is about to get bigger. let's start with a little bit of breaking news. eurozone inflation numbers coming through this morning. the estimate was for 0.5% to co me through on that cpi number. and i belief we have got that at 0.5% year on year. let's have a check on how the euro is responding. no change from the previous month. stable at this low level of inflation for cpi. this is how the euro is responding to that. it has been caught in a fairly narrow range through the

morning. that is the latest news. no move away from that 0.5%> russian stocks are taking a hit today and the ruble is sliding. companies tose new punish president clinton for supporting rebels in ukraine. -- new sanctions on companies to punish president putin for supporting rebels in ukraine. amount of the maximum heard with limited impact on u.s. and european businesses. >> i would highlight two industries. one would be the energy industry. the world's largest publicly traded crude producer in which cp has a 20% stake, has been stationed. also sanction. an interesting one, because it is not gazpromm. perhaps this is a nod from the

obama administration to the european union. u.s. a little bit of maneuverability and a way to escalate sanctions. in the financial sector, we have some news. gazprombank, a big corporate lender. they came out with a statement saying that they will remain financially strong. they have a lot of depositors. finally, a bank, a state development bank, a bailout bank during the financial crisis. they have got their hands and all kinds of deals the route the russian financial sector. one the reasons why we heard the ceo of russia's second-largest saying ise ceo of btb could be very damaging to the russian financial sector. >> thank you very much. more on the story as we go through the morning. the eu is also escalating

sanctions. for more, let's bring in caroline in brussels. what did he eu agree on? >> what leaders decided on last night does not match the u.s. go beyond individual sanchez. for the first time the eu is mentioning entities. they want to target russian companies. before it was mostly the individuals. now they want to come up with a blacklist of russian companies. unlike the u.s. we do not know which companies yet. that is something they have to decide in the next few weeks. ymbolic measure that they decided last night was to cut off public funding from the european investment bank. something they can easily do because eu leaders on the bank.

they are shareholders. they also said they will use her influence to try to cut off lending from the ebrd. the german chancellor angela merkel said last night that russia hadn't met the conditions the eu set out last month. the russian foreign ministry decided to react this morning, was acting the eu against their own interests and that they were disappointed that the eu gave in to what they call the u.s. blackmail. >> thank you. itv. bids farewell to to libertyir stake global. our deals reporter matt campbell is here. what is it for liberty, buying the stake? >> content is king.

it is amazing how everything comes back into fashion in the media. a a few years ago we had all of these distribution companies, companies that own the pipes saying we do not want to be in the content business. we want to deliver the content. that is changing. as we've seen people like netflix show that owning the content and the distribution has a certain amount of logic. this gives liberty of foot in the door with an increasingly important producer of programming people want to watch. ey." makes "downtown abb >> do they need to own this content producer? will this turn into a full bid? >> one the one hand if what liberty is after is an alliance where by they get preferred -tv'ss to some of i= content that may be shareholding is all that is required. liberty bought a small steak and

then got bigger and bigger. then it turned into a takeover. there is cynicism about liberty's and catches when they say this is not a bid. >> there is plenty of other consolidation in the media space. sky is getting proceeds of this and that leads people to want to watch sky again. we are seeinglly, talks of deal flow. >> sky did announced in may that they are working on a transaction to combine the three europe,erties in, italy, germany, and the u.k. in the u.s. 21st century foxx said yesterday a try to buy time warner, cnn for moreand than $80 billion. big deals and big changes coming to media. >> big decisions for regulators. >> i think regulators in areington will decide --

inside themselves with the bible for. possibly beside themselves with the work. at&t is buying directv. media companies are making big moves to try to come to a reckoning with technological forces that are changing the way people consume content. >> the times they are a-changing. making of deals, fiat's owners are exploring a possible takeover deal, according to manager magazine. shares have rallied on this story. hans nichols joins us. what i read reading into this report from this one particular magazine? >> well, owners of the stock at fiat or potential owners think it is ture. rue -- it is true.

fiat is giving it some credence. volkswagen is down. this is anonymous. in a magazine. seriously is that they have according to people familiar with the matter, the shareholders, the family that controls fiat. they have shareholders talking. that is a remarkable move. we have known for a long time that the family is interested in alfa romeo. on the con side, there is bad blood between fiat and volkswagen. they are competitors. it does not make sense for fiat when you think about one of the biggest auto companies in terms of employees, 575 employees. why they would want to merge with chrysler/fiat and take on all of those labor costs. now volkswagen does have a challenge. they do not have a good foothold in the north american markets. but it is hard to see how chrysler really solves that problem.

bottom line is we are asking questions trying to figure out how serious and advance these talks are. but markets as share prices are reacting. >> thank you. still ahead, novartis profits missed estimates. the drugmaker is teaming up with google for a major innovation. details next. ♪

isthis is where euro-dollar

trading at the moment. 1.3537. june cpi for the eurozone came in at .5%, the same as last month, the same as estimated it would be. interesting that we have those comments from an ecb council centralthe estonian bank governors saying that asset bank purchases were not imminent or needed now. cpi didmbers around seem to lift the euro but it is coming down. now let's focus on the pharmaceuticals industry. novartis missed estimates. the drugmaker was dragged down by declining sales in the that scene unit it is selling. unit it isine selling. thanks for joining us. they did not impress in a positive business they are selling.

away is theou take important conclusions to come out of these numbers today? that they say first do not really miss estimates. they were a touch below by 1% on the top and bottom line. it is a very small miss. what we have to focus on is the -- key division which is pharmaceutical. former have seen is the margins have increased by 2 percentage points and that is a positive benefit from the lacck .competition . >> talking of lens. alcon. some interesting deals they have been announcing with google. lens technology being

licensed from google. tell us about the applications this technology could be put to. >> yeah. i think it is -- exactly, a very interesting deal. i would see for both sides -- say for both sides. as novartis is the leader in ophthalmology. so it makes total sense to do an agreement between the two companies. a new way of thinking about health care, combining biotechnology with technology. it is a new way of thinking in health care. it is interesting because it could give real time monitoring for diabetes patients. it is better because it is noninvasive. it is a way of measuring glucose. but there is also potentially an auto focusing lens. and that would be a big market. tobasically use a smart lens

measure glucose levels in somebody's eye. and you will get up-to-date information on the medication they need. in terms of novartis and their strategy, they are going through a strategy revamp. some of that will not be felt in the business for many months. where are they in that transition process? how is that going? >> i think it is going according to plan. said, an is not going to happen before the first half of 2015. probably midyear next year. so there is still some way to come. so they have to improve consumer health which is part of glaxosmithkline. which they will keep a foot in. so it is very important for them to continue growing and improving this business. it is what they have shown in the results with a 5% growth in consumer health. is accines we know that q1

weak quarter because you do not have all of the flu vaccines in there. as i said, really the focus today is alcon. we should see some pickup in the second half with the launch of an authorized generic version of a drug. >> what does it tell us that 32% of sales come from growth products? products they have bought since 2009 or that have patents that extend out to 2018. is that a good number or average number? what should we be looking for? >> yeah. it is definitely a good number. they have many blockbusters that have been launched since 2009. i think what may be is important to remind investors in the coming months is that the presentation of phase iii, which

is potentially a new drug for data will be, the presented at the end of august in barcelona. that could be a key drug for novartis. it could be a $5 billion drug. let's wait and see. that is the next catalyst for the stock. >> odeal, great to hear from you this morning. still to come, it sounds like science fiction could could be a reality. a defense jet that repairs itself midair. we will take you inside the future of flight. ♪

>> welcome back to "the pulse." in today's new energy, a silver lining to cloud computing. tospoke with the seo of sap find out how storage technology is being honed to reduce carbon emissions. >> our cloud is the most pristine renewable cloud. 100% renewable. this is our vision for all 21 clouds we have. we have made a commitment that by 2020, we will run on the same energy level as a company that we did in 2008. so you are looking at a company

that is getting much bigger, much stronger and that's much more sustainable than ever before. >> that was bill mcdermott speaking to us exclusively. fighting, of israel has hit 1500 targets in the gaza strip. 200 palestinians have been killed. militants have fired 1000 rockets at israel which has suffered one death. elliott gotkine has more. >> anna, reason for that low casualty number in large part can be attributed to the iron dome missile defense system. i have got the inventor of the iron dome. danny golden. tell us briefly how it works. >> good morning. the system works like this. there are eyes in the sky. radar. shot, it isle is detected around israel. we calculate the system

automatically. where it will fall. if it falls outside the city, -- if it's going to fall in the urban or protected area, the missile has been launched automatically. with an allowance of the operator. it has been launched. veryes radar, a sophisticated brain. it goes to the target and maneuvers very fast and it destroys the target in the air. it also destroys the target in the air to protect the city. >> amazing to think that it almost never happened. >> yes. when i started in 2004. everybody objected. for the reason that they make it cannot be done.

it is to science fiction. another 15 or 20 years project that will never be good. this was the main reason for objection. somehow we got money for launch. to convincewo years them to provide 200 million to finish. the run many technological and managerial various. the 10-15 startups. have to work together and integration. 0% accuracy according to the israeli defense forces. some analysts suggest that there is a danger of complacency. if israel can shoot out of the sky anything the militants can fire, there is no need to negotiate or change the status quo. >> it is one of the arguments that we get. saving lives.

the other is when you have set. that is not 100%. you will see the air force is attacking to suppress the rockets. e combined with the attack in intelligence and defense is good. fixives time, freedom to the military for what to do. they do not have to act immediately. they can wait or prepare for war. if they want to stop it, they can. >> i suppose it is saving gazan lives in that it forestall the ground invasion. trying to get more advanced offensive weapons. and israel trying to get more defensive weapons. >> israel is investing in defensive weapons. dome inned the iron

a different way that can copy -- other, we designed it in a new deisign. the changes will be very fast. gold, retired brigadier general and the inventor of the iron dome. the man many israelis thank forgiving casualty so low on the israeli side. to the cease-fire they came in at 10:00 a.m. israel time seems to have been broken. a couple of rockets fired from the gaza strip. but it is meant to hold for six hours. >> elliott gotkine in tel aviv. daimler goes big with the world's smallest car. details on why the auto giant is doubling down on the smart car. plus a self-healing fighter jet. what defense companies envision for the future of flight. sounds space age.

you can follow me on twitter. back in a couple of minutes. ♪

>> welcome back to "the pulse" live from london. here are bloomberg cap headline. barack obama and the european union have impose more sanctions on russia. this time the u.s. targets banks, energy companies, and defense firms in their latest attempt to punish the country for its support of separatists in ukraine. >> what we are expecting is that the russian leadership will see once again that its actions in ukraine have consequences. >> janet yellen has finished the second day of her testimony to congress.

the fed chair at ellis there are still hurdles to overcome but told legislators that she was optimistic about the state of the u.s. recovery. >> i do think the economy is recovering and that growth is picking up and that we have sufficient growth to support continued improvement in the labor market. agreed to as five-hour truce at the request of the united nations. the temporary cease-fire will allow civilians time to resupply as the army prepares its troops for a possible ground invasion. so id of geopolitics to factor into these markets. plenty of m&a news as well. manus cranny has more. >> anna, no amount of deal doing or speculation and equity markets is going to trump the impact of russia. the movement by the united states of america in terms of closing out the access to bond markets and equities for some key russian companies.

what does it do? bp has a 20% holding in rosneft. look at portugal down 1%. that has to do with the domestic story on espirito santo. another downgrade on bond ratings. the rest of equity markets are lower. this3 in a poll stated economy is in a worse state than last year. 77% says deflation is the single biggest risk for markets. mario, youy, are more popular than mark carney and madam yellen. if you want to understand risk, look at the foreign exchange markets and look at dollar- ruble. what you're seeing is ruble lower. dollar higher. what comes next? what business do you want to do in russia? how much exposure? that is the question you have to ask yourself. as ryan chilcote was explaining,

when sanctions go down, they are there for a very long time. this is the beginning of a much, much bigger political relationship. equity futures indicated lower. for those of you driving into quarter, down .25%. s&p futures are lower. more u.s. housing data later on in the day. if i can get the right sheet, i will tell you the numbers. housing numbers expected to rise by 1.9%. permits are expected to rise by 3%> . it is geopolitics and russia that dominate the themes in these markets despite janet yellen saying she does not see a bubble. that is the state of play. >> thank you very much. in 25 minutes, it is "surveillance." tom keene joins us from new york with the previous. the subject of sanctions very much a part of your conversation this morning. >> it almost pushes israel and

gaza out of the way. a big announcement by the president and action by european leaders as well. us andmmer will join peter cook will join us as well later on "bloomberg surveillance ." dr. bremmer on what this means. these are much more serious than the previous sanctions with some real long-term effects. ian bremmer on russia, an update on the geopolitics of ukraine. morgan stanley out with earnings in our 7:00 hour. robert in our deli will join us. for years with home depot and chrysler. eli.ill talk to bob nard about all of these mergers going on and what the new strategy is. the bombshell yesterday of time warner in play as well. >> absolutely. in terms of sanctions, when you look at companies like rosneft, gazprombank on that list.

something getting more serious. really good to hear your conversations later on during "surveillance." now let's turn our attention to the media world. john malone is snapping up a stake in i-tv. liberty global bought more than six percent from bskyb. thank you very much for joining us. so what does this mean for the individual is involved? liberty and sky and i-tv. keeping it within europe, there are plenty of changes afoot. >> for sky, this was an expected regulations of they were not able to increase -- not only that, they also plan to acquire sky branded businesses in germany and italy. they need funds. this is a good way for them to monetize their stake. i-tvxit the

investment. for liberty, this is part of their attempt to build a content business. previous to that, they acquired all three media in the uk. this bodes well with their tradition of building a content business. this is an investment. people are wondering if there will be an acquisition of i-tv. for i-tv, this is good. has ans that it attractive business, drawing interest from international companies. i think there is also the element that their production houses getting a lot of attention. >> they make all kinds of very well known global content like "downtown abbey." is this going to be the precursor to a full bid by liberty? do they need to own the whole business or a substantial part

of the business to make some sort of relationship between the two businesses or is it about forging a relationship? >> if you live in the past were stakey get, it acquired a and another company and then they increased it. it projects were liberty may do with i-tv. at this point, everything is speculation. it is not in my position to say that. but liberty increase the state previously in another company. mind the factr in that there are not so many independent production houses. largest production houses are almost all owned by broadcasters. acquireberty is keen to a big production house, probably next it will be a broadcaster. roadlls us what possible

maybe. >> there were talks months ago that i-tv could be of big candidate. we will see what happens. thank you very much for joining us. daimler is going big with the world's smallest war. the company doubled down on the unveiling of two new smart models. you have been very rude about my driving. hething about my ability to park small cars in small spaces. hans, what have you got? >> we can practice your peer rouhetting.i cane cars are so small, you start on one lane and turn around and headed in the other direction without backing up. i'm sure your are very good backer-upper.

when we talk about autos and manufacturers, you have to talk about the strength of the euro. they start at 11,000 euros. about theed the ceo strength of the euro, he did not seem to be that concerned. >> we need a strong economy based on efficiency and not supported by a weak currency. therefore, i think it is fine. >> mario draghi does not need to do more. >> at least not for daimler. >> this is a gamble. people will be driving and not taking mass transportation. 35% growth in this market. 6.2 million vehicles by 2020. mercedes says they are the smallest. little more roomy inside. they put the engine in the back. remarkable story. i i do not know if i am ready to get one or not. they are neat. you can pick up the color coding for mine.

>> at least you can fit. which is an advantage for somebody of your height. aimler sponsored the german national team. they are seeking to trade on the team's success. sapad the comments from saying that hannah was the 12 men on the pitch. deter has some claim to the success. >> he saw lufthansa fly the team in. mercedes did pretty well. four had that bus that took hours to drive in berlin being followed by all of the television broadcasters. mercedes emblazoned all over that. it was one of the best investments he ever made. >> there is nothing which would top the german national team. we are with the best.

on cars.one final note european auto sales up 4.3%. the 10th straight month of growth. looks >> there is a rebound in the auto sector. we will see if they start buying smaller cars. care that you and i can park. >> thank you very much. hans nichols reporting from berlin. coming up, did you postpone vacation plans to watch the world cup? find out how the football championship may have impacted on the train operated eurostar. we are live with the ceo after the break. ♪

>> welcome back to "the pulse" live from london on bloomberg television. eurostar says we can demand for leisure travel has weaken them. many stayed at home to watch the world cup. for more, we are joined by euro star's ceo. thank you for coming. the world cup effect, not good for all businesses that. didn't really have an impact on people's willingness to take leisure breaks in paris and bruges, brussels and london? >> it did.

we were surprised it was not as strong as expected. then we realize that people were poor stoning -- were postponing. peoplenitely saw some postponing their short breaks. >> are they about to get more romantic and plan this weekend trips away? >> i hope so. >> enough football. >> we need more romance. i think this summer will be good for us. >> what about business travel? you have seen signs of growth in business travel in the u.k. and in france. does that mean that french business travelers are making their journeys? >> they are coming back. last year was not very good for the french market. we've seen the business community in france being out -- not as confident as the u.k. there is a bit more confidence and people start to travel

again, so it is good news. the business market going up 6%. we have not seen that for a long time. >> do you notice a big difference between the state of the economy in the u k the state of the economy and france? can you see that reflected in the numbers of passengers, the number of oak and -- the number of bookings? >> you see the confidence of the countries. going for a break or business reflects confidence. we saw much better confidence in the u.k. for the past 18 months than france. >> is that something that will continue? the french economy, there are small signs of recovery? >> it is getting better. it has hit the bottom of confidence. getting slightly better. hopefully, france will catch up with the u.k. >> let's talk a little bit about the ownership of your company. there have been some reports that have suggested the u.k. government might be interested

in selling its 40% stake in euro star. and the daily telegraph was suggesting it could be sold to a french train operator. does it matter to you who the big donors are? >> of course it does matter. i would say it is a matter for the shareholders to see what they want to do. no decision made yet. it is important for me, for the that we follow a strategy which is to grow our market, and keep growing the business. >> let's talk about the plans to go to further destinations. i do not know a great deal about trains but i know you cannot run all trains on all tracks, because widths are different. what plans do you have against the core of your network, london-paris, london-brussels? >> next year we will go to the south of france.

marseilles.nd then the next year we will go all the way to amsterdam. there are still a lot of people flying. many customers tell us we would love to have a train to go there. we will supply that. >> is that all going to come down to the length of time before you have to arrive for the train to go? the trouble with flying such a short distance is you have to arrive hours before the flight to check in and make sure you do not miss the flight. as well as price. they are weighing up whether it will save time. >> we see that people are willing -- because our check in is they're he short, 15 minutes to half an hour. shorter than airlines. the fact they can move around and be with their family. and they can enjoy the trip. we see that people are willing

hoursvel up to four, five on the train instead of flying. >> do you have plans to go into germany as well? >> we are offering good connections. you have to change in brussels. we are looking at it. >> your taking new trains. is that going to make a big difference? is that one of the things that allows you to go further? what will passengers notice? >> for the new trains, next year, first of all, the details are fantastic. they are very modern. we have put a lot of effort into the design so that it is really what the customers want. wi-fi, infotainment. it allows us to go to amsterdam or other destinations which is so important. to have more comfort. >> and you are bidding for britain's east coast mainline? >> we are very competitive.

we will wait and see. >> thank you very much for joining us. eurostar's ceo. let's get company news. uber officially starts in hong kong today. the company has expanded into more than 100 countries since it was founded five years ago. we spoke exclusively to the company ceo about whether it will pursue an ipo. >> the other thing that happens billion itise $1.2 is that you do not have to go public. until it becomes a strategic imperative, we are not. >> time warner rejected an unsolicited >> visit -- acquisition bid from 21st century foxx. according to people familiar with the merger, fox is undeterred and is prepared to make a higher offer. time warner's shares surged on the news. ore pricesees iron

trading at close to regular levels. >> we are seeing a reduction in prices, which we are running at artificially high levels. we are seeing the prices come down to a more normalized level. which reflects the point at which supply and demand across. >> we will take a short break. it sounds like science fiction but could be a reality. a jet that breaks apart and reassembled midflight. stay with us. ♪

>> welcome back to "the pulse," streaming on ipad and bloomberg .com. imagine a plane that can break apart and reassemble in midair. sounds like science fiction but not to baa systems. take a look at what companies envision as the air force of the future. ♪

truly futuristic. 2040. that is what could be in store. let's leave you with a quick look at currency markets before we go. 1.3532.lar trading at 0.5% was the number that was in line with estimates. weak inflation picture. but not deteriorating month on year from in that year on number. that will do it for us on "the pulse." you can follow me on twitter. up next.eillance" team tom keene and his team will be with you for that program. i will see you again tomorrow. ♪

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this is "bloomberg surveillance." weekend as president obama announces harsh sanctions against big russia business. path. takes a separate

time warner is in play as the great media consolidation continues. forget about plastics. you want a job that is rewarding. good morning, everyone. this is "bloomberg surveillance." world live from our headquarters in new york. it is thursday, july 17. i am tom keene. joining me scarlet fu in adam johnson. we a right to it. international brief, here is adam. >> we're starting with the u.k. where for a second day in the row we have a rising economic data. wage growth .7%. but mark is only .7%, carney has telegraphed that rates are likely to rise in there sooner than later. maybe the first of the major countries to do so. we should also point out result -- kind of a different story. their keeping borrowing rates at 11%. >> that is inflation with no growth. >> stagflation.