>> a bloomberg exclusive. we're live with the biggest names in banking including hsbc's chairman. a bounty on the high seas. shares rise the most in a year. you'll hear from the c.e.o. split. ng's welcome, everybody. you're watching "the pulse" live from bloomberg's european headquarters in london. we begin with a bloomberg

exclusive. some of the biggest names in bank arrange at the global summit to rethink banking models. no small topic on the agenda today? >> yeah, the future of finance and there are some big, big questions. we talked a little bit about credit provision. when you compare and contrast what happens heres have in the united states. you look at the united states, some of the big fines imposed and there is a risk of regulatory overreach. are these banks becoming overwhelmed? something that doug also flint talked about recently -- douglas flint talked about. i'll be talking with him and then i have andreas dombret of the bunde bank. we'll talk about his role on

the supervisory mechanism. we have to be clear about this. what are the difficulties here in the euro-zone? i know he has something to say on what he calls reform fatigue. look at for that one, anna. >> interesting when you consider just how much banks are spending and should be spending on regulation when we have witnessed some enormous fines in the banking sector of late. >> yeah, anna, when you look at some of these fines on the back of some of these compliance issues, some of the fines in a lot of people's minds are justified. how much do you equate for? 9 billion for one bank. $2 billion for another one. are they plucked out of thin air? at the end of the day, this is a legacy of the financial crisis. hour do you get what is called financial stability? is that an impossible mission? when you look at how much they

are spending, how overwhelmed are they and distracted are they from doing the job we want them to do? >> thank you. more from john later on. a remirnede jonathan ferro is going to be having conversations on the future of banking. andreas dombret will be with him very shortly. diplomatic talks in berlin have caused tensions. ukraine continues to accuse ussia of stoking the conflict. hans, yesterday, the foreign ministers of you crained russia seemed to be talking past each other in terms of the conditions they would lay down for a cease-fire. where are we this morning? >> there is a potential that angela merkel is visit kiev later this week. we don't have that confirmed

yet and her office is not denying it. it is very tense on the ground. there are reports the ukrainian, a rebel position has been firing on ukrainian refugees, civilian refugees that would clearly mark an escalation. rob called for a cease-fire and said no preconditions. we ran that very idea by the ukrainian prime minister. he was quite dismissive. have a listen. >> progress has been reached audiotape number of issues. - on a number of issues. have reached considerable progress on political issues like closing down the border. like effective control of the order.

we have continuous inflow. money. >> and that did not to me sound like a diplomat that is optimistic about the five-hour talks that he had. merkel eels office is saying she -- merkel's office said she is considering a visit but nothing firm yet. >> what about the prospects for further talks there in berlin? >> s there always the prospect. they need to go back and report to their president, putin and poroshenko and have confrontations and if they decide another round of talks could be truthful, they will order them. it is hard really to see where there is much space for agreement and where they get off their positions and come towards each other a little bit. seems like we're at a stalemate and the moderate progress was

moderate indeed and almost minuscule. >> thank you very much. let's turn to one of our top orporate stories this morning. aresing announced a share -- maersk announced a share buy back this morning. what is driving them this morning? >> we can break it down because it is exposure to ports. an oil company and largely what is -- it is a bellwether, i thinks it owns the biggest container line, shipping company in the world. they transport 15% of all the world contain rs. a great way of giving the flavor of what traders like from a global perspective. that is coming into these numbers. we were worried about what sanctions might do. they warped themselves they thought they were never predictable. generally, this company does really rather well.

for a second straight quarter, profit has more than doubled. they have beaten therefore their forecast. they have raised their full-year forecast. that they are going to improve this year. they say 2014 will be ignificantly better than 2015. parent company upping its overall forecasts as well saying we're going to make $4.5 billion. notably a buyback as well. >> the management telling a maresing an hour ago that the -- michigan eanch rsk that the structure cousin too -- >> what about the concerns over russia and ukraine? what details do we have there? >> getting into the statement, nothing really. saying we uped investments in ports. when we spoke to chief executive he outlined how big a player russia is within their

business model. not much. even if the tensions escalate, if it gets worse, this really is in the going to be impacting their business much at all. this is a company that is always having to navigate -- having to navigate geopolitical risks. they have thailand. tensions in thailand hitting at some exports, imports in asia. that is company that has to weather these storms going forward. wasia is not uping the ante that much. that is what came out front and center from that statement. the developed market will continue the upward turn. the economies will continue to improve. that's why they see shipments up four to five%. capacity is still a problem. they basically ordered far too many vessels. >> the problem in the middle of he financial crisis.

they are called eee vessels. three are landed in the last quarter. they have another 11 coming in 2015. this is why they are doing deals, cutting deals, particularly with mediterranean shipping. the number two player out there in shipping and they are going to share vessels and help stabilize the price that they can charge for freight. volume yupes are up and they are managing -- volumes are up and they are managing their costs. >> thank you. here is what else is on our radar this morning. b.h.p. billiton has awaited a long awaited spinoff. the new company will be based in perth. b.h.p. billiton is the world's biggest miner. we'll have more on that story later on during "the pulse". and paying as much as $300 million after resolved claims by new york's banking regulator that it didn't flag suspicious

transactions after promising to do so in 2012. the settlement should come as soon as this week. president obama said the u.s. will continue limited air strikes in iraq to support kurdish forces who are backing militants. he also said that the u.s. is working to pull together an international coalition to support humanitarian relief in northern iraq. coming up on the program, applying new ideas to reshape the future of banking. jonathan ferro is live at the global seminar with a bloomberg exclusive. he goes one-on-one with andreas dombret. that's next on "the pulse."

>> welcome back. let's get back to salzburg and the banking seminar. some of the biggest names are there. jonathan, to you. >> thank you. with eased to be here andreas dombret. thank you very much for joining us this morning. we're going to start by talking about some of the headwinds that banks face at the moment. regulatory headwinds. we have all of these stress tests and >> some complaints that banks in the euro zrone overwhelmed.

what is your take on that? >> this is a very, very -- exercise which takes quite sometime and the results are very important. so it is kind of clear that this comes with a cost. i realize that. it is also comes with some stress. nevertheless, i believe that the positive effects of that exercise outweigh the cost by far and that the given problems we had in the banking crisis, this exercise is very much justified. just think about this for one moment. the single supervisorry mechanism at least we think is a lodge colorado step of single monetary unit and we need to do this and the costs come also with benefits and the benefits outweigh the costs. >> one of those benefits might be the way the euro-zone deals with bank failures.

the fallout was quite isolated. that was a very, very small portuguese bank. you oversee german banks. if a german bank fails the stress test later this year, are we prepared to deal with the fallout of that if they have to raise a significant amount of capital? >> i'm not going speculate what is going to come out of the stress tests with regard with the german banks. we absolutely cannot make any predictions. we haven't finished all of the asset quality review. we have just started the stress tests. it is unclear what will come out of it. i'm not speculating whether german banks fail or do not fail. should they fail or should a german bank fail we would have to deal with that. there is a difference between accounting and prudential measures. in terms of accounting, we would see after the asset quality review how sound the banks are.

he stress test is solid. what if there is stress? the g.d.p. would decrease over a certain period of time. this is not necessarily a reality. i would urge everybody looking at the results of the stress test to see what is accounting and what are measures. accounting is backward looking and stress tests are forward looking. these are two different things . even if you had an issue and a challenge to stress test, that doesn't mean you are insolve ept at all. >> one of the biggest issues is when you talked about financial stability in the past, you said the biggest risk to that is reform, fatigue. >> we are -- looking much better. than we did 2012. with regard to financial -- things are normalized. you just mentioned a very large -- actually the largest

portuguese bank and the effects of the spreads of portugal were minimal. this gives you a little bit the impression that things are fine. stock markets have been rising. for sometime. now they are falling a little bit again. but it shows that if you have reform fatigue. if you believe everything stays as it is and we're in safe waters, you are making a big mistake. the crisis in the ukraine is a reminder for all of us that things can happen very quickly and that there are unknowns that we cannot really factor in. we have to be careful and we have to continue on this path of reform because reform fatigue would be one of the biggest dangers we could have for, you know, future development. >> are you seeing a risk of investor complacency? something we talked about a couple of months ago. not so much very recently. when you talk about spreads coming down are you more

concerned about investor complacency or political complacency? >> i do not give any recommendations to investors. i'm not criticizing them either. investors have to make up their own mind. i'm talking about the reform fatigue possible, political decision makers relax when things look better and deviate from the path of reform and less than what would be good. >> what is the e.c.b.'s free-throw line that? last week we had some not so good economic data to be fair across a lot of the your ozone. i off the back of that, that was almost celebrated as bad news equals good news and they were looking straight to the e.c.b.. are you worried that the e.c.b. could become the only game in town? >> the e.c.b. is an important game in town in terms of monetary policy. we should not confuse responsibility for fiscal policy with monetary policy. >> off the back of that when

you see the likes of france hitting the targets. you here the likes of renzi calling for more leniency. how concerned are you going forward? with m most impressed those countries that stick to the reform plans. >> do you want to see france do more? when they talk about a weaker euro, what is the response of the bundesbank when you look at that situation? >> france knows what they are doing and they are responsible for their fiscal policy. >> on the issue of financial stability. when we put these stress tests in the context of monetary policy, in the context of financial stability are these stress tests coming at a bad time? >> they are coming at a predictable time, you know, we knew very early on that in november we would know the results of the a.q.r. and the

stress tests. bloomberg and others play an important role in that. there is never a good or a bad time. we have to stick to -- >> thank you very much for joining us. that was andreas of the bundesbank. a very, very special guest for this morning brought to you live and exclues frive salzburg. wyle bring you more later. back to you, anna. >> thank you very much for that. jonathan ferro live in salzburg. also coming up, the chairman of hsbc douglas flint cashing in on classic cars. find out why it is full speed ahead. that is coming up later on "the pulse". 9:20 here in london. we'll take a short break and see you on the other side. ♪

>> welcome back to "the pulse" live on bloomberg television and radio and also streaming on your tablet, phone and bloomberg.com. now it is time for today's hot shots. we kick things with picturesque paramotoring unlike parasailing which you might do on the beach this summer. this gives you all the controls you need of where you're going. no ocean necessary. next we head to argentina where this person is going down the mountain taking us for a journey. it is like skiing but not for the faint of heart. finally, they may look like flying squirrels but these dare did he feels are wearing wind suits to help them as they glide to the ground. i don't know if manus would indulge in any of these hedonistic sports. > a hedonist at heart.

>> only on tuesdays. >> at least now you have any dropping -- a little bit in italy. day two on the big brother program, day two of markets rising. we are rising again. we caught up with philip this morning from m.n.i. talking about the ukrainian situation and said this is about putin trying save face and come up with a political solution, perhaps. in the u.k., day five of stock market rising in the united kingdom. we'll wait for the inflation data. it is giving me a whole new world to play with. to translate, less words. you can see this is the overall trajectory of where we are in the past few weeks, this is a 14-day view. you're actually seeing aussie dollar dela and the dollar

beginning their upward trajectory at the moment. these will be the funding currencies of choice overall. you're seeing euro trend lower. currency is definitely on the move as we await the c.p.i. data. 1.8% is what we're looking for to come from the united kingdom. that could give carolina y what needs to pause or hold off on rates. when you look at equities futures, nasdaq. a bit of a tough ride after 2000. i remember it well. home building confidence. the highest close since 2000. futures up .25%. again, you'll get inflation data coming from united states of america. that's it for me. back to you, anna. >> coming up, the l.a. clippers and fans are thrilled to have a new owner but no one is more

thrilled than steve ballmer himself. that story is coming up next. ♪

>> welcome back to "the pulse." i'm anna edwards. u.k. inflation data just coming out now and it is weaker than many in the market had been expecting. we were expecting 1.8%. it is 1.6 pnth. last month we had a surprise on the upside as far as inflation was concerned. in june the number jumped to 1.9%. that was a surprise for investors. now it is weaker than had been expected. this month we have 1.6%. not the 1.8 that had been

expect. let's see how the pound is reacting to that as we carry on to discuss where this is going to leave interest rates. you can see the pound moving lower on this. does this take away some of the pressure on the bank of england if they were under any to increase interest rates? let's talk to bloomberg economists jamie murray who joins us now on this topic. interesting to see this number coming in at 1.6% when economists expected something a little higher at 1.8. >> there are a few things bouncing around in the inflation figures at the moment. prices. ose is one of the things the bank worried about last time in their august report, they said, they were expecting the timing of sales to be possibly a bit of an issue. more likely affects the weakness in demand -- strength in demand for clothing and footwear. it looks like that is not the case. it looks like it is probably

bouncing back again. thats one of the reasons for the surprise on the downside. >> maybe a blip? >> could be just a bit of a blip. >> will this take away any of the pressure banks might have been feeling to increase interest rates? >> it probably does, the margin a little bit. the broader outlook for inflation is fairly weak. the sterling is -- headline prices. very, very weak wage growth. there is nothing pushing margins. the outlook is quite weak for inflation. as i said, the margin will help the banks. >> you have been doing some analysis of the style of the governor of the bank of epping land, mark carney. you have been taking a trip down memory lane and reminding us of alan's comments in 1998 at the establishment of the

m.p.c. about different types of policy setting. whether they were foxes or hedgehogs. >> sure. in that speech he delivered, he was saying one way to set policy is in the way of stocks is to think of many things. look at loverts variables. build up a big picture of the economy and go from there and set policy accordingly. another way of doing it is like a hedgehog, to focus on one thing at a time. that might be unemployment or wages. >> mark carney doing both. paint a picture of him being a hedgehog and a fox. >> there are things that i remember about mark carney. he is thinking about lots of variables. he likes to focus on one, easy for people to understand that. you need to remember the bank of england is looking at all the variables building up a picture over the economy.

>> interesting. thank you very much. jamie murray joining us there. a bloomberg economist. time for another bloomberg exclusive. c.r.h. reported sales this morning. >> a good start to the year with sales ahead by over 4% led by europe as you indicated. i suppose the pleasing aspect of this business for the first half of the year is it dropped through to our bottom line of that small modest increase. we have a 27% increase in i wanta. -- in eastern seaboarda. -- we have a lot of play here, haven't we? a lot o of the data. triple dip recession in italy. big exposure in poland and the whole russian effect. what ario seeing now? i know you speak wauven the people on the ground around you. what is the reality of what's

happening on the ground in the last couple of months? >> on the ground what we're seeing from our commerce and contractors is a fairly steady solid progress during the course of this year and that seemed to be maintained during the course of the summer. it eased somewhat may and june and the trends we're seeing in may and june seem to be consistent with the summer now and looking at our order books, when people come back from hol dates, they seem to be fairly -- holidays, they seem to be fairly solid. >> can you give us a sense of what impact the ukraine, russ cra crisis we'll -- russia crisis we'll call it is impacting you right now both directly and directly? >> directly we have operations in ukraine. in fact our operations are in the western part of ukraine. in the eastern part of the ukraine. we have seen a strong tart to the year and in the last couple of months we're seeing a moderation of volume. indirectly, it is a little bit

more difficult to say. there is concerns about there about the impact of sanctions. a lot of people look to to see if they can alleviate that. we'll just have to wait and speefment >> talk to me about the u.s. because at 53% of your sales you said in may and june you saw improvements. has that continued? >> yes. the first four months of the u.s. were lost due to difficult weather but in june we saw momentum build led by the residential and nonresidential market. it is very important for us to concentrate on maximizing our pportunity in july and august. it is fairly broad through the u.s. which is good to see. >> that was the c.e.o. of c.r.h. let's get some company news for you now. b.h.p. billiton announced a long awaited spinoff. the new firm will be based in

perth with the chief financial officer as its c.e.o. b.h.p. billiton is the world's biggest miner. we'll have more on that later on during "the pulse." speculation that airasia was considering taking a stake in the air line. icrosoft cloud's computing service experienced a major global outage that lasted for five years. -- five hours. they run programs via the internet. the former microsoft c.e.o. steve ballmer has a new title. owner to have l.a. clippers. he has been speaking with trish regan as they talked about the l.a. basketball team as well as microsoft's new leadership. >> l.a. is a unique market. i think it is a phenomenal opportunity.

when you look at tech companys with no earnings and huge evaluations, and a lot of downside, the clippers look like a really well valued team to me. really well valued. there is tech companies with market caps of $150 billion that don't make money. clippers do make money. we need to put leaders in place on the business side. i am "retired". i'm not looking for a new full time job. so we will strengthen and shore up the business side of the clippers. >> when you look at microsoft right now, and you see the leadership in place, how would you grade what they are doing now? >> i think they are off to a fantastic start. our tech people like to pretend it is a short-term game. it is not. it is a long-term game. businesses get built not in months but in years. but for six months in the role, i obviously love him and his work for when he worked for me.

i think he has heck of a good six months but the truth is it will take years before we know how well he is doing. >> 18,000 people laid off. >> that was a decision driven by the management team. boards don't run management teams. >> it was his decision to lay off 18,000. >> when we bought nokia, we knew there were redundancies. we used that opportunity to make changes that we felt would streamline and make microsoft better. obviously the board is supportive. that's why we put him in the board. my actions as c.e.o. speak for themselves. i did what i did. i loved everything we were doing. he gets to develop his own vision and articulate it in his own time. as a board, we can challenge him and ask questions but he

has our support and when he wants to speak on that, he can. i do think there are some fund mental things the company has got to do for its future. he puts that under the umbrella of mobile first cloud first and to really do that will require new skills and cloud sales, cloud technology, hardware sales, hardware technology, new places to go and satya will describe how ept he wants to get there. >> where are you going to sit during the games? the courtside? >> there is no question. i don't know what seats are available. we have great fans here at the clippers. they have bought a lot of those tickets. it was the number one thing we were joking around with the coaches and the players, where do you like to sit? i always thought i would like to sit under the basket. paul allen who start microsoft sits right under the basket. the players thought that was a weird idea. the coaches thought that was a

weird idea. they sitting in the middle of the court makes more sense. >> i'm looking forward to seeing you cheering on the sidelines. will we see that? >> i'm an enthusiastic fan. when i come to games i'm a fan. >> that is former microsoft c.e.o. steve ballmer. you'll hear more from him later on during the program. coming up on "the pulse," hot chocolate. coco hits its highest prices in 2011. what is behind this sweet rally? sweel discuss after a short break -- we'll discuss after a short break. stay with us on "the pulse." ♪

>> welcome back to the program. shares of lindt are rising today. the swiss chocolate maker report sales and profit growth for the first half of the year. but will the rise in coco prizes leave a bitter taste for oco make rs? overjoined now from geneva. thanks for coming to talk to us. we saw a 39-month high for coco earlier this week. what is driving this? is this all a demand story driven by increasing demand? a change in taste in emerging markets? >> that is a good part of the story as far as i can tell. for sure, the demand has been

strong. coming from developing markets. china, i think it was a few years ago was the 11th largest consumer. now it has gone to the eighth. it is becoming an important consumer of chocolate. but the other side of the story is just supply shortages which are due to weather and also which are due to probably more than anything, underinvestment in the biggest producing region, which is west africa. west africa produces about 70% of the world's coco. to consider a sustained increase in cocoa prices. whether it would increase producers to invest more in supplying more cocoa? >> yeah, that is the big issue. most experts are saying we need much higher cocoa prices to bring on more production. just going way back, these regions were understood

colorado -- colonizeation. this big demand story is something that has developed in the last five or 10 years. particularly in the last three years, we would see a higher demand. that region can produce a lot more. there is a lead time. we need a lot more investment to pour into that region. particularly west africa. >> hershey recently said they expected costs to increase in 2015. this trend towards emerging markets involving tastes and buying these affordable luxuries centered around cocoa and chocolate, is that something driving a number of the soft commodity sectors at the moment? is that changing tastes in the market? s that a bigger theme than the one we're discussing here with cocoa? >> absolutely. that relates a lot to protein market.

developing markets are putting more animal protein into their diet and as they do that, that puts a leveraged demand for grain. that is has been drivering the grain market as a long-term structural trend in the last 15-20 years. that continues, of course. >> is there any fallout from geopolitical tensions in the commodities markets at the moment? of course we have seen russia acting to stop importors certain food stuffs from parts of europe and the united states. is this something on your radar at the moment? i know russia is the fourth largest confectionary market in the world. >> yeah. the instability in ukraine has been an issue for some of the logistics in transport. i've been talking to some traders who said there is a lot of fears in terms of the logistics out of the ukrainian ports. we'll see how things develop.

but it is still a bit tmp enuous but for now, in the recent years, they settled down a bit. it is definitely an important issue. another issue for crops is weather. >> as always. i've been reading interesting reports about a shortage of hazelnuts as a result of weather in turkey. we won't go into too much detail. you are quite positive aren't you in terms of increasing requirements for food production as set out by various international bodies? >> yeah, absolutely. the overall structural trends are still in place. the f.a.o. said a couple of years ago and they maintain this position that we need to roduce 40% to 50% more food by 2030 and 70% to 80% more food by 2050. that is a huge objective.

that means we'll have to put a tremendous amount of land into production. the industry is benefiting from positive trends. of course in the short-term this can be influenced by weather. the demand trends are there. developing markets are eating more protein. we have structured our own strategy around that theme and we're investing very much in farming companies. that is where our farming index was developed based on that theme actually. >> thank you very much for joining us today. up next, one-on-one with tiger woods. golfer own with the pro to talk about nike's product launch. stay with "the pulse." ♪

>> welcome back to "the pulse". nike has just unveiled its new vapor line. aric schatz kerr sat down with davis as well as tiger woods. >> will these golf clubs still be in your bag >> we'll see. i was getting close to putting them in play earlier this year but unfortunately my back went out and i had to have back surgery and then when i came back, i was so limited on what i could do practice-wise, i didn't want to test anything. i still played with my old stuff. this time around i'll have a

little more time to test it out. i know we're really close. i was so excited about the ball flight. i was excited and shocked tods the ball flight, how much better it went through the wind. >> what is it for you that determines whether you're ready to make that change? >> if the club is better than what i have been using, it is in the bag, period. that's just what it is. if it is not better, why put it in the bag? >> how is your back? >> how is my back right now? it is a little bit stiff. sitting and standing all day makes it a little bit stiff. but it is the rehab process, i have got to go through that again. luckily i didn't do any damage to it. >> golf is in a bit of trouble. you have seen the same numbers i have seen. both of you have. 6 million fewer people playing today than back in 2000. courses closing by the hundreds. how does that change the way nike looks at golf? >> we view what's happening in golf now as an opportunity.

and i say that because our portfolio has never been stronger. our stable of athletes has never been more compelling and we have the spoosh. in some parts of the world golf is going through transition, in other parts of the world golf is growing. you look at where there is a growing middle class, you see golf growing. >> does it matter much to nike that at the very least the north american market is shrinking given that you do so well selling golf apparel to nongolfers? >> we have apparel footwear, club and ball. we are able to leverage the product portfolio as well as leverage our geographies to keep a growing business. >> tiger, i think you already ow that the rise and fall of golf's growth tracks pretty closely with your career. beyond the tiger effect, how

would you explain the trouble golf is having attracting young people and in particular young men? >> i was probably at that age when it started transforming where the golf cart changed the dynamics. so many of us were introduced to golf through caddiing. working summers and carrying bags and most kids now are, you know, they have two cell phones. 15 batteries and they are typing away doing all the different little things. they want everything instantaneous. golf is not like that. >> how do you change it? >> we're trying to get kids to play further forward. trying to make the games faster. it is just different. participation is hard. it is neat to see other top athletes like say, a michael jordan, play golf. seeing tony romo. a bunch of the different celebrities. steph curry has a hell of a game. all of these other athletes

play the game of golf and play really well. that's where you can make golf cool. >> a lot of people say golf needs a savior. another tiger woods. if there is not. and there is not somebody who has the same extraordinary record that he had as a young man and as a maturing golfer, what happens? >> well, the good news is we still have tiger woods and he is still teeing it up and he has a lot of records still to break. the other good news is we have a great new generation of young athletes coming along, whether it is a rory mcilroy and some of the others out there. you're seeing that energy come through. you talk about that next generation. that is part of how you inspire them. when they see the style out on the golf course, the energy this group of new athletes are bringing and then the way you can amplify that to that generation, that is fun, that chris energy.

that lifts up golf. >> that is tiger woods and cindy davis. we'll be back for the second hour of "the pulse." john will be back from salzburg with hsbc's chairman. ♪ >> a bloomberg exclusive. we

have the biggest names in banking. a bounty on the high seas. year asise most in a the company boosts forecasts. we will hear from the ceo. mining is big spinoff. they announced a long-awaited split of the company. welcome to the program a. good morning. good evening to those in asia and welcome to those just waking up in the united states.

this is "the pulse." we're live from london. begin with an exclusive. some of the biggest names in banking are in sulzberger today. there is a global summit to rethink conventional business and banking models tomorrow. jonathan ferro is there. our --last arrow -- our hour, what were the key takeaways. what were the changes we need to see around the eurozone? >> i gave it a good go. the thing is this is a banking man. he is about supervising the euro zone's banks. guess what the biggest risk is to financial stability, he will give you two words. reform fatigue. with words -- countries reform fatigue are making a big mistake. he brought up the situation in the ukraine.

the message is clear from him. yes things seem to be ok, but they can be disabled for a quickly. i asked about the ecb to come in the only game in town. the ecb will do more. important game in town, but it is not the only game in town. we can do monetary policy but you need to do fiscal policy. he thinks there are a lot of countries out there in the eurozone got work to do. >> i am reminding people not to confuse the two. we see some big science of the largest banks being hit by u.s. finds. what can we expect from that conversation? >> i think we will talk about regulatory overreach. i spoke about that with the incoming chief of the european

banking frederick chin. i want the nuts and bolts of what is going on. the amount of money spending on compliance and risk control and how overwhelmed they are right now from not been able to do the job they need to do. he has a lot to say on that particular issue. as we head into the g-20 later this year, where do the fines come from? $2 billion for one bank. .t $10 billion for another bank how will this impact the banking industry going forward? >> we will be back with jonathan ferro later on. it's turn our attention to the signs in ukraine. assia is caught for cease-fire will ukraine continues to accuse russia of stoking the conflict. hans nichols joins us with more. where do we stand today? >> diplomatically looks like the

germans are trying to advance is consideringel a visit to kiev. ukrainian authorities are accusing the rebels of firing on a convoy of refugees. yesterday after those talks ended without much progress in berlin that, there was a briefing. they spoke about the need for a cease-fire. we ran that need by the ukrainian foreign minister. he wanted to see russia stop their incursions and stop the cross-border flow of money. he also did say at least for some little bit of hope. he talked about moderate progress. >> it has been reached on a number of issues.

i would wish we could have reached considerable progress on critical issues like closing down the border, like control of the border. every day we have continuous inflow of mercenaries and money and heavy weaponry across the border. meter reportne that has merkel visiting on saturday. they won't deny it. it they say she is considering it and she is been in touch with the ukrainian president. >> he trusts his russian counterpart. what is the prospect for another round of talks? >> they need further guidance from their heads of state.

they will see if there is any continues thethat poetic negotiations. the germans are trying to ansys along and trying to add some sort of positive spin on this. this may be hard to do given the situation on the ground. >> thank you. hans nichols reporting from berlin. that is after the shipping giant raised to your profit forecast and announced share buyback. is drivingde, what growth? >> it is a diverse company. it has an oil company. we want to get a bellwether for the sense of trade. this has the biggest containership liner in the world. 15% of all world containers are transported by them. they sound pretty buoyant.

talk about geopolitical risk and sanctions from russia and those concerns. they did come out earlier this month saying we are against sanctions between russia and the eu and the united states. it we are worried at the unpredictable effects. the numbers are pretty stellar. doubling in terms of their profitability. we are raising the forecast. they are making 4.5 billion dollars worth of profit for 2014. were $24 billion. more than a many make in an annual year. this is a huge juggernaut of a company. they are managing to cut costs and seed increase in volume. the developed world in particular. the united states is where they are seeing the growth. >> how about tensions between

russia and ukraine? >> we wanted to dig deep. how important is russia? the sanctions they said were negative across the board. this doesn't seem that bad. citizen and a business we are not worried. the food will have to come up a while from elsewhere. that maybe latin america or africa. that means more shipping. if there is less port activity west, west, -- in the see this as a major threat. nobody wants to see the situation to escalate. >> nobody wanted to escalate, clearly. sales, it is% of not a concern. they had to navigate these

waters all the time. thailand is a concern. you have the middle east. this is a company that is globally exposed, but it always has to navigate political risks to a degree. china dominates the space from europe to the far east. deals insigning these the mediterranean. they are sharing vessels so they can keep capacity. are returning a chunk of money to shareholders. >> they think the capital structure is almost too strong. >> i'm sure there are many overleveraged companies feeling the pain. is a nice chunk of money going back to investors. that is about a quarter of this year's rough ability. they are giving back shares. the share price is up. >> all this in an industry where

overcapacity to such a concern in recent years. >> they are saying we are still worried. people are not quite as careful about what their capacity is. ae real reason this is problem is they invested just as the market started to crumble. they had already stacked up these huge juggernauts of the sea. online.coming if we are starting to see a pickup on a trade. have three of these enormous cargo ships. they are having another 11 delivered. they are boosting their capacity. trade is not arriving at the same amount. they feel the other players in the field are not being as disciplined as they are. this is why they wanted to sign this deal.

they wanted this overall agreement with an alliance between themselves and a french player. they have about half of the market from the far east to europe. they are going ahead with it. keep all about trying to overcapacity. >> thank you very much for that. this is what else is on our radar. the new firm will be based in perth. this is the world's biggest miner. we will have more on that later on today. the result claims that the bank did not flag suspicious transactions. a settlement could come as soon

as this week. barack obama says the netted states will continue to administer airstrikes in iraq and support kurdish forces. he says the netted states is working with an international coalition to support humanitarian relief in a northern iraq. finland's biggest exporters are getting squeezed by both russia and eu sanctions. we will talk about the rights of weighing financial war on vladimir putin. ♪

>> welcome back to "the pulse or ," the pound is in focus today. this was the reaction that we saw in the pound against the dollar. than theweaker analysts had been expecting an economist to been expecting. the estimate was for 1.8%. that is taking some pressure off the bank of england if it is considering interest-rate increases anytime soon. seems to be the thinking that is going into that.

let's return to the crisis in ukraine. the finish president met with -- ease putin to you tensions. no one is more dependent on a trade with russia than a finland. they are struggling to mitigate the impact of sanctions. is the managing director of an international business hub in finland. thank you for joining us. says 50%er of commerce of businesses in finland are impacted by the sanctions. does that sound reasonable? >> yes it does. what is more interesting is 70% of them show they understand the reasons for the sanctions. they are behind the sanctions. there is a support for what is happening in the business community. >> give me some background to

that. why do you think the business community is so supportive? is it coming from all areas and all sizes of the business community? has been hit the hardest of european countries. we are so dependent on exports to russia. we have a long history with russia and we understand the value of good relationships. the highest support is among farmers. they are the ones who are predominantly hit. finland has the sense that they are in the eu and in it as a team. this decision that has been made and we will do everything we can to support the decision makers -- pivot more it to the west. successful are they at

finding alternative markets. i think it is an ongoing process. private citizens have been .uying up our largest dairy producers have been buying up products. the cheese was off the shelf. there was a huge showing of support domestically. we are seeing a lot of companies come to talk about the long-term solutions. we do know how long the sanctions last. , everyone short-term -- everyone is looking at the long-term strategic solutions. people have been calling about how they can take exports more to the united states and other european countries. that has been a focus area. we are opening up the united states office to help support

the amount of companies that have reached out to us in the last few weeks. >> that is interesting. to you have experience with social media playing a role with consumers to buy finish? there was a social media camp in polandampaign about eating polish apples. >> the topic is being discussed in social media. i think it media has the larger role right now just encouraging consumers to buy finish. i think that everybody read the counter sanctions, we went to the grocery stores. we went to support our farmers and our industry. are you hearing any calls from businesses or parts of the business community for more burden sharing? this is hurting finland banks more than it has other countries around the eu.

they are going to help certain sectors as a result of the sanctions being imposed. what is the attitude toward that particular theme in finland? businesses really want to see a united eu stance on russia. they don't want to publicly call out european leadership. there are so many european projects that we could be working on to strengthen our economy and to offset the 4% of trade that we need to offset russian trade. we need to be looking more to the united states and european allies. i think a lot of what is being -- itsed right now is needs to be fast tracked. we need to complete the single market in the eu.

that needs to be fast tracked. the general attitude among businesses is we have alternatives and things we can do. there are other customers. let's get doing it. it's try to get this done. >> the sanctions are increasing pressure on legislatures to encourage transatlantic trade. thank you very much for joining us today. up next, cashing in on classic cars. stay with "the pulse." ♪

>> welcome back. not justclassic car is a purchase, it is an obsession. the amount of time and money the goes into restoring and maintaining these cultures can make an art collector blush. we talked to the aficionado at monterey our week in california. this is the most important week of the year for us. >> there are billions of dollars of collector cars here. thousands of cars on display here many are for sale. a car showd off as where the cars are judged. then these auctions started.

this is created a gravity to the events where this is the place that the world watches to see how the car market is doing. not just to see what cars are the prettiest. >> you say the market is doing well. certain drill down, makes of cars have been performing of cars have been performing that much better than others. we know that for aris have been doing well. when a for our he does something, they are index linked. >> everybody is talking about for ari, but they're so many that are doing well. the mercedes market is doing well. porsche. jack wire. the european racing cars.

the benefit of collector cars is i am not buying a yacht. you may have to pay a good amount of money for it, but the car will hold its value or go up in value. we encourage people to buy a car that they love. value,oes up or down in they may own it for a long time. >> it's all about the love of the car and sharing it with others. i think any car was ever purchased without resale value. >> as we head into the break, we all thengs off with control of where you are going. thisd to argentina where verse and is going down the mountain. this is like skiing but not for

the pain of that thing apart. they may look like flying squirrels, but they are wearing wing suits as they glide to the ground. ♪

>> welcome back to "the pulse or cope we are in london. it here are the top headlines. angela merkel is soon to visit ukraine. declinedellor's office to comment on a date. a report said the visit would happen this weekend. more natouled out combat troops in eastern europe. prez obama is sending his attorney general to a missouri suburb to help calm a weeks worth of unrest.

they have clashed with police and thrown molotov oxtails. a police officer shot and killed and unarmed like teenager. the new firm will he based in perth, australia. bhp is the world's largest miner. let's get straight to our market segment. dennis kenney has the details of where we are today. already equity market. you're going to see some kind of rye grass in the ukraine. this is a whole the debate. driving the equity markets as well. london is up one half a percent. it is day five of gains for the u.k.. we want to understand there is no inflation running a factory

in this country. prices dropped for the first time in five years. you might not feel this when you go to do your food shopping, it is there. prices are dropping. this is a important ratio. this means the bank of england is hedging. they don't have to raise rates. or will they? the rates are. the analyst notes say that the bank has more room. we have low energy prices. we have no price hikes. let's have a look at the futures. up. futures are

they're having a tough time. we have had the highest closing. i wonder what janet yellen might make of that bubble. you've got it all here. that laterfocus on in the week. that is where we will hear from janet yellen. tom keene is here from new york to give us a preview. manus is going through some of the amazing statistics. tech stocks are at a 14 year high. to i have to quote shakespeare? >> it's deemed incredibly impressive. >> i am terrible at doing that. i never had the skill to do it. it is the winter of our discontent. >> you downplayed your ability.

that was very good. of oure it is the summer discontent. we will talk with adam parker about that. his caution was right. he got a mini correction and he is now. we will talk about where to put money. there is a risk on trade two days in a row. we will turn to jackson hole. michelle meyer will join us from bank of america. she has been prescient about the housing economy. we will talk to her about the limitations and options the janet yellen has as the chair travels to wyoming. a lot is going on. we will go to ferguson, missouri after another very difficult evening and night of unrest in that st. louis suburb. >> here is a quote i did not know was shakespeare. neither a borrower know a lender be. let's talk about banking. let's go back to austria where

jonathan ferro is standing by in salzburg. he has a bloomberg exclusive interview for us. >> thank you very much. it is starting to develop into a beautiful morning. there is a very laid back feel to what is happening here. i have douglas flint. thank you very much for joining us. financial stability is a big issue. as of everybody is talking about. we're seeing more stress tests and regulations coming from various geographies. are banks starting to get overwhelmed? what are the unintended consequences? >> i think this is an important dimension. we've now got capital looking at risk and looking at leverage. this is adding another prism. this must be an issue as we go forward.

the complexity and the burden of all the different ways of looking at risk and looking at capital requirements as operational and executional challenges to the organization. having come through a crisis that cost so much for society, we need to learn those lessons and take advantage of the insights we are getting from all of the prisms that we have. could we now face a. of out right risk aversion from banks across much of europe? >> i hope not. there is that risk. a great deal of execution challenge on our people and we have an environment where they are fearful of making a mistake, they will revert to the simplest products in the simplest services. they will be disinclined to do

the more difficult customers. we are in the risk business. we have to be careful not to institute a risk aversion philosophy within the organization. that is really all about leadership and training. howhen you look at hsbc, much is being sent on a risk compliance? >> it is huge, but it is necessary. we have grown from something like 1500 to 6000 people. about $1 billion a year on compliance and risk elements. ithink as you look back, might be necessary. it has been investment that was under spent in the past. as technology supports trading we will be able to moderate that cost. we will have institutionalized that as businesses usual.

>> when you look at firms that have come back and the fines that have come from abroad, how have they been calculated? some people would say the numbers of been plucked from thin air. how do we get from point a to point b and get this outcome? >> every circumstance is different. all of the circumstances are emphasized to all of us. it is important to have a good compliance culture and in control of our business to avoid getting caught up in circumstances that can be very expensive. get the fine and then there is another hurdle. it seems like there is something always on the table. for the industry as a whole, when we get past this legacy? industry starts to behave in a way that nobody calls into question its behavior.

it we need to train the right people. we need to send the right people and have a business model that is transparent where we can evidence that what we of them is the right way of doing business and the outcomes our customers are proportionate to where they out to be. it is for us to manage our business model. >> there has been a lot of talk about regulatory overreach. some people wanted on the agenda at the g-20 later this year. is this something that needs to be looked at in your mind? >> i think there is an intense. of regulatory change. recovery,ook at the we look at the regulation changes in terms of business models that have been proposed. they are still being developed. there are a lot of execution challenges. the g-20 is right when they have an ambition of trying to call in and to putting more stuff on the table and deal with what is ongoing in trade. they can get the industry to

assimilate and take stock where we are. we can move forward from there. >> what is on the table right now is ring fencing by 2019. is that an achievable timeframe? is it the right thing to do? >> it is achieved will and are geared up to do it. i think the foreign ministry commission decided it was the right thing to do. we are geared up to do it. will have greater transparency between two aspects of the business. that is an important step to but confidence in the industry. ofwhen you look at the likes the legacy of the crisis, are these necessarily the right ones? that has left us with the regulation. is there concern that we have not pinpointed what really was

the cause of the crisis and the regulation is not the right stuff? >> i think there are so many contributing factors. it is simplistic to point to any single factor. those banks that failed or those banks that had to be injected had every type of business model and incentive structure and came from different parts of the world. it is difficult to point to one failure or was the the success. every business model had problems. >> do you see more sanctions coming through for the russian financial industry? is that a concern when you're trying to run a global business and sanctions pop up everywhere? >> i think one of the changes over the last few years has been being put in the frontline the public policy. i think we just have to accept

that. the financial industry has to respond to how society wanted to behave. respond to society's expectations. if they want us to play a bigger role in the execution of sanctions because of geopolitical events, that is a role we have to accept. >> when you look at the regulatory side of things and you look at the public calling the banks to lend more, we talk about the possibility of an unintended consequence that , is achievable to raise more capital and lend more at the same time? >> it is. we have to make sure that the infrastructure is in place to support people and train them properly. their ambition is to go out and find productive uses for the

money that we have got for the credit that we can raise. we can contribute to growth. the rehabilitation of the industry's reputation will, because economies are better and people feel more confident and secure in their jobs. they will be more sustainable. the banking system will lay a role in achieving all of that and people will feel better and more confident and more trustworthy in the industry. that is what we have got to aim for. you look at incentives and financial incentives, this is a political football. is it harder to implement the right kind of incentives when you see the likes of the new rules about what you can and can't do with bonuses? >> it is challenging. we have to respond to public the stressed. it is important -- public distrust.

society believes that those rewards are reflected. much foryou very joining us this morning and sulzberger. the sun is just that into come out here and it is going to be a great day here. we are having a far-reaching conversation. this is a very exclusive 4s. >> jonathan ferro. coming up, mining's big spinoff. there is a big split of the company. details after the break. ♪

>> welcome back to "the pulse." now to the biggest loser on the stock market. the mining giant released earnings but the big story is that it plans to create an independent metals and mining company. thank you for joining us. give us the details on what it is they are creating. what are they spinning off? >> they are the biggest mining company. they created the biggest spinoff in the mining industry. they are shedding some unwanted assets. these would be quality assets in other portfolios. they are undervalued.

they feel like they can generate more value by putting them in another vehicle. >> to we know a name yet? >> no. .he company was created >> what is driving this decision? are we talking about bhp holding onto the large resource basin since been enough smaller stuff? >> effectively that is right. they are retaining the key portfolio assets. they're going to focus on those businesses. the rationale is this is going to focus on the key assets. they put some quality people in the new company to run that. -- current cfo is

going to be the ceo of the new business. why is the stock down? >> bhp would be disappointed with the way the market has reacted to this. they are down 4%. they did not see it coming. the key driver is the lack of share buyback. sharess were expecting to be bought back. that did not happen. -- a key part of this is with the shares not being listed in london, the view is the existing london-based investors will have a mandate to invest. it will create an overhang for the stock. that will be one to watch. >> thank you very much. has a newicrosoft ceo title. he is the owner of the los angeles clippers. he was speaking with trish regan. they were talking about the market. >> i want them to be the very

best the clippers can be. the best team, the best players, the best character, the best coaching staff, the best is this, i want all of that for the clippers. we are going to have to be hard-core. we will work to be that are and tenacious and more excellent. the fans are very excited and fired up. >> a loyal group rate >> clipper fans seem conscious. they chose the clippers. that is an exciting thing. >> and you chose them? >> i think clipper fans are glad to be able to focus on basketball. >> doc rivers has been a big force holding this team together through this difficult time. what is going to happen to him? >> my job is to figure out what

i can do to help dock. >> what is your leadership style? am an enthusiastic and optimistic leader. i am going to ask a lot of questions. i will not micromanage but i ask a lot of questions. that is how you push to be better. all of those things work in a business. when i joined microsoft it was 30 people. when i left there were 100000 and 80 and $90 billion in revenue. it was the third most possible company in the world. i think that worked pretty well. to the same characteristics apply? i think those same qualities will work pretty well. the right to get people and lace. i am not the expert.

we need experts to can run the various parts of the clippers. doc had to recruit players. nobody knew at the future the team is going to be. now that you are at the helm, now that there is a path of clarity, who would be your top choices to bring in? >> there is no question that with stability comes opportunity. thativers has been clear this makes it easier for him to do a lot of things, including recruiting. >> steve ballmer is the owner of the los angeles clippers. let's move to golf. nike has unveiled its new vapor line of golf items. erik schatzker sat down with the president of nike golf and eiger woods. >> participation is hard. athletest to see other

like michael jordan play golf. it is nice to see tony romo and other celebrities. these athletes play really well. that is when you can make golf cool. that was tiger woods speaking to erik schatzker. we're going to take a short right on "the pulse." ♪

>> welcome back to "the pulse." we are streaming on the ipad and bloomberg.com. we are checking on the currencies. let's look or the pound is doing against the dollar. 16649. that is coming in below where analysts were expecting. that was an estimate of 1.8%. the markets are speculating that that might take some pressure off the bank of england to increase interest rates in the near future if they were under that pressure in the first place. that assembly that is moving the pound. we find ourselves in the currency market. ae broader market has seen positive day for europeans.

they have picked up on the good vibes from the u.s. markets. "surveillance" is up next from new york. ♪

>> this is bloomberg "surveillance." violentsters or criminals, unrest continues in ferguson. 50ice clash with

demonstrators. that was a correction? we spate to a reinvigorated bull. a darling of instagram, eva chen. this is bloomberg "surveillance," live from new york. i am tom keene. joining me, scarlet fu and adam johnson. let's get to our morning brief. overnight, u.k. inflation slowed ever so slightly to about 1.6%, it had been about 1.9%. cpi,wn read at 8:30 with expected to slow to 1.9% from 2%. >> over the weekend, inflation will go up because of the affordable care act. >> what is curious about