>> a meeting. presidents putin and poroshenko are set for talks as tensions flare on the ukrainian border. cabinet chaos. french president hollande is expected to announce a new team. the second in six months. the final showdown. overrs side with salmond scotland's independence. >> good morning. you are watching "the pulse." i am guy johnson.

fives going sci-fi. speakers.levitating apparently, they sound great. big reveal. inside of their new suv revealed today. the first look at 10:00. let's start the big story. the meeting. presidents putin and portion go, we think -- poroshenko, we think will face each other flanked with ministers. hans nichols in belarus. what we get a meeting and type of optimism that we get a deal that is tangible? >> there is very little optimism heading into it. angela merkel dampened expectations and today am the only meetings mr. poroshenko and mr. putin a half on their schedule is for group meetings

joined by ministers and other state.f one thing i will be watching is for schedule changes. if there is a tacked on meeting, a bilateral meeting, one-on-one meeting to initiate peace talks, to initiate some type of cease-fire conversation that would be noteworthy. right now, that is not on the agenda. all we have is recrimination's and escalating rhetoric on both sides. ukrainians are talking about columns of tanks coming from russia. russian tanks. clearly, there is intense fighting on the ground and no one on the diplomatic front, is trying to cool the rhetorical tensions. right now, it seems like we have a situation that this escalated and not to de-escalating. >> you are wondering why you cronies will want to back off on the ground. how is the fact we have snap elections called by poroshenko fit into the mix?

it may give up our goal more legitimacy and may lead to -- poroshenko more legitimacy and may lead -- he is saying there are so many members, some members are clearly sympathetic to the rebels. he wants to have a unity a unified government so he can sort of a, were for a peace organization and process and b, work on the economy. get the economy going in incr eased ties to the west and angela merkel. the foreign minister to german broadcasters and german sad he wanted a merkel plan for ukraine. that's a lot of dollars in economic investment. >> it is fascinating that the sort of event that it is taking place at, this eurasian meeting, this idea we would have some eurasian currency -- and not

currency, sort of tax area. currency and that is where it all started really. >> a very good point. one note. belarus which has a quite strong agricultural sector could be a great benefactor because they goodsend exporting more to russia because of the ban of eu goods. it was the idea of ukraine tilting toward the west because cancellationsts, of agreement and that agreement was finally signed after the end of june in brussels. here we are, this brand-new palace behind me. it is sort of the seat of government for poroshenko. the sovieto expand. trade union. that does not seem to be going in that far of a direction.

question has to do with energy and will natural gas continue to flow for russia to the west through ukraine to western europe? energy why the trade -- minister is also here. they want to put those talks having arack and start conversation. the delivery of natural gas, they made me to get it going. nobody is thinking about it because of the weather is nice. when the weather gets cold, that natural gas component will be much more pronounced. there., we will even hans nichols, thank you very much. we will be back with him later. let's turn our attention to france. president hollande has been forced into a third major overhaul of his cabinet in two years. aftervernor has resigned the economy minister broke ranks and criticized hollande's

deficit reduction policies. where is it going? carolina has more. this is about the economy, what are we going to do later that will fix the economic malaise? yes, the government only lasted 147 days. it signals a big divide among the socialist members of the president hollande's party. the former economy minister responsible for the cabinet reshuffle and wants to see similar tax cuts targeted toward , toeholds, french people re-boost the economy at the moment. stagnantowth has been for the past two quarters for the zero growth. it is seems at the beginning of the year, most of president hollande's reforms have been

targeting tax cuts for companies and not the french people. the minister was talking about and he said the austerity policies were failing and trying to offer an alternative. take a listen. asmy personal responsibility economy minister's proposed alternative solutions is that yes, another path exists. i'vehe past two years, been tirelessly fighting to convince french president hollande. letters withotes, private and public messages to the head of the executive to convince hollande. president ofed the the republic to refuse the measures that risk damaging and weakening our economy. ispresident hollande targeting spending cuts of 15 hision euros by the end of mandate.

we will have to see if he wants to revise the plan. for now, a whole ideological debate taking place not only in france but across europe. >> caroline, we know who is out. who is going to be in? yes, there are a few names circulating around in it the media this morning. we hear the former paris mayor. he has the advantage of being a very popular among the french people and another name coming of aeds, was the ceo which is now airbus a group. he was responsible last year for reform on competitiveness. he is among one of the names we hear here in france. another name we hear is the socialist mayor, which is the second biggest town. it could signal president

hollande wants to a tract of more mayors and local people, closer to local. his popularity is still at a percent.w around 16 of course, he wants to assert his leadership. he does now want any troublemakers to defy him. >> certainly not. caroline connan. we will be back in france later. spain today.l in tensions escalating along the ukrainian/russian border. president putin and president poroshenko are set to meet. that is coming up after the break. ♪

>> good morning. welcome back. you are watching "the pulse." we are streaming on your phone and tablet and windows phone. the presidents of russia and ukraine, we think may meet as a border tensions between it continues to escalate this morning. paratroopers captured any ukraine. the russians said they strayed on accident. the situation on the ground remains tense. at a capital

management company joins us and we were hearing from our international correspondent earlier and he said that a missed expectations are very low will will see some sort of a breakthrough today. would you share that sentiment? >> i would agree that no one is expecting any far-reaching statements. it is good that did they are meeting and at talks will be conducted. content will be mostly private. is a you think there situation that could now at least get these guys in the same or thebe positive situation on the ground as it continues to deteriorate will make any chance for a breakthrough with russia and kiev anytime soon almost impossible? is good that both

parties meet at the highest level and i think it is a good data there's clearly some european mediation and involved. behink that indicates we may at the low point of the conflict. ofhink with the advent winter and question of security on natural gas through europe, it becomes a more issue. sides may start to think about the economic consequences of the conflict and how to support and restore the economy of ukraine. this is where i think a european thinking comes into the equation. europe is realizing it will have to shoulder part of the economic cost. >> if you were running a -- somewhere had

in ukraine or russia, would you expect of the situation that we have currently to get worse as we go through the winter to affect your business negatively or judy the advent of winter and it will crystallize mines will make things better? how would you be planning? difficult for foreign businesses to plan a head right now in ukraine trading,he usual economic environment has been severely damaged and i suppose people are fighting for survival. of peace toagree war. for the involved governments, the terms of the resolution remains an important issue. for the people on the ground,

any peace is preferable to war. >> i think we probably all agree with that. this morning we have seen 10 russian paratroopers captured on the wrong side of the border. moscow saturday straight on accident. this type of incident has the potential to act as a catalyst for a wider conflict. how the nervous does that kind of event make you feel? and behavior of , led intooopers ukrainian territory on the eve of the summit in minsk is very inopportune for general peace talks. hope, this incident will not be [indiscernible] general specifications.

another potential catalyst for further military action could be the arrival of a second convoy. we saw the secretary-general of it asserts the purpose of distracting attention from more advert operations." how do you think we should, as investors, people with by theses, or affected conflict, how she will be reading the situation? how nervous should make us? russia invading enario i forot a sc see. if putin was entertaining and he hasking for pretext, plenty of pretext that could be shaped. it is not going to happen in my

mind. the discussion makes some people reasons, i various do not expected this to lead into full-scale confrontation. >> ivan we will leave it there. ivan mazalov joining us out of moscow. right. let's go to scotland. took place andte glasgow last night. before he wakes to go for the vote. -- three weeks to go before the vote. a currency union and defense. in threecision we make weeks time will define us, this generation and also the future of the nation. they have secured this opportunity to vote to themselves and to independence. an opportunity at the ballot box and has been agreed and

consented. an opportunity that may not, our way again. >> we do not need to divide these islands and separate to assert our scottish identity. we can have the best with more decisions being taken here is, backed up by the strength and security provided by the united kingdom. optione have no other than to say politely and respectfully but firmly, no thanks to independence. r darling was seen to success -- successful and the first debate. but alex salmond and the second. what does it mean? talk me through the highlights and in terms of the takeaways, what were they? spirited a far more debate from the first minister wondarling was seen to have

the first debate when he was focused on currency. this time, salmond fought back and claimed he had very much a plan b and ran at concession out darling when darling said he conceded that the scotland could use the pound as one of the variety of options. and the nationalists took a lot away from that. then exchanges over north sea attemptingarling was -- over the revenues and estimates by the scottish government. and his former life was an oil economist. areas,all of these darling failed. darling ofused of

talking down scotland. the newspapers seem to go with salmond. "salmond strikes back." does it have any meaningful impact in terms of people's perception of which way they will vote? thepolls give the unionists chance of winning. will last night have a minute for impact on a significant swing? >> we have to wait for the next poll to come in. the conclusion, from the subsequent polls was it enough sway opinion a much either way. the said, last night, victory by salmond was far greater. it will certainly give them some fiercelyto campaign going into the last three plus weeks. i think salmond opened up some

water over darling when he essentially tried to associate him with the conservative government, which is against independence and accusing him of with of the tories. that's a charge that can stick in scotland. >> it is interesting you bring the last point of. the debates, the focus of the campaign has been very economic north oil revenue and at the pound and what happens to the scottish economy. how much of this is about raw emotion? how much will come down to the fact at some level the scots do not like the english? does it come down to a level of that? >> no, i would certainly say it is not about dislike of the english. there's a dislike of what is seen as a democratic deficit in

scotland. there is one conservative member ruled byament and yet, westminster. that is an argument. that is what makes this so fascinating. very a fluid situation, hard to gauge. i am not convinced that these opinion polls tell the whole truth. >> that is what i was getting at. underlying emotion and whether it is being reflected. we will watch and wait and count the votes. alan crawford. we will take a break. back in a couple of minutes. ♪

>> welcome back to "the pulse." check in on the markets. a big rally yesterday across most of the eurozone. the dax is down by 0.3%. the ftse is back. putin and poroshenko could have a showdown today. look at a potential for a one-on-one meeting. the french may announce a government today. german bond yields going down. 0.94%. the two-year is negative. who is buying this? i spoke to the cio of ubs and

another analyst. neither of them were buyers. i will leave you with that. we will be back into. ♪

♪ >> welcome back. you are watching "the pulse." i am guy johnson. these are the top headlines. excuse me. a televised debate between the nationalist leader alex salmond and former challenge seller -- darling haslistair as the winner.nd >> have secured this opportunity

to vote to themselves and to independence. an opportunity at the ballot box and process of and consented. an opportunity which may not come our way again. >> presidents of ukraine and russia, we think meet today in minsk during a summit. discussions are expected between poroshenko and putin. the talks come as ukraine accuses russia of send a convoy over the border before heading to the capital of belarus. ukrainian president called for a snap election. -- french president along hollande has announced a new cabinet. the official -- it exposes a larger rift which is seeing a backlash against a german clamp

down on spending. caroline connan joins us from there. the entire french government resigned after the controversial comments from the economic minister. we expect a new cabinet today. i am joined by a socialist member of parliament. very nice to be with you today. we do not expect the entire government to resign. were you surprised? >> i was very surprised because in fact, the minister did not thatery different things would've come out. we were surprised. it was clearly a leadership issue. andave a prime minister said it one week ago there's only one line and one voice and

one had. and some days later they said no, let's talk. [indiscernible] ofyou were in charge economic issues during the campaign in 2012. has he become the president of austerity? >> we do not. we have decided to make strong spending cuts, one billion euros of cuts in let's say, three years. than thearly more amount we had announced during the campaign. but it is necessary. friends has to decrease -- in france has to reduce its deficit and very slow growth and we need to grow. it is this a balance we need to

find it a next month. >> the former economic minister said fiscal stimulus, he offered tax cuts for households at 16 billion euros. is a fiscal stimulus? >> he has given fiscal stimulus to companies. 41 billion euros for companies. we did not do many things for the households, even though we have issues already. [indiscernible] hollande has already said there will be tax cuts for households. the problem is -- he will ask for 16 billion. [indiscernible] we have at least 5 billion. that we needready

to save 5 billion anyway. will do tax cuts for households and potentially the middle class. we have an issue. 580 euros, would it do enough considering you gave 40 billion euros of tax cuts to companies? that is where the problem is. we need to do more for households in order to boost growth and consumption. >> a very big debate in france. we will try to start the debate. mr. hollande is at the leader. she wants to take the time to give time to companies to use it to create jobs and invest. that is not going so well.

at the very start of the policy and we need to wait realistically six months to make that we need to do something different. >> what is in your opinion that number one reform to boost growth and boost demand, domestic demand? europe issues. we cannot go on with all of the countries around europe [indiscernible] to cut spending after the same time and all the countries. if we grow like that, it will be a big issue. a kobe politico. we talk about the party increasing. -- it could be political. especially --nge we need to change especially in countries that can change it. we need to ask for monetary

policing. as much as possible and assist in a growth and help the european union to start a streak of a rebound. it has not start in europe yet. what is france's main message to your pain at leaders and is the president, mario draghi, writes to be inching toward qe? >> a very simple -- a growth. including mr. draghi. need to a growth -- agree on one word, growth. future growth. if we cannot agree on that, the next days, if we cannot agree on that, there will be problems. thank you veryr, much. socialism movement of parliament. she was in charge of economic issues during the 2012 campaign. talking to us about what is

needed to reform the french economy. back to you. >> one word -- growth. thank you very much indeed. let's continue the conversation. the growth.ng about of course, we need growth. the question is, how do get growth? hear theteresting to conversation. talking that we needed amanda story in europe. she was obliquely preferring to germany i think. sheome ways, karine berger has a point. >> i do not think it resonates well in berlin. the message that a big part of the left in europe that is been in charge and what we have seen trestman a austerity politically but there is time. over campaigning

on austerity. essentially, what is going on is the ecb is austerity. >> this is also about the reshuffle is about power and theyrity and making sure can communicate the message from the government is that it is a single voice and that's ultimately heard. onetheless, we are competing the reshuffle from an investor's point of view tells the government debt is in chaos that does not understand which way ford it is to go -- forward it needs to go unless it goes around a single message. from an investor point of view, either businesses or investing, what message -- what you take away? >> you're absolutely right. the problem is the party. people within the government. she wants to get things done. but you have a party where you have a voice.

have been saying these policies are wrong even though use economic minister. it does not send the proper message to markets. and the otherande guy have said either you are with me or against basal step -- or against me. ministers are saying argue against me or with me. >> what are the wider implications for the eurozone? it feels quite binary to me. a french government that unites, forms a core and can push forward or we end with a split party that fights. worst of what we have now. it feels like it will go one way or another. what are the implications for the eurozone? >> into depends on the end of

the day, the markets. ago, happened two years everybody would essentially be concerned about the future of france. the fact that france is a super low level of cuts it allows them essentially to muddle through. to be honest, i think that is what is going to happen. hollande can use pressure. and one of dissolution. [indiscernible] of separatist will be out of a job. negotiate, to support from the policies. the duration of the political situation that can get policies that really depend on what point you have. ahead of thears next election. you have a situation that could lead to -- [indiscernible]

merkel talking today. head of thed -- eurogroup it looks like. spain in some ways is a poster child for austerity. you have high unemployment in spain. nonetheless, you are beginning to that in this scenario and europe were germany points to spain as they do the economic reforms and this is what happens. how did that to play in both the germany and france and spain? view ofthe point of germany, it is quite obvious. they have the upper hand in at debates. the economic power. you can see some flexibility around the edges. if merkel is willing to go beyond. not so much for short-term. [indiscernible]

if they havehocked another crisis and you have to put money on the table. i do not think you will see a lot of change in germany. in spain, even though they are supporting the policies that are proposed a by merkel, he wants .o give reform and give leeway on the one hand, he is reaching austerity, to show something to voters. be an france, it will open debate. not as open as leaving the a very powerful spokesperson against austerity. it will get worse and worse in the coming of months. >> we believe it there. antonio barroso joining us. and talk about corporate. we would do the after the work. wpp beating estimates despite emerging markets' slow down.

we will break the numbers down in a few minutes' time. ♪

>> welcome back. you are watching "the pulse." the world'sp, largest advertising business beat estimates. growthcontinuing to show even though they warned all about geopolitical tensions and a slowdown in europe hurting business. here with the more it's caroline carolineith more is hyde. let's talk about the good news first. >> they did well across of the board. out there stripping currency effects, 5 billion pounds worth of growth. 17% growth in the united kingdom. notably, asia, latin america, and africa -- they said they had a bit of softness in the ukraine. ofsia, still strong in terms

sales. even western europe where they set the macro environment is very challenged and that is was it they are saying and their statements the east out growth. across the board, it seems to be improvement. profit did not do quite as well. sales are strong. nearly 9%. despite the warnings we had on sunday saying they were word about western europe and potentially russia in the second half of the year. said it germany slightly slowed in the second quarter. nevertheless, we are seeing growth from the center. likes to talk about geopolitics was that he was on form in this note for -- geopolitics. -- he was all form in this note. it has a big footprint. >> 110 countries. versailles view of what is going on.

they go into detail on black swan and gray one is known unknown. >> we are getting a rumsfeld. >> the eurozone is one of the key risks and so is middle eastern tensions and chinese or emerging markets slow down. so is the u.s. deficit. they highlighted again $60 trillion worth of debt and that is important. the u.k. is worried about and we heard from alex salmond yesterday. the debate and they are saying the u.k., the scottish on eundum, the referendum that we cannot avoid. black swan, that a word about geopolitical risks. they say number one is chinese/japanese tensions to >> that the talk about black swan. one is aay blacks known unknown and we will talk about it. indeedd gaza and

ukraine. they will be across the board geopolitical risk that they say they are worried about. the british pound, will to talk about. ravaged is what they say. they do not use the words too lightly. we see massive effects. sales were up, if you take into account the strength of the home ofpound and bring the revenue. largely in the united states. up to point -- 2.7%. , up 11 --oy the pound ignore the pound, up 11%. ell if you take into account the british pound. some point in the future, there will be an impact. thank you very much. caroline hyde. let's get company news for you. its expanding.

according to report by "the financial times." they will open offices in 12 more european countries. ads will build to buy directly. buying $8.8 is a billion worth of commercial jets. that is a big as ever for the airline leasing company. most is for the 737 family. demand ofxpecting asia. chineseese, a huge leasing company. europe's largest online shoe ,etailer, orlando -- zalando may announce its ipo this week. those close say they may announce shares in frankfurt. worth 2 billion

euros in sales. talking a bigger numbers, the pulse number. one for $1 billion is how much amazon will pay in cash outs for twitch interactive. has more than 55 million active users per month. .mazon tromped google's bid uplifting story. 1110 and speakers getting a boost by-kick starter. -- levitating speakers getting a boost by kick starter. it was to take out friction. we will talk about that when we come back. ♪

>> good morning. you are watching "the pulse." an uplifting story. what may be the first floating speaker. audio qualitytter than regular speakers because there is no friction. ♪ not a magic trick. this is the first levitating speaker made by a california startup and it works using the power of magnetism. >> levitation is accomplished

because there are two magnets. >> connecting to a music player by bluetooth, the company said the quality is better than regular compact speakers because it does not lose sound through friction and vibration. >> the sound is cleaner. you can get cleaner sound. we can get more audio. >> this is just a prototype. the company plans to use the proceeds of a crowdfunding campaign to mass-produce the speakers. >> we raised 170k and our original goal was 100. this is actually happening. we are bringing it to the world. >> they have raised more than $500,000 and expects to start shipping speakers in the end of the year. perhaps 2015 could be the year where instead of flying cars, we will see flying speakers. or at least floating ones. >>. .

up in the next hour, what have we got, the french government reshuffle. sound gdpreaking the numbers and they are out at 10:3 0. we will see you in a moment. ♪

minsk.eting in ukrainian are on the border prm hollande is expected to announce a new team today. the second in six months. we'll be live in paris for that story. >> good morning to our viewers in europe and good evening to those in asia and a warm welcome to those waking up in the united

states. i'm guy johnson. we're live from bloomberg's european headquarters in london. hi-fi goes wi-fi. volvo's big reveal. we'll take you inside their new s.u.v. first pictures today. to the first of our major stories, though. russia acknowledging troops were inside ukraine but apparently by accident. that could make for some interesting conversations in today's group meeting when presidents putin and poroshenko ill be present in minsk. inopportune timing in terms of the troops getting what the russians say was lost. >> yeah. look.

learly this is coming from other russian state news agency. russia acknowledging what ukraine has been saying all along. it gives ukraine a moral advantage. they have proof now that russian troops are inside ukraine. they have several group meetings planned today. a group working dinner. a group photo. nothing firm in terms of one-on-one between putin and poroshenko. there may not be a whole lot of progress. there may not be a whole lot of chances to have peace talks but we will learn today whether or not both sides are serious or not serious about unwinding -- or if both sides want to continue to make inroads on the ground and then at a later date try to bottle those inroads in

some sort of peace talks. we may not get progress. >> in terms of the political ory in ukraine, porshenk ore calling for elections. the objective is what? >> to have a parliament that better reflects the current situation this ukraine, which is tilted according to some of the folks we have talked to towards poroshenko's government and have a parliament that is more unified. right now it is fractured. this has long been expected. what is interesting here is that poroshenko thinks of the date which is later in october. close to two months. that will allow him to have a stronger majority to put through his economic, trade and military reforms and by i mean increasing attacks and operations against the rebel separatists in the

east of the country. guy? >> in terms of where we go from here, you talked about the fact that we may start to get some clarity. putin and poroshenko have two very different kind of desires in this situation. poroshenko is making advances on the ground. he is likely to talk about some sort of cease-fire or short-term peace. how does putin come at this? what is his objective here? what do you think his short-term means and desires are? >> well, the short-term from the ukrainian, from the russian side has been a cease-fire. they will not begin to discuss that and to consider that until russia stops supplying army and supporting the rebel factions within the eastern ukraine. we have a nato meeting coming up. angela merkel hinted -- she didn't say what happened but she

hinted at the prospect of additional sanctions. we have that nato meeting. in some ways, if this meeting turns out to be a total disappointment and there are no real peace talks and we get clarity and both sides want to fight more. it is on the table. they are not actively pursuing but it seems to me like the most active place where we could have some positive movement. >> let's go to paris now. we turn our attention to france today because francois hollande has been forced into his third major overhaul of the cabinet in two years. his deficit reduction policies have been criticized. let's talk about what is going to happen today.

we have a clearly split socialist party. walk us through the events of the last 24 hours and what they mean. >> yesterday morning, guy, we had the unexpected resignation of the entire french government. this signals a big divide among the socialist party of president hollande. austerity policies and those who want policies to boost domestic demand. french growth has been stag informant. france has abandoned their target for 2014. since the beginning of the year, hollande has attempted some reforms but mostly targeted to companies and not domestic demand. he has introduced tax cuts for companies but not so much for households, for the french people and that is exact think criticism that was brought in by

the former economy minister. he said what france needs is fiscal stimulus. euros of 16 billion cuts for household. >> my personal responsibility as economy minister is to propose alternative solutions. yes, another path at this. other possible choices for france and for europe. for the past two years i've been tirelessly fighting to convince francois hollande. i have sent notes, letters, private and public messages to the head of the executive to try to convince hollande and i have implored the president of the republic that resists measures weakening our economy. the government is -- his --

for the country. >> so we're going the get a new government. who do we think is going to be in it? >> so there are a few newcome rs, outsiders that are mentioned around in the media. a lifelong socialist who is very popular among the french people. another local political andidate would be the mayor -- of france's second largest city. he could also join the government and then you a few outsiders who are mentioned. w.t.o. director. he is among those who are mentioned at the moment as well as the former head of eads and who was commissioned to write a report about france's

competitiveness. he doesn't want troublemakers to defy him anymore. we'll know more about details later today. >> caroline, we'll look forward to hearing about them. thank you very much indeed. aroline joining us from paris. we'll wait and see exactly what happens. >> rights. from paris to scotland now. the second and final independence debate took place last night in glasgow. oil revenue, the viability of a currency union and defense. >> what we make in three weeks time, the define us, this generation and also the future of the nation. few societies anywhere on earth have secured this opportunity to vote theltses into independence.

this is an opportunity at the ballot box. it is an opportunity which may not come our way again. we do not need to divide these islands in separate states in order to assert our scottish identity. we can have the best worlds with more decisions being taken backed up on the strength and security provided by the united kingdom. i would say we all have no option. no thanks to independence. came back fighting. 71% thought alastair darling had won the second. let's talk with alan crawford. in terms of the highlights, what were they, alan? >> well, again, darling, the former chancellor, they tried mond hard to press alex sal

on the currency. he managed to get concession from darling. it is not something that darling would like to happen. he conceded that point. then, as you said, they talked about oil. darling again was trying to push -- said that the scottish government's estimates of revenue were wildly optimistic but again salmond was tough to pin down. he accused darling of talking down scott land and all the way

he was pushing darling very much on to the back foot saying that he essentially wasn't willing to champion. >> the first debate didn't really move the debate when it came to the polling numbers. a little bit maybe. do you think last night had any effect? >> all of these polls cannot be wrong. they all show that the yes campaign led by salmond has a long way to go . the polling expert wrote before the debate that salmond needed a game changer. certainly he won by a large margin. whether it is a game changer, i'm not sure. >> it is interesting. last night and the whole

campaign to a certain extent has focused on clearly definable issues. what happens the pound. can scotland keep it? what happens with debt? what happens with oil revenue? all of these issues front and center. alan, how much of this is going to impact the scottish voter? who by anl and large is a pretty rational voter. is much solve is -- of this about emotions and the relationship between scotland and london? >> well, salmond seems unwilling to admit there are any unknown issues and darling has tried to pry him open on that part. salmond in my view certainly scored last night when he was associating alastair dwarling the conservatives, the conservative government of david cameron.

he was in the labor government. and the better together campaign comprises the two parties and the liberal democrats. salmond was accusing darling of being in bed with the -- so this -- it was an argument that seemed to depain some traction. it is largely an argument of the heart. nd it essential will need wait for the first poll to come out after this debate. >> it is going to be fascinating to watch the next few weeks. historic. thank you very much indeed. now coming up, presidency in paris. francois hollande policemens a fresh start. can he revise france's stalled economy? we'll look at the options when

we come back. ♪

>> good morning. you are watching "the pulse". it has not been a good month, august, for euro/dollar. socgen says month end is going to be quite revealing. asset managers versus reserve

managers who'll get the upper hand there. we have german c.p.i. watch that one carefully. talian retail sales. of this put together kind of what is the end of the month going to look like? how much flow will there be? will there be a lack of flow? it is going to be interesting coming into the month. remember, it is august. people are still on holiday. that is really going to have an impact as well. it all comes into the story we're going to talk about now. the conversation surrounding the french political crisis. hollande will name a new cabinet today. the second reshuffle in six onths.

in terms of france's economy, how significant is today? well, i mean, what is impacting the market, first of all. it should be better for the market and slightly better -- >> what does better mean? you buy it and -- >> lower yields. >> the yields get even lower? >> exactly. a lot of the yield is driven by what mario draghi says. the impact of what happened yesterday was probably a couple of basis points. for economy, i think there is a good challenge for france, which is to push for more fiscal -- more social reform. a goovet cuts and

dedicated to that will help. >> is that at the margin or significantly? we have a long way to go until 2017 and we get another presidential election. the kind reforms you're talking about is that a meaningful impact or do you it comes about what what happens in frankfurt? >> ireland, spain, even greece. we start to see right now some political -- and unemployment. it is not something that germany used to do. we are seeing now the effect of it. we see the impact. it is not a given. it should have been done back in 2012 and pushed in 2013 and 2014 and needs to be done. >> does he have a point when he more demand and

less austerity? >> the problem is the trade balance deficit, if you boost the -- you'll increase the trade deficit and you will not make the problem go away. the margin, the growth margin and they -- it is something that was achieved in spain, should be achieved in france as well. >> that is positive that we get at the stoofert economic reform package that had impact somewhere down the road. there is a more negative outcome to all of this. the socialist party is aggressively split and effectively unable to govern. we get a lot of party infighting. this renders the government effectively a lame duck if it is not already one. what is the investment case surrounding france at that point? >> i don't think we have that. 29 of 577.

we will see part of the socialist party and voting and they will drag their feet for the 2015 budget. i think it is unlikely that we ill vote against it. abstain as long it is a green party, abstain as long as the -- the -- abstains. having said that -- >> that is assuming that they come up with radical policy. if they come up with a more radical economic agenda, both guys abstaining is unlikely. you get a radical agenda they are not going to abstain. they are going to vote against. >> if we start to see some ,eform in terms of labor reform labor, e more -- of

traditionally, the left was the best party to do so because they have the trust of worker and the union if, the less part of socialist party is against government if, we make -- they will not get any agreement with the union. >> how should i read a further decline in the o.a.c. yield? positive for france or negative for france? redshirt must be positive for companies. a big company will be able to borrow money for five years, 10 years. you can borrow -- a budget deficit. you have a -- if you borrow sub1.3% the better is you borrow than 2%. >> nice to see you. >> thank you. >> we're going to take a break. back in a couple of minutes. see you then.

>> welcome back. you're watching "the pulse" live from bloomberg's tv headquarters in europe. oday's pulse -- 1.1 billion.

55 million active users per month. amazon trumped google's bid. we'll take a break. see you after that.

>> good morning, everybody. welcome back. you're watching "the pulse" live from our european headquarters here in london. i'm guy johnson. breaking news, g.d.p. crossing as we speak. a little below estimates. we have a .6 read. just want to break the numbers down a little bit. the mining fell 9.4%. a significant part of the economy. manufacturing fell, 2.1%. ut nevertheless g.d.p. up 1%

year-on-year, .6 on the quarter. let's see what the reaction to that is. it is down. the dollar is rising versus the south african rand. an initial spike. i'm not sure this chart is picking up quite yet and it is now going back pretty much where we started. trading at 10.68. let's get some analysis now. we have more on this. a slight disappointment. the mining numbers. >> exactly. at least we missed a second recession over the last five years so we have to look at the positive. as you mentioned that quarter-on-quarter number, .6%. mining is still very disappointing, contracting just below 10%. the point is we saw the longest strike in south africa which

created a massive 2.3 billion loss for the industry and overall, affected economic growth. also saw a strike which affects the manufacturers. it is evidence in the overall forecast for 2014 where we spoke to finance minister and he said an economic growth is probably going to hit 1.8% from the 2.7% initially forecast which is adding more worries. it is adding concerns with regards to a widening budget deficit and of course the big question in terms of spending going forward. >> in terms of this impact these number have on falling government policy, what are they? yes, we have avoided the technical recession. we're not going to have that but the targets are still pretty tricky to hit. will the plan get reform? will the economic agenda change significantly here? are we going to see a decrease

in spending? what is the outlook economically over the next few months? >> with an interview bloomberg news conducted with the finance minister yesterday he said tezz confident that the government can stoic the current economic policy which is play. we have to make sure we spent more efficiently and cut down on wasteful spending and he could not commit to a budget deficit below 4% but he is saying that the overall target by 2017 should be 2.8%. he is also saying that we need to make sure that the worst is over with regards to the mining strike. i must say he sounded cautiously optimistic saying that the worst is over and the economic environment should improve from here. remember, if you have a contraction in the first quarter and growth in the second quarter and you're targeting 1.7% by the

end of the year, we'll see growth closer to 2% to be able to come up with that figure which is going to add pressure to the revenue -- and while they are considering it they might be looking at tax ins down the line. >> we'll leave through it. thanks for analysis. let's go to paris. president francois hollande is expected to announce a new team today. the second in six months. for more on the shakeup let's go where caroline is joined by another guest. >> the entire french government resigned yesterday after the controversial comments by the conomy minister. the economist -- in paris. good morning to you.

do you think this cabinet reshuffling is a good thing? >> well, it wasn't expected but i think in the end it could prove to be a good thing, giving more leeway for the government to deliver on the planned reforms. since president hollande was elected his man strategy has been to keep the left united. this may be a good strategy to be elected but you have to have a -- strategy to get things done. i think the question is how thrarge support will be for this government. does he ng do you -- need to be to reform the frefrpbl economy? >> there needs to be some support for the parliament. there are some good ideas which have been put on the table by the former cabinet, especially for example the merger of some french regions. the reduction in corporate tax

and some of these we need from the majority. introduce more fiscal stimulus of tax cuts for households. is that what is needed to boost domestic demand? >> it is true uncertainty since we have had increases in taxes. i think we need less of that. we need more clarity about what the government wants to do in terms of taxes. sure, tax cuts would help, especially for the lower income households but i don't think it will be enough. > we have seen that hollande wands to cut spending by 50 billion euros. is that too much austerity? >> i think the irony here is that austerity has been very limited in france. if you look at both the measures which have been taken so far and also the evolution to have budget deficit.

i will not agree we should reduce that 50 billion number. i think it is good to commit to that number and stick to his show us commitments and that the structural reforms are ongoing. i think i would be pleased to see some deregulation in the services sector. that would boost growth in the short and medium term. they have accused the european leaders and the european central bank policy is -- draghi inching in the right direction when he is inching toward more quantitative easing? >> from a european perspective, there are two things that could be done on the fiscal side. first, more coordination. this is one of the things a france can carry to brussels. s there -- are some smarter ways

of doing fiscal austerity. this is what draghi hinted at at his jackson hole speech. it would help growth in the short-term. >> the targets for 2014. when are we going to see the deficit in the 3% target? >> actually i think the -- it is probably going to be 4%, close to last year's deficit. so i don't think the struggle with brussels is over. i think we'll see some more negotiations. 3% next year is unrealistic. >> thank you very much. more coordination of european policy. that could be the message from france and from the cabinet. back to you. >> caroline, thank you very much indeed. lou the markets taking all of this? let's find out. over to jonathan ferro. >> let's have a look at the european equity markets for you

now. up .4%. cac 40 just into negative territory. ftse off session highs but still higher. oo little bit of a tick higher on the ftse 100. the frefrpbl are looking to put together a new government. this is what's happening with . ench bond yields now record lows. 1.29%. down another 2%. the two-year in germany -- you see it right there. a negative yield. a two-year note. the treasury note, the yield the most over germany since twetch. the spread is getting wider and wider. this is about pricing in inflation. inflation trends. germany, the rest of the euro-zone moving towards potentially deflation.

not just pricing in q.e. . my question for the market and if anybody knows please sent send me a tweet because i want to know. who is buying german debt? i spoke with two officers. $2 trillion. are you buying german debt, the answer was no. guy, who is buying it? i don't know. >> you're assuming that people in the market always tell you what their positions are. maybe. maybe not. we'll find out at some point. jon, thank you very much indeed. jonathan ferro. it is a serious question and it is a situation continues to deteriorate, will peep continue to buy? we're going to take a break, though. let's give you the latest from last night's emmy awards. plenty of glitz and glamour. not a lot of surprises, though. "modern family" beating newcomer

"orange is the new black" in the fifth year in terms of outstanding comedy category. "breaking bad" taking home the outstanding drama award. no surprises there. yep. anyway, we're going to take a break. we'll see you in a few minutes.

>> 44 minutes past the hour. welcome back. we're live from bloomberg's headquarters in london. televised yesterday's debate have proclaimed salmond the winner. 71% believe he made a stronger point for independence. >> few societies anywhere on earth have surred this opportunity to vote themselves into independence. a process which has been agreed and consented. it is an opportunity which may not come our way again. >> the president of ukraine and russia meet in minsk today. no separate discussions are expected between the two. russia sent 10 tanks across the border. ukraine said they captured 10 ussian paratroopers.

they said they were patrolling border and crossed accidentally. .e., got lost. let's talk about our top corporate story of the day. higher n w.t.p. trading this morning. they warned about the risk of geopolitical tensions and the slowdown in europe hurting its business. let's talk with caroline hyde. >> it is a lot of good news. we're seeing growth particularly sflong the united kingdom. this is where the company is based. across the board. they have got 3,000 offices. they are located in 110

countries. they really have a birds eye perspective of what's going on the ground. sales up almost 3%. 5.5 billion pounds. thank you very much. u.k., 17%. if you strip out currency issues, it is up 17%. asia, latin america, africa, even central and eastern europe. saw growth. strock growth. even in russia, they said that remained strong in the second quarter. ukraine -- the united states is going great guns and even western europe. you just talked about the diversions with germany. there was a slowdown and there was a slowdown in italy and they still posted growth. you're o explain what

watching at the moment. his is the w.p.p. product. >> they go into what are numerous gray funds and black funds. gray they call unknowns. geopolitical risks. number one, fragility in the euro-zone. they are worried about china. four, u.s. deficit. we don't talk about that so uch. $16 trillion dollars of debt they are worried about. and then the scottish vote and the e.u. vote and then they talk about black swans. talking about what they say are unknown. three key crucial ones.

firstly, japan and china. secondly, it is ukraine. they feel russia could be more of a risk in terms of the sanctions come the second half of the year. number three, they say iraq and what they term terrible conflict in gaza as well. they are trying to outline these risks but they are not being nearly as negative in terms of the actual business outlook as their key rival was a few weeks ago. they are extremely cautious bout growth prospects. they still steam think they are sticking to their forecast and will beat the rest of the industry. it is a good thing. >> foresight. british pound -- >> that is making headlines this morning. >> it is. >> caroline hyde. thank you very much indeed. let's talk about the volvo. unveiling its new s.u.v.

joining me now from berlin is chris righter. they are sticking with sweden? >> yeah, they are. it is important for volvo to its swedish guns. it is important for them to show some consistency and maintain their heritage of being swedish, they are known for being durable, reliable, safe cars. they have to do that from sweden. it is a very strong statement from sweden that they are very much still swedish. >> if i want to buy one of these cars, i'm looking at the volvo, s-5. the the s.u.v. the b.m. swmbings a lot bigger. mercedes is a lot big r. that gives them margins that swede listen struggle to do if

that is where volvo is going to stick? >> volvo is 1/3 of the seist size of b.m.w. and mercedes. it is owned by china and gili. it is stuck ob its own. relatively small compared to the big german players. they have to come one something different. they have to come one a different selling proposition than the germans . they have to find their niche. one of the ways they are going is to try to be a little bit offcenter. offcolor. they are trying to be more elect reason toically asuit. they are introducing apple's car play into their system. also they are only using four cylinder engines in their car. that's their plan. if you want more power, you have to get it with electric motor. they are trying to pick their points. it will be interesting how that

strategy works. >> they are building on the swedish heritage as well sticking with sweden from the engineering point of view. you can buy the all singing, all dancing swedish version of its cars. does that work for it as well? does that give it a brand boost as well? this is an s.u.v. that has been toughened up there in the nordic? >> right. right. that's what you get. if you figure if you're in the swedish countryside you don't want to break down. it is one of their claims to fame. it is strong enough for the swedish winters. if it is strong enough for the swedish winters, it is probably strong enough for wherever you're going drive your car. they need to build on that hert allen and stick to it -- heritage and stick to it. that is what makes difference and giving them the global reputation which is what they do

have. the interesting thing down the line is how they managed to do that on a global scale and whether that is enough to compete against germans. >> yeah. let's face it. they are pretty tough competitors. we're back in a couple of minutes. we'll see you then. ♪

>> good morning, everybody. welcome back. you are watching "the pulse" live on bloomberg television. we are streaming on your

tabletses from bloomberg.com. let's talk about the currency markets. the euro, it has been a tough month in the single currency versus the dollar. you probably see a little bit of buying of the euro just in terms of what the reserve managers are doing. will you see that volume coming through at the back end of the month? we'll see how that story breaks out as well. we're still responding to what draghi said in jackson hole. more data coming up at the back end of the week to tell us more about the stats of the euro-zone economy. a take on what's happening in the italian economy. lots to think about and a lot to talk about. but is draghi going to -- abe? that could be a problem

according to morgan stanley. in terms of what else draghi is going to be watching, the situation in france. we're going to get a new government announced later on. president hollande leading that. what will he say about the economic prospects of that government? do get a more clearly defined message coming out of the government? probably yes but it gives him more freedom on the fringes of the socialist party to get his message out. he clearly has ambitions. what will the socialist party do? how will they respond? then of course we're watching pute and poroshenko. we have this minsk meeting taking place today. we don't know whether they are going to meet in a one-on-one. watch that one careful as russian paratroopers are caught on the wrong side of the border. embarrassing for the kremlin. that is what's coming up in the

rest of the day. what else is coming up is "surveillance." that wraps up "the pulse". make sure we see you again tomorrow. meantime, follow me on twitter at guy johnson tv. snowed. -- ♪ >> this is "bloomberg

surveillance." >> the united states is beginning surveillance flights over syria.

stocks surge higher. yellen and draghi support separate economies. thecable tv wins big at emmys. this is "bloomberg surveillance." we're live from new york. it is tuesday, august 26. i am time -- tom keene. adam johnson is off. let's get right to the tuesday morning brief. >> new zealand exports fell to an 11 month low. doinguy and dsw are earnings before the bell. u.s., wedata in the get the durable goods orders. at 9:00 we will look at the price home index. at 10:00, the richmond fed manufacturing. indexsumer confidence will be interesting. look at the data.