>> tesco's chairman checks out. this as the supermarket confirmed that its profit overstatement is bigger than expected. >> we anticipated a slowdown but not this much. as words of unilever's ceo asia takes a big bite out of the numbers. expecting profits to drop on a sharp slowdown in the london market. good morning.

welcome. you are watching "the pulse." i am guy johnson. >> i am francine lacqua. we are getting breaking news out of the eurozone. we have pmi figures from france and germany. france was a disappointment. overall the figure is 50.7 for manufacturing. , but in expansionary mode watch out for france. that is what investors are worried about. let's see if the euro is reacting to any of this. >> it has been going around a little bit. the french number knocked it lower, the german number knocked its higher. we have maintained that updraft. nevertheless, there have been some fears surrounding the german economy. this may settle a few nerves. it may strengthen the view out of the abundance bank that maybe we don't need qe. aggressiven't need

monetary policy stands in the eurozone. let's break this all down. hans nichols joins us now. of two cities here. berlin and paris. the good news about that is that last month, they dovetailed. they came together. last month, you had negative views out of both economies. now we are back to where we were four or five months ago where germany looked so strong. this is before we got the negative gdp reading. you raise a good point about what is going to happen at the ecb. we have the stress test this week. -- it is the idea that the german economy is strengthening. it will certainly increase the view not only on the fiscal side of things that germany doesn't need to spend more, but also on

the monetary side of things. that is that qe should be avoided at all costs. when you look at core inflation, you shouldn't be as concerned as mario draghi is. , couldong german numbers be an aberration or a sign that things are turning around and there is may be confidence on the situation in ukraine. there is less geopolitical risk. look ato say, when you other things, other numbers and other data points, it doesn't seem like the german economy is humming the way it was five or six months ago. this may be an aberration. >> what about france? they tracked more than analysts had forecast. this is the worrying sign. france seems to be stuck in reverse gear. >> you have to go back at least 7, 8 months, nine months for manufacturing and eight months

for services to see numbers this bad in france. not just the downward trajectory continuing, it is the rate of downward sure directory. -- downward trajectory. it is dropping quickly. that has to be a great concern. angela merkel clearly needs france. germany's first largest trading partner. >> thanks very much indeed, hans nichols joining us from berlin. >> let's head to paris for some more reaction to the disappointing data from france. partners joins us. talk to me a little bit about this pmi data. this must be a very big struggle for companies. we are also seeing that a lot of companies have had to reduce their prices to drum up sales.

>> i would say it is not a surprise. here anddence is not the investors are on strike. -- sorry, carry on. that it will bring some confidence for investors , butompanies here in paris obviously the investments are not here. show thenment has to policy they want to use here. >> what are the people you are talking to saying about the overarching political story? valls and hollande fighting it out in public, valls making it clear he is a friend of business. how does business view all of this?

at least they are talking about change. or are they too caught up in the politics to an act change? we need action. it has to be translated into a reality. the tax cuts, for instance, for the companies -- there is no cash for the companies. it is normal. but the revolution will be good for the companies. it is good news for manufacturing businesses and aerospace for instance. that also had the story the battle between president hollande and prime minister valls is out in the open. is there a risk that political cerns will hijack the

economy? why ask i don't think so. we are in business as usual. we know how the politics are operating and we are just waiting for concrete actions. the issues between the different --ts of the socialist party this is not our matter, i would say. >> what does business really want to see? you talk about tax cuts, that is necessary. there also seems to be a fight about unemployment benefits, about the budget and whether that is over the limit the eu has set. is it that we don't have any clarity on any of these? i am curious to know which issue is really the closest. think we are pretty specific about the changes in the operation of employment and

the way we are getting liquidity. ishink the key signal for us spending cuts. >> just out of curiosity, one of the big questions everyone is asking is what is going to happen at total? do you think the management team announced yesterday was the right one? >> i think that it is under control. many opportunities for the takeover. i think the solution that has -- [indiscernible] he knows pretty well the group. for sure, there are many

challenges in place, but i think it is under control. the strategy will carry on. >> thank you so much for all of that. >> what else is on our radar? let's find out. profit more than doubled at credit suisse thanks to a surge in revenue. we will be speaking to the ceo, brady dougan. >> we worked hard on making sure that we get a good allen's between the businesses continuing to grow our businesses and the capital allocation, but also running an investment bank that works well for clients and provides good returns. this is obviously a good quarter for us. i think the markets were a little bit uneven. that shows that it is a pretty good performance. the important thing is to continue that performance quarter after order. >> brady dougan speaking to manus cranny. we will bring you more from our

interview with the ceo of credit squeeze. is promising to turn the company around after quarterly sales gained 1%. the advertising company is being hampered by weak performances in emerging markets. publicis shares are down. foxtons expects full-year earnings to fall. sales from commissions fell nearly 8% in the quarter. more on that story coming up. >> up next, tesco's chairman leaves as the supermarket unveils a worse off of accounting error. details when we come back. ♪

>> i want to take you to some live pictures. ist you are looking at here tesco talking about what is next for the company. he has got some interesting tasks ahead of him. how much did we really learned today? caroline hyde joins us. let's put this into supermarket terminology. the shopping list today was long

but we didn't find out very much. >> and the expectations were very high. out was thefind overstatement of profits its was bigger than estimated. it is 263 million pounds. no full-year guidance whatsoever. no clear strategy. what they said is basically everything is on the table. he is going to redefine strategy. how? he is already being much more touchy-feely. informal than the chairman before him. he wants to redefine the strategy. some silver linings came out. some of the numbers weren't quite as bad as expected. 5.5% dropping like for like sales, not as bad as was thought. i think what people are going to chairmang to is the

who says he is going to step aside. his decision was to make a break with the past. it is all about the balance sheet. >> these statements were going on for much longer. it is interesting, they are going to withhold some of the payments made to the previous cfo. , he wasnteresting hoping he was part of the solution but it is clear that he is part of the problem. the big question is, who is going to be the next chairman? what kind of opportunities are going to be there? >> and how do they overhaul the business? >> he is saying that he is redefining strategy. i think this is why there was

such high expectations. morgan said may be too high. they said this is the best chance for the ceo and the new revampdramatically earnings expectations. tesco doesn't have to be as profitable as it used to be. they need to spend 3 billion pounds and take five years. dave lewis took that estimate and said, we hope to do better than that. we don't know whether he hopes for a shorter time frame or a cheaper costs. they have to cut prices to be able to get out of sainsbury's league and start to compete. 20% more staff is what they want. that is going to cost half a billion pounds. jets thathe corporate they currently have but they need to realize they are not going to be as profitable. if they are going to change this

, and significant reengineering is needed, they need time and money. what about possible spinoffs? >> it has been in a lot of the front pages of the u.k. press today. will they sell their asian business? there asian business is about 17% of their overall sales. many feel they can sell those sorts of units. will they be selling off the makers of their club cards? they could sell off a marketing company. many people were talking about that particular selloff. at the moment, no clarity. what dave lewis has promised is that everything is up for grabs. everything is being discussed and anything could be up for sale. just trying to reclaim growth. this is a company that had a short-term crisis. the immediate crisis of the hasn't been done

appropriately for several periods. how far back does this go? are thee long-term woes premium area and discounters eating away. they only have 28.8% of market share, down from more than 30% last year. >> the sense was yesterday that they were going to announce big discounting today. you have to expect that is coming down the road. if they want to compete, they have to do that. in what yousted said about he was more touchy-feely. the culture at tesco hasn't been very touchy-feely. it has been very aggressive. difficultn a very relationship with the customer. if he is coming out and making it clear that the relationship changes -- >> they were trying to change it

before. they realize that was one of the problems they had. >> clearly there needs to be a big push on that. that is one thing i take away from today. >> remember, there has been a lot of focus on this accounting issue. why doesn't overstatement of profit happen? what they do is charge suppliers for goods. tesco to actually pay put their brands where they want them. dave lewis comes from unilever. he knows where he wanted his products. he suddenly can re-orientate the whole business as to how they supply, and how they engage in terms of selling their products. >> caroline, thank you very much indeed. >> speaking of unilever. it was a nice little set up.

unilever also has numbers today. the slowest third-quarter revenue growth in five years. the numbers were pretty shocking. tonew their exposure emerging markets was big but i didn't realize it was 57%. when you have indonesia, china slowing down, that hits them hard. >> you look at what is happening in the global economy, what is happening in china and asia, the cfo going, we knew it was going to be bad -- >> china sales down -- >> we didn't know it was going to be this bad. howwonder whether that is they now have to rethink that business again. how do they think about what happens in the next few quarters? they sound surprised. as a result of which, they are clearly in rabbit in the headlights mode. >> especially the food division.

is that bright spot this is not only a unilever story. it is unilever and their peers. >> we have had good numbers out. danone numbers were ok, nestle numbers were ok. they have come off a very low base. you wonder whether some of this is specific to them because of their mix. clearly some of it is related to emerging markets. -- thewonder how management team, you are wondering, the numbers are going to be grim. do you reorientate the business? whack's in china -- >> in china, it seems that it is because they are down inventory. the chinese buyer says, i don't want unilever products. they didn't have enough

inventory. >> we have had some interesting news out from the corporate sector today. it doesn't stop there. we need to talk about foxtons. it has always been a bumpy ride. profits down sharply. why? the slowdown in london. londones it mean, why is slowing down, what affect will it have going forward? we will talk about all of that in the next hour. ♪

>> welcome back. let's check in on the markets. jonathan ferro joins us with the latest. we have pmi figures and corporate figures. >> tesco, more mass at tesco. the number we were looking for, the overstated profit number, 263 million pounds. no full-year guidance. that is what is dragging down the ftse. the ftse down 0.3%. take swing in mainland europe. down by 1% on the dax at one point this morning. huge miss in unilever. equities lower, then higher off the back of better than estimated german manufacturing numbers. beats across the board on

eurozone data. with the exception of france. ofr-dollar down on the back french data, up on the back of german data. 1.2653 is where we are trading at the moment. dataw it is only one point. it is only one month. abouterybody was talking the german slowdown, the possibility of german recession, and then germany changing course on their attitude towards france. morning wasof this good. what do the french due to get out of this and consider -- their budget is under review right now. going into the u.k. data when we get there. the pound is lower going into it. down by 0.1%. retail sales another big data point for the u.k. >> thank you so much, jonathan ferro with the markets.

>> still ahead, credit suisse profits more than doubled. we are going to is a wreck when we come back with the ceo, brady dougan. >> in the meantime, you can follow us on twitter. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. >> these are the bloomberg top headlines. >> the daggers are out between francois hollande and manuel valls. at a ceremony traditionally used to honor prime minister's, hollande used the opportunity to presidentialls' ambitions.

france is struggling with a weak economy today. services shrank more than forecast. nearly as much as the relationships at the palace. policy now, the u.k. independent party is on track to gain its second seat in parliament. recklessl shows mark has a backing of 43% of voters in rochester. caldwell became the first you cap member of parliament a few weeks back. >> foxtons shares are slumping today. they expect full-year earnings to follow on a significant drop. they say the london market will continue to be strained for some time because of political and economic uncertainty in the u.k. and europe. >> let's talk about this. neil, good morning. what is this about? is this about people beginning

to freak out about what is happening next year? u.k.ossibility of the edging towards the door of exiting the eu. all kinds of things going on. is this the backdrop for this story? >> we are clearly seeing that with the housing market at the moment. foxtons down as much as 20% this morning. perhaps thinking the market has reached a peak are pinning their hopes on the market. the price that buyers are willing to pay is huge at the moment. one in four home perches is at the moment is falling apart. >> i consider myself a london property expert because i was looking for a place for such a long time. when you look at the market, it is clear that there was a lot of

buyers, from european from people saying, i know where to put my money. let me put my money in london. is this not likely to come back? >> the market was friendly and the price went up 20%. it takes quite a lot of time to save. who havethe russians that kind of money already own property in london. what we are not seeing is that new wave coming through that was expected. russian buyers have fallen in london in the last year. foxtons is a company that has been private, public, private, public. it always is something of a canary in the coal mine. are people talking about that again? >> [indiscernible]

it is usually a good indication of how the london housing market is going. there is a good survey every month which shows expectations. they have largely been right in the past. to what extent is this a reflection of that? are the concerns we saw in scotland a result of that? >> if you are in london and you are going for the average home, you need 100,000 pounds now. income is possibly the max you will get as a mortgage. bankers don't necessarily have the same performance as in the past. situationuck in a where there are barriers with a good home inuy

london. anecdotally, you are seeing price cuts. people are afraid of this tax before it comes into effect. >> the idea of a banker going to the bank with mom and dad is amusing. neil, thank you so much for all of that. >> ok, credit suisse. >> they reported results, profit more than doubled. manus cranny's broke to the ceo, brady dougan right after figures were released. did he say, what is his strategy? >> he is trying to get the balance right between investment banking -- nobody expected they were going to get that after two quarters, and balance this over the big demand from the market.

what are you doing with wealth management? how are you building that business? this big rumor is circulating that he had discussions. he wouldn't confirm or deny that. he said, my strategy is small additional acquisitions, smaller consolidation opportunities and organic growth. if you have an investment bank that is working, you have some volatility, why crush it. is that structurally a business that is really just done for? itis a question of squeezing for as long as you can. >> trading floors of buzz at the moment. finally a little volatility back. what is the view about the markets? where are we going? >> volatility is good.

the recent big spikes and swings were perhaps a little overdone. good in theas short-term but it is all about long-term confidence. volatility has its issues. >> i think at some point, it benefits some of our businesses. moreg more volume, volatility is good for some of the trading businesses. also, if you get too much volatility, that impacts peoples longer-term view, longer-term confidence of the market. what we saw in the last few weeks was a pretty sharp down and a pretty sharp rebound. we will see how things go forward. having some additional volatility does benefit some parts of the business. see a consistent market overtime to make sure people retain their confidence. couldn't pin him down on when

he thought the fed was going to hike. we have an uneven global environment. the last two weeks was an overreaction and he thinks the markets perhaps have overstretched themselves. about thet's think liquidity story now, what is happening here, where are we with that? liquidity has always been something that brady dougan has focused on. >> i thought this was quite an interesting response. the response,for liquidity is hard, we have to change our business model. yes, liquidity is difficult. people who carry lots of bonds and high-yield that, they are crippled by capital requirements. that is the backdrop. fine.

what he said to me or what i took away from it was this, liquidity is something which needs balance. you have the classic institution such as credit suisse that would love this volatility. we are seeing other technological pulls, facilities coming and bringing liquidity to the market. it is not an overarching issue for him. the old-style stalwarts of liquidity are being balanced out why new technology. --ck havingas been driven by to rein in some of the positioning, some of the capital they have at work. on the other hand, there are technological improvements as well that are providing venues for liquidity. we are seeing continued increases that do provide

liquidity which is a positive. i do think that what you see is, even though liquidity in specific markets is impacted, the fact that a lot of the banking industry is not carrying as large an inventory does provide some benefits in terms of less volatility across some of those banks. there are probably pluses and minuses. there is no doubt that there is less liquidity in the market. >> the question you have to ask yourself is this, do you look at ubs, credit suisse, barclays and say, who has passed through the eye of the needle of litigation? there is a consensus, credit suisse looks as if they have most of that history behind them for now relative to the others.

whether they get a green rating for that, who knows. for 2015.story back to you. >> thank you so much, manus cranny in zurich. daimler posted at 21% increase in profit last quarter driven in large part by deliveries of the top of the line mercedes. hans nichols joins us now with the very latest. daimler has delivered. >> they have delivered. can do this entire segment with just auto ponds. we can do it in leaders and whatever else they measure the a goal and jim strength in. daimler's strategy is working out. s class sales have doubled. that car goes on sale in the states this month. it starts at $172,000. profit came in at 2.79 billion. estimate was a little bit lower

than that. it is a company that is awash in cash. they have just sold their stake in happen. 3.9% stake.3. they're operating margins, 8.5%. they want to get towards 10%. here is what they said in releasing the numbers. -- guy, $172,000 for the new s class. is that in your price range? what are your thoughts? >> i think we are right in the sweet spots. let's talk about the race to be number one. mercedes, audi, bmw. nine-month figures.

bmw is in the lead. 1.32 million vehicles sold. and mercy atd about 1.2 million. mercedes is making a move. they outpaced audi. it looks like mercedes may have momentum going into the finish as we turn this into a proper horse race, down the stretch. one key factor phil look at, china. open 100 news to dealerships there. their goal for this year, 300,000. s class is selling their quite well. >> all i can think about now is you racing that car, the audi. how did it go? >> i got sick. we didn't show that on the air but i was close to getting sick and i lost to a machine. but that was an audi.

it would be a different outcome in a mercedes. >> oh no. hans nichols, i am disappointed. >> i thought hans nichols nichols was a machine. >> me too. >> coming up, recession, inspiration, the latest version of the dictionary is out. we will bring you the word from the world of finance. how did they migrate from the market to the mainstream? ♪

>> welcome back. the new edition of the collins dictionary is out today. one thing that stands out is the number of financial terms that have been added, including fiscal cliff and taper. our next guest says that financial words have been entering general usage since the credit card. he is the author of the newly released colin's action area. one thing that surprised me is how heavy it is. welcome to the program. we are getting more and more literate as financial terms seat into everyday language. there are a lot of words which have been around for ages and ages.

they need to be in the one volume dictionary. the classic example is boom, which has been around for 130 years. since 2008 that everybody wants to bash a banker and have an opinion, but they need to know the language. they have to work out what i taper is and what a fiscal cliff is. -- wet to bash a banker have got it. heavy,reason it is so they wanted to put in 50,000 new words but they wanted to make it so you could still fit it. >> it is more dense. >> literally more dense. this is interesting in relationship to the fact that we have only just introduced it now. that wean indication

are becoming more financially literate as we need to engage more with the world of finance? up to now, there has been a concern that the british weren't educated when it came to finance. >> that is absolutely true. until then, finance was nobodyng which was -- needed to know that much about it. now it is part of public debate. at any pub in britain, somebody has some opinion on the recession. i was surprised by saying this is the banker bash at parties. if you want to banker bash, you need to know the lingo. financial crisis, finance was almost a foreign language. you could have a discussion with somebody and use all kinds of initial terms and you might as well be speaking chinese.

>> a lot financial terms are quite odd. why is it a bear market? or a fiscal cliff? market is of bear about somebody who sells a bear and then goes out. hence shorting. >> the one i like is the buck, which is about skins. that comes from people trading skins. >> in early america, the currency wasn't understood. they wanted buckskin's because they could be carried everywhere. they became the first currency of trading in north america. >> when you look at some of the words we use on a weekly or monthly basis, working and photo bombing, they did not make it into the dictionary. >> they are there. and selfie. >> i did look for it and i did not find it.

speaking french at the moment. >> my boss was very concerned when i showed up with this at my desk. >> do you think this is going to be a trend? you there a lot of words didn't include or do you think we have reached peak finance in terms of the vocabulary? >> i am sure it will go on and on forever. more words are being invented every day. the eventthink about diagram of the financial lexicon and the general public's use of words, as the economy recovers and people start thinking about other issues, do you think the crossover becomes less? question, i that would have to be able to predict the economy. i can't tell you whether we are going to go into another recession.

>> i am looking for predictive indicators. dictionary -- this is a great way of winning at scrabble. tell us about the number of words in here. >> you have to take some out that mainly this has been additive. 50,000 new entries, mainly of new words, some are old words like slumber some. your favorite financial word is? >> i like bankrupt just because it goes back to the original bank. bank, which was italian for bench. he would sit at his bench and trade money. if he was unable to honor his debt, his bench would be smashed in front of him. bankrupt.

we should bring that back in financial regulation. mark, thank you so much. >> new words in this year's collins dictionary. we are going to take a break. see you in a couple of minutes. ♪

>> welcome back. time for today's new energy. renewable jet fuel is taking off in the airline industry. is oil from vegetable fat proving to be a cost-effective way to cut carbon emissions. >> japan may be left in the dark when it comes to solar energy. although it is 90 for five -- 95% of the renewable output, it remains unreliable due to weather. >> leaders face heated negotiations on reducing productions policies. the challenge lies in finding a strategy that ensures a safer alternative. cut greenhouse gases by 2030 --

>> for those listening on bloomberg radio, the first word is up next. for our viewers, it is a second hour of "the pulse." >> we are talking to the centrica ceo. ♪

>> tesco's chairman checks out as a supermarket confirms that his profit is bigger than expected. slowdownicipated the but not this much, the words of unilever's ceo. the estate agents expect profit to drop in the sharp slowdown in london housing. to our viewers in europe, good evening to those in asia and a warm welcome to

those waking up in the united states. i am guy johnson. >> ii'm francine lacqua. this is "the pulse." >> let's get to our top story. tesco's executives. the company announcing the full extent of the profit overstatement. its chairman is going to be stepping down. caroline joins us for more. it was the call. i would think a significant change in tone. >> dave lewis not only try to interact far more with the audience after richard left. he's chairman. he will be departing tesco. he was to draw a line in the sand over the past. he was to take accountability. he is looking for someone to fulfill his role. the new tube executive, dave lewis, has only been there

two-month. to get responses from the audience, asked the analysts say hello back to him. he's extolling the virtues of being a man of the people. jets ining scrapped the the first week. now i am on the train. i am on the train with the people i work with. i do not take the car. why? because that means there are more people serving you in tesco . million more hours of colleagues in the stores by the end of this time next year. he's hinting at where he is .riving this bus overall, we have very little clarity is what they see for the numbers. and really what the overall strategy is. everything is up for grabs. >> because it is up for grabs, they can start over. do forecasts, new strategy, price cuts, possibly a spinoff. >> this is where many analysts had hoped for the world today and morgan stanley was saying that maybe we expected too much. because they wanted him to say, this is your biggest chance, the

new cfo to totally redress where investors expect the company to go, how profitable tesco should be. this could be the time they said we are wiping the slate clean. we are going to invest to turn the ship around, but it will work. hsbc has said we estimate you're going to have to spend 3 billion pounds over the next five years to change this company, because it has been significantly in need of reengineering. cut the prices 5%. add 20% more staff. that could cause half a billion pounds and improve food quality. dave lewis is saying i hear you. i am thinking about quality, but they are not giving us tangible numbers or a sense of where the full-year profits will fall. they've outlined is that the overstatement of profit was worse than expected and went on for longer then was anticipated. they will be changing the chairman. i think there is a lot more meat to the bone than investors want.

they want to know what will happen to the 8 executives who have been asked to step aside while the investigation is going on. and who the culprits are and they expected you going for. we want more strategy in terms of where they see a dramatic shift in the company. they are talking it. we're waiting to see. isthe culture of the story fascinating. i really do. a lot of people are focused on the numbers. but the cultural have to change dramatically. talking the talk. we will see whether he can walk the walk, or maybe get the train. >> the aisles being messy. >> the relationship with the people at tesco was pervasive from top to bottom. >> would you describe it as ryanair? >> you listen to what o'leary says about his business. he's keen to drawing parallels between ryanair and the hard disk coaches. it is interesting about

supermarkets and elegy and the airlines are thinking of themselves as retailers now. there is a culture change taking place. >> and interesting that dave lewis did say that he was getting people from head office -- in which hsbc said there are too many. they will be working extra hours . >> it is all about listening to the customer. thank you so much. >> let's go to zurich. credit suisse posting results. manus cranny spoke with the ceo. let's go to zurich and join manus now. brady dougan, what is the strategy? >> well, just picking up on the conversation the three of you has brady dougan is a ceo gone through the reengineering and the market is not happy. the rfid was credit suisse to do an rbs.

it is investment banking that is delivering very well, beating estimates. trying to get the balance right. we had that conversation. he said, i am not in the market to tell you whether i will by julius baer. intoansform credit suisse a wealth manager. he is going to look for small opportunities. those were the the language he used. probably looking for small consolidation opportunities, organic growth. they have gone to the big restructuring which tesco and otherr other institutions are trying to grapple with. the next step forward. for now invest in banking is doing that. lots of volatility. we have noticed it. great for volume. does not do great things for business in the long term, because you have to say, ok, we are goes doing -- going through an adjustment period of rates. term, it can crush

confidence. the question you have to ask about investment banking, is it structurally challenged? he is a man that comes frf investment banking. even i could not get brady dougan to give me a statement. he did have an opinion on rates. >> we have different parts of the world in different modes in terms of growth, in terms of perspective growth. i think we are going to continue to have a very on even sort of global environment -- a very une ven global environment. different countries, different interest rates, different paths. we do believe over time we will continue to see the growth in the markets. i do think that over time we will see some normalization in interest rates. the question is how long is that going to take turns the view is now that that is looking like a distant horizon. >> you have been around. you have got to give us -- when? >> it is hard to tell. the last few weeks is a bit of an overreaction to fears on

growth. to bek we do continue constructive about what we see as the economic backdrop around the world. so i think that will over time filter through. so, i think we are probably -- i think it was a bit of an overreaction over the past four weeks. but we will see. pension's safe. you do not have to worry about pensions, just house prices in west london. liquidity. they cannot carry inventory anymore. that is not a great thing. the quiddity in the markets is something which is dissipating from the big traditional banks. at the end of the conversation, what i thought was the most insightful phrase from a man who knows investment banking, he you have got the old forms of liquidity dropping out of the market. the investment banks. but you do have new pools coming in to balance things up. maybe we are overreacting and overly indulgent in terms of the liquidity story. but of course, it does mean less

volatility on the prophet-lost. this is a bank that needs to get a read w-- a reweighting. he has paid off his fines. banks, where do up you want to put your money? who has passed through the eye of the needle of litigation offor now. >> thank you very much. manus cranny joining us from zurich. >> foxtons is down this morning. the real estate agent says it expects full-year earnings to halfin the second transactions. let's bring in our european real estate reporter. neil, what exactly is happening to prices? there is a -- a dichotomy that the buyer and the seller did not see eye to eye. prices are not increasing as much. they have a certain amount of

to spend with the new mortgage rules brought in by the bank of england. they're holding tough. llers are not motivated to sell at the moment. there is so much uncertainty in the market. prices are flat. ahead of the election this year, there is so much uncertainty. some people seem to be holding firm on price rather than reducing. >> is scotland a good example for what people are now facing -- basing their argument on? when we saw the referendum in scotland.,the housing market ground to a halt . i9s s that what people are presg in? >> in scotland, it created a pause. a similar effect in london. there is constant talk of the labour party. if you are an armored overseas bar, which has driven a large part of the london market, are

you going to come knowing that you perhaps would have to pay a big tax next yearin? labor did explain what this balance would be 250 pounds a month. they made it clear that they would tax nonresidents. they would also tax buyers of more expensive homes. these buyers have been affected by things like an envelope tax, increases in stamp tury. they are waiting -- increases in stamp duty. >> the boe has put measures in place. you're talking more on the political side, but how much has this taken this thing out of the property market? price evidence only goes to august. it does show flat prices. if you talk to brokers, they are seeing that less mortgage approval. still purchasing, still strong in central london. a lot of the first-time buyers can't make that leap with the extra amounts of deposit

required to be able to afford a home. >> this is a good, bad thing. is it a good thing? again, when you talk to people, is there an assessment that prices needed to fake a bit -- fadea a bit? >> if you are company coming in and you're trying to staff it. will they move here?they have berlin and dublin . the companies and workers are in demand. if you are a tech worker in london, earning a salary of 60,000 pounds, you cannot afford a home. where you can have an easy commute to work.these things matter when you are working 12 hours a day. >> they do. thank you for that. >> let's talk a little bit about unilever. numbers are today. 2009.growth since a drop-off in china impacting the company's main growth

engine, personal-care products. unilever has struggled to lift sales. europe, something of a problem as well. caught him by surprise. that is the story of the morning. the line from the cfo was, we knew this was coming. when it came, we were shocked by the magnitude of the slowdown. >> two things. 57% of their sales are done in emerging markets. they had the slowdown in india and indonesia. sales in china were down 20%. destocking. that may be getting better in five months. >> it is interesting. one of our guys said early on, could continue into the next corner. it may not be done with. >> one or two quarters. >> they are downgrading their expectations for global growth. so they now need to work off a lower growth story. >> we have been focusing on

emerging markets because europe was off. we do take it as a benchmark or a bellwether for the economy around the world. things are not looking great. >> yep. ok. what else do we need to talk about? this is your favorite story. >> the gloves are off in france. france's president and prime minister are fighting a public. that is later on in "the pulse." ♪

>> let's focus on pharma. when your stock is up more than 1000%. unless is precious. that is what happened to an israeli pharmaceutical company after a trial for one of its drugs failed to meet its goal. what now? elliott gotkine has more from tel aviv. >> thanks. i'm joined by visio and cofounder of komoda. david, great to have you with us. we are talking about a disappointment with the failure of the trial for the inhaled version of your alpha -- something that can treat emphysema. >> next for the company is meeting with the european agency onrequest submission based

the data we have conditional approval. for conditional approval. there is an unmet need. we have supporting data to show the impact on lung function. for betas. it is based on previous discussions with the agency and similar cases. we're going to continue to nextete before end of the, our phase ii trial for inhaler. >> the inhaled version of your treatment is dead. ais could have been half billion dollars worth of revenue coming from europe alone. your company is worth $4 billion. investors think the game is over. so, how are you going to

persuade them otherwise? >> first off, we are going to pursue and explore the possibility to create -- another from the data we have. maybe continue clinical development. at the same time, kamada is having a strong base business. products sold in 15 countries, including our glacia, alpha one i.v. product in the u.s. we have strong strategic partnerships with secure orders, $190ding from baxter for million. >> he recently extended the partnership so you get more revenues. how valuable - this is an injected version of this treatment. how valuable over the long-term can that drug be? >> is very important in growing markets. this is a stable growing business for kamada. in 8 countries.

and the world market is almost $1 billion going 10%. our market share is growing more than 10% per year. maybe double. a profitable business for kam ada. >> you focus on orphan treatments, rare diseases. products forng on rabies, cystic fibrosis, diabetes- i. drugsr along are we for coming to market? >> on top of the base business, we have attractive -- including rabies. we're going to release topline data from our phase iii u.s. t raiial. medium-term, type i diabetes, we are doing phase ii trials. this is a very promising unmet need. gphd, countries undergoing a concept study in the u.s.

>> ok. moving away from more technical things. $60 million of cash on your books right now. is that enough to see your company through to profitability to net income? >> i believe so. we race less than $60 million. . strong revenues and cash flow, we can suppoprt and - - support and complete our clinical development. >> the ceo and founder of kamd ada. one day again, they may see the stock rising 1000% over five years again. back to you in london. >> thank you very much indeed. elliott gotkine joining us from tel aviv. we're going to take a break. ♪

>> welcome back. let's talk tech. the situated smart phone market has stopped one british started from getting in on the action. -- the saturated smart market

has stopped one british company from getting in on the action. the world slimmest smartphone. ourore and more of customers are caring more technology around day-to-day. they are asking to carry lighter. the tornado 348 is the world slimmest smartphone. there are only so many ways you can take a flat screen and metal and plastic and make it look different. slightly more square or slightly more round. this happens to be our design. the last thing we want to be is a me, too. we do not want to do the same but cheaper. we want to stand for something very different. we put a lot of effort into testing the rigidity of the chasse. things to make sure it does not squeeze and break.

the beginning of 2014, you will see more kazams rolling out with operators across europe. we've got very aggressive targets. we want to be pushing some of the big oyster. -- big boys. >> a lot of the focus is on tech. we will follow that closely. i like the slimmest. >> doesn't bend. a critical thing. let's go to currencies. we have seen a bit of a bump for llar.uro-do the dip. if you see the middle of the screen generated by very poor pmi data out of france. the big fear has been a slowdown in germany. today's data may be easing those fears. data better than anticipated. adding into that the spanish unemployment level dropping to the lowest level since 2011. starting to see -- unemployment lags.

thathe big story today is maybe we do not see situation in germany as bad as we thought. we're going to take a break. when we come back, we're going to talk tesco. ♪

welcome back to "the pulse." i'm francine lacqua. >> i'm guy johnson. and these are the top headlines. >> the eu's plan to set rules to break up banks is at risk of being scaled back. italy holds the rotating presidency of the eu and is among 10 other countries that have challenged the proposed rules. >> the uk independence party

is on track to get a second seat in parliament. kent.nstituency in coswell became the first ukip member of parliament the couple of weeks ago. >> the ceo is promising to turn the company around after quarterly sales gained just 1%. the advertising company is hampered by decline in sales in europe and weak performance in emerging markets. >> took his eye off the ball. >> he said we were distracted -- the megamerger that never happened. >> a big distraction. distracting the markets today. let's find out. jonathan ferro joins us for more. >> real story of contrast. the ftse lower by .6%> . across the eurozone, stocks opened today much lower off the back of weaker than expected french pmi. then we get the list off the german pmi reading.

and expansion territory cushioning concerns about a slowdown in europe's largest economy. the dax up. say, the contrast in the data that really tells you an interesting compelling story about the politics in europe. look at how it is moving euro-dollar. in contraction. the rueuro higher. 1.36. one data point. you wonder how this plays off, when everyone is arguing about the prospect of a german recession and how that may change the approach of chancellor angela merkel. did the economy go through blip? thwill they soften their attitue towards the french? let's be clear about something. yesterday is better for germany. the data for france, that was a big miss this morning. sterling, one pound, 1.60004.

it was 1.5 for a split second. down by9 1/3 of 1%. retail sales out of the u.k., down 0.3%. market expecting negative 0.1%. england,of dovish.forecast uber it looks like they're pushing out the first rate hike. >> it depends when you bought, really. >> i'm happy with it. " surveillancemiracle ove with tom keene." >> a lot of moving on the market, and of course all of north america looking to ottawa canada, and what we saw yesterday. amazing francine to see the drama in pittsburgh last night. the hockey game between the pittsburgh penguins and the

philadelphia flyers. at a moment, all singing o, canada. we witnessed touch about that on "surveillance." michelle meyer were join us. the american economy and american housing with the global slowdown. you saw those united kingdom retail sales. dge will join us from black rock. much more investment oriented. what do you do now as you being to -- begin to look to 2015. we will look at the russian ruble with -- some real movement in the currency market with sterling. the ruble off to new weakness with those ukrainian elections coming up. >> i love the story about the hollywoodo going to to buy more content. that is a great exclusive. tom keene with "surveillance."

>> ok. let's move on. our top story. tesco shares under pressure. the crisis ridden company announcing the prophet overstatement -- profit overstatement was worse than we thought it was going to be. some rumors yesterday it was going to be better. the chairman will step down. not a shock to many people. is the call still going on? we might have some live pictures. there is dave lewis. he is not giving us an awful lot of detail about where we'll go strategically. brian roberts, a director of retail at kentar retail. how big a change do we need to see? how bad is it, and how much should he change? >> this is a dark day for tesco. the trading is worsening. profitability is falling off. the accounting overstatement

from weak trading. morale is a rock bottom. there are grounds for optimism. the stock members to speak very highly of dave lewis. that means -- needs to a total change. giving shoppers what they need and watch these days which is a million miles away of what tesco 's offering. >> i know it is a dark day, but at the same time, the new guy can basically throw away the rulebook. he can say, these are new forecast. this is my strategy. he almost is started from scratch. that must be something that is exciting. >> i think so. this is absolutely a new beginning for tesco. hopefully there are no more skeletons in the cupboard. he can start from scratch. reevaluating the global business. will they continue to be in all of their markets?

looking at the u.k. business, it does need to be a whole new approach to ranging, pricing, and promotions, marketing. you name it. slimming down or simplifying. some of it does need reinventing. today, is it got that we are going to see cultural change. the chairman is going. he was one of the legacy characters at the business. fact is talking about the that he got rid of the jets and he will be taking trains and taking the car. people from the office will be working in the stores more often. he is trying to reconnect this business from top to bottom. that's something that is very difficult to achieve in the short term, but is crucially necessary. it's the first step. you can forget the price promotions and all the rest of it, because the guy are asking to sell the customers will not be on board. >> there was a genuine disconnect between head office and the foot soldiers on the shop floor.

a lot of resentment around some of the old guard. less than optimal people working at head office. there has been a lot of change already. 8 senior executive suspended. will they come back? i doubt it. he needs to get new people in in terms of marketing. i think it really will be new -- all the way through store managers. there is a genuine sense that we have come through a lot. we have hit rock bottom. but the only way is up. there is a sense that the head office and the sthpo st-- the shop staff can pull the recovery off. it'll get worse before it gets better. >> a lot of people seem confident that the ceo is the right man for the job. are you confident? we were expecting a lot more details about strategy, which we have not really gotten. >> it's too early put meats on

the bones. he has not gone to visit all of the markets. he is off to asia. get christmas over and done with. get some more feet on the floor in terms of delivering a decent. christmas. 2015 is one will start to hear what about what he is planning. work a cohesive operation with less complications. putting the shopper first. sadlyl over the last few years, certainly the clark regi me, there was too much focus on profitability. too much focus on the shareholder and not enough on the shopper. >> just in terms of the opportunity -- how much money do you think he's investing in the u.k. business? is it the only way to fix the balance sheet is to sell off the asian operations? >> some sort of ipo.

it will bring in 5 billion pounds that can be reinvested. staff back on the shop floor. he's mentioned already this rise issue is- a off the table at the moment. i think is enough off of asia could be one option. that many people being -- operations in central and eastern europe. there are a few bits and pieces in the u.k.. if you're looking to raise cash and avoid a rise issue, asia will be the only way to go. brian roberts there. >> to france now. the daggers are out. at a ceremony that is used by the french president to honor the prime minister. alain took the opportunity to slap down his presidential

ambitions. the gloves are off. >> yes. take a look at this newspaper. you see president hollande here and aime minister here, few other socialists on the take is if they were going to war. the headline reads, "hollande's succession war." as the socialist party and the battle at the very top level of power between the prime minister and the president. president hollande gets annoyed with the prime minister attacks and a plum and benefit system of france. the president reacted yesterday by saying one can succeed in life without becoming president. a message from prime minister -- but the public battle is not over. is magazine, the

prime minister is giving an interview. he is saying that he wants to change the name of the socialist party. he is calling for a new progress parties.ce of he is criticizing what he calls the backward looking left. what we call the rebels of the socialist party who include the former economy minister but also include the former head of the socialist party. prime minster valls is take lowntage of hollande's popularity. he is looking at the 2017 presidential election. >> aren't we all. it is getting more interesting. >> i really like a frfench publc fight. doesn't get better than that. >> we do not get that on this side of the channel. coming up, you will hear from our interview with the ceo of centrica.

one of the biggest energy companies in this country. ♪

>> welcome back. you are watching "the pulse." let's go to the european gas summit. where ryandon chilcote has been speaking to the seo of one of the uk's biggest gas companies. >> we are joined by the chief

executive of centrica. he has been with the company for eight and a half years. he is stepping down at the end of the year. thank you very much for joining us. very interesting to hear speech earlier today. i want to start by asking you in the u.k., we've seen some problems, fires at power plants. what is the probability that we are going to see power cuts this year? >> i think actually the situation is manageable. it's tighter than we have seen before in terms of reserve margins. actually the national grid has some putting in place temporary mechanisms to call up additional capacity and look at demand management. when you put all that together, this is manageable. >> can you clarify what tighter means? if we were to have a cold snap, with that put more pressure on? >> well, the real question is is thee now got wind on grid. when you have a cold snap, you

do not have a lot of wind blowing. yes, those circumstances, the reserve margins get tighter than they do on warm days like today. there will be times of the year when does reserve margins get tighter, but they are manageable. i think that is the important point for people to know. >> european gas secured. the russian-ukrainian talks broke down. there will be more. i heard an analyst say europe can sustain a cold snap. cut.uld sustain a gas a supply cut from russia through ukraine, but it cannot sustain both. what do you say to that? >> i think we are in the realms of hypotheticals here. gridukrainian transit -- is not as important as it used to be. we didn't have the north stream pipelines. so we are more resilient. and of course, we are becoming

the european continent is overtime becoming more resilient with new sources oflng lng. at the end of next year, we start to see the first exports of lng from the u.s. taking a longer-term view, this is all about diversity. in the short term, europe is well supplied with gas in storage. we have got record levels of storage. the uk has very little dependency on russian gas, because most of our guests comes gaza andnorth sea and from overtime -- will be coming from the u.s. clearly ifs, you had a hypotheticals continue for a very long time, then you would have a problem, but i think it is not in immediate one. >> oil appears to have stabilized. in the $80 range. have we found the floor? >> who knows? having been in this industry for 35 years, i think all of us

would the unwise to predict the price. but i think what we are seeing, certainly, is as we get down to $80, some marginal producers start to find that that -- at that level, it no longer pays them to drill. many of those marginal producers have sold some of their energy forwrd. it is only when those contracts rollout that they will stop drilling. and the supply will curtail and that will push the price back up. >> the russian president told me he thinks we found a floor because of shale producers and that there -- their breakeven prices $80. if it drops any lower, it would not be economical for them to produce. do you agree? 9 >> some shale produces will have that situation, that high marginal cost. other producers will have a lower marginal cost than that. but the point i made earlier is

that if those shale producers, even if they have those marginal cost, have sold their energy forward, they will be able to continue to drill. >> in general, investment from oil companies and exploration with oil prices where they are right and, how will that have changed? as high as $115. >> i would expect that as you say in the high-cost areas, the first thing that normally integrated oil companies cut back its expiration programs, because it is something that can be turned up and down. i would expect there would be a slowdown in drilling. you're starting to see that in in offshore and drilling in the north sea. >> back in this country, newrica is being probed, a

competition in court. what you think the probability is that it will recommend centrica be broken up? >> we have a price in place. i think it is not for me to speculate on the outcome, but i think that is an unlikely outcome because actually everybody understands that there is a benefit and integration for our customers, in that enables us to reduce the volatility of our earnings. it enables that we get cost synergy out of it. for us at centrica, actually, what we do is we sell all the energy that comes from our power generation business into the wholesale market. so, actually, this is not a situation where we are crossing one part of the business with the other. >> thank you very much. that was the chief executive of centrica giving us one of his last interviews at the helm of centrica before he steps down. >> ryan chilcote speaking to centrica's ceo.

we are back in just a couple of minutes. ♪

>> good morning, folks. you're watching "the pulse." let's look at the currency market. cable rates. we had a touch at just below the 60 -- briefly. we've had one today. the latest data from the british economy relates to retail sales

numbers, relates to september. has been warmer in september and it normally is. the data are weaker. the housing market, look at what is happening with foxtons as well. what is happening with the way story which is starting to pick up a little bit. all of that starting to take a little bit of the steam out of what is happening with the pound right now. >> now for a look at what we're watching for the rest of the trading day. we are joined by hans nichols. eu leaders are meeting in brussels. top on the agenda -- ebola. and everything else we have seen. >> well, ukraine will also be discussed. very top of the agenda is the economic potential -- the potential economic slowdown. we've seen that numbers come out of france. more positive numbers we have been talking about out of d.rmany on the pmi rea in terms of ukraine, the danish prime minister is signaling they will not be talking about the sanctions. remember what this last round of russian sanctions, there was a lot of talk about how to have an off ramp. there is going to be a review

here shortly. in some ways, it seems like the tenor may be moving on how you start peeling back -- sanctions instead of new talk about additional sanctions. >> let's talk tech. >> we have got microsoft after the bell. always interesting to see how much crash -- cash they are printing in redmond. we also have amazon. always interesting to see whether they print any cash or whether or not they have massive revenue but not a whole lot of income back behind that revenue. both those are after the bell. we will be fast asleep. >> yeah. i really hope so. busy day tomorrow. hans, thanks very much. hans nichols joining us from berlin. >> that is it for "the pulse." " surveillance is up next. live from new york with tom keene. >> if you would like to follow us on twitter, join the conversation. francine lacqua is at flacqua.

we're looking forward to seeing you tomorrow. it's almost friday. friday is going to be a great show. we will see you then. ♪

>> can coalition forces recapture territories from the islamic state? canada reels from a

terror attack on parliament. markets recalibrate for global this inflation. the price of oil declines. debate on airbag safety. good morning. this is "bloomberg surveillance." we are live from our world headquarters in new york. it is thursday, october 23. joining me, scarlet fu and brendan greeley. an interesting set of top headlines. canada's prime minister says the country will not be intimidated by the attack. a gunman killed a soldier at the war memorial and opened fire inside the parliament building. police shot and killed the gunman. sentackdrop here, canada warplanes to take part in attacks on islamic states. a radical jihadist ran over two canadian soldier south of montreal. global airbag recall getting bigger.