>> 100 days and two profit warnings. of thees to gain control retail giant, tesco. a call for reform. usedrock ceo's streaks lucy liu to bloomberg and hear from them later. speakskrock ceo exclusively to bloomberg and hear from them later. the technology summit. ♪ >> it is 9:00. you are watching "the pulse."

i am guy johnson. francine is not here today. she is at the bloomberg summit. she will be back soon. our top story. let's talk about tesco. bleak news again. it was not top 114 billion pounds and shares will be down as much as 14%. charles, 100 days. big ofthis come as a surprise they significantly reviewing? >> he said he was going to review it and we knew it in october. it was a degree to which it is him giving the guidance and that he did not give at the end of the told her. the key point is the commercial policy which we knew tesco had they buyhigh -- how from supplies and cello. the way they were buying was

also in a mess. is he big question is going to get us back to where we a newfore our are we in normal where the company will be at a lower level? unlikely that is the trayvon martin and that tesco had for many years -- that years and we many will get more guidance in january. what is done in the short term is say, all of the back margin deals going on and they came in a number of ways with the range group of 31%. some of the things that were associated with the come back margin because you are saying, we put it on that promotion or the shelf and that much money. that is all going. he will say we won narrow the

range down to what the customers want and we will sell a book and a load of them and get the money. >> here is the big question -- is it all bad news? probably not. with any luck, all of the bad news on the u.k. and almost all of the bad news on the u.k. he has had very little time to look at subsidiaries. challengeat -- is in -- is in trouble. it may benefit from some of the same deals. marketremains a troubled where sales keep falling and we have not heard anything on how tesco is doing in relation to the others. it has been there second-biggest market. >> warren buffett described investing in a tesco as a mistake. what do the big investors will say to management? >> they will ask the question, is at the bottom?

have we seen the last of the bad news? him, you are to now working for tesco. can you be fair to the suppliers and make a decent margin and be competitive for customers? i think his answer will be, yes. we have to see how he turns that in trading. they are freezing things for christmas. we will start seeing a new trading stock in the new year. happensll see what then. charles, always a pleasure. to greece now. and what is described as a pretty risky gamble by the prime minister. this moves the votes that were set for february to a week from tomorrow. hans nichols joins us with what is going on behind the scenes here. we have had this extension of

the program on which samaras said he would deliver. what does the cover for the fact he had to do that and bringing it forward to mix up the politics? we still do not know the candidates who will be running. so much up in the air in greece. wants? what samaras >> what he wants to do is accelerate the timetable. the initial presidential election and is a ceremonial post that was supposed to be in february and he will move into december, december 17. he does not have the numbers. vote for theast president, he would need 180 votes. vote, no-confidence vote, triggered a lot of this he only got a 155. he is 25 votes short. you ask the question of will it taper over the fact that they have not left in the imf program?

that is a heck of a gamin because the opposition party, which is meeting and the opposition and meeting in the opposition and leading in the polls, they will not let them. proof positive that the samara'' government is working to keep the grease under the imf for another duration of time. the domestic challenge for him is he may be able to get away with it would international debtors. but domestically, he still has a challenge. seems stock market humbled this morning. are people talking seriously about what happens? coming closer to the events but i had in the polls and saying he will make significant changes. to what extent are we about to see a very significant development if he cannot make the math work.

routes challenge the eurozone would be held together, are we getting back to that again? risk offhe systemic the table? chris it depends if you believe samaras' claims that have moved to the sender. they are saying basically untenable. yes, we are going to and austerity but keep international bond investors on our side. those two are fundamentally at odds. as long as you are playing your domestic audience and is this the you will end of every, let's be clear, the economy has been crippling to the greek economy. it is difficult to find an economist that said greece has prospered under the six years a recessionary growth and the last quarter they came in at 1.9%. if they're going to end austerity, it will cause a massive concern in the bond market. they are fundamentally at all.

that's is why this damage to my samaras is so interested. just trying to say i did not keep my pledge to as the dust from the imf bailout programs by the year end but up on us another two months and please give me another two months. we'll see if he can pull it off. andn interesting christmas new year for greece. hans nichols joining us from berlin. morning,ur radar this cloud control. hosting pounds all morning on the key topics of tact and the bloomberg enterprise summit. you are looking at live pictures and we will bring those to you. we have great guests, god. we discussed security with him. guests comingat up. that looks like caroline hyde. we will be talking to a ceo,

coming up later as well. credibleny facing a competition from google and amazon. how does he differentiate? are we seeing the diversions with in cloud computing? a political perspective on all of this in the tech sector. be joining us. she could be running for the mayor of london. how will she change the taxing if she were to --tech scene issuer to the mayor? please give us your answers to this question -- do you trust the cloud with your data? do you understand the risk and you are running if you do? let us know. join us on twitter. that is the question for the day. europe's qe as economy falters. sovereign qe seems to be

imminent. better late than never or a little too late? we will get an site into mario draghi's next move. a couple of exclusive interviews. pulse."p on "the ♪

>> good morning. welcome back everybody. the markets this morning. let's show you what has been going on. emerging markets are being hit overnight. dubai,i off 5% per year 5%. athens, absolutely pummeled samaras after called a snap presidential election. we will watching that story. the markets fluctuate. at one point, down 7% in advance. european equities are trading lower. underheless, equities are a little bit of pressure. what does it mean if you're a big asset manager? a couple of you exclusive interviews. blackrock ceo. theave been speaking about markets in europe.

both spoke about the need for form. let's start in your. he started by telling markets editor manus cranny about what he has learned in the past three years. when an setting and executing the strategy, the last five or six years of this environment from a macro standpoint of view talk me one thing clearly -- do not count on it economy or the market. and whatour business you can control. unfortunately, it plays out every quarter. a very balanced a cautious outlook. that is really something that helped us to really go through the -- unless do the -- a let's do the right

thing and fix a fundamental part of our business. rates, you name it. they are not going to go the way you desire them to go. fix the problems. >> there's a possibility that we will lose some of our compensation and the form of the federal reserve or the bank of england possibly raising rates. riskat perhaps the biggest ? we have to see how it plays out. nobody has stopped qe and raised rates. >> if you have the reverse of the policy that would probably mean we have a big change in the macro picture that we do not expect at this stage and do expected next year of grace and the u.s. to go up. it should not be a shock. europe, of course, we would like to see the beginning of what the u.s. has been doing for the last

few years. >> the beginning of a great experiment? , i think i amrope right in this, in your view, not like the qe in the united states? >> absolutely. two fundamentally different systems and underlying structural problems are different. i do not think you eat can resolve the issues on its own. a very powerful tool but eventually if it goes alongside structural reforms, fiscal reforms, and reforms that europe needs in order to be successful going forward. al qaedafrom his adventure. manus cranny joins us now. what was the key tech away? >> a very long chat. his point was going to 2015, no

isolated event. it is coagulation of events. a little bit of liquidity. quantitative easing disappearing along with something like hong kong's riots on the streets. like the middle east situation. something like emerging markets beginning to move. liquidity, we touched on those liquidity could be something. are going to have to actually pay more money. it is interesting we talked about his structural reform at the bank and i set what was one of the hardest decisions you have to make? you remember the headline, 10,000 jobs to change and a change in nowhere near that. he said it was probably the hardest decision he had to make. he said it was like a reallyioning --

interesting -- decommissioning a nuclear bomb. he referred to the change -- >> ubs is a nuclear bomb? >> change the direction, yeah. problems andjor they were one with big meetings a lot of unhappy shareholders and change in management. i have myh the ubs, wealth with ubs. should i fill satisfied he is doing a good job and a safe place to put my money? and what's the message i should be getting from him? >> i would take it back to what and i and the reported said, you are very cautious about having the right strategy and doing the right thing. i said, make a call. if you look at the footage, is out of my twitter account and and the stock-

has delivered 75% return since helm. and avery tight management group and i had the privilege of meeting a lot of them. and almost halfway through this journey. deliver.tinuing to and they have not stepped out of investment banking holy. broad group of issues. you picked up the five minute interview on my twitter and you can pick up the exclusive interview with sergio ermotti at the forum. >> manus cranny. another exclusive, larry fink has been speaking about the global outlook. an interview with erik schatzker opinion about politicians around the world to enact structural reform. this going have forward because when you have all of these five major central

banks trying to stabilize a world which we had in the first six years, they did all the work. low, their job can not have the same impact especially in europe as when we were -- when we had -- you know, great volatility and high rates and mismatch between demand and supply in different areas. we now have to unfortunately or fortunately depending on how you -- dependink about it on politicians to do these reforms to rebuild the global economy. ast will create instability we are witnessing for the past few years, democracies are as messy as we can remember in our lifetime. unfortunately, i do not think they will get less messy. so, we are going to see that type of volatility. i am hopeful because of the new

leaders of these various countries are talking about reform. they know they need to have reforms to make their economies more competitive who -- to create jobs and reduce youth unemployment and hope for the middle-class so there than the wage growth. everyone has the same hopes and desires. it is going to be the exceptional leader who executes that. right now, i would say president in mexico may be the only democratic leader who is moving down that path of transforming his economy. hopefully, prime minister renzi is going to begin this path of reform he promoted. we talked about labor reforms last week. there's going to be an election hopefully it validates him to allow him to finally do these reforms necessary and we

will witness what happens and the united states and other countries. these are the things that will crater the uncertainty and whether these reform -- reforms occur or do not occur will really be the juice that determines if my forecasts are right or wrong. >> larry fink speaking about uncertainty. in europe.ncertainty grease once again making headlines. the eurozone economy stagnated. our will back to get qe from mario draghi? left out about what it means for the asset management industry. officer andhief richards is with us. uncertainty. ann richards is with us. >> it is not all bad news. forget that oil price theood and some parts of

world. likewise, the fact that a stronger dollar might push interest rates a little higher in the u.s. is probably good as a backdrop for markets. it is not all bad news. >> assets looked very stretched in a number of key areas. equities are stretched on a cyclical basis. if i look at my bones, well -- a bonds, well, they have suppressed. key property markets look pretty inflated as well. qe, how do i invest in this kind of environment where the price of money may be wrong? >> that is exactly the right click. the price of money has been manipulated over a period of time. eight in thed stash 2008 and the starting block is the price of money is not naturally where it would be.

every asset class is going to have some level of distortion in it. look atu are trying to allocation and where you put your money, what you have to accept is probably not even a low risk. it is just risk. you have to try and build a portfolio that puts in as many different risks as you can access how you get some balance in between all these different risks. >> when a lot of people and invest, they give you the option or if i want a low risk environment or a high risk environment and i can that more to equities. of spectrumrt really reflected the reality of what those investors are doing? think it does anymore. there are different risks erie if you buy government bonds fullywhich are pretty

valued or overvalued, you accept a decent risk. that might come back. you have that. you have the fact if we get inflation coming back, you do not have a real level of protection. you have one wrist. on at woody risk, you have to take the fact that volatility is likely to be higher. if you buy good quality companies, you are less likely to have a default risk. even cash into the bank, the possibility of a run on the bank. no matter what you choose, there's a risk and catch to all of it. we talk about building a portfolio to differ risk. not just short-term volatility or a proxy. the emerging industry is changing dramatically at the moment and a lot of people are opting for passive. some outperforming and we can

see that in all of the facts coming to us. to pass it.oing vanguard is dominating as a result and they want to make changes. do you think the industry is structurally in the right place right now to deal with what you described as a pretty broad spectrum of risk? to understand whether i should put my money with a passive fund manager or how i should position myself. is it a fair understanding of what they should be doing? >> i think the understanding of the consumer has improved enormously. clearly, more for that to continue to evolve and education. when you look at the passive decision and people make decisions for different reasons. you go to and to a passive fund. that is pure headline. fund islem of a passive

you get what ever the index and good, quality companies and bad, quality companies. an asset manager will discriminate. >> thank you for joining us. anne richards. we will take a break. ♪

♪ >> good morning. you are watching "the pulse." i am guy johnson. industrial production down. the month of october. that fact with output down by 0.7%. anticipated. the pound beginning to come under a little bit of pressure. as you can see, a little bit of pressure on the downside for the

pound. a spike earlier on the session. need to know?ou let me bring the top headlines. the greek prime minister has moved up a vote to choose a new president. it will happen next with real all opposition party leaders have said they will block samaras' pick to force an earlier election. three failed attempts would trigger a general elect should. and the bailout party leads in the opinion polls. we have the snap general election which could come as early as the new year. authority has said in a statement that the three top executives will step down. victoria, are charged with --

the communications director will step down this week. all are members of the spa's executive committee. bernie made off long as employees will do 10 years for running the ponzi scheme. unit forff's almost 40 years. break.ge gave him a not saying he was culpable of his former boss. going back in time. he did a pretty good job of reducing crime. but he is nothing on israelis synopsis company that helps catch a mass murderer and reportedly had a hand.

elliott gotkine has more. elliott? >> thank you, guy. i am joined by the ceo and president. great to have you with us. first of all, tell us how this technology works. you have video of a missing forklift truck which helps to illustrate how it works. villa andeo stream the information comes in and what the program does is it struck some of the background and then when you want to see a summary of everything that took place within a long time frame, repositions all of the objects in a very condensed manner. you actually get a summary of objects from different times but all you have to do is pick the one you want. missing case of the forklift, click on the forklift and you are back to reality which is the original video. >> it appears like you can watch

hours of footage in a few seconds. >> correct. in a crowded environment, or your home, a minute or less. >> your technology how to capture the boston marathon bar where a norm -- bomber and norwegian mass murderer. chris we are involved in high-profile cases as him and on and some areases in the news. we got a letter from the governor of massachusetts taking us for our contribution to the boston bombing. such was the case in norway when we were presented by the investigative showing how they use our system to review portions of the video. technology looks over the statue of liberty in new york. your phrase about $20 million so far. how far are you looking at further fan -- fundraising?

where are we in terms of finance? >> like every start up, we are hungry. what we do, we just raised a expanding and we are our activity. what kind of expansion? we take that usage from a high profile law enforcement worldwide mainly in the u.s. and asia and to the enterprise world. raianies in the environment. more and more enterprises. we need more fundingl and making our products more useful not only for security but usage of extracting value. into theg into getting consumer market. you are launching? >> and that is correct. we are about to launch a consumer product.

it was in las vegas in january to it is taking the high end the home. at the home, you can use your own cameras to watch what you need. security needs, safety or entertainment program >> in terms of other applications, what direction are you looking into going into? the idea, how did the come to you? >> it goes around in circles. it started and the university and the computer science department. thathen it was so cool companies who visited the commercialized, the software. it is interesting. the company was cofounded by a professor. and his student at the time. from there, it started with the law enforcement. now every video stream that comes from a stationary camera as long as we can extract value.

whether your home, enterprise, rose station. >> any chance of going into nonstatic environments where you depend on a program or when an actor comes on screen? >> it is up to the business opportunity to reveal itself. massive amount of stationary cameras makes a very beneficial for us to actually go into different verticals. we willsee opportunity, move in that direction. company asine vision specializing and that is where we focus. >> ceo and president of briefcam. guy, perhaps at 1.i will use the software to work that way you are coming on the screen so i can see what they want to watch. >> between 9:00 and 11:00 in the morning when you can narrow it down. fascinating technology.

elliott gotkine joining us. shifting gears. sanctions,ern russia's luxury automaker sector could be about to emerge as a surprise winner. self-love solo trip cars are through the roof as more russia's bank owned their andtion -- porsche lexuses. a porsche is value? >> you can park your rules. we look at all of the numbers and these are monthly auto sales and they are all for porsche by in october me, 55% and 36% in november. compared to overall auto sales in the country and they are down some 12%. areee three luxury brands really taking off. mercedes a little bit less than the other suffered we see bmw

and audi and they are being hurt like the rest of the auto industry. they are down, down big. we have a tale of 2 different classes. you have bmw and audi in one bucket and porsche and mercedes and lexus in one. drive offstory of you the lot to lose 20% but that does not hold in rules. --rubels -- rubels. -- >> amazing. let's talk about musical chairs or changing the tires. bmw. a are approaching each other. we had a lead designer from bmw going over to vw. they are approaching each

other. it is a brand is at better productivity and profit margin. 6%-7%.nt to get to they are just at 1.9% last year. she which challenges their. -- q which challenges their. they are bringing in of fresh blood. story.inating a really big change. really changing. thank you. hans nichols joining us from berlin. coming up, cyber security and the cloud. google has entered it was to take stores to a higher level. how will you offer better security for your data? lose the to the h -- we will -- we will head speak to the of the global computing sector. head what we are seeing is a significant drop around the world.

-- what we are seeing is a significant drop around the world. down 3%.t moore earlier on. athens, the story of the snap elections for the presidents. the snap general election for stocksernment's sending down. tesco taking the shine off the ftse 100. a story across the continent. equities under pressure. a story we are seeing around the world. we will see how the u.s. opens later and see if we could change the music. we'll take a break. i will see you in a moment. ♪

>> in a couple of years with the possibility of investing $200 million to boost our visibility around the world and to provide more and more success. chris valentino ceo talking to thatberg about reinventing particular luxury brand. let's continue with company news and deutsche bank has been accused of using shell companies to evade u.s. taxes. new york prosecutors allege that deutsche made a deal with a firm

and created three shell companies that had no other function than to receive tax bills they could never pay. from hansd earlier nichols, volkswagen has hired bmws development chief to lead its namesake division. he will take over responsibility for the vw brand from the ceo. he is the second manager that they have lured over. renault is planning to sell low-cost cars. the first car will be sold in india next year less than it 3500 euros. story,ay's new energy, a the plunge in oil and how it is impacting renewable energy sector. let's talk about the oil price and where we are.

ryan chilcote has it. >> in the doghouse in a nutshell. coming back -- i am often in the doghouse. coming back in the past few hours. it has been out there. it is ugly. one of the reasons is we saw the iraqis follow suit after the saudis of cutting prices. if you were wondering if you were wondering if we are in a price war, we are in a price war. the saudis are having a fire sale. at the lowestring price in 11 years. everybody is, concerned about market share in all that countries included -- and opec countries included. >> it is interesting that you talk about this in the negative. for most of the world, it is a plus. it is a massive, massive positive. the saudis are talking as well.

thehat is definitely consensus view, the majority view is that it is good. it depends on what we are seeing an oversupply issue and not demand issue. assuming that it is an oversupply issue, with the majority of people believe, is good stuff. your point about demand but even if demand is -- >> plummeting. >> it may help demand, there is elasticity when it comes to oil and ma drive it higher. not the semantics. look at what the oil price is doing right now, i read an interesting line from the saudis. they know that -- it is coming out of the environmental talks lemur, we know that the game is changing.

and we are now in a kind of situation where we have to buy time. we have to manage the price and understand the dynamics. in a betterbly place the other oil producers. the whole complex seems to be in flux right now from oversupply to changing demand patterns to geographical shifts. in flux.g is it is amazing we do not see it. >> is amazing that people were talking about type oil. it was driving. and they wereel much more attractive six months ago a much easier to find peaktment in a climate of oil. now, the situation where it up here's to be a glut and prices are going down and more expensive project. whether it is renewables or shell oil, you can see in the united states with the show producers like in canada right now. really under pressure and crude

producers over the past six since august, have seen share price go down 60% because there are any space they need a higher oil price and they are not getting it. they have the goods that everybody wants. choosing that over an alternative. >> what are you hearing? yeah, oilearing is it prices are having an impact on share price in share prices are going down in the oil companies. gearing up foris his consolidation. are you hearing much about that? >> and there are two issues. does it make sense in term of geographically and the answer is -- not just discussing as we know the sale of the whole company and other assets to sell. , one offhasing single access and that may make sense. whether you go the company as a

ofle but it has a motley mix assets around the world. the only thing i will point out you talk about him in a, it is -- m&a, it is great that the share price for the likes coming down. it means a lot cheaper. the price continues to fall. who wants to catch a falling knife? is a really difficult environment. >> right time to buy. ryan, thank you. ryan chilcote joins us on the oil price. and the cloudity when we come back. cyber security in the cloud. do you trust the level of security that your cloud provider is giving you? we will talk to google and ask of the company some key questions about your data and his business. we would do that when we come back. ♪

>> 53 minutes past the hour. you are watching "the pulse." let's talk about the cloud. the bloomberg summit kicks off today in london. a major topic will be cyber security. google recently moved into cloud storage and said it is offering the highest polity. cloud infrastructure is a big

story. why is the search engine is selling cloud infrastructure? the google head in europe. good morning. i am a company, why should i give you my data? >> you start by asking why is a search engine starting to sell infrastructure? two people started and they knew they had to do something different to great that massive scale of the worldwide internet and we have created an immense infrastructure and we have started externalizing for companies. if you are a business inc. about all of the stuff you can do in the google platform and you can run any application, any service and doing it very fast and efficiently and enjoy the benefits. >> there have been a few security issues. should i worry about it? do i understand what i am doing when i give you the data? >> clout as a whole, we are in

the next season of the ipo industry. security has to be addressed. if we look security measures, you have to ask yourself am i investing my money in the financial sector? it is probably a bit more significant than what you can do at a private company in terms of investment. and securityerves and cyber security beyond your imagination to protect your information. a big data and companies, data is now your business. as the crown jewel, it is everything i have got. i may have everything else about my data is increasingly critical to me. choose and why give it to is important. data choosing who i given to is important. about the fact that you should hand it over.

why should i keep it in-house was more why not keep in the house? i know who has connections. why don't i do that? >> are you protecting or do you feel comfortable being more efficient than what it would be with a different cloud provider? -- theare deploying cloud is evolving or creating awareness but at the end of the day, the traditional i.t. has stress and people are losing laptops with sensitive information. we eliminate the need of that whole type of technology. people are starting to look. all ofide you access to the security standards, key security things you need in order to deploy. we give you all the measures to evaluate us. probably do it within your own premise. >> ok, stay with us.

london traffic, you joined us a bit delayed. we will hold you over commercial break and we will come back. google and cloud computing. we would take a break and be back with the story when we come back. ♪

, a 30% drop in the share price. struggling to control of the retail giant that is tesco. and a head in the cloud. is your corporate data safe? nextis coming up in the hour.

good morning to our viewers in europe. good evening to those in asia. a warm welcome to those waking up in the united states. francine lacqua will be back at little later on, depending on london traffic. discussing cyber security and the cloud. a few minutes ago, we were talking about why as a company, i should give you my data. data is also my going to be in the cloud, my personal data. this is going to become increasingly important to me. my biometric data is going to be online. my financial data is going to be online. my geographical data is going to be in the cloud. consumer, as aa

user of devices and apps should i be? >> i don't think being nervous is the right term probably. technology, as a whole, has been disruptive. we have seen players like uber come to a traditional place and disrupt the whole market of taxis. >> with mixed results. >> time will tell about that. technology is running ahead of standards and regulations. data,e talk about storing we offer every company within the ability to store and to check the boxes to make them compliant. the fact that we are encrypting all the traffic, the data is

stored in a central repository and giving you access to it everywhere, the benefit outweighs the need for the privacy. >> do we understand what we are doing? do we understand how the information is stored and potentially used? >> i think education is the key for anything we start using as a whole. i'm a father, i have kids. i have to teach them about the way to behave. control over that in a way that a device that reads starteart be -- you can drawing lines between blocks of data and forming a very complete picture of somebody's life and a way that is difficult -- a little different than posting a picture on your facebook page.

little bit more interactive in a way that you don't understand. when a post the picture on facebook, i'm making a conscious decision. once i put one of those things on my wrist, some of those decisions are not conscious. >> the internet of things is evolving as fast as the cloud has been evolving over the past couple years. the ability to have smart devices communicating, the benefits just outweigh anything else. remote control thermostats, we are going to get better efficiency on electricity bill, save money. i wish all my kids would turn off all my lights. [laughter] you can control what you want to do with the device come at the end of the day. it is like a car. you can choose whether to accelerate or drive at the speed limit.

for me, it is all about the transformation of i.t. and this industry. with a voice command and a script, i can run a full data center in five minutes. let's say i am seeing a peak demand coming in from the far east and i need way more servers to serve them, i can probably do it right here from my watch without hassling anybody in the way. that is one of the benefits of the cloud adoption and disruption. >> your field is more reticent about making some of these decisions. to have different issues than the united states with how we adopt and use the cloud and deal with data and have security surrounding that data. is that holding europe back? europe is an assembly of many countries with different regulations. at the end of the day, we cannot

treat it as one bulk. in europe, we are customizing our approach. obviously, you are not interacting with customers the same way in the u.k. and germany. we are being flexible in the model we have designed for different countries because of the way that regulation is defined. a to my question, is that negative for europe that we have that mishmash of regulatory structures, that we don't have a common approach to this stuff? is it meaning that we are not advancing asthma? -- as much? all of this stuff is linked together. i set up an i.t. company, i what that company to be as global as quickly as i can, i wanted to be scalable. are the regulations causing us

problems or are we right to make the decisions we are making? >> i think it is the reality we are living in. simple if the eu had a single policy. but the reality is that it is not and that is ok. it is part of the market conditions and we are working within those market conditions. maybe the eu has been a bit behind the u.s., but i think it is picking up fast. >> thank you for your time. head of cloud computing at google. let's get back to our top corporate story. more bleak news from tesco. its shares have been down as much a 17%. , we will talk about the latest first. what do we understand is the result of the announcement this morning? >> it is down to a change in the

buying policy. tesco basically said we are millionng 500 pounds in the second half because we are changing the way we do business with our suppliers. >> is this all of the bad news? >> it is difficult to know exactly. ,n some very rough estimates tesco could make zero profits in the second half in the u.k. obviously, it is starting from go and it is a question of how far back it is going to get. if the 6% operating margin is behind us. where it will end up is difficult to say. >> january will be a critical month for this company. maybe there is potentially a bit more bad news to come.

january is when lewis unveils the plan. everybody has got to be waiting for that now. >> the outline of the strategy is to trade on the front margin, to sell things that people want at a good price and then earn a fair margin on that. what is that fair margin going to be and will customers buy into it and can tesco return to sales growth? that is the big unknown. if sales keep declining, that is not the end of the bad news than. -- then. >> in terms of expectations, we have seen some big shareholders selling down their stakes. shares have taken a battering. your sense of what you are hearing from people is are investors going to stick with this company? do they trust lewis? what kind of timeframe are they

talking about giving him? what is the medium story looking like? a change in the shareholder base. we probably have new shareholders who are looking at it as a recovery opportunity and is some sort of return to mean. the 6% is unlikely. it is what we can get to. what people are looking for is a restoration of trust to consumers that will be seen most obviously in positive same-store ands growth in the u.k. then a gradual rebuilding of the trading margin in the u.k. >> thanks for the update. charles allen joining us from "bloomberg intelligence." aheadead on the -- more on the tech theme. cloud computing.

more players getting into this space. we will find out about strategies to find -- fight off competition. overnight, we have seen significant selloffs around the world from shanghai to dubai. we have seen a fairly big selloff in greece. elections.ential they will have those in december. shanghai is down. equity markets have been under pressure around the world. europe, no exception. the markets are trading lower as well. 1%.% to i'm going to take a break. we will see you on the other side of it. ♪

>> welcome back. you are watching "the pulse." let's carry out talking about tech and the loucloud. the race for control of the cloud is very much on at the moment. it is the survival of the fittest. will the lesser-known names managed to stay competitive and

in business? had aace hosting challenging couple of years. but investors are a little bit more upbeat. how did the company weather the storm? and heis taylor rhodes is sitting next to me. >> good morning. >> tough to be small in an increasingly big world? >> you always have the bulk players, the volume players, and then you have the specialists. you have lots of news this morning about tesco's and at the same time smaller players are doing well. has always been the specialist in the industry that adds value on top of commodity infrastructure. >> drawing their -- nice line drw ainawing there between one and e other. store.s a less managed

is this the divergence we are going to see? managed cloud storage and unmanaged cloud storage? >> i think that is the take away. the first five years of cloud -- it really got started in 2008 and 2009. the early five years of cloud were driven by developer software engineers. really those developers are very technologically savvy, they want to play with the technology. now, the mainstream market is starting to say clout is compelling, different economics, it makes infrastructure available, how am i going to use it? i may not have all of these tech skills on my payroll. you will see the mainstream market perform -- prefer a managed cloud. how do you manage it?

as commodity continues to creep software ared going to take advantage of the ubiquity of cheap infrastructure. big companies have a hard time eating up with the tech skills keepinge the cloud -- up with the tech skills to manage the cloud themselves. >> hardware and software? >> and service. >> and you are the service option. how different have those two markets become? >> if you think about a traditional software company. let's talk about cloud delivered software. they used to sell you a license, you bought it as a thing that you paid a price for, you paid a perpetual maintenance license on it. the cloud has said, we don't like that model anymore. we want to make technology

utility-based pricing. to bere is going monetized in cloud-based service models. modelld a cloud service and we deliver that technology in a service context. >> ibm? >> it is a good model for the pre-cloud era. delivering value on top of commodity infrastructure. when you look at the potential for your business further down the road, how different is it in the united states and how different is it here in europe? we were talking to our last guest from google about the differences between the adoption and the regulatory story in europe versus the united states. how different is it? >> it is quite different. because europe is not one homogeneous thing, you naturally have the friction and complexity

of the different models looking at data privately, looking at the consumer, and trying to plan the right policy. but because it is a more complex environment, it will move more slowly. the u.s. is more of a homogenous market. always see the u.s. market 18-24 months ahead in terms of technology adoption and that is why. >> is that something we are just going to have to get used to in europe? or can we move on from it? >> if you think about e-commerce years ago, people were very hesitant to buy online. and it is a good business model. club will do the same thing. it will just develop a pace -- cloud will do the same thing. .t will just develop a pace i hope that governments take a

technology and business friendly approach to cloud here. it does really speed the innovation of business. >> what do you think is really going to happen? have a crystal ball on brussels, but i do think it will take longer. the u.s. is a couple of years butd in cloud adoption, i've moved to london in 2010, spent three years here, and i can tell you that the inflection curve started to catch up. as the economics get more and more compelling, you will see the business market pushing to treat it with fairer policy. >> security seems to be a bigger issue over here as well. do you think businesses understand the cloud yet? do you think we fully have grasped what we are doing in terms of what we are doing with the crown jewels of our business ? data is everything. we are handing it over to you.

do i understand what i'm giving you at this stage? >> i think markets go through hype and then wisdom. the cloud has gone through tremendous hype. cloud has become shorthand for buying computing is a service. the market is evolving with a preference for hybrid cloud. some things will be in a private cloud context, which you can manage for your environment solely. then there is also public cloud, which is generally the model that a google woodfield, shared tool -- would field, shared tools for many customers. rolete clouds have a real with data security and privacy and performance of hard-hitting databases. but the ability to use public cloud right alongside for things that are highly variable mattered. domino's pizza, every tuesday night for the football, they run

an offer. cloud,t they can use the they say, i'm concerned about data privacy and i'm going to run that in a private cloud and connect them into a public cloud for versatility. i can pay for the base of the business, i can rent the peak, and then i can turn it off. that is a good example of a mainstream market application of hybrid cloud. >> pizza as the story. >> yeah. [laughter] , europe's qe quandary. better late than never. too little too late? on all get a perspective mario draghi's next move. we will get perspective with bloomberg exclusive interviews. ♪

qe cann't think that work on its own. i think it is potentially a very powerful tool if it goes ,longside structural reforms fiscal reforms, and political reforms that you would need. , the ceo ofmotti

ubs, speaking to manus cranny. talking about what is happening with qe. >> qe could support global markets in the medium-term. that would be the idea. hisnight, what we have seen asset prices in the equity space coming under pressure from shanghai to brazil to dubai to greece. equity markets have been falling. those names down really quite sharply. off 5% overnight. dubai down 3.5%. athens is one of the big stories in europe. the country's prime minister plays a little bit of political poker, a bit of a gamble overnight, early presidential elections. stocks are down, bonds are slumping. we will get a take from athens

when we come back on what happens next in this country. it is going to be a big story for the end of this year and the beginning of next. we will be back in a moment. ♪

>> welcome back. you are watching "the pulse. we are live from london. let me take you through the top headlines. the greek prime minister has moved up a vote to choose a new president. it is going to happen next week. opposition party leaders have said they will block his pick in order to force a new general election. we will have more on that story

in just a moment. the three top executives will step down amid a wider restructuring of the financial markets regulator at the financial conduct authority. the fca is merging two departments. one of bernie made off's longest-serving employees -- off's longest-serving employees is the first of five former aides to be sentenced. the judge gave him a break for not being as culpable as his former boss. hm. a will watch that story

little bit more for the other sentencings that are sure to come. let's see what is happening in the markets right now. jonathan ferro is on top of it all -- quite literally. >> yes, quite literally. in europe, stocks are taking a little bit of a beating. off by 1% in spain. trading about $65 per barrel. look on the map. greece. political risk is back in focus. calling aninister is earlier than expected presidential election. we don't know who his candidate is yet. if he wants to get his man through, he needs 25 opposing lawmakers to come on his side to make that happen.

if it doesn't happen, snap elections. that is the unknown for greece. , here is the story. oil stocks have seen a lot of trouble. retail is the second worst performing sector this year. look no further than tesco. the stock is down by 10%. without the bad news had stopped. profit warning this morning. -- we thought the bad news had stopped. profit warnings this morning. the ceo has been on the job 100 days. the stock is down 26%. guy, you love the line. helps.y little that will be the story going forward from here. incremental gain. we will find out in january how he is going to turn the business

around. let's give you an update on what is coming up next. 25 minutes until "surveillance" is on the air. tom keene joins us now. >> i have to straighten out my bowtie is what i have to do. we will look at these markets. oil hitting $62.25. brent is sitting a little bit above the american oil price. ,e will link that into china the oil price. we saw this bombshell overnight from china as they spruce up the capital within their repo market. we will talk about tech, but aboutok, and about ab -- facebook, and about linking into a challenging advertising visit -- business in the u.s.

the duke injustice -- and duchess continue their visit to the united states. they took in a basketball game last night and beyoncé showed up. >> is new york city having fun with it? give us a sense of what the story is threre. >> over here, you don't have the debate. it is not that there is a royal infatuation, it is what is missing. nobody here is to having a here is having a discussion about the royalty and the nation. it is just the excitement. kate is getting a lot more airplay than her husband. >> that, we have in common. hereis probably true over as well.

thank you very much indeed. tom keene joining us from a very roiled new york city. new yorkp -- royal city. greek stocks and bonds. is the primek minister taking here? >> sorry, i didn't hear. >> how big of a risk is the prime minister taking? >> the government seems to be very confident. it has been negotiating with the troika. by government is emboldened the successful performance of the economy. the economy is in a recovery phase with the third-quarter growth of gdp being at 1.9%. aboutexpected to grow 2.5% to 3% next year. on top of that, fiscal

performance has been much better than expected. we are targeting a primary service for 2015 of 3% of gdp compared to 2% of gdp this year. everything moves in the right direction in terms of fundamentals. the only thing that is missing from the puzzle in front of a sustainable growth path is this political uncertainty because of the election of the president of the republic. >> you brought us through the economic upside. the potential of what the greek economy can deliver. then you highlighted the difficulty. if the prime minister gets this wrong and he has to call general elections in the start of 2015, , are thosessible economic numbers going to turn out to be real? >> of course.

the economy's numbers are so good that any successive government will have a much easier task in negotiating with the troika. i think that in the event of a change of government, we may have some turbulence in the markets, but at the end of the , political instability will prove much milder than what many people believe. i think, at the end of the day, any government will take the right measures in order to sustain stability in the economy? . >> i am surprised you say that. the prime and mr. has made it clear that it will not be business as usual and that the game -- one of the candidates that -- the prime minister has made it clear that it will not be business as usual and that the game will change. all the parties are saying a

lot of things to try to gain power, but at the end of the day when they become the government, they go for the return to normal business as usual because there is nothing else they can do really. i don'tthe rhetoric, think that greece is in danger of leaving the eurozone or that european partners would allow such things to happen. yes, there will be turbulence, but at the end of the day, things will return to normal. how fast, this is for everybody in the market to find out. market in greece is down 10% this morning just on the chance that we make a general elections. what would happen if we were to get general elections? do you think that asset prices

would come down more sharply than even we have seen this morning? >> i cannot comment on the stock exchange. itsously, the market has own mind and it changes its mind within a day or five minutes. the only thing i have to say here is that the markets knew perfectly well that the outcome, the likelihood of not electing a president of the republic was there and therefore the likelihood of national elections was also there. the only thing that has happened today is that this was moved forward in the fact that it was brought forward made us more comfortable because we believe that the government is ,egotiating, as i said before in a much more robust manner with the troika and the fact that they brought the elections of the president of the republic earlier, it seems to me, it is an indication that they feel more confident about the entire

process. they are turn to muster the support of the candidates, the deputies in the parliament. that theyonfident will calibrate the process so that stability is maintained in greece. elections, we are definitely entering into a new it willlikely probably be some kind of instability, as i said, because of the political , but beyond that, i notk that there will be much happening at the end of the day. >> thank you very much indeed. take.sting coming up, we will talk about hot topics in tech.

we have been discussing the cloud story throughout the morning. francine lacqua has been done at this bloomberg summit. she will be back and we will bring you an interview. tech, british entrepreneurs, london's role as a tech hub. what should london do next? ♪

>> welcome back. you are watching. ." has just for me -- you are pulse." "the it has just been -- until now. >> we were talking about silicon valley. we were talking rezulin round out versus silicon valley -- about silicon roundabout valley.ilicon we need to do more. we could be so much better at innovation. in relation to tech readiness , we are number two.

roundabout, tech city. we also have other parts of london which are beginning to develop. there are other parts like kentish town. we have structural weaknesses. we have broadband with only 85% coverage and we are never going to match silicon valley. we also have skill shortages. all of the tech firms report skill shortages. we are doing less well than cities like bangalore and berlin in recruiting new tech entrepreneurs. i think that may be over the last year or so, the debate about immigration, which has

been intended specifically to exclude highly skilled tech , it may well have put some people off coming here. we welcome people with these skills to come and help the tech economy of london and other cities to grow. >> you are considering running for mayor. >> it is a long way to go before that. [laughter] >> i'm sure we will get there in the end. give me some policies that you would start to think about in terms of dealing with some of the issues you have just talked about. >> well, i think the first would be to look at how we get .niversal coverage of broadband until you have that, you have a structural constraint on the

development of many businesses. that is something. the second is looking at the skill shortage. looking at how the skill shortages created way back in our schools with not enough girls, particularly, taking the subjects which are key. >> is that a london mayor story? >> no, it is not a westminster story. a mayor has to give effect to these kind of answers. the mayor will have a responsibility to implement working with the boroughs across london to do this. the third is scaling up. a recent report indicated that if our tech companies scaled up, they could be worth an extra 38 the u.k. economy and

create a quarter of a million new jobs. is the techon capital of the u.k., although other cities are developing hubs and beginning to become strong in tech, still the success of the u.k. tech industry is judged by the success of london and london needs to do more. >> to attract investment, you need a stable situation, be it political or economic. >> at the conference we were at earlier -- >> we talked about the possible exit of the u.k. >> one of the delicates raised with me -- delegates raised with me the perverse incentives for startups that go once you reach a certain size.

that is a disincentive to scale up. your second point is the uncertainty caused by the of the u.k. exit from the eu. that would be catastrophic for the economy of the u.k.. dependent onn jobs access to one of the world's largest markets. i believe that were it to come to that that the country would vote to stay in the eu because the evidence is that when the case is made and you get out there and sell the argument, people understand it, they understand the impact on them, their families, their jobs. powerful turning point in the scottish referendum. when people realized that their jobs could be at risk, their weekly shopping could go up, then they voted to stay in the u.k. tothe labour party seems

have decided that it needs to reconnect with british business. onespect the reason is that -- the one that you described. do you think the labour party can reconnect with business? >> absolutely. i think you don't want to give too much credence to some of the turbulence that has been reported. >> we have ceos who come on and that they are concerned about what your party is going to do. >> i hope they can recognize and accept that the labour party is a pro-business party, but also that the labour party is the only major party that is quite clear about the importance of britain's place in europe and what we have. being rather partisan about this, we have a tory party where the u.k.'s relationship with europe is a bargaining chip in

order to manage for you lent -- t tory party individuals. they will always pull you further away from the individuals that you might have reached agreement on. , don't worry,e is we will get through it? a i hope that there will be labor government and that that will stabilize the position in may next year. i hope that investors will not be deterred by the uncertainty that a possible referendum would create. when the argument is put and people connect with that argument, they understand that britain's place is best in europe as a full and engaged partner in europe. >> thank you so much for joining us today. >> we will take a break and will

come back in a few minutes' time. we will tell you about a controversial cia report being released today. that is coming up next. ♪

>> welcome back. a look at what we are watching for the rest of the day. hans nichols. francine, this is the

executive summary of the report. lengthys been a back-and-forth between the white house, senate republicans, senate democrats. the white house says there is no good time for this report to come out, but they expected to come out today. there have been some phone calls between secretary of state kerry and his old senate colleagues, warning them that the release of this report could have consequences. we are going to be looking at countries where so-called black sites were operated are named. it is likely they will be whitewashed. will be interesting to see whether there are protests in some of these countries where there may have been cia black sites. >> i will pick it up. thank you very much indeed. tomorrow,ck note for the german finance minister as we prepare for presidential

elections in athens. >> that is it for "the pulse." "surveillance" is next with tom keene and his team. you can follow both of us on twitter. see you tomorrow. ♪

. times of theks and quality of that collateral as oil continues to defend -- descend. expect the unexpected. advertising faces seismic

shifts. , come on,nd duchess kate, try some gummy bears. good morning, this is "bloomberg surveillance." we are live from our world headquarters in new york. i am tom keene. joining me, scarlet fu and brendan greeley. we need sometime headlines. >> we are singer global selloff today and it is being led by the biggest drop in chinese stock since 2000 nine. the index dropped more than 5% after the government tightened collateral rules for short-term loans. between of ember 21st and anderday, it had sort 21% had closed at its highest in 2.5 years. oil prices keep plunging. they have not been as low analyst 5.5 years. west texas intermediate rebounded slightly today.