>> bp under cost pressure. the oil giant just started laying out its plans to analysts. gunning for google. the u.k. lays out its plans to tax multinationals later on today. and, try before you buy. how virtual reality will change the way you plan your holidays. good morning. welcome. you are watching "the pulse." i'm guy johnson. francine is off today.

we are talking about bp, a company under pressure. the oil giant has just announced that it expects $1 billion in restructuring costs as falling oil prices and speculation of a possible merger swirl around this business. let's join our bloomberg intelligence expert, philip. good morning. very nice to see you. bp is a country under -- a company under pressure. dudley has had a fairly turbulent few years. what is he going to be telling these guys about his upstream operations? >> i think the bottom line right now is, they are focusing on the big projects in the gulf of mexico, angola, the caspian, and they will try to sell off the smaller assets and the assets that have reduced production volume. >> is that a continuation of what they have been doing? >> it is a continuation and an intensification.

with the pressure they have now, it is going to be more pressing and more of an issue going forward. >> will they find buyers for some of those assets? there's a lot of rumors swirling around about m&a. are we about to see a real shuffling of the deck within this sector? maybe you see roll ups. how is it going to work? >> they have been successful in selling assets in the past three to four years. might be moresets difficult to sell. we see that also with other companies that are trying to sell assets in the north sea. it is taking quite a while. where does bp sit with the russia relationship? t, has a big stake in rosnef a lot of skin in the game when it comes to russia. >> russia is one of the biggest oil producers in the world, and

will stay so. for any company that wants to grow, again, big is beautiful. a one to go for the big assets. there are not a lot of places in the world you can find them and russia is one of them. they have said they will commit to russia. it doesn't look like this is going to change because the big assets are in russia. >> do they make any more acquisitions? do they go the other way in certain areas? is there a kind of opportunity and a kind of opportunity to offload? there is very strong competition. all of the big oil makers are looking for big assets. there's not a lot of big discoveries coming on the market every year. it will be difficult. they already have a quite good portfolio of big assets, of promising developments. rather focusmight on those.

>> they would be very keen to point out the gearing ratio, 15% at the end of the third quarter. another thing i'm hearing is that heavily geared companies are the ones that are going to be problematic. if you want to analyze the oil sector, do the credit analysis. with the lowballer oil price, it is going to be more difficult. having said that, there is still space to sell assets and make money this way. >> we will watch this space. philip, thank you very much indeed. we will continue to bring you the headlines. the banking now. of theercussions financial crisis continue to be felt. deregulation is being unveiled by the federal reserve. fromrs are retrenching more costly businesses across europe and asia. here with more on the latest hyde.s caroline

let's start with rbs. >> once again, they are retrenching internationally. they are decreasing their exposure to japan. in fact, just leaving the bare-bones when it comes to fixed income. 200 jobs are to go over in japan. they are no longer going to be a primary dealer when it comes to japanese government bonds. informingoing to be the financial services agency officials as soon as today. clients are set to learn directly from rbs next week. perhaps we just beat them to the post at bloomberg. it looks like they are trying to cut back from asia because the finances don't make sense anymore. citigroup, they are selling their consumer banking units over there. loss forbs posting a two straight years in japan. there seems to be a problem with that particular market. ross mcewan needs to cut costs

by one billion pounds. this is helping him do it. >> let's talk deutsche. a very big business. >> perhaps not many jobs going, but it is a key theme. it shows that overall, we are starting to see banks moving away from less profitable areas. credit default swaps, this is the era get at now. products that help insure against your company. we used to talk about them all the time in the financial crisis. they have become very expensive to offer as a business. you have to set aside a lot more capital to trade. are to be moved on to different units in london when it comes to deutsche bank. they already said, we are not going to trade in single names. g to be ablegoin

to trade a product ensuring against rbs debt that you hold. the single names are gone. it looks like they are scaling back from indexes as well. they are focusing more on the corporate bond market. perhaps even on more active derivatives indexes. the credit default swap still remains a huge market but it is slowing. we are seeing it down by 22%. that is how much the market shrank. that was this year. size,$17 trillion in bigger than the u.s. economy. budget bank saying, doesn't make bankcial -- deutsche saying, it doesn't make financial sense for us anymore. >> walk us through jpm. >> the united states once again showing that it is going to get tougher than the rest of global regulation.

the financial stability board that advises the g-20 countries, they say the banks need a capital requirement, core levels of equity to protect yourself of seven present. if you are a globally significant bank, up that by 2.5%. you have to have 9.5% to make sure you are stable. it goes one step further if you are a globally significant bank. you have to have 11.5% core capital. this is a problem for jpmorgan. they could be $20 billion short. they may be -- they won't be paying out so much in dividends. we saw shares off a little bit yesterday. clearly a big flag that this is that wouldk potentially have to up its overall capital levels. goldman sachs, citigroup, and the like seem to have enough capital but they are going to have to be far less dependent on

short-term funding. northern rock in the u.k., they want to have far more stable banks in the u.s. the federal reserve is willing to take bigger steps. very muche, thank you indeed. what else is on our radar? isnce's economy minister presenting a reform bill to his cabinet this morning. it will aim to energize the french economy. his proposals will include speeding up the settlement of disputed firings, labor laws, and easing restrictions on store openings. microsoft skype units are among a number of companies that benefited from secret text deal with luxembourg according to documents released last night. the documents also show waldorf pincus benefited from special

arrangements with luxembourg. this will increase pressure on jean-claude juncker who is due to be sworn in today as president of the european commission. the u.k. government is due to an us the details of its so-called google tax. chancellor george osborne outlined his plans for a tax on multinational companies' profits that moved overseas. the buddies like google, amazon, and starbucks are expected to be targeted. the government hopes the new tax will generate one billion pounds over the next five years. more on google after the break. that brings us to today's twitter question. is google now a scapegoat for europe's troubles? join that conversation. tweet me. i'll let you die just that. you can tweet francine as well. break, i head into

want to bring you what is happening for the equity markets in europe. bit of a black tuesday for the greek market. wednesday not shaping up to be that much better. 3%, but thatown by 3% on a fairly significant fall yesterday. we haven't bounced like the rest of the european equities space. athens down another 3.1% this morning. we are going to take a break. see you in a couple minutes. ♪

companies the largest in the world, including those in the tech sector, use elaborate structures to avoid paying taxes. i'm introducing a 25% tax on profits generated by multinationals rum economic activity in the u.k. which they artificially shift out of the country. that is not fair to other british firms. it is not fair to the british people either. we are putting a stop to it. autumn was the statement, chancellor george osborne, him laying out the as thoseh google tax in westminster are calling it. this is a tax aimed at multinationals. today, we get the details. we find out the length and breadth of this tax. tax on profits made

in the u.k. intended to generate one billion pounds over the next five years. multinational giants operating in the u.k., should they be worried? let's find out. i'm joined by chris morgan. good morning to you. should they be worried? be a bitk they will nervous. as you said, the tax has been stated will raise about 5 billion -- about one billion pounds over five years. that is not the concern. either the tax is going to go wider than it is meant to, or i think more worrying, other countries around the world will also introduce similar rules. australia has said they want to adopt it. spain has been saying it should be adopted across europe. you have lots of fairly similar rules and countries could end up paying. >> from their point of view, they would like to see --

>> that is what is meant to be happening with the g-20 initiative on profit shifting. i think the head of tax at the oecd has indicated he is not that happy that we are jumping the gun. if this is going to be targeted against really aggressive schemes that ought to be stopped , or is it jumping the gun? >> what do you expect? >> basically, what they have said is you have situations where you have a lot of activity in the u.k., companies are able to shift their profits out by manipulating the current rules. one is where there is no taxable presence under existing rules but there is lots of activity. one is where there is a taxable is not caughthat by existing rules and that reduces the u.k. tax. the issue is that there are already rules that govern those situations.

what interesting to see they are trying to get at. >> the language is quite important. there are tax treaties in place regarding corporations. >> that is exactly the point, which is why my initial reaction was, i think what they are going to do is deem some kind of profit. if you say, my profits can only be taxed in ireland or luxembourg under the treaty, the answer will be, this isn't a corporation tax charge. on the profit which is calculated, but it is not corporation tax and you are by projected -- protected the treaty. >> why are they doing this? is there a tax reason for doing this? >> that is the $6 million question. you could say, maybe it is

largely political because of all the noise in the press about large companies not paying tax in the u.k. it might be trying to introduce something in advance of the final conclusion. it is true that the international tax rules were introduced many years ago. they don't really cover the situation where you've got high tech companies which have a lot of presence, a lot of sales and the u.k., but no taxable presence. there has to be some kind of change. so maybe this rule is just trying to capture that before the new rules go into force in a year or more. >> is it going to be hard for these companies to argue against it? a multi end up with jurisdictional issue, but the argument i've always heard is that, you set the rules and we work with them. now the rules are changing so i guess the argument still applies. >> that is right.

there are some really interesting issues about, how -- can under asian national under international law? if there are rules against discriminating against other european countries, they wouldn't be law unless they are specifically targeted. so they only apply to structures which have got no substance in them. >> there is this sort of assumption that it seems to that these arek. not the foreign multinationals taking advantage of the u.k. we have lots of multinationals. are they going to fall a of similar rules around the world? we have our own. my openingxactly point. it is not so much because of what is happening in the u.k. but what could happen all the way around the world. if other people introduce similar rules, maybe some of

them won't be so -- what is the might tryligent, they to start taxing our multinationals in other countries where they can't do that. -- isyou think companies this the start of a process? it feels like the start of a process. >> yes, and what is strange is, this all started with the oecd and the idea was to get a harmonized type of system throughout the world where countries agreed on how to change the international rules. what we are seeing now is some countries jumping the gun and introducing rules. it is going to be interesting to see if we remove these roles once there is an agreement. maybe once there is an agreement, we won't need these rules. we have to wait and see. >> we will find out at 11:00. chris, nice to see you. thanks for your time. toing up, we are going

continue with the tax trouble story. it is no fairytale ending. these documents reveal walt disney and skype are among multinationals benefiting from tax deals. i can't believe i'm hearing "frozen in my ear. what will the latest revelations mean for jean-claude juncker. is he feeling a little frozen at the moment? find out after the break. ♪

tax. back.welcome another interesting morning. jonathan ferro, over to you. >> this is kind of like a calm after the storm. you have to percent. up on the ibex as well. it did not look like this yesterday. the dax down. that was a very messy day. we are even racing some of those losses this morning. the ftse 100 up 0.25%. the story in greece is a story for greece this morning. the spillover is limited this

time around. i'm going to bring you up the bond market right now. yields in greece up around 50 basis point again. 8.6% is the yield on the 10 year. the moves are feeling like 2011. elsewhere, yields coming up in germany. 0.69% on the 10 year. quite clearly, the political crisis in greece is starting to affect bonds in greece. it is affecting equities in greece. sinceggest one-day drop 1987. the sovereign debt crisis was huge. the bond market movers as well. the theme in japan was strong yen, week nikkei. that is what you see this morning. dollar-yen moving lower, money going into the yen. i want to get sterling up for you. here we are, sterling. mccafferty, that is the man

talking about putting his hand out because he wants a rate hike, here is sterling right now. no one is talking about a rate hike in general. man, he thinks the bank of england should look through the recent drop in inflation. what do you think about that, guy johnson? >> i think there are arguments on both sides of that one. i think you may be should look through the drop in inflation. on the other hand, if it gets embedded, that is a different story. it is about perception. thanks, jon. jon ferro on the markets. coming up, we are going to start smart stitching -- start smart switching. we discuss tech, wearable technology, and the expanding market. that is a bloomberg exclusive out of leweb. you can follow me on twitter. is, is googleoday

actually being used as a scapegoat for europe's troubles? is that fair? tweet us, let us know what your thoughts are. ♪

and you areing watching "the pulse." i'm guy johnson. shortly.lking to tony he is the head of the airline organization that is an umbrella for the sector. profitability is up. the price index fell. prices were down. they were impacted by falling

metal prices. than the 1.6% increase. reaction to cia interrogation. obama said the government has made terrible mistakes in authorizing torture, using techniques like waterboarding. >> any fair-minded person would look at this and say that some terrible mistakes were made in allowing these kinds of ,ractices to take place because study after study has shown, when people get tortured, are position ofput in a stress or pain, they are often willing to say anything to alleviate it.

the information you get is not necessarily better than doing things the right way. >> the president of the united states. the international monetary fund says thertfall and country faces financial collapse unless the gap is filled. people brief say the gap opened contraction in the ukraine pasta messick output and the export to the trading partner, russia. disney and skype are companies that have benefited with deals from luxenberg. they could all make for awkwardness in luxembourg where the former prime minister will talk about fundamental rights for the year p.m. courts of justice.

we are joined from berlin. what have we learned? >> the list keeps growing. the list of companies that want to relocate part of the headquarters to luxembourg to capture the low tax rate. here are the new companies. the walt disney corporation. you have a unit of microsoft and you have a firm headed by the former u.s. treasury secretary, timothy geithner. times spent a lot of trying to capture some of these profits from the companies. this is a list of 340 companies that have all negotiated these deals, according to the outside group. they negotiate deals with accounting firms and all of the big accounting firms are trying to sing the praises of setting up shop in luxembourg.

they put out a statement. this is what they said. they said the global effective andrate has averaged 34% 35% in the most recent years according to a spokesperson. they wanted to figure out what went wrong and what the role was in all of this. >> in some ways, he has to carry on and not talk about it in public. to what extent is this overshadowed? same theory. and he is claiming that he has been reviewed. they're going to have to investigate and come up with conclusions. the question is if the

conclusions will have more are less authority because he is president of the commission. think he is out of the clear yet. that is not what a lannett -- not what a lot of analysts are saying. and there is a question of what you do to promote competitiveness and make sure all of the states harmonize the tax properties. we will see a replay on this and what happens with the internet in the issues writ large. >> thank you so much. our international correspondent joining us. innovation is now underway. a will eventually become popular text conference -- tech conference. let's take you live for a bloomberg exclusive. good morning to you. you guys make wearables that are literally wearable.

what are you proposing? >> we are a clothing company and we turn you to connected objects that read your body. i am wearing a shirt and it goes into the cloud. >> i am curious why this is better than wearing something on my wrist. >> well, it is different, in many respects. the factor that we have been wearing is clothing and it is a natural behavior to start with. because it is clothing that is made out of textiles, for example, my shirt is reading the electrical semester of my heart at the torso level and the depth of the signal is great.

that is designed to be ubiquitous. >> a couple of fairly obvious mechanical issues. i'm curious how you think they will be solved. -- i wash myose close and it may not be available to me in the same way a wristwatch would be. is that a problem? will we have to buy a lot of your shirts? the way we think about it is that you will keep on buying and, over time, you will go to the store and buy a new jacket, a new shirt, it will be connected and it will be seamless in your life. and youthe shirt on .onnect the module on the side

we recommend you take off the marginal -- the module. ok. are you going to become a clothing manufacturer? do you see yourself providing the big clothing retailers? >> a great question. collectionitting a we launched and polo shirt earlier this week that was powered by technology. we are working. happening what we see of ae beginning convergence between the world of technology and fashion. it is a real trend. >> i have a couple of quick

questions. moment,t one is, at the there is a social element to this. are you going to provide a social element to it? >> absolutely. this is the most comments we get from our consumers. they want a fitness test where you work out and there is a trainer in the application. theyo the work out and absolutely want to share on facebook. this will be a future release and we want to do this thoughtfully because it speaks to biological and personal data. there will be featured. >> where do you see this going? what is the biggest use of technology? is it telling me how fit and competitive im? monitorl continue to

people who have diseases, need therapy, need the work. how do you see this developing and in which direction? really all of the above. it just so happens the first markets we decide to tackle have to do with fitness. people have been clamoring for the technology loudly. buy a cart who would without a gas gauge. what happens with our body and mind and we wonder what will happen when we have zero information about ourselves. shortort question -- the answer is that this will be ubiquitous. who -- we question,

,ive in a world of android and in terms of when you build this to workow easy is it with android and apple? i'm curious to know which direction you think the people wearing these will be going. on thetarted the focus platform and in the apple universe. that is our current focus and .eople with iphones we started there. we are about multiple technologies. and nerooctors science.

so far, it has manifested first on the platform. once it is great to speak to you. thank you for taking the time. >> thank you. >> i guess he has to look good in something skintight. that is an issue. i would put a shirt on over the top. beating expectations, the ceo joins us. good news for airlines. and oil prices come down. ceo at theak to the top of the next hour. we're looking for to that conversation. we will see you all in a moment. ♪

>> we are live from the london headquarters. forecasted further growth. let's talk him at company and the numbers. who continues to head the company. -- is hanover meets good morning to you. let me ask you a broad question

with everything at the moment. how big of a game changer is the drop in oil prices. important.it is it is long-term. we are hedging the business and oil price developments because, once we have publish the prices for our vacations, we should not be reliant on strong changes in oil prices. and limits the risk short-term opportunities. long-term, the oil prices will help our industry a lot. >> good to know. let's stay with the mathematics of the numbers this morning. you talked about a 15% growth

rate on your financial forecast. , people a bloomberg cap been crunching the numbers and the belief is that that is below what you guided for. achieved an, we guided andd we achieve 40. a principle of promising and delivering. includes the one billion and at the beginning of are still very much in the ballpark. ,f we look at it right now there is the economic situation and the geopolitical.

i think it would be very good. >> a very good result. >> some are suggesting that the guidance is conservative. know, i think there is nothing wrong with being conservative. if you say conservatism means that we deliver our promise, i say it is fine. reports and this -- because behind we're still in a takeover process, we have to be certified rocksolid number. >> that is what i expect. and are about the story

we going to see a change in the dynamics and destinations changing? give us the outlook. >> you see the change. it has been difficult for us in the past year and it has recovered. ande are numbers coming up turkey is a little bit more difficult than it was a year ago. in general, the good thing is that we have a very strong germans who travel a lot. the destinations might change here and there. the business numbers and booking numbers and our trading is. good. >> they are still going on holiday is the message. let's talk about the merger. the execution is now the story. are you confident on the ability

to execute on them? >> yes. >> any issues that you first see at the moment? guidance -- is that you being conservative? >> the guidance promised had to be certified. you can expect them to be real deliver on not under promises. this is something which is also clear. we did not even close. we will close the merger on --day and our new share and our new shares will be traded in on december 17.

we are in front of the merger .nd excited the promisedere synergies. know, it is difficult to make a new guidance as soon as you have a guidance out. to promise and then deliver it is something that is important a good idea and the basis of the growth. it would be a good idea and we will deliver. >> ok. cool. i would be interested to know when it is going to happen, if it is going to happen. >> q think you should have offered green a job?

>> i do not know. i do not know what green will be doing next. maybe you will ask her. it will break even this year. givens a guidance we have and what we do with it is another subject. we have always said we will try and see ifbusiness it is core or not core. accountsssets in our assetsis clear that the ipoed toe sold or finance the ships so that all of the shareholders and the company

has a high interest to have it floated. >> ok. very nice to speak to you. thank you very much for your time. going to take a break. we are going to talk about another travel company. it allows you to try before you buy. virtual reality is the story. we will take a break and be back in a couple of minutes.

>> welcome back. let's give you headlines. subsidies for clean energy will bills of u.k.he households. added to the average household bill. let's talk about the water risk. pool.is a new algorithmic by idea is to conserve water using it more efficiently. manufacturing facilities for productivity are considered.

they hope to reduce it. the first word is next. we are talking about the airline sector.

>> under cost pressure, the oil giant is expected to spend on restructuring. we will have the story in a moment. what was the with the ceo. trying it before you buy it. how virtual reality will change your holidays. >> good morning to our viewers in europe and those just waking up in the united states. this is the polls. we are live.

francine is off. she is back at the end of the week. the restructuring costs and prices.g -- falling oil let's figure it all out. ryan chilcote has been working through the slides and all. what do you make of it? came ahead of the strategy for exploring and drilling oil. was not bob dudley. the hope was to not stray very , having said that, you put the man upon straight -- up on stage. >> you sort of compartmentalize.

of compartmentalize the conversation and there is a lot to talk about. you want to narrow down the conversation and this is the way. intriguing what they said about the costs. who are not restructuring. do withhas something to drilling and getting the market. they did not get many details beyond that. i got to thinking, what could this be. anothercation is

euphemism. i did math and this is a company with tens of thousands of people. they are not saying this. this is me applying the mathematics. employees, to cut that would be an intriguing statement. >> i want to cut you short. the reason i'm cutting you short is a ferrari. it is a related subject. >> it is cheaper to run your ferrari these days. >> the operating cost is a factor. movings a breaking story outside of italy. a lot of people are doing that right now. they seem to go hand-in-hand and

are a synonymous. outside,ere to move the company would become less italian. they feared chrysler would have made it. it.re not making for i he is said to be -- meeilan.my land sergio is having a look at all the options. runningepping down from on a daily basis. he is shuffling the deck a little bit and looking at the options, considering what he

wants to do next with ferrari. does it make ferrari any less attire in? let's move on. countingon euros and is the estimates on how much the pilot strikes have cost this year. let's hit the details from berlin. the ceo of the business is not exactly backing down. >> he does not have any intention. she is a board member. then make anywhere between 30%-50% more than counterparts at other airlines. characters -- carriers,

depending on the strikes, they is that some10, like other airlines more. could accept the mediation. we look at the numbers going into next year and we have a new survey out on how much profit there is going to be. the have a passenger. there are two radically different airline environments. i will be interested to hear the interview coming up. hans nichols, the international correspondent, talking about what is happening. let's talk more broadly about the airline sector.

profitabilityhe is upce for the sector get hisantly and we can take on what happens next. for us through the reasons the upgrade. presumably, the oil prices are part and parcel of the story. >> yes that is part of it. there is a certain amount of money. we are seeing relatively good isbal economic growth that approved. i'm curious what you said. the airlines are not going to

take a bulk of the gains and not pass it on to the consumer. there are improvements in margins. yearve seen margins this and we do see some improvement. we haven't average profit for a leaners next year and business. less than average, some airlines will do better than that. we're talking about an average of the global industry and its global trends and averages. take oncurious on your the ones that will do less well. there was one a few days back

he is going to keep some of the less efficient airlines in business. do you think about this for 2015? >> we will see geographical it will come from north america. is seeing part of the north american carriers. prices helping everybody and the oil prices have been high. there has been effective discipline with capacity because it is hard to operate in the and haul with a lot of fuel

fuel prices have come down. some of the routes will become a bit better and you will see people who might have otherwise gotten out. prices will be a relief generally. about your views on the capacity for europe next year because it will be the area that is most relevant. >> yes. certainly. the financial performance will improve and it will certainly be one of the weaker areas, in terms of margins. europe is an expensive place to operate and taxes are high. business isdoing see high and we will capacity increases because, in

this business, you need to go to new markets and look for new markets to operate and make sure you have sufficient markets to have mobility with the pricing and the product. let me ask you questions about the story in europe. do you have any personal preference or desire on england's? is it better? see what the commission recommends and the important thing is that the government's of political this andet behind implement what will be recommended. doing its work

thoroughly and confidently and i'm sure will come up with good recommendations. the question is if the political will will be there to implement it. certainly there is no doubt. question where it should best be and it is being investigated. i have confidence they will come up with good answers and less confidence on the political will to push things through. >> can i talk to you about norwegians? do you see washington bras view on whether or not the norwegians should be granted a license? i struggle to use the expression because it means different ways to different people. it has become more liberal and more available.

they are having difficulty in persuading the authorities that they should be licensed to the question seems to be dragging on. governmentshat sometimes take a long time to and the expansion into the southeast was a good example on the side of the atlantic. i think he could be a long time before we get a decision. . nice to speak to you. the ceo and director general. , made in italy and maybe not staying there. removing tax residents out of italy and prepared for the set off -- the sendoff.

details on the story are next.

>> welcome back. let me bring you the breaking news. ferrari is planning on moving out of italy. the man we used to track every milan. move is in

nice to see you. liz is said to be one of the auction. is it the most likely auction? >> it off. beingy, it is an option considered by for aris and fiat ferrari and fiat. it will be a very high symbolic move. it is a symbol of the country. moving away the tax residents will clearly have opinion on public opinion and customers want to not see any difference. they could still be used.

the fiscal residents may go go to theand it may because a fiscal reason taxes are lower than analyst and with an easier environment the word bank and business ranking. the u.k. is number eight. 140. is over it is something related for clearly, itns and, will be a big blow for the country. the was about to say drivers are not going to feel a difference. italy will take this claim.

do you think there will be a political backlash? clearly, they have backed the he said, i dod not care where the headquarters is based. they are trying to have an and itment more friendly may be too late, even for for ari. >> a great story. joining us from milan.

the web gets underway. up on the pulse.

some ofway in paris, the tech companies on the ground. , a bloombergw exclusive.

good morning to you. run and it iss to getting to be a crowded's race. crowded space. >> what we are doing in france and europe is new. >> in terms of the big opportunities, one of the things we talk about is starting new businesses is not a problem and scaling them off is an issue. are you thinking about that as the best opportunity? >> these are an area where we talkingelp and we're about launching and building a business. they have a minimum viable

product together and we are usually helping them to make sure the product works and validate it with the market. we help their and do development. are you looking at? what are you focusing on? faces -- spaces are hot. space, we see a lot of data and a lot of gaming and music. a lot of innovation can be done in classical spaces. we talk about a lot of the same trends. >> that is good to know. we are on the right track. talk about what paris needs to do. microsoft was invested and you have been there for some time.

they talk about london and berlin. ?hould they be talking >> they are talking about paris is a friendly, it rivalry. these locations because their core markets for us and, with the innovation we are seeing coming, it is building entrepreneurship. we will continue to advance in the right direction. >> what does france need to do? what needs to happen. >> i would argue that it is

theirinto the culture and and thebig examples -- terrific examples. it is on the ground and is not very common. so, i think we have terrific examples from france that are less known. otherwise, i think we have a lot of things to do, in terms of producing the administrative barriers. these are things we see across the european continent and, it obviously gets attention. in other areas, the government is listening and making the changes. they are working on making stock options better. creditse terrific tax and i do not agree with the fact needsaris is not where it

to be. france is not where it needs to be today. >> i'm glad to hear. at microsoftd us france. we would take a break. we will talk about the banks. ♪ .

good morning, welcome back. you are watching "the pulse." francine is off today. let me talk about the bloomberg top headlines. indexs produced price fell for the 33rd straight month. factory prices were down in november impacted by falling oil and metal prices. inflationary prices also affected consumer pricing. less than october's 1.6% increase. , reaction to the

release of the u.s. and report on the cia's interrogation techniques. in an interview, he said the u.s. government made "terrible the stakes" in authorizing torture of terror suspects using techniques including sleep deprivation, beatings, and waterboarding. >> i think any fair-minded person looking at this would say that some terrible mistakes were made in allowing these kinds of practices to take place. in part, because i think study after study has shown when people get tortured, when people are beaten, when people are put in a position of severe stress and pain, oftentimes they won't sit -- they will say anything to alleviate the stress and pain. so the information we get isn't necessarily better than doing things the right way. international monetary fund has identified a $15 billion shortfall in its bailout for

ukraine and warning the country faces financial collapse unless that gap is filled. that is according to a report in the financial times. people briefed about the imf warning said the gap has opened up because of a contraction in ukraine's the mystic output and the collapse of export to its biggest trading part which is russia. show you what is happening in the markets. or jonathan ferro will show you what is happening in the markets. >> that is very nice of you. dax higher,ftse up. selloff in one-day the dax. you remember the mess that was october 15. pretty industrial -- of industrial numbers. 0.2%.g for a positive it did not come. it doesn't matter because stocks are higher. in paris, up.

you look at that map in his says stocks higher but outside of that, outside of equities, classic risk off. , political risk in greece, what might happen there, will the pro-minister get his candidate through to be president? if not, a means snap elections. let me give you the perspective. 8.74%. december 5, 7.2%. that is a big move. reese, higher. -- greece, higher. risk off in the bond market. same story in the fx market. new k, lower. the dollar getting weaker, the yen and stronger. pretty powerful. >> thank you, indeed.

tom keene joins us now from new york with what we're looking at. of me yesterday, but i will make up for today, a belated happy birthday. >> what i did was ignored. birthday asvery un- well. these markets are most amazing. we occur flattening within the united states. sport.ll looking at bridge crude under $66 a barrel. we will link to markets in our financial system. we are pleased to bring you for hour,tire hour, the 6:00 michael spence of new york university, the nobel laureate, abilities subtly within finance and economics, but michael spence on one of his more recent studies, that of china. china folding into the commodity collapse. we look to washington and the 7:00 hour.

ken feinberg. you know him as the czar of this and these are of that. ken feinberg on any number of topics including the ponzi scheme of the madoff scandal and the sentences we saw yesterday. and also joining us, robert wolf. we will talk to robert wolf about sitomer mccain of arizona, most interesting -- senator mccain of arizona, most interesting story today. to it.ing forward thank you, tom keene. the repercussions of the global financial crisis continue. get a is being unveiled by the federal reserve -- new regulation is being unveiled by the federal reserve. here with born the latest banking, caroline hyde. >> let's start with jpmorgan. the u.s. once again showing us

they want to be tougher than the rest of the world. the same was switzerland as well. really, they are very worried tout banks being too big sale. the rest of the world is put in place financial stability report's recommendations, you need 7% of a cushion as a bank -- >> a basic bank. >> and if you're fairly important, 9.5%. the u.s., big bank 11.5%. most of them meet this particular target except for jpmorgan, which seemingly, if you do the math, that about just over 10% call capital ratio right now in the third quarter. therefore, they need to up the by 20 be dollars -- need to update by $20 million. it is not like they will have to selloff shares, but they will probably have to withhold some profit. they will have to dish out the dividends. a little bit of a worry for the shareholders.

ever so slightly late market trading. clearly, something still in the federal reserve's front of mine. making other businesses not look --te so >> you have to carry capital to take on those assets as a result. do you want to take on the assets? you better think about your business is structured. deutsche bank. >> they're looking at credit the full swaps thinking, maybe this doesn't the way -- doesn't work the way it did. credit default swaps was the biggest growing business. you want to be offering these derivatives so people can protect themselves if they held ep debt, rbs debt. that you could also buy indices and the like. we knew last week i said, look, we're not going to be making a market in single names in a particular credit default swap, say, try to bp or rbs.

we will still trade indices. and now letting go of 10 traders. it clearly showing their moving toward a more liquid area, areas they don't have to hold so much capital for, corporate bond markets that will be focusing on. more active derivative indexes. bots don'ty liquid make sense for them anymore. it is an interesting trend. they try to say, look, the moment we are remaining committed to credit default swaps. clearly, there are shying away from certain markets. it is interesting, if you look at the actual size of the market, yes, shrunk about 22% -- of biggerthe than the u.s. economy saying, with some way to go before it is that much smaller. interesting move. much, carolinery

hyde. we have to take a break. seeing is believing. you can experience or vacation destination and virtual reality. we are going to put it to the test with a comedy's chief innovation officer when he joins us next -- with the company's chief innovation officer, when he joins us next. ♪

>> our trading is very good. >> that was the ceo speaking to me in the last hour, talking about his expectations moving forward from here. what he did say was the brits are still traveling, the germans are definitely still traveling. the question is, where are they going and what decisions are they making in her choice of holiday destinations? cook,big rival, thomas has a new way of deciding where you should be going on holiday. it is harnessing technology to avoid buyers remorse, you now have the option of trying before you buy. you can look before you book them is probably a better way of heading up. using a headset that lets you check out your vacation destination in virtual reality. thomas cook, chief innovation

officer, joins me now. good morning. have you rolled this out yet? what our customers saying? >> we have been running a pilot for the last few months in one of our stores in the u.k. we will be rolling this headset, commercially available one out, before christmas. the initial feedback from customers is, everyone who puts on the headset, you could be meted, "wow!" what we have done is created a lot more content that is much more relevant to our destinations, and we're broadening and will continue to do that. they have a much more richer choice in a much better experience of a try it before you buy it. >> let's have a little look. phone boltedamsung

onto the front of this headset, essentially. i'm going to try before i buy. there is music that goes with it. beach,to be sitting on a looking from one side of the other. it looks extremely attractive and very, very nice. how will this convince me -- i will take this off now. how will this convince me that i should be going to this destination? what difference do you think this will make and actually allowing you to take people who tried on into actual customers spending money with you? >> one of the challenges about getting into a travel store is, you're buying a virtual product. you're buying out of her brochure or even on a website. you're not experiencing what is around you. we want to make sure that people really see and feel and touch honest exactly what they will see when they get there. this helps. the content is always updated and relevant. this gives them an actual feeling of what it will be like. how far is the beach from the hotel?

what is the view from my room? what are the excursions? there's a helicopter ride across and hatton. we will do more and more of those. if i book an excursion with the family, what will it be like? >> presumably, you need of a lot of content and run it quickly. i booked a holiday yesterday. i looked at three different resorts. if i would've had this, maybe it would've made a difference. in reality, i looked at all three. how quickly can you get more content available for your customers? >> to give you an idea, the content we created for the initial pilot, which was about six different experiences, so ,hree of our different hotels the new thomas cook airline and airline seats, and some of the excursions. that took us about two weeks to create. >> so relatively short. >> and we were just proving the concept. i would expect to scale the content very quickly across our

key destinations and key partners. the main thing, it is not about the device. it is about the content. this is a commercial device people will have in their homes. they can still be gaming. , whatr we use google card they want to be able to do -- we will be launching the content on the website. there will be apps where you can download it. >> you primarily initially use it in store, but ultimately, we will all have one of these devices. i'm sitting at home and looking at my different options on the web, i can plug in my headset and take a look at some of those places. >> absolutely. thomas cook is not about the technology. >> you are a tech company. >> it is what we do, but we are a travel company. giving people great holiday expenses. this is about creating that experience early, getting them excited early and engaged about what they can do on their holiday. holidays are five and exciting.

about content, not the technology. this is the right technology for launching into stores and will allow our retail agents to really help people do that, at the content will be available on the website and through apps so you can plug in and you can plug in and use the content. we will be using it in destination as well, for example. our reps will have some of this content available so if you want to book an excursion, you can look and feel. nearly 40% of our business is online. giving people a choice, that is that high-tech strategy that thomas cook is well known for. giving people a choice about where they consume the content is the main thrust of what we're doing. >> when you had your first meeting with the big boss and said, this is what we want to do, what was his reaction? were there reaction? >> her reaction? peter, our new seo, is actually supportive as well. it is about creating that wow

factor. when the of a strategy that is clearly focused on high-tech, high touch, this allows you to see something, using technology to give a different experience, and innovating. we have a history of what hundred 75 years of innovation. for us, it is a fundamental part of our strategy. peter is absolutely sporting and how we are going to do this and roll this out. >> thank you for showing us, indeed. marco ryan, try before you buy. coming up, fast cars and tech giant. all about taxes. we will show you both after the break. how do we link them? tune in in two minutes and i will show you how. we will see you in a moment. ♪

>> welcome back to "the pulse." tech leaders from around the globe are in paris today for the annual tech gathering. we spoke to the ceo phil live in an exclusive interview. i think the view is mixed. there is definitely a lot of sentiment that france is a difficult place to do business in. but i think the smart companies are all contrary in. when the conventional wisdom is

some places difficult to be, it is probably the best time to go to that place. the most important thing is the talent. the most important thing that any country can do to attract tech properties to invest in their education system and to have the best talent. france is very far ahead of many of the places in terms of education and talent. ultimately, that will keep copies like ours coming back. places talkt of about making silicon valley somewhere else. i don't think that is the right would've think about it. silicon valley is great for what it does, but there is a lot of problems as well. i don't think you need to re-create silicon valley in paris. i think france and europe in general is really on the verge of entrepreneurial and technical renaissance, but it will look different than silicon valley. it will be a great hub and location for technology companies. i think the next revolution is going to have the highest impact on one billion people is this

revolution in productivity, in the idea that what it takes to make as productive isn't having the separate tools that are based on physical ideas like a telephone and a slight projector in a typewriter, but that you can really combine these things in a way that breaks down the barriers of individual productivity. i think people will be more productive next year -- much more than this year. and technology, a commendation of augmented intelligence and wearable computing and new workspace technologies are really going to make that a profound transformation. what are we watching for the rest of the day? caroline hyde joins me now. we're talking big multinationals. the british government is about to unveil details about what some call a google tax. a diverted profits tax. it has been dubbed the google tax, but it could be dubbed the starbucks tax. multinationals based in the united kingdom that through

certain strategies, certain ways of structuring their tax, they managed to pay much lower corporate tax and perhaps the other ones on profits earned here in the u.k.. it has been hacking george osborne off. he is looking at the draft legislation today that will come with a finance bill about 11:00 a.m. you'll understand what the rules are that they want to impose and will become active, april 2015. what we know already from the statement is there likely to levy a 25% tax rate on any of these profits that aren't earned them uganda currently perhaps get siphoned off by ireland or some of their tax havens -- some other tax havens. interesting that the 25% because the corporate tax rate in the u.k. is going to be lowered to 20% next year. hopefully -- it is a bit of a carrot situation.

we will just go for the corporate tax rate of 20% overall rather than being forced to go for 25%, having their numbers look at for treasury before they can declare themselves. interesting tactics been deployed. as -- just a extent, the uk's jumping the gun a little bit. designing tax policy that is meant to be rolled out around the world, but the u.k. analyst really at some of the countries may be trying to get out in front of that. maybe for political purposes. >> the cbi, confederation of british industry saying, why go ahead of the gun? why not wait for the rest of the world to catch up? there have been national voices opposing this. at the moment, they play by the rules. they're not doing anything illegal, it is just the voices of dissent i think have been rising, and i think perhaps political strategic reasons and it looks like they're going to

jump the gun a little bit. interesting whether the oec be has to play catch-up. >> we will find out surely with the details are. that will be out at 11:00. the other tax story, ferrari, apparently, considering moving its physical residence outside of italy. be very will still pretty and go very fast, but will they be as italian and how will the italians react to the idea that maybe ferrari becomes a little bit less italian? interesting to see what mr. matteo renzi's reaction is to this in the fabulous museum. is part of the spinoff strategy for ferrari. he is a ready moved the tax base for field slice -- fiat/chrysler. the government appears to be on board. at ferrari, italy, separating

them could be a difficult story. anyway, more news on that. "surveillance" is coming up next with tom keene. see you tomorrow. ♪

bid.l goes in search of a markets signal a new and greater uncertainty. washington, they try to get to the holidays, a cia bombshell

and a budget agreement. out in toober is many cities. good morning, this is "bloomberg surveillance." we are live from our world headquarters in new york. it is wednesday, december 10. i am tom keene with scarlet fu and brendan greeley. let's get to our top headlines. >> overnight, in announcement that commerce has reached a deal for u.s. spending bill that would avert a government shutdown. but there is something for everyone to dislike in this bill. conservatives are unhappy because the bill failed to challenge president obama's immigration policies. some democrats displease because the bill rolls back rules affecting banks and clean water. leaders in both the house and senate support the measure and the house is expected to vote on it tomorrow. chineseal of fortune in stocks a day after a route and chinese equity sparked a global selloff, rebounded almost 3%, perhaps resuming its