>> intervention. russia sells u.s. dollars to prop up the collapse of the ruble. s trying to convince lawmakers to back his choice for president in the first round of voting tonight. , sony'sling the plug premiere of its new film "the interview" has been canceled. good morning. welcome to "the pulse." we are here in london. i'm guy johnson. >> i'm francine lacqua. russia fights back after

yesterday's plummeting freefall of the ruble. the russian finance ministry announced that it is selling foreign currency. >> ryan chilcote joins us to bring it all down. give us a sense of what we have seen this morning and announcement and our argot. look us through the details. >> who would have thought the deputy finance minister of russia would be channeling mario draghi? that is exactly what he's doing. he said the finance minister is prepared to sell as much of its foreign currency reserves as it takes. a consultant adding that they have $7 billion worth of foreign currency reserves at their disposal. we've seen an extraordinary move in the ruble. it hit 80 against the dollar yesterday. it is now down about 20% from that, yet it is still up 10% on the week. we got news that yesterday, the bank of russia was on the market

, intervening to the tune of just under $2 billion. there are rumors that they are on the market today. the biggest support for the ruble yesterday came from the economy minister, former deputy head of the central bank himself, saying that russia will not impose capital controls. that gave huge support of the ruble. if you look at the volatility, it has been all over the place. right now, russia clearly fighting back. >> give us a sense of what the volatility means for businesses in russia. some of them have stopped selling goods. >> apple stopped selling iphones through their online store because they couldn't keep up with the fluctuations in the ruble and didn't want to get caught out. not a huge hit for the company. they sold about 1.5 million iphones in russia last year. worldwide, they sell about 150 million.

it does give you a sense of how hard companies are finding it to stay on the right side of the ruble. another example of that is ikea. they are going to raise their prices on thursday. they've got lines of people outside their store looking to purchase their furniture i head of that increase in prices. it is interesting. has a store ofre value ahead of the depreciation of the ruble. across the board, price rises. mcdonald's raising the big mac price by 2.3%. renault raises the price of cars. trying toust probably get out there and get what they can. they know that price hikes are coming. any speculation beginning to build up about what president putin will say tomorrow? >> this is going to be epic. every time he gives this press

conference, they last for four hours. the timing of this one is extraordinary. who would have thought russia's currency would decline by 25% in the days leading up to his press conference? there will be questions. critics will tell you the whole thing is orchestrated. it will be difficult to imagine that he can spend four hours in front of 400 journalists and not answer hard questions about the ruble, the central bank's handling of it, the central bank governor under fire, and also these rumors that perhaps some of the depreciation is down to a thattive bond sale russia's largest oil producer engaged in. minister ofinance russia, a close ally of the russian president over the years , criticizing that bond sale, saying that is part of the reason why the ruble is where it is. the timing of it was extremely bad.

i think we are going to get a lot of politics tomorrow. the focus of the day, four hours, vladimir putin on stage answering all kinds of questions. >> ryan, thank you so much. ryan chilcote will be following the story. let's get some more perspective on all this. global head of emerging markets over at ubs. good morning. is this what they should have done yesterday? >> there are quite a few moving parts in russia. the oil price is still declining although at a lower pace. the situation in ukraine is not getting better. the central bank does continue to impress. this is the third time in six months that they have raised rates by more than the forecast. we've spent the bulk of this year being bearish on russian assets. >> did they make a mistake last week? we had two rate hikes close

together. >> perhaps they should have gone harder earlier. by and dollars, once they start losing confidence in the ruble, once that cat is out of the bag, it is difficult to pull that back in. i think the market is worried about capital controls. i don't think capital controls are coming now. 17%, that is a big rate. russia's history tells you that the rate can go much higher. in the 1990's, this rate was 180%. >> as soon as you have a currency crisis and a speedy depreciation, it almost becomes self-perpetuating. america, in latin russia, how do you deal with this?

+++ when you have massive leverage. the sovereign in russia does not. unlike 1998, when the sovereigns had 30% of gdp debt, they have very little now. the companies in the banking sector and the mining sector are quite levered. including that, they do have enough reserves. the big risk is, as you say, locals lose complete confidence in the currency. if everyone does that, that is a problem. we are at the beginning stages of that. it is not clear that a crisis is upon us. we have been quite bearish. i'm impressed by what the central bank is doing. the central bank is only one actor in this drama. putin holds most of the cards. if the situation in ukraine doesn't de-escalate, there is a possibility that next year, we see sanctions increasing. i don't think it is a given. are assets in russia

trading at levels where we want to take a look. if you look at russian-dollar sovereign bonds, i think this is reasonable value. it is very liquid right now. the market can be volatile. we have been bearish all along. i'm saying that things are changing. the central bank is doing the right thing and the price is moot. russian corporate are very levered. >> can i pick up on that point about russian corporates and the leverage they hold? a lot written about this was not bond. you talk about -- this rosneft bond. leverlk about this ability. was it a mistake for those bonds to be used as collateral? i don't disagree. i think that was a mistake. there have been a few policy mistakes, most of them being people thought the dollar would continue to weaken.

all of this debt seeing issued in the first race was a mistake. year,e as july of this the financing of the markets would open. you saw a lot of money pouring in. if this continues, the contagion doesn't go through the economic channels but through the asset market channels. corporate bonds are a very large part of the benchmarks. i think there have been a few mistakes along the line. the central bank i think is doing the right thing now. >> it is clear that they had to make sure they say, capital controls is not where we are going. stemcan they do to try and the huge decline in ruble? >> hike rates much further. as i said, they are at 17%. in 1998, rates were at well above 100%. you can combine that with intervention. again, this is not purely an economic problem.

the political aspect has to play ball. if it doesn't, i'm afraid but the central bank is trying to do will not work. >> the next step is to sell gold. this comes back to the political question, the politics of putin 's dollar and gold. would it be acceptable to the kremlin to see the central bank? thatfore they get to stage, they've got plenty of dollars they can sell. if you want to go large and sell dollars, you have large amounts of dollars area you have $300 billion plus $65 billion. you can sell those dollars. i think the gold comes further along the line. >> ok, don't sell the gold for now. sell dollars. let's open this up to our viewers. tweet us about the ruble crisis. should russia sell gold?

>> stay with us. bhanu baweja joins us again after the break. we are talking about what else is in focus today. that is the fed. fed maybe it is or isn't thinking about emerging markets right now. is it purely thinking domestically? the fomc releases quarterly projections this afternoon. let's get a preview of what we can expect from the fed from jonathan ferro. >> thanks very much. the question of what is going on is one thing, but they are a domestic-led organization. i don't think they will care about the ruble's tech line too much. the question will be the risk of financial stability domestically. the ultimate sanction for russia would be a much, much weaker currency. that is what sanctions are therefore. it is for punishment. i doubt the fed is going to give

them the route out the about door. conflict in between what happens in the economy and what happens with financial markets is one they've got to walk a fine line with. it is the same for inflation and the decline in oil prices. prices may be oil good for the economy but there is risk. the drop has been fast. what could happen could spill over to other markets as well. that is a big consideration for them. >> many fed watchers expecting them to keep interest rate low. it all hinges on two words, considerable time. vowed to keep rates low for a considerable time. they are not just going to make radical changes to the statement. the line from greenspan in 2004, the fed can be patient removing accommodating monetary policy. think about that.

that might be a line that fits well in that statement. jon, thanks very much indeed. ubsack with bhanu baweja, global head of emerging markets plus at that strategy is still with us. you have been a bear on russia for a long time. now you say you could buy corporate bonds that are dollar-denominated. what is your take on the fed and what they will do to russia? >> i don't think the fed is particularly worried about what happens to em. if you look at what ben bernanke used to speak about, how em has reacted, he said, em has to deal with its own problems. we talked about currency wars. we are all worried about the strong dollar. there was a time when we were worried about the weaker dollar. ben bernanke said, let your currency appreciate. don't ask me to conduct monetary

policy for jakarta. i'm going to conduct policy for the united states of america. you arehe em crisis, if to call it that, unless the em weakness translates into significant weakness in u.s. when you start worrying about the fed reacting. i don't think that is happening yet. the u.s. high-yield market is trading badly but that is because of the oil price area -- price. the fed may be cognizant of that. the fed may not want to rock the boat too much. i think we have to pay attention to what is in the price in the market. the market is not priced for aggressive rate hikes at all. it is very difficult to surprise the market dovish lee. -- dovishly,.

if you can't, it is much easier to surprise them hawkishly. what is priced into the market is one rate hike plus a chance of another rate hike in 2016. that is much too low in my humble opinion. if you look at the backend, the 10-year rate, in 10 years time, this price of 2.8%, that is not much at all. that is pricing in stick local segment -- cyclical stagnation. we have the fact that the turkish lira trading at low levels and the south african banging the drum, complaining about the what the fed is doing, what is the potential downside? >> there is much further potential downside. i think these currencies can depreciate by another 10% to 20% without breaking a sweat. over the next six months, sure. particularly things like the south african rand. turkey, theof

central bank will intervene through aggressive rate hikes. the central bank in south africa is much more laissez-faire. i think brazil can depreciate further as well. so far, em has been weakening despite lower u.s. rates. last year, em weekend when u.s. rates were rising. -specific.y is em the source of volatility from u.s. rates has yet to come to bear on em and it well. lacks all right. bhanu baweja, global head of emerging markets. >> breaking news from germany. the constitution has just ruled on a tax break that allows families to transfer companies from one generation to the next. they will back in the inheritance tax rules must be revised and by july 2016. more on this story later on in the hour. >> this is a big chunk of the

german economy. also coming up, the greek prime minister's gutsy move. ♪

>> >> welcome back. you are watching "the pulse their co-it is a big day in athens. let's go to athens now.

the weather is not so good. elliott gotkine joins us from there. walk us through the day. all this political uncertainty right now. if i lift up my umbrella, you can see where it is going to take place tonight at the parliamentary building. three key numbers to watch for. 300, that is the number of lawmakers. 200, the number that need to vote in favor of the prime minister's presidential nominee in order for us to not need to go to a third round. [inaudible] --t is when we get to 101, after each lawmaker's name has been called out, you know it is game over.

one of the key things to look for will be to see how many votes samaras gets. you will get an inkling as to whether he will survive the third round. >> what are we hearing from the independence? what are they saying about whether or not they will back the government or whether or not they are prepared to see elections that could put syriza in power? people sometimes vote with their conscience and sometimes vote with their self interest in mind. we are hearing from another independent mp this morning saying that they would vote with the prime minister. there are a number of independent voters from other parties that aren't in the government that have said they will support the prime minister's candidate for president. they also have one eye on the opinion polls. right now they show that syriza would win a current election. the gap is coming down.

some of the parties, some of the ;s they worry they might not have a job to come back to. they feel that it is best to vote with the prime minister. that way they will keep their jobs. politicians can be senegal in that regard. certainly, some will vote with their conscious and others will --ld -- will vote with phil with their self interest in mind. >> coming up, more problems for sony. keep it right here. ♪

>> welcome back to "the pulse." what better way to round off 2014 than a hearty italian lunch with some of europe's powerbrokers? i asked some of the executives what is ahead and why they can't stand some parts of their job. withdon't like dealing politicians. that is the reason why we never do political advertising. >> [inaudible] >> another world. where sincerity varies

with the weather. ingredient important to success is sincerity. once you can fake that, you've got it made. >> be sure to catch my when "leaders lunch" airs on friday at 5:00 p.m. u.k. time. today we had the news of baidu buying a uber stake to challenge ali baba. what all these readers had in common was a fear. they need to make sure they are on top of that. fear of politicians from the sound of things as well. ok. what did you eat? >> chinese food, what else? up, we bring you the details of the boe's december minutes. you can follow us on twitter. back, boe minutes.

more of the conversation surrounding what is happening in russia. a busy morning once again. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters in london. >> the interest rate vote for the mpc on interest rates, 9-0 on the asset purchases. the bank of england saying the oil place decline is a net stimulus for the u.k. economy. the majority of members say signs of wage growth ticking up are promising. near-term activity stronger than anticipated. this is the drop that we are

seeing in the interest rate in the u.k. the inflationary rate in the u.k. down to around 1%. wage growth may pick up sharply, which is quite interesting in contrast to what some economists are saying. >> and of course wage growth is one of the biggest components of what we are going to see in the next couple of months. we spoke to the boe's deputy governor, andrew bailey, about monetary policy. policy environment, this environment, is unique and unusual. of theng whatever degree past normality we do restore, there are questions around that as well, is always going to be the biggest and most uncertain step. >> just another line coming out. the oil price and market rate

dropped are the most significant developments for the and pc to be considering right now. that is latest. >> the u.k. chancellor of the exchequer also sat down with charlie rose and started by talking about the nation's deficit. ask this was a deficit built up in the good years before the financial rash. -- financial crash. -- yes,ut of that crash it is. it is of course half what it was. we have done the hard work in reducing our deficit. we are seen by institutions like the imf to have the most sustained and effective deficit i reduction program. you've got to stay the course. you've got to go on dealing with

your deficit and bring your debt down as part of a program that says to the world, britain is the place to be, the place to create your business, the place to invest. faster thaning jobs any other major economy in the world. >> that is the winner. >> unlike the u.s., the participation rate in the u.k. is at an all most record high. we are not getting people dropping out of the labor force. i think the u.s. is a strong begin in the world economy as well. i think what both of us have managed to achieve is this combination of activist central banks, fiscal consolidation, although in the u.s.'s case, more unintentional than intentional, and now we've got the supply-side reform. have advanced economies not been able to get those three components working together. >> you can watch that interview

in full with charlie rose and the chancellor of the exchequer right here tonight on bloomberg tv. those are the times. just want to take you back to the statement from the mpc. the bank of england putting out the minutes. theminority, the 2 versus 7, survey suggests wage growth may now pick up sharply. the drop suggests rapid absorption. the minority see wage growth coming through. the majority say that in order to hit the cpi target, you need to see wage growth coming through. i.e., increasing evidence that the mpc is focused on that wage growth story is a prime determinant for policymaking. once again, being reinforced in the minute as a result of what we've seen over the last month, the fact that this is a big deal. plus, the oil price, the rate

story that we are watching carefully as well. bloomberg's other top headlines. in pakistan, the first funerals have been held for the victims of yesterday's taliban attack. 132 of the dead were students. in a show of solidarity, schools across india observed two minutes of silence. >> a macau casino company fell sharply today after china started cracking down on a money channeling through casinos. macau casino revenues have fallen for the last six months as the chinese president has cracked down on corruption. the former portuguese colony could see its first ever annual revenue decline. i has rejected a complaintofa that the bidding process was misrepresented. michael garcia led a two-year probe into how russia and qatar were chosen to host the

tournament. the judge who received his reports said the appeal over how fifa summarized his report was not admissible. hackers behind the sony cyber attack have dealt another blow. sensitivepelling e-mails and information, but forcing the cancellation of "the interview" premiere. with more is caroline hyde. i'm not sure we should be talking about this. should we be talking about "the interview?" we can expect repercussions. >> everybody wants to see it. they are getting their own way. the group called the guardians of these that hacked sony entertainment are basically getting what they want. the whole idea was to prevent the distribution of "the interview" which is based on a androus line where they ssa eight north korean leader kim

jong-un, which north korea aren't fighting all that funny. the premier has been canceled. it was due to be tomorrow. landmark theaters have said, we are pulling it. the fourth biggest cinema chain than 2000., with more screens, they are not showing "the interview" at all. it is not just people not going to see "the interview." any other showing at that cinema won't get people going in. people might be nervous about going to the theater as a whole. >> what are people worried about? >> there have been threats from this group called the guardians of peace. they say, we recommend you keep yourself distant from the places at that time. it is a veiled threat that people are associating it with a september 11 sort of attack. we've now got 60 countries meant to be showing this film. not asia, but it is meant to be rolling out in australia, new

zealand, and around the world. clearly, we haven't heard from the three bigger the other chains in the u.s. that is regal, amc, whether they will be pulling it to zip. sony is sticking by this release. they also said, we understand if you feel you need to pull it. >> there are more leaks around this. >> it keeps on giving. for a christmas euphemism. angelina jolie, that has been in the press. there have been all these horrendous e-mail chains that have been highly embarrassing but also shining a light on the fact that they are not particularly fair in pay structure. now, snapchat has been drawn into this. sony entertainment ceo michael linton is on the board of snapchat. on some technology blogs, it has been unveiled that in certain perhaps waspchat

offered more than $3 billion to be bought out. also, snapchat spend $15 million on a company called virgin cloud. google glass.f snapchatk snapped up that company for $15 million. there are some more embarrassing e-mails involving evans legal -- , who has not been treating potential investors and people on his board with all that much sensitivity. more and more people are being tainted by this. every time sony entertainment has tried to bring back some sort of progress to their studios, more and more keeps getting unveiled. theyians of the peace, have really killed it when it comes to cyber attacks. it has roiled the entire of sony

entertainment. >> and there may be more to come. caroline hyde with the latest on sony. >> coming up, germany's constitutional court has ruled against tax breaks that benefit small companies. they are called the backbone of the german economy. that backbone under pressure. you can't hand these assets from generation to generation. that is a big deal for germany. ♪

>> welcome back. you are watching "the pulse." let's talk about germany's highest court. it has ruled that it is unconstitutional to pass family-owned businesses from generation to generation without paying inheritance tax. hans nichols visited one industry that will be hit hard. >> precision mixed with tradition. that combination has towered small and medium family businesses known as the mittlestand, the engine of the german economy and employment. handcrafted the woodwork industry directly employs 2000 workers. ringo comes from a line of owners that survived two world wars and communism. >> [inaudible]

>> but the country's constitutional court may force family-owned businesses to pay inheritance taxes as high as 30% when they change hands, a direct challenge to the mittlestand's family legacy. >> this is the wish to be accessible. that the next generation -- >> a high court ruling could spark a fire sale among germany's 3 million small and medium businesses to settle their tax bill. it is not just villages like this one where small workshops dominate the economy, but the entire german mittlestand, where the goal is to pass the business from generation to generation, going round and round without paying caesar. more than 130,000 family businesses with 1.6 million employees are set to change

hands in 2018. under current law, they can be bequeathed tax-free as long as the heirs keep without substantial layoffs. 20% of mittlestand companies are worried that an end to that tax-exempt and would threaten their existence. that means wise men in robes may not bring good tidings to the german mittlestand this christmas season. a new tax instead of frankincense and murder -- my consent and myrrh,. >> on snaggle's us now from berlin. what are people saying on the ground? mittlestand industry group is crying mad. they are saying there need to be reforms of the tax laws. here is what the court said. there are some pretty dire warnings on how many jobs this will cost. this could cost a half million

jobs inside germany. here is what the court ruled. they said it is unconstitutional, that you can't have different inheritance tax laws based on the assets. if you pass on a bunch of stock, that would be taxed. if you pass on a family-owned business, that should also be taxed. they also gave the government a chance to amend it. they have until 2016. the new tax will not be applied until the government has a chance to fiddle with this. now it goes back into the political process. francine, guy? >> hans nichols nichols, you are our international correspondent so could me some international correspondence. >> inheritance tax laws are notoriously difficult to compare. when you look at germany, basically you are taxed potentially your highest income level. let's say you have an estate

that is more than one million ways, that can go all the up to 50% if you are in germany. in france, it is 40%. the netherlands, 10% to 20%. take a look at the netherlands and how complicated taxes is, at least inheritance tax. you have a set limit of 114,000 euros -- 118,000 euros. if you have a partner, it is in a 10% range. if you give to grandchildren, it is in the 18% to 35% range. to some random person, 30% to 40% range. tax harmony, you will see a lot of well-paid lawyers and accountants out of work. >> great reporting. thanks very much indeed, hans nichols joining us from berlin. >> coming up, the oil plunge puts pressure on alternative energy. ♪

"> welcome back to "the pulse live on bloomberg tv and radio.

>> a quick check on the price of oil today. joining us now to discuss the oil price and how it is impacting everything from the new energy sector, the oil sector, our next guest. oil down again this morning. he is an energy strategist. good morning to you. a lot of conversations happening about whether or not we are going to see new projects being funded as a result of the drop in energy. what are you hearing? how significant is this drop in terms of new projects coming to market? certainly, the low oil price isn't stopping current production from existing fields. the key issue is the extent to which investment in new projects will be deferred. and also, lower price in two senses. one is that there is less free cash flow to invest in new

businesses. projects a lot of don't make a sufficient return over the life of the project. the net effect is that investments will be cut and some projects will be deferred. we won't feel the effect on overall supply for one to five years. there are such time lags between the decision to invest in new projects and those projects coming on. the key uncertainty is how quickly the market will respond to low oil prices, both in terms of demand, which could be encouraged by low oil prices, and supply, which too will be encouraged by low oil prices. >> i was interested to see your line on what is going to happen with gas and the fact that prices are likely to come down. the impact of that on the red knowable sector should be dramatic. if gas comes down, gas is the

obvious way for countries to provide energy for themselves. how big a seachange are we talking about here? how out of kilter is energy policy in western countries? >> gas prices are falling for two reasons. in many contracts, the price of gas is higher than that of oil. secondly, the shale revolution is also leading to increases in gas production. there is a far greater supply, which is making gas more competitive. in terms of the co2 debate, it is a far more effective use of energy per unit of co2 compared with the likes of coal. it is the most obvious means of reducing co2 within the economy, by displacing coal fired generation with natural gas.

for many western nations, renewable forms of energy have been promoted and subsidized even at high oil price levels because they are uneconomic otherwise. the subsidy would need to be greater in a lower energy pricing environment. what do you think the cost of co2 is? how much are we prepared to pay through subsidies to mitigate that? >> carry on. so should gas be the ideal form of energy to reduce the use of coal within the energy mix in preference to other energy forms? it is all about price. another element, it is all about security through diversity. i think in the case of western europe, it is the diversity that is the important thing.

that will lead to increased security. diversity in types of energy that is used, and in the case of gas, diversity in terms of .esource just to come back to the point about subsidies, do you think it is going to be harder for western european governments to justify the subsidies they apply to renewables as a result of the changes we are going to see? ,s you say, it becomes harder it becomes a greater portion of the overall story. do you think governments will become more reticent? >> it is possible. in terms of what it means for the end consumer, i think he or she is probably unaware of the extent to which there is a subsidy involved. therefore it is not a politically sensitive subject at the moment. it might not be going forward.

if it were to become so, on that basis, politicians would come under pressure to justify the increased degree of support given the fact that energy prices are falling. >> interesting story. thank you very much indeed. , energyewis-davies strategist at bnp paribas. >> for those listening on bloomberg radio, "the first word" is up next. for our viewers a second hour of "the pulse" is coming. we are heading to athens. >> the hotel president is giving us his take on political instability in his country. >> then we talk tech and we talk about blackberry. what does it mean for the business community? we find out later on. break, we are going to check in on the world's richest. richest 20 people have

lost $10 billion this week. combined $62 billion this year. big numbers. ouch. see you in a moment. ♪

>> intervention. russia says u.s. dollars to prop up the collapse of the ruble. lawmakersto get u.s. to back his choice for president. interview has been canceled. >> good morning to our viewers in europe, good evening those in asia, and a very warm welcome to those just waking up in the u.s. i am guy johnson. >> i am francine lacqua. this is "the pulse."

>> russia fighting back after yesterday's pummeling of the ruble. finance ministry is selling u.s. dollars to try to stem the breakdown. ryan chilcote, what have we seen? >> yesterday at one point the ruble was down 23%. deputy finance minister channeling mario draghi. saying they are prepared to spend as much of their foreign currency reserves as necessary to defend the ruble. a consultant for the finance ministry saying they have 7 billion to spend today. the central bank of russia was buying up ruble yesterday. speculation they are there today. speculated why does the finance ministry have to dip

has 413inance ministry billion. he likened it to people looking for change at the back of the sofa. [laughter] in addition, only had the man in alexeyof the economy, ulyukaev, saying they will not use currency controls. it is difficult to find people who want to buy rubles. think the next move will be? is sittinge minister down with the head of the central bank. she indicated she is willing to work with the government and exporters like ross left -- r osneft and lukoil. depending on how you look at it,

we can expect them to be told one of two things. either, please take some of your hard earned currency revenue and turn it into ruble. or, we really think you ought to turn your foreign currency revenue into rubles. something day cult's running out conversion of fx revenue into -- something they called smoothing out conversion of fx revenue into rubles. one of the tools they can use to stabilize the ruble. they're going to be told they should be spending more of their and currencyves they are earning for the sale of oil and gas and nickel. to prop up the ruble. >> what he think the first question is going to be to vladimir putin tomorrow? to be- say it's going exactly what his press secretary

says it should be. >> what? >> they know the ruble is the elephant in the room. he's going to be up there for four hours. none of this is good. the drumroll has begun. if you look at the trailer they are using on russian state tv, it is like an action -- >> a trailer? >> the trailer to the press conference, which begins at noon moscow time. it is like an action film. if you were looking for eight jerome roll to a press conference, they've done that -- a drum roll to a press conference, they done that. taking the alpha male approach to the press conference. tomorrow he's going to come out and defend the ruble against those nasty speculators. coup, someign

officials have said this is how they see it. >> a lot of questions can be asked over four hours. they are not all canned. he's going to have to weigh in. what is most remarkable, we've heard a bit of a spat between members of the inner circle. the blame game begins. >> i am in shock. before.ot seen that i'm in shock that that is the trailer to the president's press conference. >> that is state media. if you turn on russian tv, the way they portray the crisis is vastly different from how foreigners are talking about it. >> it is the year in review as they see it. was giving my state of the union, maybe i would go for something a bit more generic. >> the president of the u.s. does not have that kind of trailer. >> he announces what he's going

to say on facebook. >> maybe he should? >> wow. >> president obama could use a couple of the russian president's tricks. >> we need to find out what it does to the approval rating despite a freefall. >> maybe they will watch it if you have seen that trailer. >> we are not watching the interview, we might as well watch this. >> ryan chilcote with the latest on russia and the spectacular trailer. >> looking forward to it. yeah. amazing. >> will have it live tomorrow. onwe are still focusing wednesday. the greek parliament will choose a new president for the country. the president needs the support of 200 members of the parliament .

samaras needs to secure the nomination to avoid a snap. the opposition party syriza, which wants to roll back budget cuts, cut when seats. -- could win seats. >> tomorrow night premiere of sony's "the interview" has been canceled. following hack attacks. the fourth largest theater chain in the u.s. has decided it will not screen the film. >> blackberry launches a smartphone. the blackberry classic will feature a return to the keyboard and blackberry 10 operating system. anlysts see the phone as attempt to win back professional users who have been put off by the touch screen. are you impressed? >> i let my blackberry go. >> it was a big day. >>. it's a little forgotten. it will be interesting to

understand how they want to reassert themselves. they greek prime minister's gutsy move. will the decision to hold early presidential elections backfired. we go live to athens. ♪

>> welcome back. a check on the world's most richest. russia's richest 20 people have

lost a combined $62 billion this year. >> a snapshot of the big three losers. they've lost a lot of money. check out the year to date numbers. lisin and usmanov. "ouch" probably encapsulate the drops. painful numbers. >> for further perspective on currency crisis, let's bring in global chief economist at renaissance capital. it seems this is going so fast so quickly. what is coming up next? capital controls? does that look like the endgame? once it starts spiraling out of control, the endgame is confidence. >> capital controls are coming up again and again in the last

40 hours. what we are hearing still is that the economic liberals in russia are resisting this. saying over my dead body or at least of further job. if the key people keep their jobs, finance ministry is not blamed, then the argument is there going to continue without capital controls. russia still has 400 billion in reserves and the gains over the last 10-15 years have been about trying to get russians to have faith in the ruble. having an open capital market. if they go back on that now, how are they going to get the savings to drive growth in the medium to long-term? >> where do you think the peak in the rate cycle is? policycentral bank's rate move was only one part of what was needed to get the currency out of control.

while was also needed was a spike in overnight money market rates. you can go back to 1992. % in sweden. getting towards triple digits would make a difference. that has not happened. potentially to protect the banking system. the second thing, big fx intervention. yesterday, that was absent. >> do you think they need to do more? people have talked about the fact that there may be higher rates. they may do the things you are talking about. but we are still in the foothills of what the policy response looks like. >> money market is what it is about. squeezing ruble liquidy. next week, the west is off on holiday and the russians are working until january and then they are on holiday. i would guess they are hoping

for the oil price to stabilize. without that, how can you join a line in the sand? >> but not this volatile. there is not really a correlation. i understand the price of oil is going down and the ruble is falling. the ruble is out of control, what is there a defense? >> it is not all about russia. the price moves in everything from african eurobonds to the brazilian real. regulators in the west have put pressure on banks to take less risk. suddenly we have more volatility, which creates more risk. this is partly an em problem. this is where the central bank has to be more involved,. if the fed titans is significantly, how much more aggressive does this become? selloff hashe em

been about markets pricing in the assumption of said tightening -- of fed tightening. it is not going to help if the fed confirms it is taking away the forward guidance on rates. >> that is an understatement. tomorrow, vladimir putin is addressing the nation and has 4-5 hour speech. there's a wonderful trailer. let's play it so that our viewers can see it. i don't know if you have seen this. this is the promotional trailer to his speech. he is playing to a domestic audience. he's concerned about popularity. >> his approval ratings are still so high. but that gets maintain -- whether that gets maintained remains to be seen. the russians are queuing up at shops to buy every good they can get.

that is something which people had thought was left behind in the 2008 or 1990 crisis. thinkthe russian people the president is on their side? there was a story of a rosneft bond, the central bank quasi -financing rosneft. is there a belief within the russian populace that the president is on their side? is a viewnk there that favoritism is playing too great a part in the story? storyuspect the rosneft is in the financial sector but i doubt it is hitting the streets. there's always been a disconnect between what the czar and president knows and those further down. i think there could still be

scapegoats. rumored changes at the government level that would happen before people were taking to blaming putin himself. >> stay with us, we are going to talk about greece. >> it is great when you own the media. an important vote is taking place in greece's parliament. lawmakers are taking a first vote on the new head of state. elliott gotkine from athens. walk us through what we are expecting to see. the rain, 7:00to p.m. local time it is not to start. -- meant to start. 300 lawmakers will go into parliament. say they either support prime minister samaras' nomination for the presidency or

effectively abstained from the vote. when you know the game is up as far as this round is concerned, you've got to get to 101 abstentions. then it is mathematically winssible for samaras to this round. the focus is on round two, december 23. the main one is round three, december 29. he only needs 180 votes. 155.already has lawmakers have said they will vote. perhaps because they know there job to come back to. if samaras does not win, general elections will have to be called. willical instability

continue a little longer. >> general elections, the fear. win.a looks like it could it would have to form a coalition government, we will wait and see. talking about renegotiating with creditors. how seriously are the people in athens taking that? is there a view that they would ?ake the hardline line is muchs' softer than it was when the original memorandum was signed with the imf and european central bank. a littleady showing bit of pragmatism. one economist saying it would not be surprising that if syriza goes on to form a government, it

would perform a trick known as the u-turn. stepping back from any tough stance or confrontation with greece's creditors. the other key date is february 28. its currentexits bailout arrangement and has to agree to a follow-on arrangement. if not, there could be implications for financing. the market could find itself in turmoil in grace. -- in greece. athens andgotkine in we are back with the global chief economist at renaissance capital. >> we're in a situation where syriza would ask jack. you are not convinced about that. >> i think people are very complacent and optimistic. ipras andthink ts syriza have moved. they are moving towards the hard

left. sipras has to win a couple more percentage points to make sure he's the first party and he has done that. where is the support from? 80% of his support is now hard left. even ifets are saying they do not get through the maybe newal election, democracy will win on the day itself. if syriza wins, it will be ok because tsipras will do a u-turn. that is not the case. ipras has sat there, washed greece get worse, unemployment and theoverty increase, electorate has moved to him. see this as a far more dangerous story for europe today than 2-3 years ago. >> a refreshing view.

we've had a lot of great politicians saying he will do a u-turn or it is different because you have to be more centerleft. if what you say is true, he will continue to be hard left. what does it mean for greece down the line? are they going to exit the euro? is that going to be the endgame? >> i don't think there is a straightforward and game. even if you have a situation where germany is saying we will not maintain your debt and you will maintain 180% of gdp. it is unsustainable, syriza is right. what is syriza going to do next? i imagine they will start drachma notes to help out. these become a parallel

currency. there is no straightforward exit. it gets very messy. a negative example for the markets with regards to what happened in spain or italy. >> thank you so much. renaissance capital's global chief economist within interesting view on grace. presidential elections in greece could drag on for months to come. how much will the uncertainty impact tourism? from athens. ♪

inbaidu has agreed to invest uber. andu will connect its map mobile search features with the company. the size of the state to be bought has not been specified. rhiannahas appointed as its creative director. the pop singer will oversee puma's female collections starting in january. >> i cannot wait. american apparel's incoming ceo has another headache. more than 30 executives reconsidering their decision to fire dov charney.

>> ok. we will continue after the break. talking about what is happening in greece today. we will be back in athens. we will see you in a moment. ♪ ♪

make the best entertainment part of your holidays. catch all the hottest handpicked titles on the winter watchlist, only with xfinity from comcast. >> welcome back to "the pulse." live from bloomberg's european headquarters in london. i am francine lacqua. >> i am guy johnson. >> in pakistan, the first funerals have been held for some of the 141 victims of a taliban attack on a school in peshawar. many dead or students. schoolsnally rival observed a moment of silence. >> the south china morning post

reported china will crack down on money channeled through the city's casinos. acau's shares have fallen as xi jinping cracks down on spending by officials. garcia led a probe werehow russia and qatar chosen for fee for tournaments -- fifa tournaments. >> to the markets with jonathan ferro. session lows. a drop on the dax of 100 points and now down by .4 by 1.2.n, ftse off .5%, down forown

the seventh day in 8. an oil story there. in the fx market, we could talk about unemployment at 6%, wage growth. finally picking up, flattered by the fact that inflation is so low. there is only one thing we have got to talk about -- dollar-ruble. higher by .5%. a stronger ruble/ the finance minister in russia intervening in the market. it lasted for the best part of an hour, back up again. ruble weakness. you have a finance minister intervening. rate hike,ast week's 7.5 percentage points of rate hikes and still the ruble weekends. -- weakens. policymakers are losing control. elsewhere, the move in crude is

not helping. brent down 1%, $59 a barrel. ferro with markets. in 25 minutes, "surveillance" with tom keene. it is all about the ruble, russia, and the fed later on. >> the fed front and center. we look to moscow. the, fragility of the markets, particularly in oil. we bring you robert of pierpont amherst. bob on the ruble. really, the linkage of equities, bonds, currencies, and commodities. ian will join us from pantheon. sinche and ian to get you started. dean will join us from macro risk advisors about

a historic volatility we saw yesterday. >> thank you so much, tom keene with "surveillance." >> one of our top stories, russia, the fed, greece. has its first round of voting later this evening to elect a new great president. let's take you live to athens. elliott gotkine is standing by. a tourist's take on this story. >> from an economic perspective, very much focused on what is going on in parliament because of how the political stability filters into the economic instabilities. in the past, one of the drivers of the greece's recovery has been tourism. i've got the president of the hellenic hotel federation. great to have you with us, yiannis retsos, usenis, greece planned to

tourism as an engine to recover and it seems to be working. >> 2014 has been the record year for greek tourism. with 21 .5 million arrivals and more than $14 billion in direct revenue, excluding transportation. if we see a roadmap for greek tourism, which was conducted by mckinsey in 2011 on behalf of the government. projected 24 million arrivals and $19 billion in direct revenue. we are three years ahead. we achieved numbers that were projected for 2017. we are in the right track. >> it is good to plan for this. how has this come about? what elements have had to be put in place? or have happened beyond greece's control? >> the right strategy from the

private sector. good cooperation with the public sector, which was the main goal in the beginning. we seem to have a very good product. a very competitive product which is priced well. a good value. >> is a lot cheaper? >> it definitely got cheaper. at the same time, quality went even higher. when you decrease prices, normally, you decrease quality. in our example was the opposite. >> you have benefited from the instability and egypt and other countries in the middle east. >> the geopolitical situation cannot be a long-term strategy. it was circumstantial. of course it helped us for a couple years. product and the right strategy that boosted us. for greek tourism has been in russia.

isn the way the ruble going-- >> russia was an emerging market for us. it started evolving after 2010. in 2008, we had 250,000 arrivals from russia in last year we had 1.2 million. we had the crisis during the summer. bankruptcy of several big russia n tour operations held sales back. now we have the economic situation in russia that is problematic. still, the russian market is a very good market and a strong market for greek tourism. >> you are president of the hellenic hotel federation. including this hotel we are standing on. have hotels seem to benefit? are you thinking it is a great time to build more hotels to cater to these record number of

tourists? >> everybody benefits from a situation like that. yes and no. sector ist and our good for investors, the situation is a little problematic at this point. somebody who approaches with a eekg-term strategy, gr tourism and hotels in greece is a good fit for investments. you are saying that some hotel operators catering to greet tourists have not benefited as much to the ones catering to overseas tourists. >> we have popular destinations in the greek isles. they benefit because they have their own ru brand name.

one area had a bad reputation during the crisis. they benefit less. if the trend continues and we achieved numbers we have projected, everybody will benefit from the situation. >> we have got this situation and parliament. does what is going on politically impact you as a businessman and someone working in the tourism sector? does that make people think maybe i will not go to greece because there might be riots on the street. >> tourism and vacation involves a big deal of psychology. the negative and positive images affect the decision of the traveler. what we do not want and what we are afraid of is having the same images and same reputation and bad publicity we had in 2012. this is the only thing that stresses us. this is the only thing we ask

for from our political parties. we are a democracy. we do not interfere in politics. we do not want the bad publicity we had in 2012 again and grace. -- in greece. >> yiannis retsos, president of the hellenic hotel federation. thank you for joining us. the acropolis is right behind is on the hilltop. back to you in london. >> thank you, elliott gotkine with the latest from athens. back to basics for blackberry. >> the company launches under smartphone. a's back -- a throwback. will going old-school save par sink this company? ♪

>> welcome back to "the pulse." live from london on bloomberg tv. classicry launches the in new york. the company's troubles have been well documented. will the old-school model help revive its customer base? joining us is tech analyst daniel. a lot business people got rid of it just a year ago. is it too soon to make a comeback? >> when you say come back and

blackberry, you have to temper your expectations. it had a huge share of the smartphone market. blackberry is aiming to own the niche area and enterprise use and to be the goto device and service in that area. it is pulling back from the mainstream consumer marketing efforts of a few years ago to focus on that. >> what is the unique selling point to the enterprise market of a blackberry? is it a keyboard, security? >> for the users, the keyboard is a high priority for certain users. for i.t. departments, the security as by far the biggest selling point. they are still the gold standard and security. neither the iphone and especially not the android competitors come close.

probably the closest competitor as microsoft with its windows phone. not really because of the security effort, it is more because of services like office .hat microsoft has for blackberry, it is more a question of honing in on those services. on its security and device management to build its customer base. >> if you were in charge of blackberry, what would you do? doesn't need to look different? people like the keyboard. can they keep it classic and innovate? >> blackberry released the whichrt a few months ago, looked radically different. it had the innovative look and feel. i think they're trying to. they also have a more old-school looking device that is easy for people to use quickly. when you are talking about

enterprise use, that's a big asset. these are devices that they do not want to be in the way if productivity. they want to enable productivity. the more easy and intuitive it is to use, the quicker it is to pick up, the better. >> what is the market value for blackberry in this niche enterprise space? what are we talking about in terms of how much money they can make at the top line? shipments for smartphones, our forecast has blackberry going in at around five or 6 million units in 2018 or 2020. it can be sustainable, particularly when it is paired with the services portfolio. blackberry is going to live and die by whether or not it can keep the enterprise -- >> it is not a hardware company anymore. >> not really. -- it's mainre

thrust is going to be software and services. >> president obama uses a blackberry. i think angela merkel still has a blackberry. >> from a security point of view. ?> is this the selling point >> security is by far the strongest selling point at the moment. not just the devices but their overall network and ecosystem. they used that not only to sell the devices. particularly you have a device management portfolio for managing enterprise devices. they are branching out and supporting other devices. they realize that not everybody wants to have a blackberry device all the time. >> we are going to talk about sony in a moment and the hack on that company and the ramifications. a caseime that such happens, doesn't reinforce the proposition for this company? >> it does and it does not. it also puts his up on a pedestal. if you go back a few years ago, there were problems with the

blackberry network. there was an outage. because blackberry had been so known for its reliability and security, the fact that there was an outage was a massive deal. it is good and bad. obviously you want a reputation. but it means as soon as there is the slightest problem, people start questioning you. s> daniel gleeson, ih technology analyst. >> let's talk about the sony story. the cyber attack continues to deal blows to sony. we've seen sensitive e-mails and information delivered onto the public market. it is not potentially facing the cancellation of the premiere of "the interview." other cinemas potentially not showing the film. let's get the details from caroline hyde. nervousness building. pr disaster is potentially becoming a financial disaster. the so-called "guardians of the

the cyber terrorists, you might call them, who gained control of the computer system at sony entertainment are now unleashing threats. the premiere of "the interview," meant to be a comedy that has and its storyline and the assassination attempt of north korean leader kim jong-un. which north korea is not finding funny. the new york premiere of "the interview" looks like it is being canceled tomorrow. so says landmark theaters. it is after threats came from hackers saying we recommend you keep yourself distant from places at that time. not only is the premier being canceled. also one of the huge cinema chains in the u.s., the fourth biggest with more than 2000 screens, they said they are not going to be showing "the interview" at all.

it is not just at that show that you might avoid if you are worried about terrorist attacks. you're going to avoid the entire cinema. the other screens might be showing different films, it is going to have a knock on effect for any film early january. this is a pr disaster. the sony -- sony is standing by the film. saying we are going to unveil it but we understand that cinemark does not want to run it because of the threats. >> thank you so much, caroline hyde with the fascinating story. >what are they releasing tomorrow? >> will you be watching this on dvd are going to the cinema? , what will question the federal reserve say later today? we have projections later. will russia change janet yellen's thinking? stay with us, next. ♪

>> welcome back to "the pulse." i sat down with some of your's executives.biggest >> i do not like dealing with politicians. that is the reason why we never did political advertising. >> because it's too difficult? or another world. >> another world. we will put it that way. where sincerity varies

with the weather. >> [indiscernible] the most important ingredient is sincerity. >> be sure to catch the conversation. lunch, friday, december 19 at 5 p.m. u.k. time. on disruptors, innovation, and social media. >> i'm sure you've enjoyed lunch. what are we watching for the rest of the day? janet yellen and the federal reserve is the big story as we progress through the day. jonathan ferro, we looked at russia. it is important to put the fed in the mix. >> particularly in the fx market, a hawkish fed and a stronger dollar, forget rate hikes. it could blow out not just

russia but a couple other emerging market currencies as well. let's get to the bottom of the issue in russia. let's remember what sanctions are about putting pressure on russia and punishing russia. weak currency and if a collapse of the currency is the consequence, so be it. if janet yellen takes on the russia question without justifying how it impacts the u.s. economy and starts thinking globally, if you were barack obama, when you call her up? the whole point is to punish them. >> independent central bank. >> i'm just saying. >> it is domestic policy. >> absolutely. >> why would they even be looking at russia. to create any instability within the u.s. and within the u.s. markets. is economics of it, the u.s. an increasingly closed economy. what is the feedback loop going to be of rates at 17% in russia.

rates that may have to go higher and other emerging markets. a it going to be strong when huge chunk of gdp as a low rate environment. >> you have some smart guys at the israeli central-bank to how this policy works and the emerging markets and feeds back into the u.s. economy. >> we have to deal with the communication, "considerable you're not coming get anything dramatic. it is going to want to tweak things slowly and put out soothing words. rate hikes might come but we will do it gradually. >> what i love is the fed lexicon. it all hinges on two words. >> considerable time. everyone is talking about patience, greenspan's word in 2004. >> the markets gyrate. jonathan ferro will be on top of it. >> that goes without saying.

we will analyze it all. were going to take a break. "surveillance" with tom keene and the team is up next. ♪ . .

>> this is "bloomberg surveillance." as oil tries to find a bit with hope and at that city. russia intervenes a job on the ruble towards stability.

the recitation for investors. janet yellen and they said they meet. -- janet yellen and he said -- they meet -- and the fed meet. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarter in new york. joining me scarlet fu and brendan greeley. our top headline -- i am guessing the ruble. >> you are absolutely right. earlier in the day, the russian currency strengthened into a seven-day wrap that had shaved off 22% value. it has now fallen back to the 67 to 68 range. the government's position -- the ruble is undervalued. >> of course everything we have been talking about is on the stabilization of the ruble. we believe that the exchange rate is not correspond to fundamental