>> low bull markets continue to react to the sip prize decision. >> what it means for the deputy chairman. an exclusive interview. >> talking about buying the largest independently owned photo company. >> good morning. it are watching "the p

ulse." >> if they are having to cut global demand for the first time in five months. overall, the ink the price of oil will rise. >> they are seeing a non-opec output estimate. the chunk of global out of its that opec does not control but would like to see cut may actually be cut. that is good news. it is anyone within the opec complex but they have been cut by the iea. these guys want to see it hand-in-hand with them as we try to manage the markets. we can see what is happening here. we are up over 1% as you can see. switching directions. yesterday confused them.

some interesting headlines coming out of the iea. >> the swiss national market to raise the cap on the swiss rank. it is surging as much as 41% yesterday. >> let's figure out what is happening here. hans nichols is in zurich. i guess the morning after the night before. >> the morning after there are two questions dominating the conversation. what does this do to the swiss economy? the middle companies have a high labor costs. they still pay in swiss francs. they are exporting. they would get 56% of x ports. the second is bank exposure. we saw the online trading platform. they have had to set aside 25 million provisions.

we sell global traders saying they were going to have a hard time and would have to shut their doors. it gets down to the decision i the swiss national bank. it was too difficult to defend. we have a screen that shows you what we have in terms of holdings of the swiss national bank. a big increase we talk about defending it. then it is basically fat -- what. the question is how much more six and says is a getting to be too defend that pay? is it more of a parameter and move and they did not want to spend more? >> we are having technical difficulties. i'm not sure what our audience is seeking but we are experiencing a few technical difficulties out of zurich. we will go back to hans in a few minutes. the frank is soaring.

let us talk now to our big test of this morning. it is an exclusive interview. thank you so much for joining us. this was a surprise to all of the world. it sent shockwaves across all of the foreign exchange markets. how is your bank dealing with it? >> it is a surprise with the methodology be swiss it used. the swiss franc was under attack was kind of obvious. i think the big bang bang in favor of the swiss franc was a safe bet. nobody would ever think that the swiss franc would devalue. it was simply a question of time. the swiss franc is against the europe. particularly when the euro was weighed against the dollar. >> can i ask you what kind of

feedback you have from clients? what are people telling you about how this changes their view of putting their money in switzerland and maybe taking a step back? >> the main concept is on the swiss exporters which are suffering a lot because especially in europe. the swiss economy is becoming less competitive in europe terms. as far as the european choices in terms of which currency to keep their savings, the swiss franc has always been a fairly choice. the euro is waiting. it means a more swiss francs will be in the bank deposits of the european favors. >> i'm slightly curious about

the medium-term outlook which is what i should've list and on the question. this kind of volatility doesn't scream this is a safe haven. the volatility was quite extreme. i'm wondering in the more medium-term if this degrades switzerland as a safe haven? >> you are right. this was a surprise. a huge volatility even if the volumes have been extremely low. volatility yes but volume essentially nonexistent. you are right. this certainly does not have the swiss franc. >> do you think it is still considered that switzerland is considered a safe haven? we were trying to figure out the impact of other safe havens. does it still represents a good

value? >> yes. i think it will remain a safe haven. it deals after a hundred years of credibility does not disappear in one day. >> to think there are other places to park their money. a lot people gave it to singapore. do you think this will stop the flow or it will mean that people will look to other options around the world? >> people are always looking at other options. especially the volatility we did not have. at the end of the day, switzerland remains a very safe haven for most investors all over the world. >> does it have an impact on your bank? what advice are you giveing to clients? i know it is an investment but there's nothing you again as advise? >> no, really.

we are an advisory bank. this movement in currency does not really change. >> give us a sense of, of course you're one of the most famous majors -- major oil producers in the world. what you think it is right now? >> this is a good question. in my view prices will remain low for a long time, lose 18 or 24 months. they might even go lower than that. simply because demand is weak. this is the concept and the u.s. the new production in iraq is growing. saudi arabia did not want to take the charge of reducing projection -- production to find a connection between demand and offer. this would mean big quantities

are involved. we continue to flow in the market, driving prices round. i am not expect any good news for oil producers anytime soon. this is very good news for the economy of europe. also at the end of the day for the u.s. economy. >> can i ask you to wear two hats at the same time? you have excellent knowledge of the energy sector. and the advisory had you are wearing at rothschild. i wonder how much him in a you are expect toing to rise in the energy sec and are in result of the moves we are seeing? >> if you are talking about oil and gas i am expecting very little action for the next two months. the market is still surprised by this quick drop in oil prices. after a few months if prices

continue to be as low as they are today, they will be bound in activity as an terms of mergers, exchange of assets simply at this level of price oil companies need restructuring. >> how many companies will be have left at the end of this? if you are looking at the landscape now, what kind of divergence and m&a are we foreseen? >> i believe that every company which has been relying upon debt in order to make investments in the oil for will need one way or the other to refinance with these oil prices, or to literally if they stay as low as they are today for the next 18-24 months. we will lead it through a

freezing of activity in terms of m&a for the next three-six months. then everyone will drop the impact on their balance sheets of oil prices. >> one final question to take us back to the beginning of the club -- conversation and the swiss franc do things was companies will now use the extra firepower they expect to have to make acquisitions around the world? if you are trying to head yourself to deal with the high swiss franc is the most obvious way to do that to make acquisitions around the world? do you think you will be out there making advisory touches on that basis? is that the most logical progression? >> i think so. i think you are right. this was companies will be pushed to become even more international than what they are today. in order to do that, if they can

use the swiss franc and to make acquisitions in countries which have a currency weaker than the swiss franc. this is what is going to happen. >> what does this mean for qe in europe next thursday? >> what does it mean? listen, i think quantitative easing in terms of this is something that will happen in the next week. there has been strong signals in the direction that would ease the price if it did not happen. >> thank you so much mr. paolo scaroni deputy chairman at ross child. "the pulse" coming up, john cox will talk about the impact on the markets of the essence be. pulled the rug out from that currency for. >> the bigger picture, the world's online profile for

images. we will talk to shutterfly in a bloomberg exclusive. ♪

>> welcome back to bloomberg.como "the pulse"." >> yesterday we saw a major

global currency offing around in a 30% band. spectacular. has the snb lost credibility? >> let's take you straight to europe. hans mikell has been standing by with a very special guest looking at the fallout from the exchange rate. hans? >> good morning. i am joined by the head of swiss equities, john cox. thank you very much for joining us. we look at what is happening at the currencies, stocks were down but not as much as the currency. so some good value in swiss stocks? >> the currencies were down 15% against the swiss francs. most of these big international swiss companies to not have any swiss sales to speak up. stocks should have been down 15%. that is a very easy translation for these guys.

lindsay s stocks were not down 50%. at the house we see further pressure on earnings estimates. you will see further pressure on the swiss market. this morning already we are underperforming again. this will last for a few days. >> only get the next earnings report we look at a sense of how much of the downward pressure this has had. >> probably the companies will initially say we have seen the translation. it is probably a bit of a pressure. they will downplay it to a certain bit. they do not know what the repercussions will be. i am sure none of them had to. everyone thought this would last. they are on the hedge. they are naked out there. i think the impacta has to be worse. analysts are saying 15%. they are underestimating. they have a fake swiss franc - big swiss franc cost space.

it will dent your margin and estimates. >> give me an estimate. >> between 20% and 25% declined an estimate for msmi stocks. we saw some yesterday down 8% or 9%. estimates their need to come down 15% or 20%. it is a free lunch for some of the international investors yesterday. i know some britain and european fund manager saying this is great. the swiss franc is up 15% but nestle is only down 6%. that free launch will not continue. >> we are in the shadows of the swiss national bank. did they miss by? do they expect us to happen? >> i imagine these swiss

national bank is the least popular in switzerland as far as the business and political elite. the move we saw yesterday the euro and dollar down 40% against the swiss franc probably took them by surprise. let's see what happens next. it is not a popular institution. we saw a lot of his leaders, and say this is a disaster for corporate switzerland in the economy. i think you mentioned earlier there is danger of it dipping into a recession. all of that comes to the swiss national bank store. on the flipside, on the right instance there will were a lot of people questioning why the bank was intervening. that pressure was building as well as the qe. that probably triggered this whole sobriety move. >> is there anything the bank can do to rectify this? julie have any credibility? what can they do? >> there were rumors about

potentially the pay going to 1.1. it's morning it was 1.0. that is 10% lower. i think they will wait a few days and weeks to see what happens and they will probably do a messy float. i think they will be intervening and keeping an eye on the situation with the ecb in any easing. they may be pulling support over the one-to-one versus the euro. that is still down some 20% from where we were sort of yesterday morning first thing. i think one-to-one is probably where the swiss national bank will hope to defend the level with a dirty float in the future. >> mr. cox, thank you very much. francine we will send it back to you. this was equities will be done a great deal more at a potential recession around the corner for everyone here in zurich and across the country. >> hans, thank you so much.

>> let's delve deeper into one of the sectors john cox was just talking about. the swiss farmer sector. lubricant diligence joins us now to talk about that. -- a bloomberg intelligence joins us now to talk about that. do we need to be even more nuanced than that? how do we make this work in terms of the actual numbers? >> verse to prove him absolutely right. in the time we spoke as morning it worked out that some of the numbers for half these numbers. this is not 7%. it is 14%. that is a much bigger number. that is exactly right. you need to make sure you get the best numbers.

they have what this could be viewed as a national hedge. they report everything in u.s. dollars. this will be an impact on them. they gave an impact yesterday from point five to $4 billion impact on operating profit. they just said that that is based on the swiss bring to u.s. dollar. i do not know if it will have to be refined. it certainly has to only get there. they will get an opportunity to look at other currencies and what that means for them. they will put those on u.s. dollars. the impact will be close to what they said. for us we are talking about a big number because everything is in swiss francs. what we now need to work out is what has this done to valuations? what was the valuation yesterday? what is it today in terms of

epa? >> is it really difficult? you seem to think it is worse off. >> it seems logical. then of course, the whole thing ends up being at the end of the day in terms of cash flow and payments and what it means for the non-swiss shareholder. >> one quick question. who competes with these guys in the oncology space? will this affect the top line? >> it will affect a lot of toppling. i assuming if you are a watcher and you are selling it for 10 pounds niger going to have to charge 11 pounds. or you take the hit. you cannot really change your pricing. nothing really will change them. >> thank you very much. you can continue reading about the swiss francs.

yesterday the snb was a soon on me. you can catch that story and others at bloomberg.com/popular. we're back after this very short break. ♪

>> coming up, shutterstock widens its lens an exclusive interview coming up after this very short break. in the meantime he could follow

us on twitter. >> the question we want answered has the swish national bank lost its credibility? see you in a moment. ♪

>> welcome back to "the pulse"." >> these are the bloomberg top headlines. the belgian police carried out in anti-terror raid killing two suspected terrorists and arresting a nerd. 10 people were arrested in paris overnight and we will be questioned about their connection about the hackers. police in berlin also carried out in anti-terror raids. >> u.s. judge has told bp it will face a maximum term of 13

$.7 billion for the gulf of mexico spill in 2010. it was reduced from $18 billion after a ruling that reduce the estimated amount of oil in the spill. this will begin next week here . >> ims tour has spoken about -- has said the oil prices will not be enough to stimulate growth in the year ahead. >> despite the boost from oil prices and despite a stronger u.s. growth we see the global recovery can take doing -- continuing to face a very strong head wind. >> christine lingard. we look forward to hearing from her and outposts next week. -- in davos last week. >> 700 $50 million.

>> joining us now is john. thank you for joining us. give us a sense of what is for these acquisitions. they are big for you. how long have you been looking at them? what has been so enticing? >> the landscape is changing. for the past three years we have been looking at it for ways we can expand into both the editorial market and commercial music licensing market. we have been building both businesses for some time now. we want to take a step forward and purchased both of them. he gives as much more ahead in the premium market. >> there have been management buyouts. i am curious who calls who.

and you call them? how did it work? >> with both deals we approach them with a partnership deal. sometimes along the way in mineta sessions can -- m&a conversations can come up. wanted to sell it to our big media agency clients. even our subscription clients around the world. when we started talking further we started to realize how much we can do together. they are experts in getting content out to all the publications they have relationships with. we also have amazing relations with their supplier. this gives as much heavier -- much more ahead. >> these costs, the amount you can charge for a celebrity photo is actually huge. is this what you will be going into? how does it fit with the music category? >> we're interested in all segments of the market. what we get with rex is

sports entertainment, and news. all three areas are important. >> which most? >> it is different from our side and theirs. the entertainment stuff does well with the magazines of that people reading every day, the news photos sell well. i believe it changes the route the year. we're just are doing to get into this market now. >> how much cross-selling is there between what you used to do, what they do and the sound side of things as well? does it cross politic? >> they were large media agencies that were also doing stock video. all of hollywood now is using stock via and episodic type series. millions of people watch it every day. today you can buy a go pro, put

it on a tripod, but in the middle of washington, d.c., film traffic going by with the sun setting behind the capitol building, accelerated to a time not in use in almost any documentary. >> if we speak to you in two years, how much money we generate from video? >> video is important. i can see it being a quarter of our business in many years down the road. >> when you look at the competitive landscape or the landscape within images, video, sound, audio, we see some interesting things happening. you mentioned go pro. you look at the impact this had on business. how much of this stuff is still to happen in terms of years? i feel we are in the foothills of understanding all of this stuff and the implications of how it all fits together. we need to get your view on the

hardware, software, the images and where the maximum point of value is in the advances. >> it is all about the democratization of content creation. these devices of that the logic built into a go pro, that kind of system just a few years ago would've cost tens of thousands of dollars. today professional lover recording capabilities are put into people's hands for $300. people who did not have a chance to get good at the content are becoming expert content creators. that is why we have the marketplace we have, so we can get people that did not have access to these types of buyers that we have, trading this and making money for it. >> do you think about scalability? i'm trying to get numbers out of you. do you want to double in size? will they get much more gradual? >> i will give you some numbers.

we have been growing 40% year over year. >> we've got it toward 30%. around 400 $30 million. it is hard to tell. the world is changing so fast. as long as we keep ahead of all of this technology and know what content is created more people want to buy, we will continue to grow. >> when you look at the democratization of images video, etc., does that have a bigger impact into the shutterstock space or is it images like this of george clooney? >> it is getting interesting. with a small camera you can fit in your pocket you can match the quality of what a digital slr with a long lens can do. the difference between these two

is closing down. tiny cameras now can do things like produce artificial depth of field even though the optics are not there. the subject is in focus and the background is not. it looks a professionally created photo from your pocket phone. >> they take the picture. >> there are many more people around him news events than there are professional photographers at any moment, right? if we can get more people recording the news around them we think we can sell it as a news and involve the editorial image market. >> give us a sense of who will be your biggest market? is there a lot of appetite from emerging markets or because they are a little bit behind in terms of this will take more time to pick up? >> we have the steelers in 100

different companies. 70 businesses outside of the u.s. we answer the phones in our new york office in 10 to 15 different languages. the whole world is looking for content. when you create content you get visitors. then you can do other things with people on your website. we do not see that slowing down. >> one final question. is him in a the model for you now? you are clearly that going to grow or chemically. -- you are going to grow organically. are you going to make it grow faster by making him and a -- m&a acquisitions? >> we have built a lot this stuff in house. i think we can do that with the two acquisitions we made now. i think we can make them bigger. they are smaller in relation to our market cap. it could be there is a bigger

acquisition we can make. we evaluate everything out there no matter what the size is. there is a reason why we went menus about making an acquisition. we find the right acquisitions we will make them. >> thank you so much. the founder and ceo of shutterstock. >> a court ruling that provide good news. it feels like good news that it is some fairly big bad numbers. we will talk about that when we come back. ♪

>> welcome back to "the pulse"." >> what we saw earlier on in the morning wasn't and expect to announce that from the iaea. the iea making it clear that back in the future we're going to see a degradation of output from non-opec suppliers. we started this pogrom 43 minutes ago oil was trading up around 1%. since then we are in the upside quite nicely. 2.6% for the nineymex contract. quite a closing of the gap. >> the gloom of following oil prices for bp is up over the

last two months. what does it mean for bp? a u.s. judge has ruled that during the gulf of x co. rig disaster more all has built them believed. we will hear more from caroline. how much could bp have to pay? to settle it out with the u.s. government? >> about a quart or less than had been feared. $13.7 billion is the maximum amount it could be fined next week. but that in perspective. that is bigger than the entire market capitalization of [indiscernible] it is still a record fine. it is a quarter less than the u.s. government was pitching for. according to the judge it was a quarter less oil spilled into the sea during the 2010 oil spill. about 3.2 million barrels was ejected into the sea so says the

judge. bp was a little more optimistic. they said it was 40% less than the u.s. government pitched. it is better than was hoped. >> no penalties being determined. they believe it will be on the lower end of the range. set us up for the next week or so. the court starts to rule on this. how does it actually happen? >> new orleans next week here at good it be what it is find westmark bp thinks not. david said look. this is a major victory for bp. it should be shy of the double-digit figure. it is still going to be a record. according to the clean water act you can only find 4300 per barrel. the judge also has to decide what were the steps that bp went to to try to salvage the situation? he did say it was grossly

negligent. it was clear that they worked very hard trying to clear this up, billions of dollars. he could find them less thinking they worked hard to minimize the damage. $43 billion is a huge amount of site that had been set aside by bp. only 3.5 is for pollution. it's >> ever was trying to figure it out. >> you have banks and casinos claiming. because you are held to drilling to damage our businesses. there are so many ongoing issues

with the blame of the spill. if he is not settled with any those sorts of companies. states like louisiana and obama are saying this. >> it is also impacting a lot of these oil service companies. they're saying they'll will have to get rid of 9000 jobs. >> unbelievable, isn't it question mark that is what happened when oil prices fall by half. the companies that provide journaling services, oil rigs to the big u.s. giants and international oil giants are suddenly having to slash jobs and minimize costs. 9000 jobs. justin steps are being taken by u.s. energy companies because of the decrease in oil prices.

they are saying we have an environment they are worried about. it is a big charge. some statistics are phenomenal. if they are right, energy companies this year will cut spending 35%. u.s. rigs, 43% could be no longer used. that is 750 oil rigs to go this year. phenomenal. >> thank you so much. that was the very latest on dp and schlumberger. >> the work up. let's get more. details. we are joined from paris. what led to this growth? >> the key thing is they are very good performers. they compensated for some regrowth in europe and countries such as italy and also growth in

china. there growth is 22 .6 billion euros. it is beating estimates. in france about half their revenue is prepared better than the big hypermarket and the big out-of-town outlets. in four markets had a strong performance for argentina. we have sales growth of 30%. a huge number. in brazil which is their second biggest market after france, the sales are 10%. they also said he is planning a sale of the units. this year brazil has been one of the key markets for the past 40 years. more recently they have been boosting their investment there. they have been teaming up with a local businesses in order to improve the relationship with suppliers. key suppliers for carrefour.

in china, their organic sales growth is up 7.8%. >> caroline, thank you so much. coming up, more on the swiss shock wave. tweet as if you think the snb has now lost their credibility. we are back in a couple of minutes. ♪

>> welcome back to "the pulse" live on bloomberg tv. >> the swiss franc jumped at least 14%. in switzerland your money will not go nearly as far as it did before. that is a bad news if you are off to the world economic forum next week. tom gibson is rd there. he sent this report. >> a ski holiday in the swiss alps can be pretty hard on the wallet. now spending francs will cost you even more thanks to the country's central bank to raise the values. it has made the currency soar. here in the resort town of davos preparing for the world economic forum, delegates should expect

to rake the bank. these hearings at a local jewelers cost 5500 francs. it is nearly $6,100 in u.s. dollars. the jump threatens to make an event that already cost it to be more exclusive. why it is no major program for the world believed get the rest of the year to worry about this. >> we are shocked and a little bit confused. if you work in next word industry you could work with the tourists. it is much more expensive for everybody coming in here. >> this cost 355 francs a 13% increase to skiers. >> why should the german tourist come to davos when

he can go to austria without exchanging his money? the same applies to the buying of real estate in switzerland. they will stay away now even more than before. >> switzerland was rd one of the world biggest countries. the residence of davos may have to put their faith in the beauty of the mountains in which it lies. >> tom gibson their reporting. this has sent shockwaves around the world. you saw traders in the u.s. had to take a hit. let check the price of the currency right now. yesterday we saw a huge move. it was down 15%. >> everybody is trying to figure out who lost how much and how

big it is and where some of these survived the impact from london to switzerland to new zealand. we are still dealing in digesting with the details of that story. >> we have a great story on the bloomberg terminal saying some of the richest clients are now being drawn to dollars after the shock. >> this will push the dollar up. a lot of these big institutions will look at it carefully. if you're looking for a safe haven, volatility is not on the list that you are looking for. has the snb lost its credibility? it switzerland no longer the safe haven it once was? can we rely on it? let us know what you think. we will be delighted to get your take on this important story.

>> the second hour of "the pulse" is coming up. we will be talking to the chief financial officer. that is an exclusive and it is coming up. ♪

>> swiss shockwaves. global markets react to the snb 's surprise decision. >> what it means for swiss business and finance. the ceo of swiss re will be joining us. >> obama and cameron announced measures to counter hack attack threats. >> 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."

live from london. a little bit of breaking news in terms of data out of the eurozone. >> we are seeing, that may find the number -- rising 0.7 from a year ago. the debt consumer price decreasing 0.2% from a year ago. condemns the month on month number -- that is the month on month number. >> let's have a look at the euro. it would be nice to have a look. >> yesterday we broke 1.17. the market decided that yesterday's move signaled we were going to be seeing the ecb announcing qe. on the 22nd.

a further reason to sell the single currency. that selloff has continued. we are flat on the session. >> switzerland's currency shock continues to battle the markets after the swiss national bank's decision to lift its cap body swiss franc against the euro. the swiss franc is close to parity with the euro after surging 40% yesterday. the country warned about impacts on tourism. the ceo of swatch learned about the impact for the economy. hans nichols is in zurich. we are still trying to gauge the fallout. >> trying to gauge how much more will swiss stocks slip. down 6% when i checked 15 minutes ago. we were speaking to an analyst who suggested they would go further. this is going to take a couple days and maybe until the next

earnings season to see the impact on that publicly listed companies. there is another conversation but it is going to do to the swiss economy. you are hearing mittlestand companies talking about ca furloughing workers. maybe sending switzerland into recession. a few blocks away is the swiss national bank. i will cant out and see if protests turn up. >> this isn't the global currency. one of the ones we talk -- this is a big global currency. one of the ones we talk about. >> the famous moves we have

like the mexican peso, those were depreciation. nothing was so sudden or an appreciation. the swiss franc got a lot stronger in minutes up 40%. it is in the high teens. we will see where it goes. one more point will the swiss national bank do spot interventions? will continue to they -- will they continue to buy swiss francs? if we get quantitative easing, the swiss franc thinks they have a direct line to mario draghi. this could be a preemptive move. >> in addition to describing the currency cap, the snb increased the amount investors have to pay to hold swiss deposits.

it is impacting the nation's insurance sector. we are joined by swiss re's cfo on the phone from zurich. thank you for joining us. what has been the reaction in terms of your company? >> in terms of swiss re, the impact is going to be minimal. we are globally diversified unlike some swiss exporting companies. our cost of goods sold are around the world so we are not as exposed to the swiss franc. for us and most of the diversified insurance companies it will not be that much of an impact. >> do you think you have a different view this morning of the ability for the snb to carry out policy as effectively as you did yesterday? was this handled in the best interest of switzerland? >> it was no surprise to us. it was a surprise to the market,

contributing to the degree of the volatility. the swiss national bank and other national banks are and a difficult position. it is very challenging to say what you are going to do. i can certainly understand. i think any good analyst looks at the facts. as the facts develop you have to be willing to change your view and change your policy. >> them us a sense -- give us a sense. this is a conversation we are trying to have this morning. because it took us by surprise are you concerned about more volatility? switzerland is less of a safe haven than it was a week ago? >> i think the fundamentals of switzerland have not changed that much. the swiss national bank has done a respectable job. in some respects protecting the

swiss economy from developments in other currencies in other regions. also giving the swiss businesses some time to adjust and prepare. over the more recent period, the euro has weakened over most other currencies. the u.s. dollar has been strengthening for some time. it's understandable and there is no doubt that the impact in the short term will be negative on certain sectors of the swiss economy. i do believe the economy and the swiss are resilient and swiss business will respond appropriately. >> in terms of your business -- the insurance industry infest takes money and figures out how to calculate risk. when you get a huge move and a currency like this, which bit of

the balance sheet does it affect? does it have p&l impact? what was your thought in terms of how it affects your business? >> my first thought was we are well-positioned we try to position ourselves in a way that we are not overly exposed to one currency. the nature of our business is different than manufacturers. the costs of our goods sold are not determined by manufacturing facilities located in any specific country. therefore we do not have the same exposure. i think that is true for larger more diversified insurance groups. there is no doubt there is an impact on p&l. the impact will probably be minimal on us in terms of p&l or balance sheet. that is because of our approach to basically matching and hedging away various currency exposures. >> did you lose money on the trading floor into you have a number for us? >> no i did not lose money on

the trading floor. we are not active traders. >> in terms of investments. i understand you are diversified internationally. >> our investments are more or less matched with our liabilities. the currency move does not really have an impact on our net position. that's inherent in what i said. we manage our business on a matched basis so the move in currency does not have that much of an impact. >> d think it will make it harder or easier to attract talent? is switzerland going to be a place people are going to want to live? you operate around the world you need the smartest people that you can get working for your company. is that one of the effects this could possibly have? >> if anything it underlines how stable and strong switzerland is, to be honest. i recognize there will be

short-term impacts in some sectors of the economy. we talked about exporters, tourism. overall, the economy is resilient. the economy is well diversified. the country will continue to be extremely attractive. i do not think the move by the swiss national bank will change switzerland is a place to attract and retain talent. >> are we going to see more volatility and for how long? >> the question there, i'm not a stock prognosticator. while this does not change the equation for the swiss economy, given the size of the economy it does not change the situation of the economies around the world. it does add additional volatility where we already have volatility. my conclusion would be an

increase in volatility. probably will be with us for a while. >> inks for your thoughts. we appreciate you taking the time to talk with us. david cole, chief financial officer of swiss re. >> let's delve into the farm sector -- pharma sector. >> sam fazeli we've been trying to figure out how this affects companies like novartis. if you are a foreign investor you've seen a pop in value. once we start to price the numbers in to the models un than the story start to evolve. >> if you put in spot rates today and assumed u.s. dollar and euro and a certain percentage hit roche's earnings per share, 14% is a calculation.

the number has hardly moved. what is difficult for roche is the fact that everything is in francs. >> novartis reports in dollars. >> we will know details later on. the cash flow is going to go down. what happens to the dividend payout ratio? in terms of dividend yield. novartis is simpler. they have given us one number, $0.4 billion to $0.5 billion just on the exchange rate. everything else is reported in dollars. the dividend is paid in dollars so it makes it easier to follow. both share prices have reacted the same.

>> in terms of who is worse off -- >> it seems to be that roche is because everything is an francs. >> pharma companies are essentially ip companies, the value. is there a manufacturing hip? >> puerto rico is a hotspot. south america, the u.s. come europe. they have manufacturing all over the place. roche and novartis also have some manufacturing locally. swiss francs, swiss sales is not a big number for either company. it is a small country.

from a multinational perspective may have -- novartis definitely and roche to a lesser extent -- a natural hedge. >> sam fazeli of bloomberg intelligence. >> the snb's surprise move may have paved the way for gold's best week. the relationship between swiss franc and what you are looking out here. we will find out and get more on the news, the fx brokerage. we will get some more details on what we know about that when we come back. ♪

>> welcome back. you are watching "the pulse." are you a west ham fan? bad news. the shirt sponsor pari afx has confirmed that the move by the snb, it has resulted in volatility and liquidity. the firm is entering solvency -- entering insolvency. in accordance with financial

hundred 30 rules -- in accordance with financial conduct authority rules. >> our next guest says the snb's move is a win for the precious metal. a twitter question of the day. we've been trying to figure out whether the snb snb has lost credibility. does it mean that a safe haven is now gold? >> i think it has lost credibility. the godlike status we have conferred on all central banks is being questioned it in the huge volatility and turmoil created by the unprecedented and surprising move of the snb. the scale of the move on foreign exchange markets was incredible -- a 40% move on the euro and

dollar versus the swiss bank in 13 minutes. that is unprecedented. it is potentially going to have created issues in terms of hedge funds. i think there could be a few london whales out there who have had their heads on the plate. there is going to be jitters this morning. the fact that it came out of the blue, nobody expected it. even christine lagarde of the imf seemed not to be aware of it. given what is happening next week with the ecb you would think there would be more coronation. i think the ecb and snb did coordinate. i think the federal reserve was aware this was going to happen. it is difficult to know and it was a shock. there are questions as to the safe haven status of the swiss franc as a currency. it also questions the status of

currencies in general. >> a lot of people say this will be dollar positive. as you run the mechanics, it is dollar positive which at some level will be gold negative. >> in the short term that is possible. in the long-term the fundamental story is one of currency devaluation's of increasing deflationary pressures in the world. that is leading to currency wars. jordan, the governor of the snb is an astute lieutenant in the currency war. they will devalue their currency again because they cannot afford to let their currency appreciate again in terms of the euro and dollar. the dollar has its own issues in terms of the huge national debt in the u.s. people seem to have forgotten about fiscal issues in the u.s.

the data in recent days, whether it be retail sales or reports of different banks over there. there are signs that they are less likely to increase interest rates in the short term. >> are you hearing anyone being force to sell as a result of margin calls? gold is easy to sell. people tend to liquidate entire portions of their portfolio and gold tends to be first. are you hearing about people having to liquidate? >> no. gold went up yesterday and stocks went up. it was not a lehman moment. it actually lead to increase in physical demand. we did not see any liquidations on the carmax or in the futures market. >> thank you so much.

continue reading about the swiss francs. /'s -- swatch's ces spoke about this yesterday. we are back after the break. ♪

>> welcome back to "the pulse." live on bloomberg tv and streaming on the ipad and bloomberg.com.\ >> u.s. regulators post a record fine of $14.4 million on ubs' s dark pools. he securities and exchange commission has been cracking down on high-frequency trading abuses in allegations that rapid fire orders can be used to rig the markets. >> if you want to buy google glasses it might be too late. the company is phasing out its program that made the glass is available to software developers four $1500. the company says it is still committed to making glasses available to consumers. >> luxembourg does not comply with international accounting standards. the eu told officials that deals

give the internet retailer and unfair advantage over competitors. >> let's have a look at some of the bond yield movements we saw in switzerland. this is incredible. look at the swiss yield. >> this is the 10 year which has now got a negative yield attached to it. yesterday, the swiss cut rates down to -0.75. we have a 10 year in switzerland, historically you would be saying we have a recession coming in switzerland. that's probably the take away some assume from this story. the swiss reaction continues and the bond markets certainly are in the center of the story. a negative yield on a 10 year in europe. >> tweet us what you think.

the twitter question is has the snb lost its credibility? @flacqua and @guyjohnsontv. see you in just a couple minutes. ♪

>> welcome back to "the pulse." live from bloomberg's european headquarters in london. i'm francine lacqua. >> i'm guy johnson. >> belgian police carried out a terror raid carrying -- killing two suspected terrorists and injuring a third. they will be questioned about their connection to the charlie hebdo attack. police in berlin carried out a raid. >> bp will face a fine for the

gulf of mexico spill in 2010. reduced from the $18 billion expected. after the ruling reduced the estimated amounts of oil released in the spill. a process to determine the exact find will begin next week. >> international monetary fund managing director christine lagarde has warned that slowing oil prices will not be enough to stimulate global growth in the year ahead. >> despite the abused from oil prices -- despite the boost from oil prices and stronger u.s. growth, we see the global recovery continuing to face a strong headwind. >> let's figure out what is happening. what a 24 hours it has been. jonathan ferro still dealing with the shockwaves felt from the swiss. >> remarkable. i will start with the equity map

in europe. the ftse 100 is lower. the dax in frankfurt is off by .4%. the last tweet for hours, the capital of global financial -- in the last 12 for hours the capital of global financial markets has been zurich. typically you have three of the biggest gainers in this spot. not a single stock that is gaining. losers are the banks, financials. the swiss national bank, we are still digesting the move on the currency as they remove the cap for the swiss franc against the euro. that is a stronger swiss franc. today we come back a little bit more. only emphasize how historic this was. for a major currency to move this much you might have to go back to 1998 to the asian debt

crisis. the move of the week does not beat the swiss franc in a matter of minutes. that historic move, let me show you something pretty special. we talk about german farm yields 0.45% near record lows. we talk about the japanif ication of the bond market. forget japan. this is how it's done. a 10 year bond yield with a negative yield -- three basis points negative. learned to switzerland and over 10 years you pay for the privilege -- lend to switzerland over 10 years you pay for the privilege. the first victim it looks like our some of the big fx brokers. it will take a number of days and perhaps months to shake that move out of the market. >> still trying to count the losses. jonathan ferro with the latest.

in 25 minutes "surveillance" with tom keene. what are you looking at? >> much will follow on to what jonathan ferro said. the markets are remarkable. when i emphasized is we will begin to only hear of the losses taken on what will take weeks to work out. brad will join us, legendary at sanford bernstein. now over at new york university. he will join us with the venture capitalist alan patrickicof. hans nichols will join us from zurich. robert albertson will join us from salmonella -- sandler o'neill.

we will be monitoring the markets across equities, bonds currencies and commodities. looking at the -10 year yield in switzerland. >> thank you so much. "surveillance" is 25 minutes from now. >> the british prime minister david cameron is in washington d.c. to talk to president obama. the terror attacks in paris and the recent hacks of sony and the u.s. central command put cyber security at the top of the agenda. phil mattingly joins us from washington, d.c. we are expecting to hear about counterterrorism and stress testing key institutions. talk us through what these guys have in mind. >> in an ideal world this would be about the economy but the fact of what has occurred over the last month or two with paris and sony, cyber security in

general, has raised that to the top of the agenda. while we know so far is they are going to have a press conference. what they are going to layout is a cyber war plan. it is going to involve major commercial banks in london and new york city. it is going to involve the governments on both sides. they are going to war game worst-case scenarios. when the attacks occur if they reach the stage of catastrophic, which obviously they have not reached so far, there is some way to know on both sides of the ocean what each country is going to do. that is the big thing. we're going to see in alignment between the u.s. and u.k. security services on how they deal with cyber. the gchq and nsa are going to start a cyber unit. cyber a top issue, maybe more so than counterterrorism based on what we have seen over the last couple weeks.

>> counterterrorism and economics is also on the agenda. >> no question. for both leaders this would be their top issue if it could be. the one that was not sucking up all the oxygen. trade is a big issue you are going to see both leaders talk about. both leaders in their country are having difficulty pushing for the european free trade agreement they've been working on. for the president, barack obama he's having problems with his own party. he's trying to make a push in his final two years to try to get this done. you will see prime minister cameron do the same thing. yesterday, cameron met with said last chair janet yellen, with christine lagarde and with jack lew. christine lagarde lavished praise on the british economy which david cameron was not unhappy about. this are some key issues today. >>. obviously plays into the idea that david cameron is there as much to boost britain as he

is to boost the conservative party. with the general election coming up i guess that is part and parcel to what he is looking for. how does obama handle that? >> the white house is cognizant of other leaders' domestic political issues and they try to stay out of them. everyone i talked to at the white house acknowledges that david cameron and barack obama have a good working relationship . they seem to really enjoy each other's company. they do a lot of quirky -- things -- there is a genuine like for one another. the strange dynamic here is a bunch of barack obama's former campaign advisers are working for politicians in the u.k. his campaign manager in 2012 is working for david cameron. david axelrod, his top advisor through both campaigns is working for ed miliband. there is an interesting dynamic. i talked to officials who hear

from both sides a little bit before meetings like this and try to warn the president, do not get too far on one side. no denying there is a genuine like for david cameron and you will see the president speaks very highly about their relationship and what david cameron has done as a leader for the u.k. >> thank you so much, phil mattingly. >> let's stay in the u.s. amid the gloom of falling oil prices, perhaps there is good news for bp. a judge has ruled that less oil spilled out and the u.s. government believes. capping defined that bp faces. let's get some details about how the legal story is going to play out with caroline hyde. >> a quarter less oil spilled into the ocean, that is what this judge has ruled. therefore a quarter less of the fine.l

next week when the trial kicks off, bp are facing about $13.7 billion that is the maximum that could be levied at them by this judge, a u.s. sister. district judge many are saying this is a victory for bp. many feel it could be some double-digit billion figures -- sub double-digit billion figures. it will be interesting to see what the judge takes into perspective. he has been critical of bp. he called than out to say it was their fault, basically. he said it was gross negligence that was causing the largest ever offshore oil spill in u.s. history. he laid 67% of the blame at bp's feet. he mainly said bp was culpable.

they spend billions of dollars trying to clear it up. he will take that into account and therefore see how heavy defined could be -- the fine could be. bp sounding optimistic. they are sounding optimistic that the $13.7 billion that could be waged at them probably will not be. they feel it will be at the lower end. they are feeling quite bullish. but we have to hear it, the judge has been quite critical. this is a never ending story and there are many more battles when it comes to governments, state governments and companies that want compensation. >> caroline hyde with the latest on bp gaining 3% in today's trading. >> what new technologies will be the most disruptive in 2015?

we ask a tech expert. ♪

>> welcome back to "the pulse," live from london on bloomberg tv. cyber security is a global priority. david cameron and barack obama are meeting today to discuss their nation's anti-hacking plan.

london and new york banks will simulate a massive hacking attack on their computer systems later this year. will be fear on cyber security decrease innovation? we ask a tech expert. as soon as he sat down we were trying to gauge what the trends for the year ahead are. how does cyber security fit in? >> it becomes an arms race. you base a lot of security on cryptography, cryptography and space around prime numbers. there is a limit to what silicon computers can do around prime numbers. whoever has the biggest processing power wins. we are beyond silicon we have graphing, an order of magnitude faster than silicon. the big thing is computer space

around quantum computing. google has a home warehouse. the nsa and the u.s. has a lot of experiments. these computers are amazingly powerful and will generate massive amounts of complex -- >> this ends cryptography in the way we understand it. once someone attempts to break down security, security locks up. the nature of security changes. how far away are we and what is the acceleration looking like towards that? >> if we looked at the doubling of processing power every 18 months, that is based around silicon. if we move into a new environment around graphing that could excel or it you might see new chips arriving. graphene is experimental perhaps around next year, we

could see a serious change in cryptography. >> coming from silicon valley? >> the nsa is trying to protect the u.s. government from attacks . they are investing huge amounts of money. >> they have not been that successful. >> not yet. >> houses this fit in with artificial intelligence? how do the two things fit together? once computers get better, are they also going to get better at cracking codes? do the two things sit side-by-side? >> they do sit side. artificial intelligence's real application is deep learning, mimicking the human brain. if you show a human a picture of a cat we can't assimilate back from any angle or any color or shape and any distance -- we can simulate assimilate that from any

angle, color, shape our distance. a computer cannot do that. because of a change in technology, there is a check from qualcomm that simulates the human brain. at that point we are talking about another quantum shift in computer power and that segues into cryptography. >> how fast does a computer have to be able to recognize a cat to be a success. does that happen this year? from 30 minutes to two minutes? >> technology is accelerating at an accelerating rate. we know for a fact that google is starting to break down fixed images at this moment and being able to tag content. the point that they get to video changes the advertising business massively because they will be able to tag content of a city out and show specific ads. >> you've got onto the

interesting bit. which industries are going to be most disruptive and who are the winners and potential losers? >> the obvious winners are technology companies. ibm, google apple, facebook. they are all generating very clever algorithms using lots of computer power. google last year spent more money on computer service than the rest of the world, $8 billion. let me tell you about the effects. let's take an accounting business p or you have a junior accountant that will look for something called discovery. finding out about new european rules. you have a partner that looks for patterns across multiple configurations. if you have a computer doing that, the computer is more capable of doing patent recognition across huge data sets. you replace the partner and the junior accountant. >> what about journalists? >> do not answer that. in terms -- you say you seem to

suggest that because you are a tech company you are going to do well. some must be doing this better than others. >> it has come down to cash and brain power. google has huge amounts of cash, apple has huge amounts of cash. google employs more phd's than any company in the world. you put that amount of brainpower and that an out of cash into the process there are going to be people that win. >> john straw, thank you. we are witty, some journalists. >> 40 million job losses. >> that is not journalists. >> that is worldwide. >> thank you. has the swiss national bank spoiled the party? million job losses. > what the bank's decision means for those traveling to the world economic forum in davos. heading to the world economic

forum. should they be worried about the conversation we just have or how expensive it is going to become? we find out when we come back. ♪

>> for a look at what we are watching, we are joined by matt miller and lucy.

alpari filing form insolvency. >> i just ran to their offices. they cannot deal with what happened yesterday. they do not have the money to cover it. they cannot take anymore trades. >> do their clients lose money? if you have money with a lpari what is the story quest my >> most of the companies, you lose what is in your account but you cannot go negative. the clients should be ok but the company cannot keep up. >> they sponsor the football club. >> they sponsor tons of things. cycling they are big investors. >> there are a lot of fx brokers out there. can we assume what is happening at alpari is happening elsewhere? >> i think it is a leap to say

they are going insolvent but we are talking about the risks. people are angry, they are blaming the snb. >> we cannot cope with it. >> we has trying to figure out exactly who is losing watch. what does it mean for ubs clients? >> they are more anxious. some ubs analysts told us they are more anxious about this than they were about the u.s. possibly imploding in 2008 greek debt. they are trying to get their assets more diversified in terms of fx and currencies and trying to make sure they are holding onto a diverse group of assets and not just swiss assets. >> there was an assumption in switzerland that equals security and safety. >> and predictability. >> you have a surprise once every hundred years and this was the surprise. >> let's hope it is only every 100 years. >> this has got everybody

freaked out. wealthy clients and other swiss bank clients. people always assume they are going to stay there because of the tax benefits and the haven type of mentality. that does not mean they do not have diverse holdings and they do not think about things like that. >> it is a story we will keep following and giving you breaking news that we get from it. thank you so much, matt miller and lucy meakin, one of our experts in terms of bronze and brokers -- bonds and brokers. >> that's it for "the p ulse." we will find out a lot more about this next week in davos. this is going to be one of the main subjects. >> if you go to dallas, bring more cash. guy is @guyjohnsontv, i am

@flacqua. see you monday. we will be all over the swiss story as we tried and depict the fallout from it. >> we've been asking you what you think. the thought seems to be the snb could have done better. ♪

>> this is bloomberg "surveillance." >> adapt and adjust as switzerland will confront massive deflation. goldman sachs is not jp morgan. how lousy was trading in the

fourth quarter? >> forget davos man warsaw woman is crushed by the snb. this is bloomberg "surveillance," live from new york. friday, january 16. i'm tom keene. let's get to our top headlines. >> inbounds and a manhunt underway for more suspects after police thwarted a possible attack. 15 people have been arrested. police killed suspects in a shootout and arrested another. authorities believe some of the suspects had just returned from syria. french police have arrested 10 people connected to the terrorist attacks. aftershocks in the decision by the swiss central bank to lift the currency cap against the euro. client threatened -- client debt threatened. a