>> smp bloomberg why rating agency cut russia to junk. greece's new government is set to name the members of his cabinet this morning. the u.k. elections as of the economy takes center stage and the political debate and we will get the latest growth figures in 30 minutes. ♪ >> you are welcome to "the pulse ."

i am manus cranny. cut to junk is the verdict from standard and poor, the first time in a decade it has dipped that low. russia expert ryan chilcote is here with us. along with stephen king will be with us, the chief economist at hsbc. great to have you with us stephen. ryan, was this something we thought were coming? one person said we have not then asked -- in terms of the central-bank. >> it was widely anticipated and came a bit earlier and s&p said it would, by the end of the month and the results of the review. it was not entirely priced in. i doubt -- i thought the head of sovereign rating and defended his decision to effectively junk russia and he made the call.

in responding to some the russian criticism saying he was overly pessimistic a he said, no, i have a more optimistic view of russian growth than the kremlin itself. how can i be too pessimistic? he's at one of the problems russia is facing is the so-called rainy day funds and reserve fund and welfare fund are not as big as people inc.. have a listen. >> it has been built up during the oil boom years we are feeling as if the build up of assets rainy day funds, if you like probably around -- >> one of the interesting things we have seen is the ruble totaling yesterday. you have to ask yourself is the central-bank spending $379 billion in reserves at 300 billion in yesterday and that's a different pocket of money. the answer is we will not find

out until tomorrow. you do not get the information until the next day. the ruble is stable again but at a more elevated rates. >>'s season, -- >> stephen what is your take? currency crisis since 1998, what do you make of it? >> it is a quite deep trouble. in our forecast around the world, russia is about the week as we have got shrinking this year and 2016. -- is about the weakest we got shrinking this year and 2016. the oil and gas prices are high, russia is ok and if they collapse, russia is in big difficulty. that lack of diversification has revealed the problems it has got as a result of these much lower oil and oil -- gas prices. >> they seemed to stumble from

one problem to another. where is the new normal for oil? usually dictates where the ruble goes? >> nobody has forecast a oil prices protect really over the past few months. does particularly over the past few months. changing attitudes toward being a swing producer and worried about oil prices being too high and encouraging alternatives. the saudi reserves of the next few decades is one factor. the second fast -- factor is faster demand is softer than expected especially emerging market demand and everybody is talking about the u.s. being result -- up to the rest is darkness rather than life and true in the emerging markets and consumers over the past few

years and that story has gone wrong. >> there is a double edged sword and your place like turkey and india that could benefit from the lower oil prices. it is not all -- >> not all in are facing the same difficulties. latin america, countries in many cases in recession. the bric dynamic. not quite the powerhouse he saw three or four years ago. >> russia has been improving on moving along for a year. a year ago, it was moving into international markets and that has not been the case. do you see a point more recently where russia begins to sort of move international markets are again or is it a contained crisis? >> russia in the first half of last year, a sense with the russia/ukraine story kicking off

breakout oil prices higher. we are seeing more fundamental factors coming through, the impact of saudi and emerging markets more generally not withstanding -- and so, russia has the capacity to have influence. and have a huge influence. >> thank you very much. stephen, you will stay with me. breaking news for our viewers. yanis varoufakis will be the next greek finance minister. he spoke to him yesterday. let's get straight out to greece. guy johnson and the beginnings of what we understand who will run the finances in degrees. i? >> it has come out on the personal blog. let me read to you what he said.

it will be more infrequent and shorter but i hope they compensate with a juicy your views, comments, and insights. carry on his blo now that he has been named finance ministerg. he calls himself the accidental economist. it is interesting, the greek press reporting that yanis varoufakis have -- if i can get my pronunciation right had spoken yesterday after the eurogroup at meetings and maybe that is an indication of the conversation is already started between greece and the rest of the eurozone about what happens next with the debt load. he is going to be the finance minister and he has done so on his personal blog. we spoke to him yesterday on air and he talked about how the negotiations were to go. i spoke to him last night as he was walking out of the athens

plaza hotel on the other side of the square. he seemed in good spirits and maybe he already knew the news after that point after mr. tsipras was sworn in as he calls himself the accidental economist. i think he will try to avoid an accident in his relation with the eurozone once the negotiations start. >> one gets the feeling the voices from europe, the imf, are quite embracing of the opportunity to speak with the new government. what do you make of the comments so far? >> fairly mixed so far. mr. hollande has invited mr. tsipras to paris. and he is invited to brussels. the tone out of the capital may be a little bit more circumspect making it clear there is a desire to seize the greek agreements made by the previous administration of mr. samaras.

a story and the present going around which is entitled "he is under the doormat" and the fact that mr. samaras was not there to greet mr. tsipras and the places effectively bare. a very clean handover. they have been spring cleaning and maybe a sense of the tone of one government from the other. maybe that's something brussels should look that to expect to see the greeks carry on and the commitments made by the previous administration. the fact that mr. tsipras' party has gone in with the independent greeks making it clear that a harder line is going to be taken up by athens despite the fact that the greeks have very few solid cards to play. >> we will see how it comes to bear to see how they get the funding. guy johnson in athens.

stephen king is still with me, chief economist at hsbc. an accidental economist. >> i think a professional economist. >> exactly. it's a good we have somebody with a sense of humor? >> it is always good in these areas. >> stephen, how strong is his hand at the negotiating table? >> it is the strongest hand simply won his election with a great deal of success and the greek people have spoken and they want a new deal with the rest of your and do not want to leave the euro or the eu. they want different terms. greece and self has been through a depression which is similar to what we saw in the united states in the 1930's. greece is an exceptional story where it was hit very hard by

the policies we have seen. in a democratic sense greece has a voice. in the negotiating cents, it is a degree of difficulty. it can determine whether it stays in the euro or support banks or financial system. all of these are still issues. walking on eggshells. >> walking on action and not tripping over one another. -- on eggshells and not tripping over one another. i had an interview this morning that said he europe would be a stronger place without greece. discussed in this morning. >> that is very impressive. >> would be stronger in greece left? >> it would be stronger if greece was not a member in the first place. >> there is a whole -- >> i think greece was in a weaker position. the issue now is if it were to

leave open of the departure door for other countries to leave or the markets to speculate a leaving. the whole part of the euro is once you are in you are supposedly in forever. that is a powerful firewall their protected the other countries. a departure could create difficulties. and people tend to assume the greek exit would be a disaster for greece. the banking could be a serious trouble, etc. there is one possibility that the departure which is a major decline in greece might make greek chief for incoming foreign investors from china, russia the americas and so on. suddenly, the money pouring in and begins to change and revitalize the greek economy. and the last thing the rest of europe want is the resurgence of

a tiger is a consequence doing well and portugal and spain, why haven't we thought of this if greece can do well. >> help me. the hellenic tiger. they do not have resources. they do not have what argentina has. retrospective, people are looking at structural reforms is stepping that austerity but they do not have the resources basis to give them a boost. how could a tiger be born? >> it was a tiger because it attractive for an investment from other parts in the world american investment, british investment. a huge amount, abundance of resources and human capital perhaps but not necessarily natural resources. in greece's case a position in

europe which is intriguing, a gateway of the middle east. it is certainly by russia. more influence than it does. i am not saying it is a good but maybe incentives for other countries to invest in greece. no guarantee by departing there are opportunities that my come from investors and maybe greece is transformed. >> we will pick it up again. we were talking, are the firewalls in europe strong to withstand a grexit? >> there is no political consensus in europe on how the euro should develop over the next few years. draghi talks about all of the time. it is politics between northern and southern europe and how you work out who pays the bills. until that is resolved,

fundamental difficulties are likely to continue. >> a very abridged aversion. stephen, thank you so much for you will stay with me. coming up countdown to the u.k. elections. the numbers out in 15 minutes. we will explore what it will mean in a run-up to a general election. ♪

>> that sap action has an impact on novartis but we are a very large international company and happen to be headquartered here in switzerland. because of that action and 15% depreciation of the swiss franc we're taking a look to look at ways to reduce cost and looking at cost across the company. again, the underlying growth of this company is what is important. >> that was the ceo of novartis speaking to me earlier about the impact of the decision to lift the cap on the frank on his business. for a little bit more, a chief economist, stephen king from hsbc. brave move by the swiss liberating them from having to

keep on intervening in the market? are they that in the market? they do not like it is the euro. >> not surprising. i think central banks in one sense, it is like a vegetarian tiger. they have a bite but they claim they will not invite over deflation and concerns over lack of growth. the swiss national bank has proved it is not a vegetarian tiger but a proper tiger and they promise a will keep the frank constitute the euro and everyone planned or business as subtly, it turns out this vegetarian tiger has a real bite and that is what we're seeing. >> i think that is being very generous to them. no, personally, these guys wiping the floor in terms of reading the foreign exchange market and destroy value.

>> bear in mind, in one sense, the s&p is behaving as if those not part of the euro. snp said we are not a great with quantitative easing. we would rather be away from it and were happy to stick with the euro as long as the europeans are not doing qe. they are doing qe of this the dollar in every other currency. of course, the problem is when you move from one regime to another, it creates enormous shock waves and that's what we of seeing over the course of the past few days for it promises to be a vegetarian tiger and we should a look at them and they have claws and teeth, they are a tiger. >> you know from -- i suppose a short -- a shark. >> slightly different. >> they show themselves to be

decked areas and not conforming. -- dexterity in not conforming. >> canada and the combination of falling energy prices and moo towardd a loose monetary decisions. to what extent do any of these qe policies are working? currency wars of countries trying to sort out to their deflation somewhere else through a weaker exchange rate? what europeans have tried to do the japanese have done in the past is weaken your currency and try to lift your domestic inflation because you created devaluation elsewhere which shifts yours to other countries. chris is the ecb a tiger >> is the ecb a tiger or a waking giant? >> it was always it was quite a tiger, conservative.

one reason for doing qe is everybody is not conservative and basically printing money. and the risk of your currency ends up stronger and stronger and that is where we were much earlier last year. strong currency alongside domestic and i would argue it would create a strong economy and what they are trying to do is the downside risk and try to show they are not particularly conservative. you go back to the 1990's and japan made a major mistake and boj was conservative and the more it depreciated the worst it became. >> hold those thoughts, we are more to get through. we have the vegetarian central bankers, what will be the next race? the u.k. elections is next on the agenda. stay with us for that. ♪

>> you are welcome back to "the pulse." still with me is hsbc chief

economist stephen king. we are going to get a little bit of the fourth quarter. some other survey to data is a little bit softer, wasn't it? >> rhetoric feel your phase -- rather peculiar phase and we will see where we get in the fourth quarter. a mixed story. investment is softer perhaps, consumption ok. retail sales are probably up. weaknesses here that are over 6% of gdp is not a where you want to be in one year of recovery. >> i perhaps think cameron will make it about recovery and we will get the message is to look at the data stephen. stick around. let's check in on dollars/sterling.

that is where we are at the moment. as we head into the numbers, we estimate we see around 0.6% in the u.k.. a very initial of what is going on and the u.k. and stay with us. ♪

>> some breaking data in the u.k., we are seeing they u.k. economy grow at a 0.5%. 01% lower than the consensus estimate we had out there for the fourth quarter. this is not the full picture but let's bring in hsbc's stephen king. a little bit of a miss there. the flash estimate. not all that surprised? >> no ours was 0.6.

there have been much bigger errors than that. >> trading the currency and looking at the currency, 150 for cash. we are seeing sterling drop here. where are we in this debate? a little bit of a slow down and inflation heading towards zero, some people have said. where does it put mark carney and his cohorts? >> the gdp up in the quarter not strong enough to tell you it is a robust economy. inflation is a remarkably low rate. the bank of england has lots and lots of time of how to normalize policy. think about earlier last year and raising rates in november of 2014 and asked not looking like they will raise rates until 2016 at the earliest.

inflation collapsing at the moment all which points to a buying more and more time and continuous zero interest rate for a very long period of time. >> can anybody raise rates in this year? every time i look at the statistics for the fed and the stats looking at possibly 30% of our poll in september. can anybody raise rates this year as the fed? >> the federal reserve is the most likely and even their there are difficulties given the eurozone use of qe and the dollar on the back of that. and tracking down effect of term of u.s. inflation and you have oil prices. it is likely to be down to zero and even possibly lower than zero. although the u.s. growth in numbers are ok lingering

suspicion that the rest of the world being weak could drag the rest -- could drag the u.s. back down. can it sustain that it through this year if the rest of the world is soft? >> a matters most to the u.s. growth story? christine lagarde was on a panel with francine and she made a very clear there is one bright spot in the world. >> that is what is going on. >> you can see who it is, track of them. [laughter] that is the absence of our concern, isn't it? >> low-level -- a level oil prices will boost a real wages a real profits in europe and japan and later in the year. after this precise moment, only the u.s. is doing the type. the u.s. is going up the mountain with all of the other countries attached to it by ropes in the u.s. is better in

every time one of the other countries falls down, it brings the u.s. back down. it is not strong enough to provide the engine of global growth. there are other countries that are being they used to be dynamic that are softer and dragon down the overall global growth rate. >> for us in the united kingdom that relationship with europe is presumably one of the biggest issues. we have a strong currency against the euro and it is one of the main export markets are the you pay -- and it is one the main exports for the u.k. currency on one side and oil on the other which is coming down and doesn't have the same impact are those the key issues? >> what happens to the eurozone growth rate given the trading partner of the u.k.? the u.k.'s own forecasters they

are sent 3%-4% per year. recovery in the eurozone. if they eurozone outgrows it is very difficult to see how the u.k. can grow indefinitely without running a massive imbalance. other countries end up in that position facing some kind of crisis. if you have not got this growth and investments, you will ultimately be constrained by the performance of your their neighbors and trading partners. unfortunately for the u.k. the euro is not the best trading partner and is still very, very weak. >> and i have read recently why bother with a 2% inflation target whether talking about japan, u.k., you wet, your -- u.s., eurozone, inflation target

is an alternative concept are still a concept that holds well with economic thinking? >> i am quite surprised that it has not been crushed more than it has. it was going against conventional wisdom. the results around the world and rather discouraging. even worse at the moment, more difficult to achieve that inflation target. you think about qe over the past few years, the u.k., the u.s. japan, struggling to get inflation at 2%. >> should gdp? >> the gdp targeting and there are difficulties there, it is revised. looking back at a mirror with one since. it has been growth positive area >> let's hope the politicians are listening. stephen king, great to have you with us. stephen king, chief global economist at hsbc.

ok, those are the big issues cleared out of the way. other headlines we are watching. russia's foreign currency rating was cut to junk. the move the country for the first time in over a decade sap told bloomberg that the asset position has eroded. president obama is heading to saudi arabia to mourn the death of king abdullah. he as leaving a bipartisan delegation include secretary of state as cia director john brennan. king abdullah helped anchor in the alliance between russia and saudi arabia, the world's largest oil exporter. a blizzard intensifies along the east coast of the united states last night and the national weather service predicts more than two feet of snow could fall in new york and reach -- and the

wind could reach 60 miles per hour. transport has been suspended and flights have been canceled. now, a new development in a bit potential airline merger. british airways owner iag has been given access to the books after raising their bid. now, joined by benedict. looking at the story ia has beeng the third big rating of the price and not have access to the books and begin to understand whether it can be done. >> into looks as if the latest may have done in the trick. they raised the offer to $50 a share plus five cents dividend. the admission bid was 130.

and now they said we are willing to engage and give you access to our books for a period of time. it really depends on what i ag sees their and they are making quite positive noises saying lingus would be better off within the larger framework of iag and they welcome this step. >> what were the stumbling blocks in this? the irish government and ryan air and a regulator, they would allow iag to make this bid? >> that is the tricky question. it will go to brussels to regulators who will look as the typical things to look at as so-called overlap of what might exist between iag and others and we will have to see how big that

overlap of might be. iag said it is not very pronounced. ryan air has said he thinks regulators will fall over themselves to approve this one because he thinks lingus standalone doesn't have a future and do not want to see it go under. the part of the bigger group as part of the future for aer lingus. >> let's leave it there. the numbers of the company where he started at the number of years ago. let's see how it runs. earnings at the moment a good price on lingus why not. 239.3. join me on twitter. you can find a stephen king's what he christens the national bank, a tiger, not a vegetarian

central-bank. follow me on twitter at man uscranny. ♪

>> we are role -- pro -- we want to sit down with our colleagues. i do not believe the greeks will play any role in of that and

will simply allow us to get on with it. >> that was yanis varoufakis speaking to us yesterday and posted on his blog this morning he will be the next greek finance minister. a big job and we waiting for the official announcement to come through. let's a our next guest. he said politics will be the key driver for 2015. he is the chief european economist and work at the ecb as deputy director general of research and head of monetary policy staff division a he joins us from goldman sachs. very good to see you. amazing how we go from one discussion to the transatlantic. you just heard from the perspective new finance minister yanis varoufakis and how strong a hand do the greece have to get a debt extension forgiveness

or a little bit of reprieve? what is in the cards? >> well, i think we will start with some attempt of were negotiation between the authorities and the new greeks on the next. the scope for really big changes is relatively limited and nonetheless probably some flexibility and i think the key question will be how asked the electoral mandate received by the new government and powers them to really push the limits? and how much they face pressures by economic and financial to behave in a more in line with the previous agreements? my sense is we will start with some posturing on both sides but as the financial pressures on greece and the greek financial system begin to mount and pressure of having to pay back

some of the loans to reduce the imf and spending and probably we will be nonetheless forced to some sort of agreement which is not so far away from what we have seen in the past. >> that is interesting and would weaken samaras and the mandate he went with. i mean, how would you describe this alliance? this gathering, this political gathering tsipras that put together? >> what is interesting is the traditional domain of the left/right of politics. we have done work looking at how on the one hand the traditional left/right is being shifted and the new politics will produce the parallel. it is between pro-euro mainstream parties which the greek context of being dominated

and the less government on the one hand. on the other, those more populous or euro skeptical on the other hand. the interesting part of the outcome all the greek elections which may have wider ramifications or europe is the outcome we have seen despite reorientation. we seem to be forming a government which were additionally might be seen as a left wing or right wing party and both which are euro skeptical and a come together over to traditional left/right differences in order to polarize greek politics around pro-euro/euro skeptic. i think that is a new domain, a new territory and the implications for how things work out in greece and what information that may imply for other countries looking forward into spain and portugal all of which have elections in the next year or year and a half or so. that remains an open issue we face.

>> that is really, i had a conversation with stephen king from hsbc. he said actually if greece accidentally stepped out of the eurozone, it could create a hellenic tiger which was set in train everybody in europe been battered by austerity going, what about that and we will have a little of that. it has a much broader consequence if we see greece trip out of the euro. >> well, i think that is right. it has 2 dimension of consequence. we are quite skeptical of that could be managed practically in a very easy way. the underpinning euro area, the other bailout mechanisms and now the backstops provided by the ecb especially in a contest

where a large part of the greek debt held in the private sector to official balance sheets a european authorities' balance sheets. that provides a greater insulation for the rest of europe from an economic or direct financial contagion. this new channel you are pointing to is more political channel of contagion. certainly, if we were to see a greek exit but if we were to go down that path, the experience of what happens in greece will have big ramifications for how it is seen elsewhere. i do not really thing that spain or countries that have made successful and are beginning to grow and the political dynamic probably still has spoke for the mainstream parties to come together in a grand coalition and maintain membership of the euro and relatively orthodox and adjustment process even in the face of strong showings of

parties and spain. i think probably there's enough resilience and the political system to buy some more time for that and adjustment to proceed. if we do not see an improvement in the euro area growth and improvement in the functioning of the euro area over a longer period, maybe 4-5-year horizon a greater concern. >> on the note i had for you, it is also in brackets. on to the economy stupid. also talk about elections and the indicators. portugal and spain. the average reelection probability stands at 58%. i can kick back and relax for the rest of 2015. >> i am not sure it is quite as simple as that. the peas we did in each country

-- the peas we do in each country, there are important idiosyncratic events especially across all of the countries in each have a special case. i think if you just look at history and across in the advanced democracies and given in the states of the economy, changes in the states of the economy, what should we be looking for? maybe the probability of the reelection of broadly mainstream policies which probably are market friendly, that points to probabilities. the key feature which you have to caveat that work with is we are facing quite a shot politically orientation. greece is perhaps the more advanced example of that. relative to these sort of drawing conclusions based on historical and experience weather in the u.k., we have a plethora of new parties and that

makes the outcome more difficult to predict. or if you the same kind of events in spain or denmark where the populist eurosceptic parties are both left and right becoming increasingly popular. probably, we should flag of those results with caution. to me, the main issue across elections is the difficulty of predicting results. >> quite indeed huw. great peas of research. i was not trying to denigrate it. -- and great piece of research. have a great conference. great to have you. huw pill goldman sachs chief european economist. from the economics of europe to the middle east. divide -- dubai, the top

international air hur.b. surging passenger numbers, the busiest airport a worldwide. joining me is the ceo. great to have you. i went through the airport before christmas. it is truly an impressive -- i supposed regrowth story from when i started going to the area 20 years ago. you do not have the problems that heathrow has been you have space and very few issues to deal with. was it easy? >> i would not exactly say we do not have certain issues. we are rather landlocked on our current site. i am glad you think we make him look easy because we try to put together a service offering that is a good one despite the huge volumes they go through our

airport every day. some mornings we were facilitating the journeys of about 40,000 people. it was not without blood, sweat, and tears behind the scenes. >> know, as some of the best rings are not without -- things are not without blood, sweat and tears. we saw a picture of emirates, a huge supporter of the growth story. how important is the support for the by? -- four dubai? where is the support of the airline and how do you manage that? >> having a high quality home base carrier gives us a lot of focus. our challenge is to provide the level of service on the ground that passengers on emirates experience in the air.

the number of carriers that serve dubai is not just home base but about 150 airlines contributing of nearly 71 million passengers during 2014. having a carrier that is focused on quality and incredibly progressive helps us with a philosophy that is going to be competitive globally as the years develop and the growth continues. >> give us some of the ambitions is it to be the biggest airport in the world? >> well, the ambition is largely achieved. where the larger international airport and the world and the ambition doesn't stop there and we are building the new airport at dubai world central when it opens by the mid-20 20's will be the largest airport in the world. we are planning to overtake ourselves in terms.

the real challenge is how do we keep this volume flowing through our airport with the idea of service quality being something our customers appreciate? being part of a population of 71 million isn't really conducive in some people's minds with personal service and we are trying to make and that's very much in the case. >> financing the ambitions, how is that going to be done capital market, family? >> it is a $32 billion venture and it has significant amounts of research behind it. we think it is a very good project and how it will be ultimately finance is something we are still considering. there are many options available and we are confident the outcome will be positive and successful. >> paul griffiths, thank you

for joining us. bloomberg "first word" is up next. john ferro is here for the rest of that. ♪

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>> tells bloomberg why the rating agency cut russia to junk. greece's new government. the new prime minister set to name his cabinet this morning. countdown for the u.k. election. the economy takes center stage in a political debate. good morning to our viewers in europe. good evening to those in asia.

good morning to those of you waking up in a very, very cold united states. russia, cut to junk. that is the rating from standard and poor's. ryan chilcote is all over the story. not unexpected i have to say. the movement on the foreign exchange market on the ruble kind of suggested it. >> we just had the head of s&p ratings here . he was defending his position. the russian finance minister said he was being overly pessimistic cutting russia to junk. he said he is not. he thinks the recession won't be as deep as the recommend lynn will. he said the money russia has in its rainy day fund, may seem

like a lot but it is not that much. have a listen. >> there are some buffers that have been built up during the oil boom years. what we're feeling is that build-up of assets, this rainy day funds, you like rrk probably rather puny. >> rainy day funds aside, russia's central bank still has $379 billion in its own reserves. the question i have is are they using some of that money today? the ruble after falling 6.3% yesterday on the back of russia getting cut to junk initially concerns about perhaps new sanctions coming we have seen the ruble kind of strengthen almost a little bit today. it is still below 70. to the dollar. and one wonders whether they spent some of their money. they spent money last year propping up the ruble. the finance minister said they

are not going to spend all the much needlessly, but it is pretty interesting. >> the ruble back at 68. talk to me about the politics. for putin, is this an embarrass identical? >> it is an embarrassment. obviously what happened in the middle of december was embarrassing when the ruble went to 80. there was a run on the banks, a mini run on the banks. people went to the banks and first changed their ruble currency to either dollar or euro. then they pulled their money out all together and put their money in appliances. because it went to fell in a curn basket, shall we say. the kremlin said that was bad. we should have acted more quickly. we have some stability and think the ruble will be between 60 and

65. yesterday it touched 70. today it is 68. there are people out there who are going to say this is new normal. how long does the new normal last? >> another thing we have to think about, the first full day in office for greece's new leaders. the other members of the euro-zone are looking at their response. guy, any other news? we have seen the euro-zone finance minister suggest they are willing to make a compromise. any suggestion about a haircut on the debt? >> yeah. what is interesting is we know who they will ultimately being negotiating with? it hasn't come out officially from the new administration who the new finance minister is.

it came out on his blog. he will carry on that blog, which is interesting as well. he promises that while the blogs will be more infrequent, they will be compensated for that by being juicier and providing more comments and insight. the renegotiation of greek debt may end up forming part of that blog that he is going to end up putting out. interesting way the news is breaking. he calls himself the accidental economist. you have to hope. i suspect in every capital around the euro-zone there won't be any accidents on his watch. john? >> guy, accidents one thing. i'm going to bring you headlines from angela merkel. she congratulated the new prime minister. she said he faces great mobility

in greece. what does that mean? to stay in the euro-zone? >> it has been made very clear that the new administration would like to remain in the euro-zone. that is really the issue of the accident. let's hope that the negotiations don't result in an accident which could end up pulling the country out of the euro-zone. when he went into the office, he had a clean desk. there is nothing there. he is starting from one point of view with a blank piece of paper. i suspect the euro-zone would like to see him carry on what was started and the commitments that were made. it will be interesting to see whether they end up doing that. there is also a story that he spoke to the head to have euro group yesterday. we talked to him as well yesterday.

we talked to him in brussels. this is what he had to say. >> these are difficult problems . they will not go, go away in a short period of time. once again their approach may be different. we will talk how they will want to address these problems. within the boundary s of what we have agreed within the euro-zone. >> yeah. maybe they are going approach things a little bit differently. if you're looking for an unorthodox approach, he seems to be your mind. i used the word orthodox deliberately. he decided laths night when he was being sworn into office. >> definitely change of direction. when you listen to those comments i go back to last week when we were both in davos.

the idea that they can expend churts when they negotiate this package, the idea that they can cut interest rates. is that going to be enough? >> i think it is going to be right on the edge of being enough. it is going to depend on how it is going to be spun. you can make a case for a significant reduction in the coupon tax to the payments that have got to be made there. a significant reduction for greece and maybe making that debt more sustainable. remember, we had p.s.i. that resulted in huge portions of debt being transferred on to the sovereigns around europe and their balance sheet effectively. if reck reduce the coupon pames then maybe we'll be in a situation where he can spin it here in greece. yes. i think there is middle ground for a compromise. the question is will the politics allow it?

>> i imagine this is going to take a couple of months to pan out. thank you very much. still ahead, the underground reaction to greece's new government. we talk to the c.e.o. of one of greece's leading business groups. that is next. stay tuned. ♪

>> welcome to "the pulse" live from bloomberg's european headquarters here in the city of

london. joining me now is youras asia group's -- eurasia group's bremer. is this the first of a few chapters we're going to see across europe and that is the opposition to the european union? >> i think so i think it is the tipping point. there has been so much dissatisfaction on the streets. the periphery and some of the core states with what has been crippling austerity. 2014 was the land of -- not in the united states. we bought it. we didn't read it but we bought it, but in europe, you actually lived it. that is why this guy became as well known as he did. you have such crippling youth unemployment. thinking they have no chance in they see countries. in greece, the people came out, the birthplace of democracy and decided to vote in an astonishing factor for a party

that would have been considered beyond the pales of greek parties and politics. >> we talk about the markets. you speak to businesses every day about political risks flt how concerned are they about the rise of anteeuropean sentment? >> they are concerned about europe. it is about radical islam in the region. it is about lack of willingness of the germans to lead in collaboration and cooperation with anyone else. it is about the brits being completely at the margins of this debate, which is a misfortune for everyone. franz not leading with germany. it affects the europeans so much worse. europe really -- if you're talking with c.e.o.s now, it is concerns about europe that is absolutely in charge. >> greeks and greek politics on

what is going on in europe. when you look at tsipras, whether this guy is a more business friendly socialist side of things. where does he sit on the spectrum? >> i think there is a question. he is certainly going to be much more moderate as an individual. you have seen that very clearly. liing nato. i know i said it. it is not on the agenda now. we still want to be a part of the euro. we want to negotiate. we're not going to default. you know it is one thing for him to say that. it is another for all of his ministers, for his new minister of finance to have the same sort of tempers when none of these people have been in government before. and they have got some hefty promises they need to make good on. when you see the reaction from people like merkel and her government and christine lagarde and the i.m.f. and others, you

realize that the chasm between where he is. >> merkel called this morning about 20 minutes ago. >> i didn't see that. what did she say? >> she said congratulations. you have a great responsibility. that is like obama sending this carryover into france about a week late. the sent identical shows when you don't get it done immediately. it is not better late than never. sometimes it is better never than late. >> absolutely. mr. tsipras is choosing his cabinet. we'll get the refraction the c.e.o. of one of greece's leading business groups. great to have you with us. ian is going to join in. first, when you look at tsipras' government, is this a business

friendly coalition? what are your thoughts? >> well, there is a government, a very quick one. we'll have to wait and see for the members of the new government. which the people getting into the government will definitely give some indication. of course -- one can get after the problem attic statements in the parliaments. >> have you had any communication at all with them? have you spoke on the tsipras? >> no, no. we didn't have any communication. just in some public meetings or speeches, but nothing very complete and personal. >> so tsipras has come out very much as the anti- establishment party. do you think the business

community right now feel like there is a bit of a target on their backs like there is going to be a rise in populism and they are they will use this to villainize not just the germans but the business community in greece? >> we'll have to wait and see. one cannot make general -- jump to general conclusions. i don't know exactly what it means. as far as our group, we're very specific an transparent and very long standing vems in business. so definitely, any more transparency in the way how to do business and getting permits or having the stable law system which does not change very quickly is definitely welcome by any business member. >> the prime minister, when left office, he said he was leaving greece in better shape.

in your experience of the greek economy and business world, have things gotten better over the last year? for the greek people, there hasn't been sign of that. >> you right. definitely the business outlook was much better at the oveped 2014 for example, november of last year. than it was when the previous government tooko. this -- took over. according to my opinion, it was a matter of time. definitely the new government should not lose any time. they should keep any momentum that was put on hold due to the elections for new businesses, new jobs to open. the biggest problem with the economy is unemployment. this is the harshest thing on

the people of greece. no delays should be permitted. all jobs -- all businesses should be left to continue and we need an investment shock. we know there is great jobs -- to create jobs. since the prime minister has announced that some things will be taken directly under his control, maybe it should be examined, the following. a small and very efficient team, the people who the prime minister trusts. to push any investment and anything that will create jobs. especially the ones that help exports or imports. the same thing. >> let me ask you since people are now starting to talk about the possibility of a greek exith

again from the euro-zone. is that something that you as a senior member of the business community see as a complete disaster and a nonstarter or do you see circumstances under which a greek exit could actually be the right decision for your country? >> i'm not an expert on macro economics but i don't see a way this could be done without a disaster on businesses and the real everyday life of the people. i cannot see it. >> thank you very much for joining thus morning. c.e.o. of g.d.k. ian bremer will stay with us. we'll talk yause in a few minutes. you don't want to miss that. back in two. ♪

>> there are some buffers that have been built up during the oil boom years. what we're feeling is that build-up of assets, the rainy day funds, if you like are probably rather puny. >> puny. that was s&p's head of sovereign ratings motte its kramer. with us is ian bremer. several years ago you wrote a book about mobility.

--ability. when do we get to that point with russia where it becomes more about ability and less about willingness? >> we're not there yet. if war has been declared on you, you would be less willing to pay. they are trying to make it clear that right now they are still within the bounds of somewhat cordial society, but things can change. the russians are going to play hardball. they are coming after the german government directly with cyberattacks. they have poured more arms into the ukraine. i suspect the russians are going to be playing ball on greece too. that is going to be a very interesting discussion. tsipras is going to use that in his discussions. >> how? >> if this gets ugly, it is not just about oh, we won't pay you. there are people out there who would love a water port in

greece. the russians lost syria. there are people that would love to flip greece from nato. they have lost a piece of the ukraine. they would not mind getting greece. they would love to stick it to the west on this issue. frankly get the greeks to say we oppose further sanctions or the continuation of sanctions. that is going to play. right? putin is absolutely thinking about that right now. so it is not as if they don't have geopolitical leverage. >> is putin embarrassed by the downgrade? is that embarrassing politically for him? the approval rating has not come down. what is your view of that? >> given photos i've seen of him shirtless and horse back, not many things embarrass him. i think he is angry at the west and using it in a very constructive way,

domesticically demonizing the united states and germany. portraying the ukraine as a neo nazi government. he is effectively riding that horse and 80% approval ratings. he has been unable and unwilling to attract significant investment. the government has been a disaster but his approval ratings are on the back of ukraine. >> politically, that downgrade then? >> i think just about anything that comes from a western rating firm is irrelevant. you have heard the russians and chinese say they are going to put together their own ratings agency because the west's agencies are all politicized. >> thank you very much. we're going to talk more after the break. we're going to talk about oil. stay with us ian. the new saudi king.

what does the new leadership mean for oil prices? we'll discuss that after the break. ♪

>> welcome back to "the pulse" live from bloomberg's european headquarters here in the city of london. i'm jonathan ferro. this is what stocks are doing here in london. we are lower on the ftse. in fact, we're lower across the board. the dax down .4%. the cac 26 points. the big data point in the last hour and a half though, was u.k. g.d.p.. disappointment. 0.5%. the worst reading in over a year. not exactly strengthening the government ahead of the

election, just 100 days ahead of that u.k. general election. we're face league isdown. remains to be seen. euro sterling a little bit higher. that crossed strong per. that is a weaker pound. a stronger euro. up 0.5%. that's big story in the market. here are the top headlines here at bloomberg. russia's foreign currency credit rating cut to junk by standard and poor's. s&p has a sovereign rating and told bloomberg their asset position has eroded. president obama is heading to saudi arabia today to mourn the death of king abdullah. he is leading john kerry and brennan . a blizzard intensifies along the

east coast of the united states last night. the national weather service predicts more than two feet of snow could fall in new york and wind speeds could reach 60 miles per hour. public transport has been suspended and thousands of flights in and out of the region's airports have been canceled. oil trading near a six-year low thanks to signsor a global supply glut. for more that, we welcome jeremy greenstock and still with us ian bremmer of eurasia group. i ask this ke a lot. i don't think it has been explained. how did we price a barrel of oil so badly for three years? >> the market prices it absolutely accurately according to the day's trading wishes. it is very sol -- volatile.

it is connecting with everything whether it is politics or economic growth or the lack of it. the recent downward push in the oil price has been real evidence of so you hadi intention to talk the market down because it wants to move some players out of competition with their market share. particularly u.s. shale. opec's share of global oil usage has steadily dropped as nonopec producers have been increasing their production. the competition, the rivalry in the market is much sharper than it used to be. >> that is high stakes blinking contest. how long can these political bliments stomach $45 oil? >> if you're talking about the middle east, quite a bit. i think the saudis clearly,

they don't want to see the iranians it is a key beneficiary . it is not just about shale. some higher prices producers they don't want to see geopolitically more important. same with iraq. massive problem in iraq now. they are fighting the strongest terrorist organization than we have ever dealt with. the territory that ai sis holds is where the oil comes from obviously. that is what the saudis see as basically influenced heavily. teheran, the toxic conflicts in the middle east now is geopolitically saudi arabia versus iran. that does lend you to the saudis not wanting to play nice-nice with the iranians or opec. >> it is a high blinking contest between opec and the u.s.

there are debates going on there. how does that play out? >> the gulf producers tend to stick together. saudi is obviously the leader in opec particularly in the gulf because it has the most massive production and it is normally played the role of swing producer because it can vary its production between 12 and 6 million barrels a day. if it wishes by much greater amounts than others but other players are beginning to move in on that. america obviously is producing much more than before. but iraq which is producing just below 4 million at the moment more than in previous decades, could produce if everything was quiet around it between 10 million and 12 million barrels a day. there is enormous potential there. geopolitics stopped the production capacity of major players hitting the maximum. but there is masses of oil and more gas out there.

we're a long way from peak in either product. politics and the growth of the global economy has an enormous effect on supply and demand in the market. >> what does this mean? where are we at this the political debate now? >> there was a wild card obama might have thrown in this the state of the union but he didn't because he didn't want to touch it. he is leading the opposition mode. i don't see that. i do think that the willing orns congress to play foreign policy and swri seen this with additional sanctions against the russians. we have seen this with menendez and others talking about more sanctions against iran. the willingness to invite thenia huh to give a the same when obama wasn't even told. that has the potential to bring more geopolitics into the energy price. what is so interesting about the environment now is that geopolitics are more -- globally than we have seen in decades and

yet having no impact on oil whatsoever. i don't think have a major impact on oil production given what the supply is and the big driver in the near term. >> outside over the politics, i look at this supply reaction. have we underestimated u.s. shale and how flexible it actually is? >> probably. it is well estimated now. but u.s. shale, the remarkable thing about the u.s. economy is that it is so driven by individual enterprise choices. and we can't predict those. people invest in particular areas according to the returns. and they can raw investment just as quickly as they it in. some of the u.s. shale producers are quite highly leveraged. some of those bank loans may be

called in. it cowlingds vary. -- could vary. that is what saudi arabia is playing for. it is quite a high risk strategy. saudi arabia to achieve a larger market share, long-term into the future, needs to bring the oil prices down very far, very fast and then have a rebound with some people knocked out. but banks can cover that period if the leverage producers think they can hold on for 18 months or two years. they will stay there and then the saudis won't have so much money to spend on their politics, which does come into it. >> jeremy, just very quickly, one final question for you. we talked about the price in june. the geopolitical risk wasn't pushing price up anymore. if we got that wrong and most people missed the stunning collapse in the price of oil, what are we missing now? >> oil price prediction has been a game for decades. there is hardly anybody you

couldn't spot who got it right looking backwards. just the occasional pundit that you never listen to. there are so many factors . joio political sometimes plays a role. economics certainly does. you can't be sure what you're looking at. because people make individual choices that are linked up in a myriad of ways. what will have an effect, though is the return of demand to the global economy, particularly in asia. and in europe eventually. maybe even japan. that will make a difference. oil price will come back i think quite sharply at some point. >> i think the issue of asia being a beneficiary, a major beneficiary is great. the one point i would make strongly is that the single best piece of news on oil prices is that he fetes-time to continue his reform. that is the dog that hasn't

barked. no domestic political pushback. that helps a lot. boy, that is important. >> thank you so much to jeremy and of course ian bremmer of eurasia group. it is time for surveillance request tom keene in about 20 minutes. in my ear, they told me no bow tie. i have ian bremmer, his face is showing shock. >> it is the storm going on. the summary is that the storm is not as bad or serious it is a fears that we had a bit ago, but all said the storm will still be important. maybe a move from two feet down to one foot. from 12 inches down to six inch, but it is a new york city closed down this morning. >> talk the agenda for the markets, russia. i take it you were not surprise

bid the move in the past 24 hours, downgraded to junk? >> not at all. we talked about this. we have seen some stability on west texas intermediate. $45 a barrel. as you know, it is $68 ruble, this is extremely serious for vladimir putin prmplet it is. thank you very much. we'll catch up with you in about 30 minutes. coming up on "the pulse," fourth quarter rulls that mention weakness in north america. stay tuned with us for that. ♪

>> welcome back to "the pulse" live from london on bloomberg television. a look at what we're watching for the rest of the day. we're joined now by elliott gotkine. the big news out of the middle east the death of king abdullah. president obama paying respects later today. >> yes. president obama has cut short his visit to india canceling a trip to the taj mahal much to the chagrin of some indians. he will only be on the ground for about four hours. the delegation is 30 strong. not only president obama.

the first lady will be there. john mccain. nancy pelosi. john kerry will be among those there to pay their respects to the departed king, king abdullah and also to meet again with the second time with his successor, king salman. most people don't think policies will change. disgreetly get a look at his health. he is 79. he has had at least one stroke and lost some mobility in one of his arms. a meeting with president obama and the new king of saudi arabia. >> how important is this relationship? it is a new reign. should anyone be concerned about instability in the region now? >> no. as far as policies go, it is highly unlikely that king abdullah would anoint a successor with whom he disagreed

with on any big points. but they have had disagreements during the course of their 70-year alliance. next month it will be 70 years. they disagreed on things like the u.s. invasion of iraq in 2003. the u.s. stepping back from air strikes on syria. the saudis are often not to pleased the music rack loose in egypt. they do have many more shared agreement on. the saudis are fighting alongside the u.s. there they are concerned about iran's nuclear program. saudi is worried the u.s. may go too far in reachings agreements about uranium.

rebels took over the presidential palace. some say they are backed by iran as well. this is an extremely important alliance dealing with terrorism. oil as well. plenty to discuss. very important for the president of the united states and the new king of saudi arabia. >> elliott gotkine, thank you very much. coming up on "the pulse," we'll talk business. sales that trailed estimates. we'll talk to the c.e.o. about slowing orders in all places, not europe, not asia america. stay with "the pulse". that is coming up in the next hour. ♪

>> welcome back to "the pulse." ericsson's fourth quarter sales came in shy of analyst expectations. joining us now is their c.e.o. hans, thank you very much for joining us this morning. i think the standout point for theaverb read through your results sheet, the growth in north america, disappointing. what is going on? what is the story? >> i think this is very similar to what we saw in the third quarter and there is a lot of things happening in north america. it is a large market. our commerce there are doing a

lot of -- acquiring companies. we see a little bit of a slower spending at the moment. we saw that in the third quarter and the fourth quarter. the underlying market meaning innovation that the u.s. is leading, that has not changed. our position in north america is very strong. they are showing the global scale -- in 180 countries. >> they are compensating but when i look at pricing pressure where is the pricing pressure outside of north america? is it in europe? is that where you might struggle? >> no. i think europe, we had good growth in europe, grew at almost 7% in the fourth quarter for us. we're growing well there. i think it is a tough industry

where we continue to perform and actually improve in our profitability in all quarters. of course it is a tough industry. it is very important. broad band and the services. we're also doing a lot of solutions. very different from a competitive landscape. >> hans, the fx exposure, we saw a big decline in the kronor last year. were you able to take advantage of that? >> short term, we get sort of very little impact because we are hedging on a six-to eight month base is. that is now clearing up. we got now quite a lot on the top line. on the other hand, we had not realized losses on our

evaluations and currencies. especially between the u.s. dollar and the swedish kronor which is the only meaningful exposure we have. >> given the exchange rate at the moment and the direction things are moving are you going to readdress your hedging strategy? >> no, we have had the same hedging strategy for a long, long time. we are operating with different currencies. we will continue to do so. we're not changing the hedging strategy as we speak. >> hans, i want to talk a little bit about litigation with apple. what is the time frame for that? what are your thoughts on a court case with them? what's happening? >> i think that we are communicating from both companies. of course we have a disagreement on the royalties to be paid between our companies and remember now that we have the most -- in the world and we're basically in agreement with

anyone in the industry we could not gri with apple in this case. we'll let the third party evaluate where it should be. we'll let the process go on. i cannot have any opinions about it but we feel that we are really good -- portfolio, basically the best in the industry, two year, three year and four year. >> i want to talk about consolidation in the u.k. in the telecom sector. what a lot people have talked about in the last couple of months. i believe ericsson has a deal to service the network. >> if you globalize the question, i think first of all we see it happening. i don't think it is strange. we are at the inflection point in this industry where we go to data. they can do multimedia services. different industries. there are a lot of choices to be taken.

i think that of course short-term in general, the spending level usually comes down. we are the largest service crew in the industry. alarm, a smaller operator, larger carrier can address a larger portfolio. it is not strange that this is happening in an industry that is moving so fast. >> hans, how long can we expect this kind of performance in europe. revenue in europe up 17%. the reason people might be surprised, when you look at the global economy, you see north america outperforming. that is not the story for your company. >> i think europe has for us been very good for a couple of years. we have strengthened our position in europe with a stronger market share in 2011

and 2010 where we increased our footprint in europe. i think that is very important. carriers are building and transforming at the moment. that is very important. in north america, what i found at the report this morning is that in the near term, we believe that the operators will remain softer on the investment in the mere term but again, have i to stress it again in the long term we believe the u.s. market is still the most advanced. oin vegas is happening in north america. our position is very strong there. it is more about right now this is happening. >> a big, big thank you for joining us first on bloomberg. the c.e.o. of ericsson joining us live and first on bloomberg television. that is it for "the pulse". keep it right here on bloomberg television. "surveillance" is up next live from a very, very snowy new york

with tom keene and his team. of course you want to continue the conversation with me, you can follow me at twitter on ferro tv. good luck with the rest of your day. ♪

>> this is bloomberg "surveillance." >> boston will receive near two feet of snow. a historic blizzard from new jersey to maine. in new york, 6.3 inches of snow

in central park. the new york stock exchange will be open to trade. russia stocks decline. the ruble weekends. standards and poors delivers mr. putin a junk rating. live from new york, tuesday, january 20 second. joining me, olivia sterns and brendan greeley. our top headlines, at storm central. >> remember the storm of historic proportions? it's a little bit that outside but not that historic after all. the national weather service peeled back its forecast. at 22 feet in boston. travel at a standstill through the region. airlines have canceled more than 7000 flights. drivers