>> raining in greek. ecb wants agreed the banks to capitalize controls. a lower for longer. the u.s. federal reserve surprised with village in its to keep interest rates near zero. and the china challenge. sales growth near the low end of his target as it struggles in its second largest market. ♪ >> good morning. welcome to "the pulse." i am guy johnson. my colleague francine lacqua

will be that half past after the hour. the european central bank is not making it easier for greece as a new government prepares to extend the loan required. the ecb gave greece a small increase in emergency funds. there's report out of the ecb was to reduce capital controls. let's find out what we know and what we need to know. husband locals, he joins us from a berlin -- honda nichols, he joins us from berlin. they may be playing hardball. >> says what it looks like. these two stories could be related. the ecb could not force the greek central-bank to impose controls. that would have to come from greece. if they only have so much breathing room to the emergency equity assistance that could have the effect of forcing them in effect to impose capital controls. it is report at the frankfurt

newspaper, which is very well sourced in german circles. it's unclear if this view that german ship -- greek should impose as pan-european or just a german view and they want to help make it a reality. we are waiting this morning on the submission from greece to the eurozone group on what they actually want in terms of an extension of the bailout program , of the loan agreement. last night, and optimistic note from mr. yanoufikas. he said it would satisfy the greek side and the president of the greek group, the finance minister for the netherlands. one other note is that what we got out of athens yesterday was a formal expression and documents on what they plan to do. for the most part, contrary to the bailout program and they want to slow down privatization.

what the greek government is saying publicly is very much at odds with what germany and other financial groups here, other eu groups want is complete the program. i am still trying to square everything here. where positive comments out of varoufakis expressing optimism. we don't have much in the way of greece and they will abide and that could make for difficult negotiations. guy? >> do we know exactly what they are vying for? what we will be seeing them ask for? >> the latest is an e-mail received late wednesday night from a greek officials saying that they are applying for a loan extension, none the surly completion of the bailout program which puts them at it. i wouldn't knows if varoufakis is saying publicly that will be able to crack the language that appeals to both sides, maybe they that down. we will not know until look at the actual document which we

have reported a good 24 hours away. guy? >> hans thank you. i want to bring the headline. from the ecb. the governor council did not discuss greek capital controls. so hans, they didn't discuss it. but, there is a story going around that they would like it pretty i want to square this again. is it something a technical view at a stock level that it would be a good idea but yet to go into the more political arena of the governing council? i don't know. there are layers in the ecb. >> two ways. discussions at the staff level. number two the ecb wants it and has not been formalized in a governing council meeting which may you have a minority but you

have some members of the ecb that could be pushing. we don't know that to be true. what seems to me from the reports we have, it should be clear we don't have perfect information here is there is a minority view on ecb that the ecb should push for more capital controls if they haven't discussed at the governing council, it doesn't seem as strong as the initial report suggested. >> seemed wiser much indeed. let's go to act as a bring in our bureau chief. -- thank you. let's ago to our athens chief of bureau. the government is running out of money and the greek banks to a certain extent are running out of money as something may be needed sooner rather than later. can you give me a sense of how fast the process is and when the

crunch point comes? >> well, it will come sooner rather than later. the finance minister varoufakis released his speeches and his talking points and the last two eurogroup meetings yesterday. and there we see that he said the bank revenue is falling short of targeted by 2 billion euros. that is the first month of the year. and we have several of the report saying that agrees will run out of cash as soon as next week. they may be able to tap the reserves. retail banks, but that would be a short-term fix. the best case scenario is greece would run out of money sometime next month and will have to

default on some of its payments. a solution to his financing problem is found unless we have a deal with creditors. quest presumably -- -- >> presumably -- >> i was saying -- >> you go. >> ok, sorry. deposit withdrawals accelerating and we know that more than 20 billion euros have left greek banks since the political crisis erupted in late last year. greek banks are running out of cash and they are now almost totally reliant on the emergency liquidity assistance extended by the bank of greece, subject to the ecb of course. >> thank you very much indeed. our bureau chief in athens. some perspective on the greek

situation. let's go to berlin where we are joined by the president of greek association. good morning to you. what is your assessment of the situation in greece? what is your view of what needs to happen next? and you think a deal is possible? >> the first priority of the government needs to be to regain confidence. the true opponent of the greek government is not in berlin or brussels but really in greece. the biggest challenge is the capital flight from the banks. this means we have a couple of more weeks ball for the banks are bankrupt if they do not do liquidity and particularly from the central bank. it means bank of -- basically we cannot lend to the real economy and cad per recession in greece and also the greek government will not be able to pay. that's a scenario i see the more

likely at the moment. hence the greek government needs to seal a deal for extension of the existing program to buy it self time, no more, no less as signal clearly to the population that we were not have a debt cut. >> is a problem with all of that especially the latter point the greek people voted for the exact opposite. >> i think we need to look very closely at the program of the reason they have been saying a lot of the right things. we want to continue reforms especially proving the barack street and fighting -- bureaucracy and fighting corruption. they are saying a lot of the right things. the question, can they find the compromise and i think it's possible for both sides to save face and basically serve their domestic electorates for here and berlin for the german finance minister saying greece has a deed -- agreed.

in the greek government saying we have achieved the modification and we can spend on social purposes. i think a compromise is still possible. >> do you think that compromise if possible in the time we have though? that would be the critical thing that needs to happen. it needs to happen in a very quick order. probably two weeks to make it work. >> i think of the next to two weeks will be relatively easy. i think we can agree 20 extension of the program and this is a very big. the greek government said we will continue to the reform process and not have a debt cut. and they are saying, here you go, you have additional financial support that types you over.

the really tough step is what comes after? what is the precise reform they need to do in greece to get additional money? and what is the plan for the next two years? the greek government needs money for the next two years otherwise, it is a matter of time before the country is bankrupt. >> do you think you could fashion a deal more on structural reform rather than focusing on fiscal reform? do you think that is where the balance should shift towards? >> absolutely. the focus has to be on structural reform. it is also the willingness to compromise in europe on the fiscal spending side. i do not think the obsession with keeping 45%, there's a willingness to compromise. the difficult situation is with what we are currently, our growth projection is deteriorating, which means the

income of the greek government is declining. actually improve taxes or lower spending even more. actually, achieving fiscal sustainability over the last two or three months, has become more difficult for the greek government. >> if we can't find a deal, do you think is likely the greeks should impose capital controls? >> capital controls is really a last resort option you want to do. when you impose capital controls as a government, you send a clear signal to the population and that is, look your deposits are no longer safe. that has a huge confidence of fact. companies no longer investing in the country. you would see particular companies going abroad and not wanting to come in. you really have a negative impact on the sentiment in the country. and you really want to do it

only if you absolutely no option yet. but yes, if you don't have solution on till the end of next week, i think the next step will have to be capital controls. >> give us a sense of how long you think they would be required for. iceland still has capital controls years after the financial crisis. cyprus through his program able to loosen. do you have any idea any sense of what history would tell us for how long the capital controls would be needed for? >> it is very hard to say. it depends on the greeks government next step. if they follow cyprus to agree to a new program to help and clear reform the capital controls could be lifted quickly. if you have a situation like iceland or march worse like argentina, it can last for quite a while. even worse, the greek government would have to take money out of pension funds and other public

funds basically from the population to finance is spending. that would be the worst case scenario. it would really deteriorate or distort growth prospects for the next couple of years. >> the final question, marcel. there was a belief in a series of statements a couple of months of that, the german government believed that an exit of greece from the eurozone could be -- you have your air to the ground in berlin, in germany. what is the current thinking about whether or not that is achievable? an exit from greece could be? >> it yes, unfortunately, a lot of people think greece can be -- that is an absolute illusion. it is a dangerous game. remember 2008 that's what we said about lehman's brothers. we can deal with that.

that's not some systemic. we were entirely wrong. we should be very careful and we do not know how financial markets will react. my sense is when could -- to other countries but we have italy with huge problems. no growth for the last 10 years. very high public debt. what happens if interest rates rise? even on a moderate scale from those countries, you see interest rates rise and growth prospects deteriorated. and then having it spill over across of the countries. i would be very, very careful to underestimate the risk of contagion of a spillover of the greek situation to the rest of europe. it may not be as bad as 2010 and 2012, but i see it as a real economic and political risk for europe.

>> a great pleasure speaking with you. thank you. the president of the german institute for research, marcel fratzscher, speaking to us from berlin. it looks like it is on the table. a long extension requests. bring us to our twitter question of the day. should the ecb force capital controls an interesting starting point. should that happen? is that the best thing? slow the process down and allow political debate to happen or just be really the end of the road or the beginning of the end. tell us what you think @ guyjohnsontv. we will take a break. we are back in a couple of minutes. ♪

>> welcome back. nestle posted numbers today. let's find out the results. caroline hyde is here. they make a lot of stuff in switzerland. they did talk about the rmb effect. >> half of their research and development is done and they said that's where the impact is. when you look at the 20 numbers,

the currency shift -- 2014 numbers, the currency shift. they didn't say how much. they said the swiss national bank decision has made a life more uncertain. and if they are thinking twice about expanding. there were looking at acquisitions. about their swiss operations, they think twice about the cost that will be driven higher. they said it will not affect job cuts. it won't hurt to jobs. luckily, much of their debt is an dollars a euros. they said they have been dealing with this for years in fact. overall, bringing them back dollars and having to convert to swiss francs for reporting purposes underlying business not as good as expected. >> the underlying business. china is a problem. united states pizza and other

frozen products. what are we looking at? >> more optimism for 2015. they admitted 2014 was not at their best year and their slowest in five years. it was below their long-term which was 5%. china is where they were hurt. they say changing demand of their and they had to respond to fewer expectations of consumers. they are focusing on innovation and a new formulation, relaunches. they said over the next couple of months looks pretty good in china. china is where it hurts and it's been smart. -- -- biggest market. if you are looking elsewhere, brazil, emerging markets, you've got to live with a slower brazil. u.k. germany, rick -- weak point in your. in europe. when you look at america, you bring up frozen food young -- in unit.

actually, america has outperformed in terms of sales up 5%. net cafe not doing it well. relative to the rest of the market, they say look relatively good growth. they are sound optimistic. u.s. frozen goods, we have products being launched and will be back in the portfolio. optimism for 2015 and maybe no real concern. >> a little of the get go this margaret thank you in deed. -- a little of it. thank you in deed. we will have the ceo. we will get it all. he is coming up right here on "the pulse." ♪

>> welcome back. greece has submitted is loan request to the eurogroup. let's bring in jonathan ferro. a conversation surrounding capital controls and we have the long and an extension. -- loan and an extension. nobody quite understand the details. was speaking anonymously. i guess we have to wait and see. >> what we know is that they have a went in for a loan extension? what does it no question mark we do not know. that's will be the debate. this effectively guess of them around a table. you put to the loan extension

and maybe they call the eurogroup and how the finance ministers and try to hash out. >> possibly around yesterday. >> you can agree to this or do you actually have to get the guys back around the table? if you get them, is there a greater risk? a greater risk it doesn't work? >> i am wondering how much has changed in the last week. the less finance ministers meeting and this extension request, how much has changed? maybe not that much. they still have to compromise. >> the greek banks are running out of money. maybe they -- at the lower level. >> and reports talking about capital controls anywhere. a lot of interest. do not talk about capital controls. >> like about fight club. it brings us to the twitter question --

is it the smart thing to do or capital disaster? let us know what you think. we will be talking to air france when we get back. ♪

>> welcome back to "the pulse.” i am francine lacqua. >> i am guy johnson. group profit fell last year. that followed the longest strike in the history. let's go to our reporter. what did he have to say? >> last year of course course was a very difficult year for air france. the worst in the airline's history.

but of course, in the long term not the only challenge air france has to face. they have strong pressure and competition from low-cost carriers. i asked the cfo where they'll lower fuel prices -- if the lower fuel prices could help recover this year. >> they would help but we believe today, there's a chance that much of it, not all of it could go away. change in the u.s. dollar a euro and -- which is taking go away part of today. but also pressure which is linked to the equity in the market in and out of your. in some parts of the world, namely africa, asia, south america, compared to the demand in europe is too sluggish.

this is basically an online with what we see, which are increasing. >> overcapacity, a strong price pressure a negative impact from the dollar/euro exchange rate will continue to weigh in the balance for air france this year. this year, they are saying will be very tough. in a statement that said weft to be very, very cautious all about the 2015. so cautious, they didn't want to give a profit target for this year. last time they did and they had three profit warnings. this year, they said they do not want to give a point to shareholders in have a surprise target for this year. >> are more job cuts needed? >> well, of course, air france

has already cut many jobs and been a lot of cost-cutting of plants in the past few years. they cut to more than 5000 jobs since the end of 2011. the cfo told me more job cuts cannot be ruled out. >> cuts in the past, thousands of jobs in air france. will announced there would be 800 more -- we have announced there would be 800 more to go by the end of this year. this on top of the 1300 that i expect after the end of march, next of march. indeed, that is big enough. we need to sit down with unions and send it down to look at each and every this is an see what type of adjustments we need to look at and the impact. [indiscernible] we should not leave any stone

unturned. >> more job cuts cannot be ruled out. this year, pierre-francois riolacci and there will be more tightening from the 90,000 plus of the group which is europe's third-largest biggest airline group. you have to be really careful of the job cuts. that is when he said social conflict and the whole reason behind the strike last year where the fact that some of these cost-cutting measures were transforming some pilots to low-cost carriers, where of course they have lower salaries. back to you. caroline on air france. >> let's move on. the bloomberg top headlines. greece has asked for ace it's a month request as the central-bank granted banks a

small increase in emergency liquidity assistance. the indebted nations of 20 billion euro program expired from the end of february. tsipras set it is crucial. we have confirmation of the request has gone in. this is the [indiscernible] head of the eurogroup and we have received the greek request for a six-month extension. what did the extension encompasses, few details -- it would be useful. >> a let's watch his twitter page. the biggest food company nestle has reported is lowest growth for five years. the second largest market is china and inflationary pressures in europe having an impact. in switzerland they said last

month's decision to go to the euro will create further uncertainty. >> poroshenko has open diplomacy to the united nations peacekeepers to enforce the cease-fire. the ukrainian government troops withdrew from the rail hub following what are the largest battles and the 10 month-long conflict. portugal accuse pro-russian rebels of not going to the agreed to truce. >> from the first minute, russian backed rebels and military forces did not keep to the cease-fire. the biggest concentration of shelling was in sector c in a battlefield. >> for more on the situation in eastern ukraine, let's go to moscow where we are joined by tony. what's the latest? it seems that they have lost

control of a key town. >> good morning. the ukrainian military said their troops have withdrawn and forming a new line of confrontation outside of the town. they said their forces have come out of schelling near the port city -- shelling near the port city. it seems somewhat fragile. the rebels have said they are not interested in the united nations peacekeepers being deployed in the areas. but they did say that were interested in considering a long the cease-fire line with ukrainian forces. >> we've talked a little bit about the possibility of peacekeepers in place. isn't that the only way that the agreement ends up standing up? is that we need to see happen?

>> both sides agreed to a cease-fire effective february 15. they already have monitors on the ground to see how well the truth is being upheld. yesterday, for instance, they pinned the blame on the rebels refusing to hold firing while saying the ukrainian forces were ready to do so. i'm not sure it's clear the u.n. peacekeepers would make a substantial difference of the monitoring. it really relies on the signature is to the agreement on both sides. to live up to what they have agreed to. >> in yeah, tony, what are the implications for putin here? >> well, germany called the massive violation of the agreement of the european union and said they want to see the cease-fire and forced very quickly. it much depends on president

putin and is scheduled to have a phone conversation with a germany's angela merkel and first wall along and petro poroshenko later today -- francois hollande and petro poroshenko later today. they are concerned for it is unclear if it fails. i think everybody is going to be waiting on what ever president putin says it will hear more after the conversation tonight. >> thank you for all of that. >> coming up, will be joined by an entrepreneur and ask him about his london mayoral ambitions. we would do that after a break. a quick look at the financial markets. we are watching greece a very carefully at -- the actin markets is trading higher of the back of the submission of the request but of the stoxx 600 is down by 0.2%. everybody is watching what happens in greece.

we are waiting for the ecb minutes from the last meeting and that will be interesting as well. the actin submarket. ♪

>> as the european commission looks to revamp capital markets and start investment and reduce red tape and 28 a member countries, jonathan hill, he

talked to our international correspondent about why the city of london has nothing to hear from europe. break it down for us. >> i think it is nothing to fear, nothing to hear, he wants to hear from euro. they want to really increase the way you can have more landing outside of the banks. they will standardized abs and some of the things that got us into the very financial crisis that europe is trying to did out of. when i asked commissioner hill what the city had to say, here was his answer. >> i hope london will commit the cuts i think the city of london, generally speaking, is a place in favor of single market and it knows it has a great repository of expertise of the air. i would hope it would welcome it. but i come back to my core point

about the capital markets union of what you might call a single market for capital. it is a project for all 28 member states. i am more concerned about what we can deliver him from all 28 member states than what it might deliver for any one individual member states. >> francine, when you look at the issue, it is about one fourth of what it was before the crisis. the u.s. is about one half. it has both gone up in some places. when i asked him whether the u.s. would be a good example he said a decent example, but not a perfect example. >> what i am not seeking to do is make a clone capital markets a system in the eu. i think though, i believe in loaning from assistance and i think when we were talking today about some of the examples from

the u.s. and certain markets, capital private, capital markets generally are much bigger. and also worth mentioning that chinese capital markets have not proportionally overtaken the eu. looking outside and a looking at these challenges and reflecting on them and thinking ok, are there some things we can learn and some things that will give us a new impetus to look at this again within europe. i am in favor. >> francine we are at the beginning of the debate. can you relax securitization without inviting all of the toxic sludge that led to the financial crisis? it is the beginning of the process and not the end and it will be interesting. >> hans nichols. some distance days away from the u.k. general election. one man has his sights set on a

vote in 2016. >> he is looking at a bid to replace boris johnson at mayor of paris. we are joined by october nor gay rights activist -- october nor, gay rights as the -- entrepreneur, gay rights activist, ivan massow. >> a good morning. a long list. >> let's start with 2016. you're expected to be on the ballot. >> yes. and at the moment, i am the candidate to become the candidate. in line of people vying to become their candidate to replace a boris. that in itself is a job and a half especially as we expect it to be an open primary, which is great and allows london anybody to vote on who his candidate can be. you can log on. [laughter] but if there is another general

election and there could be two general elections it could really -- to speak. >> do that -- do you expect that to happen? we could end up with a minority government? >> that is what "the sun" was predicting. i am more bullish. when you look at the figures, especially this morning, there is nothing else that could go right in the last term. low inflation, incredibly low employment low deficit for it is looking amazing. i cannot imagine what more he could've done over the past five years. i'm pretty sure it will -- people will think it is safer to go conservative. it is quite a nail biting until then. you could pose every day. get a miliband s&p coalition and

what would happen then? >> so many things. [laughter] >> are you quite a nervous? i'm european a used to coalitions. maybe not for very long. are you nervous about the selection? there are so many unknowns and you may have we're coalitions cropping up. >> i really liked our last coalition, i really enjoyed it. i thought it was important to have two major parties to make cutbacks for having a conservative party alone and throwing rocks at them from across the ravine a lot more difficult to make changes that are necessary. my source within tell me they have not gotten appetite for coalition. the party needs to win or the chance that something drastically different. i for one, would be nervous to have that s&p -- smp forming a

u.k. government. seems to hate england so much. seems to be so angry with us. one of the reasons i want to get involved. and piggyback on -- they english and the scottish debate started. london is quite hurtful and quite tricky for a time. it's field to acknowledge that the london gets so much less than if you live in scotland. and we don't enjoy things like free to wish and or free prescriptions -- tuition or free prescriptions or the weather. and have incredibly expensive brands. they travel on an average of 20 minutes longer each day. they have enormously expensive

transport costs. it was not painted by this debate and a beautiful existence. >> westminster, london should have full political powers and great responsibility for tax generated. >> putting a really good business case. and sometimes one of the things we have been looking at is whether -- should be swapped out. and of course, the danger of doing any business of doing this is the risk that properties stop selling. you will be left with a depreciating revenue stream, no guarantee. and second, some sort of options to go backwards. if you could, if we could run, it might encourage councils to

build more and see the value in granting and getting of the case about it. at the moment, no financial incentive. as long as you can put a business case together, not recklessly -- a government asking for more for the sake of more. not that we wanted this book as we want expert >> the perception that london has everything? four westminster, they want to have a country that gives each other, right? >> the idea about keeping your money and the idea, to make morning -- more money, london is already a huge exporter to the rest of the country. it would be nice if we may certain excesses to spend on ourselves. for instance, to travel in central london or london at all is three times more expensive and traveling in new york.

three times. there are areas which you can start to eat away at. if you are able to get the funds. and other great things you could do in london. let's say you couldn't address the issue of housing which is the thing that comes up all of the time. i ask people what is your big idea? every week we send out a newsletter to support. every time comes back housing. [laughter] that is all they want to talk about. and addressing that, probably too much for this program. what's coming back to me, if people had a better if they felt that they owned the london. in barcelona, they have a night where the galleries comes they open to 11 -- 11:00 or 12:00 the galleries belong to the people work.

we close facilities for tourists and we sort a gain ownership. something just a little bit more cultural. little things we could do if we had the money to change the quality of our existence in london. and there are ways of raising bunny that doesn't require taking more money from the treasury. you could have a tax on hotel rooms like in barcelona, paris, and berlin. little things day-to-day. i think i could race almost half a billion pounds a year. >> all right. you -- if you don't believe me. [laughter] >> i'm sure i've been to one of the late-night >> a couple of them. >> absolutely.

>> a bit more special. ivan massow, prospective london mayoral candidate. >> were back in a couple of minutes. ♪

>> for those listening on road -- radio, first word is coming up. >> will be talking to a ceo later and will talk about the swiss franc. you cafe, a little higher but

the big challenges lay ahead. how his company is going to fix it them. you can find us on twitter. we will see you after the break. ♪

>> request received. >> lower for longer. the u.s. federal reserve surprised investors with keeping interest rates near zero. >> nestlé struggles and its second-largest market. >> good morning and a warm welcome to those just waking up in the united states. >> this is "the pulse." >> greek banks are feeling the

squeeze. this as the ecb did little to ease the pressure that the cash crunch is exerting. let's go to hans nichols in berlin. the request is in. what is the request? >> it is a request for the loan agreement or the bailout program. it is the master financial assistance facility agreement. that could be an indication that greece has blinked a little bit. the question is what are the terms? what are the conditions? among the requests, they say that they will parallel commit

to fully implementing reforms on limiting tax evasion in greek cartels. the couple of things were talked about last night. slowing down privatization and slowing down the reforms of the labor market. those are two requirements that seemed that they are going to be required by the germans, the dutch, the eurogroup. until we have a little bit more clarity on privatization to complete those things, that is what they need to do in the program. it seems to me it will be unlikely they will get an extension if they say they will reform taxes, but not privatization or the labor market. >> let's go to the former bank of argentina governor for more on this.

thank you so much for joining us, mario. you are one of the authorities on central banks and what would happen if greek were to exit. there is noise about capital controls, emergency funding from the ecb. how do you see at all panning out at the end of the day? >> at the end of the day, we will find a solution. is it a solution that will satisfy all the parties? i think the main thing to keep in mind is that the solution of leaving the euro is very messy. if we get to that point i think it will create trouble for greece and the rest of the system.

we have to do everything possible to avoid that. >> is the root of capital controls a prelude to the exit or is it a way of managing the story? >> the intention would be to manage the transition, but i think the effect would be probably a prelude to a night's it from the euro -- an exit from the euro. it makes it quite difficult to manage. it is of a problem that has not been solved. >> how do you see this? we just found out that greece has submitted a loan proposal extension. on the 26th of february, we find out how much money has left the country. if this amount is horrific, does

this mean that it is game over? >> idle think so. it depends on what the attitude of the rest of europe is. the issue here is that the currency, the value of the euro is not correct. in the longer run, they would have to find other solutions because in the longer run it would be very difficult to manage. during the transition, they have to do everything possible. all of the problems of greece's around this point in time, less than 50 billion euros at this time. how much is the problem quantitative easing?

the european central bank is going to buy government bonds for more than one trillion euros. the problem of greece's 4% of that, maybe. i think it would be possible to find a solution because the problem the greek government is raising has not worked. it is a problem that has not worked. when you have 25% unemployment, this is not a solution. >> i was talking to somebody from the diw institutes earlier this morning. he was saying to me that there is this belief in berlin that greece can be ring fenced. he said he disagreed with that. is he right?

could the exit be ring fenced? >> i disagree with the idea that it could be ring fenced. the example that a country can leave a currency union may actually spread. the fact that the currency union is not more than a rate that you can abandon at a given point. there is a possibility in the middle. something like the greek government issuing temporarily some kind of local currency. [indiscernible] [indiscernible] not every province was issuing his own currency.

with greece, it may actually help to some extent. this is a possible solution. leaving it will basically devalue the concept of the currency union. >> we are getting some headlines that the eurogroup will wait until friday to debate this. you are saying that the need to make sure that greece stays in because it would be very difficult to contain. if you look at the consequences at the same time, this union is going nowhere and no one is even talking about it. whenever going to have a solution which makes the eurozone strong for the future? >> the problem for the eurozone is that you have a monetary union without a fiscal union.

that has been said many times but it is the truth. you do not have a system that is consistent internally. let's put it this way. the euro is a political project, it is not an economic project. as an economic project, it is not a very good project. it is a political project. care is not being taken politically. that is the inconsistency. allowing greece to leave will be some sort of end of the euro as we know it. >> can i put another layer on this? the qe program you mentioned earlier on. i want to reference it back to the ring fencing. do you think that qe1 make it easier to manage the process -- qe will make it easier to manage the process? >> yes, it will make it much

easier. but it will not solve the problem. there is a lot of liquidity, the cost of capital is low. >> a greek exit would become more manageable because qe is in place. >> yes. [indiscernible] the ecb can buy these bonds and control the interest of the yields. it would be less visible, but the crisis would still be there. capital outflows [indiscernible] other countries may start looking at the possibility of doing something to make rates more appropriate. it will be much easier to manage. >> mario, could greece default

and stay in the eurozone? we look at argentina and this is a country that defaults and then investors go back in after eight years. >> greece has defaulted and stayed in the eurozone. there is no fiscal union, there is no mechanism to prevent the default. the difference at this time is that most of the greek debt is not with the private sector. that should have been easier to handle and not more difficult. in fact, it should be easier to handle if we recognize the fact that this is a political project

and there are political factors and geopolitical factors that have to be taken into consideration which are not being taken into consideration. >> what are the odds? is it one in three that greece leaves? >> that depends on with who miami adding. -- whom i am betting. >>[laughter] >>1 in 3. >> that is quite high. >> that brings us to our twitter question of the day. should the ecb force capital control on greece? let us know. >> we also just got breaking news the eurogroup president says that the eurogroup will meet tomorrow, friday, in

brussels to discuss the greek proposal. they will meet as of three clock p.m. tomorrow. >> we will speak to the nestlé ceo, paul bulcke. we will see you in a couple of minutes. ♪

>> welcome to "the pulse." >> is the european commission

looks to revamp capital markets and reduce red tape the city of london has nothing to fear. >> i hope that the city of london will welcome it because i think the city of london is a place that is in favor of simple market projects and open markets. it knows that it has a great repository of great expertise. i would hope it would welcome it. i come back to my core point about the capital markets union. this is a project for all 28 member states and i am more concerned about what we can deliver for all 28 member states than i am about what it might deliver for any one individual member state. >> let's get you some top

stories. u.s. beverage can maker ball corp. has acquired rexam. >> a market study on investment banking and corporate banking services to see if the sector is working properly according to the fca. >> the u.s. plans to auction off 50,000 bitcoins that received -- were seized after the closure of the silk road marketplace. bitcoin is down from $369 on december 4 when the last auction was held. >> let's get back and talk with the former bank of argentina governor mario blejer.

the fed last tonight sounded a lot more dovish than people weren't as the painting it would. it does seem that there seems to be many members of the fomc who are concerned about the implications of an early rate rise and what that would mean for what appears to be a fairly robust recovery. what are your thoughts and when we will see the first hike from the fed? >> i don't think it will be this year. i think the fed is looking in detail at the labor market. the data from the labor market is not so bullish as the data and the general economy. a very high proportion of the new jobs that were created with the recovery are in the oil-producing states. that is an indicator that the

labor market has not recovered completely. i don't think that the fed will want to do anything that will make the recovery of the labor market more difficult. that is one indication. the issue has to do with the strengthening of the dollar which is very marked at this moment. increasing the interest rate may create capital inflows and affect the dollar even more. on current information we are not going to see increasing interest rates very quick. >> is this more to do with the fed saying, we are not ready or this currency wars? is this the u.s. entering the

currency wars to make sure the dollar does not pop too much? >> the fed has been notorious for ignoring the politics of the rest of the world, that is quite clear. you also affect the american economy. this is the issue. the strengthening of the dollar. it is a consideration, but it is not the main consideration. >> what about the u.k.? when do you think the bank of england will raise rates? wendy you think they will decide? -- when do you think they will decide? the bank of england has indicated that it sees the base effect that cpi will spike sharply. >> it is very difficult to know.

i would say that they will likely raise before the fed. i think this is probably a safe statement. i don't know when exactly this would be. increasing interest rates at this moment may strengthen the pound may make effects that are not desirable. i don't see any reason but i think it will be before. >> if you are still on the mpc for the bank of england today, would you still be nervous? you have the fed saying, we are passing for the moment. to be the first central bank in the world raising rates, is that not enough to shy away from it? >> yes. [laughter] you have to have a very good

reason. if anything goes wrong, you can definitely be to blame. remember what happened in the ecb actually. there is a reason to be nervous. >> a very quick question on argentina. we are seeing headlines about bribery involving the president, allegations of one of the main prosecutors finding his death by being killed. what does it mean for an investor? >> there has been increasing uncertainty. the situation you described -- [indiscernible] trying to call attention to the

fact that there is a problem and the problem is for everybody. this uncertainty is creating a situation that is limiting the amount of investment even further. investment is a big problem and argentina. the big problem in argentina is the lack of investment it is not inflation or reserves. there is no investment domestic no investment public, no investment private, no foreign investment. this is not helping in that sense. i do think it will have a direct impact on the economy, but it is hindering the expectations. i hope that when the environment gets a little more clear that it will recover because a lot of projects and argentina are very profitable. returns are very high.

you need to recover from uncertainty. >> thank you so much for joining us today. the former bank of argentina governor. >> we are to take a break. when we come back some we will you know what is happening we will continue the conversation and we will talk to nestlé. ♪

>> welcome back. we are looking at breaking news.

bloomberg obtained the draft document greece has presented an greece wants to reintroduce collateral waivers. >> we are going to take a break. see you in a moment. ♪

' mitted a request for a loan extension. the indebted nation's bailout program expires at the end of february. the prime minister said this week is crucial. >> we are at a critical and

sensitive point in negotiations. we are submitting proposals and we hope we will turn this corner which will give us the possibility of moving forward. >> staying on greece greece has just asked the ecb to reintroduce the collateral waiver that got taken away a couple of weeks ago. >> that is the latest breaking news. the world's biggest food company nestlé has reported that slowest annual sales growth in five years. sales were hit in china and by deflationary pressures in europe . >> u grades president has urged the deployment of united nations peacekeepers to the east of the country to enforce the cease-fire that was agreed last week. ukrainian government troops withdrew from the strategic rail house following one of the

largest battles in the 10 month conflict. >> from the first minute russian backed rebels and russian military forces did not keep to the cease-fire the biggest concentration of shelling was in sector c. >> to the markets. two jonathan ferro. >> thank you very much jonathan -- guy johnson. here in the eurozone, we are pretty much dead flat, but not boring. greece has applied for a six-month loan extension. the key point is that they will get back around the table and negotiate. something that is politically palatable for the domestic audience for everyone. the athens stock exchanges a

little bit firmer. elsewhere, i will take you to the bond market. greek bonds are performing ok. it is to spain i want to take you. spain has a record low yield. you see the spanish yields moving lower. it is really the moves in greece, they have been quite isolated they have not spilled over to the likes of spain and italy the way they did in 2012. because the market moves have been contained, they lost a little bit of leverage. greece is not the monster it once was to the rest of the eurozone. that means the rest of the euro has a little bit of leverage when they get around the table tomorrow. i take you to crude. it dropped below $50 per barrel yesterday. we are down 3.62% today. is that going to spell out into the ftse.

greece is one theme, the bond market is another, and a big move in the commodity market. >> jonathan ferro with the latest on the markets. the world's biggest food company, nestlé, reported numbers earlier today and a key twist exporter has -- how is the company dealing with the swiss franc? >> caroline hyde is here. >> this is a company based in switzerland that is 98% exporting its goods. it produces a lot of its goods outside of switzerland. where it could be hit by the swiss franc is research and development. about half of all research and development for nestlé is done within switzerland and they say that will be impacted. overall, they are saying it does add another dose of uncertainty into 2015. currency shifts knocked earnings

per share by the tune of 6%. they say they have been dealing with this for years. it does add a few uncertain breaths of air coming over there to their direction. they said we will think twice before we expand our operations. >> aside from the foreign currency impact, how has the company actually performed? >> if you look at the underlying business if you strip out the effects of the foreign currency this is a company that is actually doing pretty well despite the concerns of deflation in europe. they managed to do better than many expected in europe are many expected in america. we are seeing sales rise more than expected.

they are up about 5% in the americas. there is also europe, up 1.5%. they are saying that is better than many competitors. u.k., germany a bit of a concern. russia and ukraine helping despite the economy. the area of concern for nestlé is it second-biggest region, china. china is where they have had to invest. the consumer expectation is changing, they are having to revamp, relaunch, adapt portfolios. they are saying that in the coming months, things are looking more buoyant, there is improved momentum in china. 2015 could be better than 2014. >> thank you very much indeed. let's go from the food manufacturer to a food retailer. we have breaking news coming out of co-op. the troubled co-op group in the united kingdom. it has named a new chairman.

>> alal en leighton is the former nonexecutive chairman of the royal mail. he is the former chairman of pandora jewelry. >> he was the man that was charged with a turnaround previously and he delivered it successfully. he has executed that role in a number of businesses subsequently. this group needed his help at the moment. >> except co-op is not only restructuring, it is also getting trust back. >> a had a massive crisis with the banking. that really undermined the credibility of the whole business. >> our next guest rose to prominence when she rose to the

managing director and she has established herself as one of europe's talk tech leaders -- top tech leaders. >> let's talk to her now. good morning. >> good morning. >> technology. let's get a big picture of what is happening in the technology landscape at the moment. we are seeing huge valuations being applied to relatively small businesses with huge growth rates. we have stock markets back at where they were in the year 2000. the year 2000 was an interesting time for the technology industry. are we there again? >> what happened in 2000 was the dot come and then you had the dot bankruptcy and then you had the dot come back.

the turnaround is not only tech startups, but it is restarts of the industry. this is why the internet of things that is why it is booming. i have to congratulate london on this. you are well in pole position. >> we speak to a lot of tech entrepreneurs who are on the scene one of the things that we ask on we look at valuations for snapchat, 19 billion, is this a fear of missing out? we understand we are changing the way our lives are being construed but is there a chance that investors get too hyped up about these things? >> i think this is probably the biggest lesson from the beginning of the 2000s. it was all about using the most

money with no really business identity. as long as you had a company that had design, we with her money to you. how i interpret investors now is that they are much more conservative. they're also more trained in evaluating technology. this was the beginning where the internet was new. now we have 10 more years. it is all part of a balance. >> you mentioned london and berlin. what is it like being in the technology seen in norway? >> norway is in a very interesting position to follow. we have been in position with oil and gas. we have the highest gdp in the world but if you take away the oil, not so much. if you look at the gdp of norway in 1971 before oil we were at the same level of greece. the ceo of the norwegian bank said in his speech that we are

going to go from a pole position to a big transformation in our economy. for the booming tech entrepreneurs, this is a great opportunity. since you are in urban london -- we have 5.2 million people in the whole of norway. we need to be very specific about where we should compete. we have very high tech entered -- engineers. ed tech is an area you should watch coming from norway. we have 50 million users now and technology from education. you should watch out when it comes to clean energy, biotech. big industrial changes that we need to pick up in norway. where do we want to go? norway is not the hottest scene for basic app developers. >> how long will this transformation take? you now have very young, very bright engineers trained.

we were thinking they would go to work for the oil industry and that may not happen. is it a transition over three or four years? does it take longer? do you have such a flexible working model that in the next six months you could start getting significant startups? >> we have already defined 26 new technologies that existing technologies from oil and gas can enter into. when we went into oil and gas in the beginning of the 1970's, that was based on the technology component we had in the maritime industry. we have a big history of transforming ourselves and transforming our knowledge because since we are not that many people, we are all very highly educated and we are a test base for different companies who want to test mobile technology. every norwegian has at least 1 2 or three devices each. it is a very good test set.

the question is, how do we transform our economy? how do we replace 70% of our export income into new industries? who are the new industries going to be? those are the victim's that will be developing in norway and the next 5-10 years. >> think you so much for joining us. the ceo of innovation norway. >> a slowdown in sales at the world's biggest food company. we are about to speak to nestlé's ceo paul bulcke. he will join us after the break. ♪

>> welcome back to "the pulse." >> nestlé missed its own target. china was a particular challenge. it said it expects good momentum in the country over the next few months. joining us is the ceo, paul bulcke. paul thank you very much indeed for your time this morning. can i start off talking a little bit about what has been happening with the swiss franc? you manufacturer around the world and have a natural hedge as a result of that, but research and development is heavily centered in switzerland. are you expecting to move some of that out of switzerland? >> that would not be my first reaction on this.

the swiss franc has been strengthening over the last 5-6 years. it is true that two thirds of our research and development is here in switzerland. we have increased productivity. we are also exporting out of our factories in switzerland. a strong swiss franc is something we are looking at to really try to minimize the impact the latest impact, a few weeks ago. >> to put this into context, you are saying that the swiss franc has moved higher but this was a big move quickly. does this put in jeopardy your buyback program? >> i would not link one with the other. we really want to get it done at the end of the year this year.

it is a framing of great consideration. we have been building new research and development centers around the world so that we could have a geographic presence close to the consumers but also gives a spreading out to not have too much concentration in one country. >> you talked about the productivity gains you have made. it was a very big move. did you have any sort of instant reaction that we put all investment into switzerland on hold at this stage? is there a moratorium on capital spending in switzerland at the moment? is there a meeting of the minds to spend more money elsewhere? how does it work? >> we would not go to these

extremes. we don't do that. the fact is that the stronger swiss franc over the years has created these conditions to a country. there are some other things that are creating and reducing the attractiveness of the country. we have immigration laws that directly impact the possibility of bringing in scientists from all parts of the world. two thirds of our scientists here are foreigners. we have our headquarters here andbut we need people from all over the world. switzerland needs to think these things through. it is not only the swiss franc. >> the swiss franc is a big part of that, though. does it make you richer?

do you have a bigger purchasing power? you are looking at acquisitions you mentioned. do you feel that because of the swiss franc moved you could go for something a little bit bigger than what you were thinking 8-9 months ago? >> no, i would not say that. for the same reason. if i go something that i buy in dollars i have to pay a price like this, too. i think this is not linked with one another. >> ok. let's talk a little bit about china. you are obviously trying to reengineer china, trying to make it work you little bit better. can you give us a sense of how long it is going to take to put china back in a place where you would be happy with it? can you give us a sense of the timeline for how you see that region coming back? >> we are launching and

relaunching things as we speak. that has to start rolling in and create some momentum. i really want to see it coming back and gaining momentum during this year to relink back to the consumer. during this year, i want to see momentum and growth coming back. we have certain brands that have lost a little bit of link. the brand synergy this links to the consumer is where we have more challenges. the consumer has moved and is working with traditional arguments or traditional brands. the move to e-commerce is dramatic in china. we are engaged there. are we engaged good enough? [indiscernible]

have a gun at the same pace? -- have we gone at the same pace? this is the repositioning we have done in the last year, year and a half. >> you were mentioning e-commerce in china. the way you engage with the chinese consumers is very different from consumers elsewhere, what are your key challenges for china in 2015? i know you say the long-term prospects for china remain positive. but is there something that you need to focus on in the next 12 months? price? engagement? what would it be? >> i would say definitely engagement, understanding the new expectations of the consumer. this e-commerce and the drivers of e-commerce and how we can link up our product portfolios with the e-commerce. e-commerce is driving different portfolios that you would not expect in the traditional

retail. the brand architecture has to work in these other things. that is why we have redesigned our e-commerce teams to understand social media, we have also redefined our retail sales organizations. all of that has been rolled out recently and the focus is to make it work. >> a quick question on the united states. frozen food in america, let's talk about that. you have taken an impairment on your business there. is that business back on the road to recovery? >> oh, i hope so. we have been working for that. we have to drive the category. there are quite a few similar

things that happened in china. expend haitians -- expectations went from fresh and natural, new offerings -- lean has grown to help. we have brands we are narrowing focus on only part of that equation. all of that has been revisited revamped. we have quite a few new products that are answering these new expectations. this is being rolled out as we speak, too. this has to be in momentum. we see consumer confidence in north america picking up a little bit. >> paul bulcke, i need to ask you. nutella there is a lot of speculation that it may be sold.

is it something that you are looking at? it is a great brand. >> i'm not going to comment on that. the family is also passing a difficult moment and i respect that. >> in terms of valuation, i know it is a difficult time and it is somewhat premature to talk about it but have you ever looked at it in terms of valuation would you be concerned? if you look at valuations of food companies around the world that something like that would be overvalued because it is a recognizable brand? >> i understand, but allow me not to answer that. >> i respect that. we will have to get you in the studio so we can have a conversation. >> lovely to speak with you. thank you very much, indeed. >> my pleasure. >> the ceo of nestlé joining us. >> this is what we are watching

for the rest of the day. greece is a big topic of the day. this has been our twitter question of the day. should the ecb force capital controls on greece? it seems that greece has submitted a proposal and they are asking for a little bit more support from the ecb. >> what they are asking for is for the waiver to be reinstated which would allow the junk bonds to be used as collateral for loans. that was withdrawn at the beginning of february, but a reinstatement would significantly alleviate the situation in the financials. >> what happens at 1:30 p.m. frankfurt time? we get minutes from the european central the first time ever. given that this is 18 different countries, it is going to be pretty explosive, i imagine. >> you are not going to know who said what but spotting what mr. biden said is going to be the game today.

>> for my two cents, it is not going to be that difficult. even right here on bloomberg tv. >> "surveillance" is up next with tom keene and the team. we will see you tomorrow. ♪ . .

>> this is "bloomberg surveillance." tom: the cease-fire fails. kiev asks for peacekeeping. greece files for a bailout

extension of the european central bank makes an ecb correction. draghi did not discuss capital controls that everyone else is discussing. and lucky charms have lost their charm. americans are eating less serial. once more, past the cocoa puffs. brendan: as you know, i may lucky charms land. tom: good morning, everyone. this is "bloomberg surveillance." it is thursday come up every 19. i am tom keene. joining me brendan greeley. olivia sterns has the plague. brendan: we begin and ukraine were a military spokesman says more than 90% of horses have retreated -- forces have retreated from depaul death -- debaltseve. it is a strategic rail ray junction. russian