guy johnson: the ecb begins qe today. german bonds are on the shopping list. the union says the latest great reforms are not enough to we will have more from brussels. you are hired. we talk about internships with boris johnson. good morning. welcome. you're watching "the pulse." we are here in london. francine is off today. she we in the eurozone today.

the central bank will buy government bonds to the tunes of 60 billion euros a month. let's talk about the implications of this with mark. the gestation. for this has been long. how significant is the day that it actually begins. >> this is forward guidance writ large. everyone knows it's coming and everybody guessed the german bonds would be first on the shopping list read you are still seeing a lot. morgan stanley says the supply is negative. reductions are -- one think might happen, if you own government bonds and you are a bank, zero is great. one way you might get more bonds out of the banks and into the ecb's hand is admit that

government bonds are not zero waited. if you see that move, there might be more bonds available to the ecb. >>guy johnson: what are the advantages of doing that? >> one of the things about being a government in europe is you have a captive buyer with bonds. thanks have to hold them. when you start using those rules, it gets interesting going forward. it's tricky. guy johnson: why start with germany? >> top rated. you have to be talked around to this plan in the first place read --. the most resistance it come from the german minister. you have to start the top quality stuff. guy johnson: this is going to be the hardest to buy. you want to have the biggest run-up to it. >> it's also prove that they are

willing to buy at negative yields. if they are buying at the shorter and, -- and, we are willing to buy negative yields. that is not going to be the barrier that some people thought it was. they can always manage the rate if they want to. they can buy bonds and there is a strong signal that we don't want to buy negative yields. guy johnson: 0.2. do we wind up with qe having a different effect on different terms? >> you have seen a flattening. they have said they will buy all over the spectrum. guy johnson: they will buy shorter duration stuff in italy than you can in germany. we could get some anomalies where the normal spread between a five-year dtp could start the change significantly.

it is going to be hard to model this. >> the federal reserve, not just trying to cut yields is trying to change it. that is where the ecb ends up at by accident. you end up with exactly that. you change the shape of borrowing costs going out into the future as well as capping borrowing costs. it makes it interesting. it will be fascinating to be at the bond buying desk seeing how they make the list of what they are going to buy and what models they use. guy johnson: we have had qe in the states and japan. which is the best way to look at this? >> a lot of people say it doesn't work. i am pointing at japan. it has been a failed policy. it is harder to say. where with the u.s. economy be without the fed using qe. the u.s. economy is moving into

health. the expectation is the fed will raise rates by june. it's hard to say qe did not work in the united states. we don't know how it would've looked if they hadn't used qe. guy johnson: mark, think you very much indeed. mark gilbert. a referendum on reform, the greek government is looking at the prospect of putting his proposals to the electric if they are rejected by the eu. if we get even greater demand for other measures, they may go back to a referendum as well. this includes hiring nonprofessional tax collectors to crack down on tax evasion. rebecca christie joins us from brussels. where do we stand with the view of the proposals that are put forward? there is a sense that they are not enough. >> today there is a meeting for discussion between the finance minister and his counterparts.

it is not expected to be a decision day. there will not be a thumbs-up or thumbs down at the end. they can hope for signals that is moving in one direction or another. the greeks alike to get signals that people are receptive to the measures they are offering. the euro area would like to get ideas from greece that it will follow through on its commitments. if there are no signals, they will go the other way and people will regroup and think about what they will do next area --. guy johnson: what do we make of the relationship in terms of the gap that exists between athens and the rest of the eurozone right now? how would you characterize it? >> are reporting shows that how one characterizes it depends very much on who one is. if you are in the euro area, the greeks say they are going to do things in a never do any of it. the greeks think how much are they going to eat us up best and mark you can't get blood from a

stone. there is a lot of room in between the two sides. guy johnson: ok. we will watch this with a great deal of fascination and look forward to your reporting. rebecca christie is joining us from brussels. let's continue the conversation. let's bring qe and greece together. good morning. it's very nice to see you. can we start off with qe and talk about that? we talked about whether or not it worked in the states and delivered the recovery we see now. is it going to deliver similar stories in europe question mark this? >> we had depreciation of the euro. we also had a context of high debt in some of the countries.

in a way, it's not only that. i think the signal that the ecb can act as a central bank like any other central bank and is not prisoner of political economy hurdles and contracts. i think these things have been very important. the announcement was very reassuring for the market. there is quite a bit of optimism around. maybe too much optimism. if it will work, i think there are a lot of question marks. what we know about japan and the united states -- guy johnson: what should be used as a yardstick to tell us whether or not this qe is working? is it the growth rates?

>> in the end there will be inflation. they are linking this to the target. the ecb is forecasting to go back to 2% by 2017. there is a lot of uncertainty about whether this will be achieved. there is an overhanging it is very important that this signal that they want to get there. we know the communication is the best part of qe. this is what works. guy johnson: it's interesting that you don't say growth. should we look at growth? when you look at the debts and the high level of debt that much of europe terry's at the moment --

carries at the moment, there could be growth. we need some degree of growth to start to be able to put these countries and a position where they could at least manage. >> they will say that by targeting inflation, there are some questions about whether this is true or not. this is the job of the central bank, to monitor inflation. the two things are relatied at this juncker. it does not help growth. this will help to boost demand for countries that are very much open to trade. not only germany but also italy. we have seen the rebound of spanish exports.

that has been a big surprise of the last year. now, there are lots of signals about the european economics. my company has been saying that we monitor the real-time data. that has been pointing to positive things in a consistent way at least since october. when the data is consistently pointing to positives, not only gdp that arrives late, you have this consistency that something is really happening. this is the first time since 2011. technically, we are not out of the recession. we are dating european recession. we will be able to say that we are in positive territory. guy johnson: positive territory is great.

it has to be really positive to have a meaningful impact. we are just going to stagnate. is that really 1% growth? is that what you're needs? i know it's not getting worse. >> that is not what you were looking for. you will be disappointed. we know that more or less we look at the productivity and so on. europe has a potential rate of growth at 1%. i think in a recovery you have to grow above potential. i would not be surprised if we are above 1% for 2015. i don't think they will go massively in the different direction. italy is out of negative territory.

i am quite positive. i don't think that we are going to see growth below 1.5% or 2%. contrary to what people say, i see a slowdown of the u.s. economy. i know the unemployment has been very positive. we know that it is lagging in respect to gdp. a lot of other signals that the u.s. economy is slowing down. the euro area is catching up with the u.s. which we have seen. now it is flattening. guy johnson: that means of the dollar won't be as strong and there won't be a demand engine that represents opportunity. >> we will see what happens.

guy johnson: ok. we will get your take on it. we will keep you here because we still need to talk about greece and the oil market. we will do that in just a couple of minutes. we will be coming back very shortly. vince cable joins us to talk about a apprentice ships. it will come at the top of the next hour. we will be talking with the mayor of london, boris johnson. they are talking about apprenticeships. what should politicians serve? what is the right way to train a politician. let us know. we will take a short break and we will be back in a moment. ♪

guy johnson: welcome back. you're watching "the pulse." we are streaming on the new bloomberg.com. still with us is the london business school. we were talking about the prospects for the eurozone. we are getting into a more

positive frame of mind. there are risks. one of those has to be greece. how would you handicap what is happening in greece right now and the danger it poses? >> i think greece is -- if the situation were to deteriorate, that is not good news. i think this is not at all what i predicted. greece would out of the eurozone. that would create a lot of volatility. the attitude would spread to the eurozone. i think should not be conflating the ability we have seen in the last year or so. we know that market sentiments switch and can switch suddenly.

i know that this is not the same position. we have a banking union and a mechanism for banks. we have a lot of pillars that can affect the rest of the zone from volatility. i don't think this is going to be enough. the idea that there is the possibility of getting out, i think that would be a huge shock. the market will test it. it would be affected. we will go back to a. time of uncertainty. we know the zone has been improving. guy johnson: what would it take to make greases membership sustainable? >> frankly, i think the greek government has a point.

they are not sustainable as an economy. they are basically bankrupt. any organization should start from a realistic analysis of the situation. in a way, they have promised things they cannot deliver they have made a point. they have not worked. the bailout has not worked. not in terms of sustainability, gdp has increased and not declined. the economy is a mess. i wish that this kind of realistic analysis would dominate the design. it would help design a program that is realistic and long-lasting. i think the worst scenario is

nobody -- something would be put together and we would provide another year and then a year from now it will be worse. guy johnson: we need to restore confidence. we are living hand to mouth constantly with this. we have a confidence deficit. >> there is a lot of noise. we go from optimism to pessimism about how decisions are going. this morning, i see more pessimism. this is an invitation. it's going to be noise i definition. -- by definition. i still remain positive. i still remain optimistic. even the most extreme positions in europe they are still quite concerned about an exit of

greece. i think that will bring sanity back. i think that the way to understand the conversation is from the european side they have to have the same conditionality. there is no framework in europe. you have to understand that greece will have to negotiate within that framework. otherwise, greece will be pushed out. guy johnson: on that note, we will look forward to the meeting. thank you very much. she is a professor at the london is the school. we will take a break and be back in a few minutes. ♪

>>guy johnson: disappointing gdp data out of japan. let's find out going on. brian, why was it soft? >> consumer spending came back at the big disappointment was business investment. it has flatlined for three quarters which is a huge disappointment. there is record cash and profits. guy johnson: where does this leave the japanese? >> it's not in a good place. there is hope that there could be some kind of trade deal that could get people more optimistic

about investing. most likely the bank of japan will have to step in and october. guy johnson: take me through why companies are doing this or it you've got a weak yen. why are companies not investing? >> there is a big demographic drag in japan. consumer spending has come back but wages have not. there is pent-up demand. they don't see a great case for a big greenfield plant. guy johnson: in terms of where this goes, are they expecting the currency to get weaker? >> it's a possibility. i think they think the inflation target, the 2% target they are aiming for, is going to be difficult to hit.

based on comments coming out of the bank of japan, they will look at an expansion of qe in deficit categories. guy johnson: brian, thanks for seeing you. we will take a break and be back in a couple of minutes. ♪

guy johnson: welcome back to good morning. you are watching "the pulse." francine is off today. i am guy johnson. let's get you up to speed with the top stories. brazil's congressional heads design involvement in a corruption scandal after being named among dozens of politicians up for investigation. they took kickbacks.

the top court does not have authority to probe the president. they are learning from the scandal. >> with courage and some paint brazil has learned to practice social justice in terms of the poorest. this is what is happening in this investigation of the episodes. guy johnson: a russian court has indicted five men in relation to the murder of boris nemstov. the charges come a week after his death. mother reports say a six suspect blew himself up after eight police -- eight police stand up. swiss pioneers have taken off on

the first around the world trip with a solar powered plane. they will stop in india miramar, and china before heading across the pacific ocean. they will land in july. they hope to encourage the replacements of old alluding technologies with clean efficient technology. right let's head across the water. negotiations continue with ron -- iran over there nuclear capabilities. to review the status of a deal, the deadline is set for the end of the month. joining us are bloomberg news correspondence. elliott, let's start with you. benjamin netanyahu urged u.s.

lawmakers to be tougher on iran. he took his arguments to american television. what did he have to say? >> the same thing he said last week to congress. this is what he has been saying in the years leading up to where we are right now. he is concerned that any deal with iran that may or may not be on the table will not be tough enough on that country. he says that he and president obama share the view and the desire to prevent tehran from getting hold of a nuclear bomb. they disagree on how to go about that. >> i do not trust inspections with totalitarian regimes. it did not work with north korea. they violated and did a good job of hide and seek. it did not work with iran. >> he wants three things. he wants to extend the amount of

time it would take for iran to get hold of nuclear weapons. the breakout time, he wants to limit the nuclear infrastructure. he wants to -- israel once any deal with iran to include a proviso that sanctions will not be lifted if it continues to call and support groups like has block that call for israel's destruction. there was a letter written by some republican lawmakers to the leaders of iran. even if they do reach a deal that could be reversed what's he is out of office. guy johnson: elliott, part of this is plane into the election coming up on the 17th. is it having any impact on the polling? >> i do think it's having any meaningful impact.

net has always been seen tougher on security. -- netanyahu has always been seen as tougher on security. the elections are next tuesday. there are israelis rallying over the weekend. they do not want to see him remain in office. they don't want to see him get a third term. they may not disagree with his stance when it comes to iran. they are interested in the cost of property and costs of living. those things are more important to them than the concerns about iran. for netanyahu, iran and security are his biggest issues. he pulls stronger on those issues. the zionists union are more or less net can in the opinion polls right now. -- that a net in the opinion

polls right now. -- now and -- neck and neck in the polls right now. guy johnson: what is the feeling about what john kerry is up to? >> things need to continue as they have. i think the speech that net yahoo! gave to caught -- benjamin netanyahu gave to congress has been seen as ridiculous and repetitive. i think iranians who did watch it felt the same way. i think that with this sense of momentum that appears to be building up to the deadline we have four framework for a deal i think iran was to make sure that these deals are kept on

course. that they are not derailed is there priority. at this stage, any further pressure would not the rail the talks. it brings more pressure on the obama administration. benjamin netanyahu's speech may have sparked some concern among iranian officials it could put more rusher on the obama administration. i don't think that realistically right now they are at such an advanced age. they are sounding positive. i doubt that at this stage right now they could be derailed. the final deadline is july 1. there are still many months ahead. guy johnson: how broad are the discussions?

it seems you've got the energy secretary going and different elements beginning to be pulled into these talks. can you give a sense of how broad they are likely to be? >> we always have these technical talks that are ongoing. they are involving officials. they are arriving in terror on. those talks have been ongoing. officials arrived for the next round of talks today. those are about the technical details with specific regard to the various nuclear facilities and passed concerns. there are issues that the agencies may have had in the past. in the foreground, there are issues like sanctions. iran insists that this deal has to include the removal of all the sanctions. that is a redline as far as the

iranian administration is concerned. guy johnson: one final point. the oil market reacted positively to all of this area the price fell. there may be some more iranian supply. can you give us a sense from within the country, how quickly would they start putting oil back on the market? what state is it in? >> the oil ministry and the minister have said that iran is able to respond to the removal of sanctions. the day after sanctions were lifted, it can increase production as soon as possible. they have that capacity. the problem is because sanctions have been in place for a few years some damage has been made to the oil infrastructure to an extent of under used pipelines.

they are tending to those issues. development of the infrastructure in terms of the refining capacity has never stopped. with the decline in the price of oil and pressure on the budget right now, it has become a egg issue for the oil industry itself. they are considering bond issues. they are trying to shore up more money so it can invest in those projects. those are large oilfields which are priority at the moment. guy johnson: it's been a fascinating story to watch. thank you very much. let's move on. coming up, we will get back to apple. tim cook is bringing apps to your arm. can it sell it in big enough numbers to have a meaningful

impact? we will talk about that later on. a big marketing test is coming for the company. we have live pictures of the german chancellor in japan. she is visiting as part of a bilateral meetings with g7 leaders ahead of a summit that takes place in germany. we are back in a couple of minutes. ♪

guy johnson: it is 43 meds past the hour. -- minutes past the hour. welcome back area let's check the markets. the ecb kicked off

its qe plan today. it is rumored to be in the german markets already taught on's there. -- bought bonds there. we are seeing a drop stateside friday following that strong payroll number and the expectation doing our baking in a summer rate hike from the fed. you can't pull the two apart when it comes to the bond markets. there is a drop on the term in 10 year. i am fascinated to see whether buying on the curves will shape bond markets around europe. we start with the germans. that should keep things happy. let's talk about what is happening in california. apple is bringing the internet to our wrists. tim cook will unveil the apple

watch. he needs to convince us why we want one of these read there to help us through that speculation is caroline hyde. why are we so excited about this? >> we have been teased with the details so far. we know there will be three models. there will be a high-end luxury addition and a sport model. they will be made of rose gold. gold twice as strong as other gold. the gold molecules are close together. we get customizable faces. there is a touchscreen it. there is so much left to understand. we know the starting price, everyone is going to go berserk with how expensive they could get. some say they could cost up to $20,000 if you are getting the 18 caret gold one. that's not as much as a row locks -- rolex.

the price is going to get exciting. we understand it has been promised to last an entire day. we will have to charge this every night. is that what people will want to be doing? where is the battery life going? we will know more details. we want to know about the apps behind the watch. this is what is going to help sell it. tim cook is saying he wants car doors to be opened with the apple watch. bmw developers are helping behind the scenes create apps that would be unleashed on us when this goes on sale. it is more than just messaging and a calendar. we want to know what the health benefits are and for painying and our everyday lives. when and where will it be on sale. will it be across the world?

we know officially it will go on sale in the united states. they do have another event happening in berlin today. the main event is spring forward. there is plenty to get us excited about. i think he needs to convince us why we want a smart watch at all. it's almost like going back to the ipad. we are getting a new genre of good. before the ipad, the tablets were not ubiquitous. how can he tell us why we all need one? the estimates are huge. there were less than 5 million smart watches sold. you've already got samsung and lg making them. 5 million is going to be, 28 million this year. apple is going to sell 40 million of these devices. it's going to be fascinating to see them convince us that we

need a smart watch. guy johnson: let's get more analysis on this. i read your notes this morning. >> i don't know what problem this is solving. i don't understand. people talk about this being a device. it's not. it's an accessory. it only works if you have an iphone in your pocket. what if you had to have a stopwatch in your pocket? guy johnson: why will people buy them? >> there will be a fashion dimension to this. there will be at market in asia. the fashion thing is telling. tim cook and his publicity tour says this is about fashion.

they had the front page of vogue. the rumors i hear is that they bought 18 pages of vogue. they want to stamp the credentials around fashion. that feels very un apple. i think there are loads of luxury watches out there. i think we could name them. i'm not sure what problem this watch solves. i think the entry price is $350. that is a small price. i'm not sure what this is. guy johnson: this is just the first iteration of this. is this something you don't get right the first time? the first iphone wasn't great, but they got better. >> i would say the first one was good. if you've got a lousy product, you are allowed to go early.

if you go late, you have to have a fantastic product. nobody knows with the features will truly be. it looks like an also ran in a more attractive case. i don't think people will start abandoning their tech fleet to wear a watch. guy johnson: what would it look like in your mind that actually works on my wrist? the wristwatch is already there. >> i think you are starting at the wrong place. they have a product that is looking for a problem. i saw fascinating product the other day which was a lightbulb that is also a tooth speaker. -- lou tooth speaker. -- bluetooth speaker. now you never have to charge it. brilliant. it's all the problem. educating people that don't wear

watches to re-wear watches on their wrists, i just don't think it adds up. guy johnson: would that make this a better product? >> it will work on your smart phone. that is the problem. if we go back to the wristwatch and the stopwatch, we have roque and the barrier of the pocket. -- broken the barrier of the pocket. why you need to do this, i'm not sure why you do that. most people can get e-mail through their earphones. guy johnson: there are other wearables that would work better? we had google glass. >> i think we have a literal interpretation of what a wearable is. all the devices that can be

connected to the internet whether they are on your skin or not. this feels like a vanity project. i just don't think that's how the market is going to play out. guy johnson: the advantage is its in contact with your skin. it works is a biometric device in ways i don't think we fully understand yet. whether or not this could do security by reading our heart rate or the differences that exist in our heart rate is the ability to marry this with technology produce some interesting integrations -- innovations? >> i do think that's an interesting space. it feels to me like a tiny subset. when you look at the success of the iphone 6, that's because it hit mass-market. you are talking about a subset

of 24 to 35-year-old man in asia who are interested in biometrics, it doesn't feel like a killer project to me. guy johnson: thank you very much. now sticking with retail, we will talk about the luxury end of the market and why chinese money is being drawn to old italian flair. that story is up next later in the program. ♪

guy johnson: good morning, welcome back. we are almost done with the first hour. we have a second hour coming. what we got for you? we've got to politicians to talk to. we will talk to vince cable. we will be talking to him about a range of things. we will talk with a printer ships. we will talk to the mayor of london boris johnson. this is in the context of the general election here in the united kingdom. it is apprenticeship week in the u k what needs to happen to make this work better? the question of the day is a bit of fun. what apprenticeship should politicians serve? what is the best start for a politician? what apprentice a should they serve? how should they get ready for the top jobs in global politics? you can follow us on twitter.

we would be delighted to have you along. we will take a break and be back in a couple of minutes. the second hour of the pulse is up next. ♪

tom keene: there is surging job growth in america. europe adjusts and recalibrate

to mario draghi. greece hints they might go back to the people and vote on whether athens should submit to brussels. break out those terrycloth sweatbands. there is sweat over the apple watch. will anyone buy it? we are live from world headquarters in new york. i am tom keene. joining us is olivia sterns. let's get to the top headlines. here is olivia sterns here in >> any nuclear deal they sign with president obama won't last after he leaves office. senators from both parties have been pushing to have their say when a deal is signed. the president says they are willing to walk away from talks. he was