guy johnson: down to the wire. still no and act, -- still neck and neck. caroline: we speak to global business leaders about concerns. guy johnson: bonds battered and negotiations remain strained as european yields soar. ♪ good morning, you are watching the polls live from bloomberg's

european headquarters. >caroline -- francine: we are getting data we have been expecting on the u.k. a little later on in half an hour. the pmi has fallen to 54.1. we have had growth forecasts for gdp. it is pointing towards greener chutes. >> we have had a strong spanish number. the french number was actually surprising with the upside and the preliminary number picks up little bit on the confidence level. they german number was a miss and that is what is striking down the aggregate number of cross the eurozone. francine: we are keeping an eye on this and tomorrow is a huge day. guy johnson: on the last day of

campaigning, no clear front runner with three polls overnight showing conservatives and labour neck and neck. let's get to westminster and anna edwards. what is happening? anna edwards: the final day and tomorrow, the election takes place. there will be mps elected to the house of commons. before that, the final push is underway. the candidates and leaders of the parties are visiting the hardest to defend locations where they hold seats and they want to protect the seats that they hold. that is the strategy the parties are adopting in the final day of campaigning. the messages we have been hearing have been drummed home today. david cameron says you can deliver stable government or risk it all with ed.

they are fusing the arguments together around the economy and snp and labour. ed will put working people at the center of things saying that government will only succeed when working people succeed. the liberal democrats walk the middle line. we heard they want to put a brain into labor or a heart into the conservatives. that was the catch phrase that nick clegg came up with. he says the reckless borrowing and the conservative ideological cuts are less likely with l d. >> we were showing the interactive map that we will be showcasing. we are seeing different results for voter intentions. what are they telling us?

anna edwards: the polls not giving us many close. we have a populous poll and a ugov poll. we have 33%-304%. some of the spread betting is interesting. they forecast can service more seeds and computer models available put the conservatives 10-20 seats at ahead of labor. it will come down to the numbers and how many seats the parties managed to retain and when. -- and win. guy johnson: the horse trading has begun already and we are hearing increasing reports of the parties try to put deals together. maybe not overtly. maybe covertly. may be it has -- maybe it has

already started. >> we talked to the conservatives and labor and they refuse to a knowledge anything other than going for a majority. there will likely be a coalition . they are reporting that liberal democrats are scoping out what kind of price they want to extract from the conservatives to make a deal happen. one of the key policies was a referendum that runs counter to many of the instincts of the party. equally, they will have to think about whether they want to go into the coalition with labor and whether snp is a force, even on the sidelines.

looking at the news overnight with regards to the coalition building and the discussion the leader of the party was in scotland and was trying to get back to some of the tubthum ping form. he says that what david cameron was doing, even if he gets one more seat he says and gordon brown says that they plan to be kingmaker after the election will stop -- the election. francine: thanks. guy johnson: research on the prospects for the u.k. economy and the director joins us now for more. the conclusion is? >> the week growth figures are likely a blip. we expect growth to return to a

slightly more normal base for recovery in the next few quarters. we expect growth around 2.5% for this year and going forward. that is we are seeing something that looks like a steady recovery and it does not make up are the huge amount of ground we have lost. francine: what about wage growth? >> it is beginning to come back to more normal levels. again, the reverse is unprecedented in the last few years. there, that is the uncertainty. the final was the economy and what does the party do? we do not think they are doing much. guy johnson, it has been -- guy

johnson: it has been stunning. >> there is intense fixation. it is not a problem in the short-term. guy johnson: is a problem you cannot solve in the parliament. -- is it a problem you cannot solve in the parliament? francine: it does not mean they are not looking at it. guy johnson: i have not heard -- if you think you can change the productivity story and you can deal with the economic problems the country faces, why have we not centered around everything and everything else is a derivative? that is why i am surprised. guest: i agree and, as you say,

it is a good way to get people turned off. thinking about education, skills, wage growth, and housing, it seems that they are proposing to make things worse and not better. >> it is tight. what are the main issues that the people care about? >> i think wage growth is what people are likely to care about and they should. it is reasonable to not care and it could have gone on under the parties for a long time. that stopped and we are now 14%-15% poorer. you do not hear the parties say, what are we doing to restore growth? guy johnson: restoring

productivity could take longer than that. anything you do with graft, you are unlikely to get a political dividend from. >> you have to start sometime and you have to start somewhere. we know that governments have failed to build enough houses and it is bad for labor mobility. we have known what the answers are for 10-15 years. they have not implemented the measures and particularly in the last few years, they have positively made things worse. francine: we are turning to the wider implications of the election and what they had to say about the impact. >> it is the rugby cup in the

u.k. and the situation. i think we share a lot of common objectives and i think that the u.k. should remain and we are positive on the outlook. >> less attractive question market >> the european union would have rules that would manage.

it would be less -- more complex. the best solution is to remain in europe. >> i like talking about that. >> the reporter is with us. a couple of things are coming up. let's talk about the financial services sector. it just depends. do you have any sense of how it will work? >> one thing they have done is changed the regulatory regime. the implementation of some of the recommendations with ring

fencing and investment banking. we are hearing about the business and the difficult trade-offs. regardless of political color, they will have to face it. the government has, to some extent, used the banking sector as a cash cow to raise taxes. there is good reason for this given the way the financial sector works. what does it do to the effectiveness of the financial sector? these are issues that governments will have to grapple with.

francine: thank you for joining us. guy johnson: let's talk about the twitter question. it is straightforward and causing arguments. should the party with the most seats form a government? what is a legitimate government? that is the #and we will see you in a moment.

francine: welcome back. we are live. >> greece and the creditors failed to reach a deal. for more let's move on. markets, let's start with you. talk us through the latest and where we are on the negotiations. >> things are going well until yesterday. the government through it out among the pigeons with a

statement. they blame the creditors for failing to break the talks and the greeks say the imf is insisting on economic reforms and they would need to write it down at some point. they insist on the fiscal target. now what is interesting is the time of this and the diplomatic push has positive signals coming out with progress and it came

moments before the greek delegation was pleading the case in terms of liquidity constraints on the greek economy. it is pretty interesting. >> how are you likely to act? >> you can take a reasonable bet it will be increased once more and the question is under what condition. on the formal agenda it may be a key. the rising concern is too much exposure to greece and steps

need to be taken to rein that in. if you were to cut, there would be a problem. if you adjust the haircut, that is something more technical and it has the same impact that greek banks have to have. that will be discussed today with no decision being taken. the discussion will be there. >> can i read this as a political decision? if it turns out that haircuts are to be increased and that it will make it harder mri going to far when i talk about this as politics? >> the ecb would argue that the

decision would have political implications. the rules-based procedure and it dates back to late last year with the greek bailout program perfectly on track. clearly, it is not anymore. maybe it is time to change the rules. mario draghi has been cautious about making political statements or being seen as leading this debate in any way. francine: let's get back to you and the deal. what does it mean to the payments? >> the greek signal is the implication that they are too

soon to get the money to the greek payments and no one is expecting any deal. that is just a positive statement about it. the signal is that it will be ok and the margins are getting thinner and thinner. as the margin gets thinner, it increases the likelihood. guy johnson: we will leave it there. thank you for joining us from frankfurt. >> the approach is generating interest in sales. stay with us.

francine: microsoft is weighing up a possible bid. and have been -- bid and have been interested. guy johnson: elliott gotkine has more. ellie gotkine: it fits in with the strategy and they have revenue. let's not get ahead of ourselves. they are not in discussions.

others have been approaching salesforce. what does seem to be clear is that salesforce is in play and they have investment ranks to work out the strategy. we have seen the rise in recent weeks and it is a big fight. they say they have zero interest in salesforce and oracle would disrupt the market and microsoft would seem to be a favorite. >> this is huge. microsoft is no stranger to big deals. they tried to buy yahoo! and it did not work out so far.

the division is just over seven. francine: thank you so much. we are going to take a break. guy johnson: we are going to talk about the election tomorrow. .

francine: welcome back to "the pulse". we're just getting breaking news from the u.k. guy: the average person in the country is not going to pay a great deal of attention but this is a really good number. 59.5. the bulk of the british economy. the pound is turning around having sold off into this number. we are unchanged on where we are in the session. what we have seen is a little bit of turnaround. that number is better.

the p.m.i. numbers of late that is flattened a little bit. the g.d.p. number. over the duration of two or three years, the two numbers tend to coalesce a little bit. the g.d.p. that we have seen, a little bit of a blip on the downside. as we see the year progressing, the economy bouncing back on to a more stable and firm footing. francine: i know the vote on the street doesn't look at p.m.i. services numbers. however, it is the last major piece of news before the election tomorrow. with 40% of voters still undecided, any little bit helps. 40%. it helps the toris. guy: let's talk about some of the other bloomberg top headlines. beating up the government's spying powers. that follows the charlie hebdo

terrorist attack in january. the two main parties have -- to combat terrorism. the bill goes before the senate. francine: today is the deadline day for benjamin net l.a.ia huh to form a coalition government. -- netanyahu to form a coalition government. guy: the european commission will propose rules for the technology industry including implications for everyone. it will look at whether extra regulation is needed. the e.u. is considering proposals to reign in internet companies just after google was accused of using its market power. guy:

francine: caroline hyde spoke with alsunny cooper. -- i'm still very confident that we're going to get this deal completed this spring. looking forward to the people onboard and the brands onboard and make a sess of this business. it is really important. really important in terms of cash returns for shareholders. caroline: how transform i.d.f. will it be? -- transformtive will it be? how much do you want to grow from a 10% market share in the states? >> we want to get back to 10.

therefore 10 is the first target to get back to. what i want to see from that business is steady show of growth. we're going to do things to build that sustainable quality share growth. invest behind the brands and the capabilities and the sales force and make sure we build quality solid share growth in that market. caroline: when we look at your numbers, it is about profitability. do you ever envision a day where we will see a pickup in volumes? >> i think for the moment it is more around decline rates. you can see that coming through in a number of markets in the first half. but no, i don't necessarily see a growth in volume. what is important for imperial to do is to find where growth opportunities are. we have small shares. u.s. is one of them. we look to build those shares over time. given our scale in the world, even though you may not see a macro environment of growing

volumes. guy: that is alison keeper speaking to caroline hyde exclusively. let's talk about what's happening here. caroline hyde is with us. what did she say? caroline: it was interesting, the growth in the united states. that's what she was starting from. this is an acquisition $7 billion worth of assets. it is already the spring but she couldn't give me a date. e cigarettes, they are growing that brand in the u.s. it is very embryonic. there are some phenomenal targets about how big this could be by 2050 and she thinks in particular the health benefits can be significant. it doesn't have to be about cigarette smoking anymore. it could be about taking nicotine in another way without

any burning in your mouth. i also spoke to of course the u.k. chief executive about the election and politics. she said she couldn't make a comment in either direction about which party she would want, but she said they need to focus on business and regulatory issues. in particular, she feels at the moment there isn't much consistency when analyzing what regulation makes sense for companies in the u.k.. that was a priority. i pushed her a little bit further just asking about what about the exit from the e.u. if the conservatives took to the helm. she said leaving the e.u. would be bad for her business. it would raise a lot of concerns for her.

she feels that is a key issue for them. notably, on the flip side, labor is an issue for imperial tobacco. they would raise taxes to pay for health care. she said they already pay 12 billion pounds a year. they are substantially giving to the taxpayer. all in all a very interesting conversation. the way she sees women's role in companies, she wants people to take into account how we promote diversity from companies whether it be from an ethnic or gender point of view. back to you. francine: thank you so much. caroline hyde there with the latest on imperial tobacco. guy: the company posted its first profit drop in 12 years. the c.f.o. described challenges in the grocery market. >> it has been a tough environment over the last 12-18 months. we have announced a drop in profits today.

681 million. we have beat market expectations of 659 million. francine: paul, thank you so much for joining us. the profit dropped for the first time in 10 years. how bad were the results? >> as the c.f.o. said there, they were better than expectations and he has done a good job driving costs down in the business and that was the essence of the beat for expectations and they also did a pretty good job on their financial management. their capital expenditure i think pleased the market. initially, the share reaction was positive. however, as with all of these things, it turns out that maybe things are not quite as good as we first thought. that was the case with tesco two weeks ago. the share price opened positive and at the end of the day was negative. the share price is now falling off and the reason for that we

think is because within the statement they talk about the 150 million pounds of price cuts which they have said they will do. now they are talking about that number rising to 200 million pounds and it is really a sign that all of these mainstream grocers are having to put through even more price cuts just to stay ahead of the game or in line with the game where all of these discounters are making them stronger for business. guy: you're talking about the discounters. we still don't know yet how aggressive tesco is going to be. we still -- the expectation is that tesco is going to hit the price point pretty hard and that is going to affect sainsburies' and morrison's. it could be more than that. it could be in for quite a long duration. >> ultimately it could be. i like to think the tesco effect -- if you can imagine

sainsbury being in a box and two walls coming on either side. 2001 discounters and the other premium sales. for a long, long time now there have been these two walls pressing against them and now we have this ceiling pressing down and this is tesco. the pressure is coming from three sides now like you say, tesco is putting everything into its business. for the middle of the market this is really having a massive impact. if you look at the short selling interests, that is indicative of this. tesco is nowhere near the level of short interests. francine: thank you for joining us. paul jarvis there, one of our editors on consumers talking to us about sainsbury. guy: coming up, we'll take a look behind b.m.w. numbers

next. ♪

francine: welcome back to "the pulse" live from bloomberg's london headquarters. guy: b.m.w. beat estimates this morning. ryan chilcote joins us now with more on the numbers. we weren't expecting very much out of these figures. a boith a surprise.

break it down. mark: you're going -- ryan: you're going to hear a lot of beats. they beat in terms of the amount of sales they had last year and what investors were expecting of them for the first quarter of this year. so not bad. part of that was the products that they are selling. the x 5 doing particularly well, sales up 30%. doing really well in the united states. they have a factory there in south carolina. that helps them -- shelters them if you will from the euro's decline. the mini up 28%. the coupe doubled. i think a surprise for investors is that the company stuck to its forecast saying that it is going to be a record year for sales. that in terms of pretax profit, they expect that to rise by between 8% and 10% this year. and sorry -- their margin they

expect to rise and remain between 8% and 10%. it came in for the first quarter at 9.5%. pretax sales which is the metric that the industry follows, they expect to rise between 5% and 10% for the rest of the year, which is down on what they had as a goal in past but that is what they think they can still achieve, though i have to point out that in the first quarter, pretax sales only -- profit rather only rose by 5.1%. so right at the bottom of the range. still within line. francine: we have a -- coming out. ryan: that's right. cruger will become the new c.e.o. he is a 49-year-old guy. he has been at b.m.w. since he got out of engineering school when he was 26 years old.

i think this is going to be interesting. he has a number issues to handle. one is the cars. you know he used to run production. so when he takes over, on may 13, he is going to be able to grapple with this issue of where they are right now. i was talking about how some of their car sales were doing really well. that is actually also a bit of a surprise. the company described it this morning as a tail wind. a lot of those models came out last year. right now b.m.w. is developing about 15 cars. the good news is they will have brand new cars to sell later in year. the bad news means they are spending money developing those cars getting them ready for market now. that means that the cars they have out there now are not brand new. that is one of the challenges he is going to have to face and have to navigate this. you china, sales there slowing and the united states and

europe really on fire. the united states, they have seen 60 months of consecutive gains industry-wide in terms of sales. all the while, he is going to face pressure from competitors like of course daimler's, mercedes and v.w.'s audi. all you to do is look at the share price this year for b.m.w.. up 20% year the date. take a look at its rivals. up 27%. everybody is making money but if you had to choose a winner in this in term turnovers stock price you would probably go with daimler or a v.w. and they are closing the gap. so that title to have world's largest luxury car maker is not something that b.m.w. can take for granted for too longs because mercedes and audi are closing the gap. back to you. guy: thank you. let's stay with b.m.w.

francine: we're joined with the head of global research. thank you so much for coming in. give us a sense of how you think b.m.w. is doing so far? >> i think they are doing incredibly well. currently some of the low point in their product cycle. is seven series is very old. europe is still at a very, very low level. there are some pressure points in china. the u.s. does really well. it is a global business. they generated more than a billion in cash in the first quarter, which is huge. better than mercedes. i think they are doing very well. guy: they have been beaten up over their position in the china. is that overdone? >> it was pretty much since the middle of last year. antitrust investigations were hitting the auto sector. dealers were complaining. it is a very important product

within b.m.w. in china. it is getting older. hitting a brand new s class for mercedes. i personally think b.m. swmbings singled out as having problems in china. i don't see them being in a much different position than the others. china is normalizing something that all of us will have to expect. francine: what will change in china? is it a market that has to mature? is there something that b.m.w. can do to make things better? >> i think you to control your inventory. they are only up 50,000 sales from eight years ago. the megagrowth is coming to an end. the market is maturing. some cars are getting tougher to sell. you have to be extra careful

managing the inventory. guy: any radical departure in strategy? any significant change? he has been there for quite some time. is this continuity or a significant move? >> i think it is continuity. clearly. b.m.w. has a winning model in place. they shouldn't really change it too much. i think it is more because he is a pretty young guy he could run the company for the next 10-15 years. for him, preparing the company for the revolution in power trains finding answers to new business models, how to deal with data in the car and how to make money from the consumer sitting in the car, i think this is really the challenge. guy: the data and the car stuff. they are already talking about it. they are building front-wheel drive cars. there are a few things which a few years ago would describe -- a front-wheel drive car? really? >> absolutely. 10 years ago they were a

company selling give or take a million cars . now we're approaching 2.5 million cars. european consumers are aging. they want different concepts. the classic limousine is out of vogue. you need the broader product spectrum. you more global and you to spend your money in different areas than in the past. francine: a quick comment on v.w. what is this company going to look like? >> there are no quick comments on v.w.. the depart cher of the chairman -- departure over the chairman is game changing for the company. the culture will change dramatically. guy: for the better? >> i personally think for the better because i think it is a pretty old management style. it is managed by fear as many

have said many times. they need a chairman to run the it and they need a younger and new c.e.o. really to lead that transition that is needed for the company. francine: thanks so much for all of that. guy: let's take a break. back in a couple of minutes. ♪

ryan: you did such a good job in the first place. we had to go to war with you to get our say. anna: back to the subject. there are 650 m.p.'s. we vote for them using a system called first part of the post. you need the most votes of all the accounts. ryan: in the states, whoever

wins that state takes that state. what is all the talk about a majority? anna: to form a stable government they want to get a majority of the seats. at least 326 out of 650. it is not enough just to get more than the others. ryan: that is just like the u.s. where one party has to get 270 out of 538 electoral votes on legs night. -- on election night. anna: the conservatives and the liberal democrats had to pull together in a coalition to hit that magic 326 mark. this it looks as if the major parties will win fewer seats. that's when it gets exciting. the main parties are scramble around to make a deal with one or maybe two or even three other parties just so they can form a stable government. ryan: why can't the biggest party just go it alone without

a majority? anna: they can. but laws are passed by yorte vote. governing could get difficult. some say a it wouldn't last long and we would have another election within a year after this one. ♪

francine: down to the wire. less than 24 hours after the general election and polls are still neck and neck. we bring you the latest from the candidates. guy: with the election too close to call we speak to the candidates about their key concerns and hear from the c.e.o.. francine: greek banks under review, the e.c.u. looking at tighter rules for greek lenders. guy: good morning to our viewers in europe and good evening to those in asia and

those waking up in the united states. i'm guy johnson. francine: i'm francine lacqua. we have the prudential c.e.o. coming up and we'll have lots to talk about. guy: he's sitting next to francine. and the candidates are looking to campaign and no frontrunner showing the conservatives and labor is neck to neck. anna edwards is in westminister. the final push, what's happening? anna: yes, absolutely guy. good morning to you and fran. the final push towards tomorrow's election, the 2015 general election culminates in tomorrow's vote when 650 m.p.'s will eventually be elected to the house of commons you see behind me here in westminister in london. the final push today sees some of the leaders of these parties crisscrossing the country, many choosing to spend their time in

either knows constituents they have narrow majorities in they want to retain this time around or some of the parties heading for the high profile scouts, the ones they really want to make a push for and win this time around. we see those strategies being adopted by the party leaders. the key message the parties want to put across, david cameron medaling some of the messages we heard, putting them together talking about the economy and stability and the s. ad p in all of that. he says you can deliver stable government being held hostage. vote labor for a government that will put working people first. echoing very much the underlying differences and themes we've heard so many times with the candidates during this election campaign so far.

francine: we're seeing different results for voting intentions in three different polls. anna: the polls are difficult to read into. the populous polls put labor and conservatives on 34% each. and another poll with 1%age point between the two big parties. really nothing in it. if you look at the spread maybe you get a little more of an idea what is going on some saying more seats will go to the party. and others suggesting that the conservatives will be ahead on seats. some of these seat modeling software products putting the conservatives on 27 0-2 90 seat and the labor party on 26 0-2 70. it will all boil down to those individual numbers, the number of seats each party manages to get ahold of in this election and the kind of deals that were

able to be done in the aftermath. guy: thanks very much indeed. my colleague anna edwards found in westminister. now, to be honest, p.m.i. data usually doesn't make it into the mainstream. had quite good data out of the u.k. on the services side today and david cameron decided this is a piece of information that needs to be made public. he's been tweeting it out. he's not talking about the market data as in the company market that puts this number out but nevertheless, the p.m.i. data having a big day, actually making it into mainstream politics and usually us geeks talking about this stuff. francine: david cameron singing i have 24 hours to go and if there's anything that boosts my popularity let's go to the p.m.i. services number. well done. you've made it on to mainstream politics probably the first time in your life. guy: probably the last as well. let's talk what's happening in

the bull market. we saw something of a sell-off earlier today with european bonds firming a bit and yields coming down and seen that in the u.k. where gold yields have gone over two. so that's the yields. price is rising a bit but certainly very volatile for global bond markets. francine: prudential reported a 6% drop in the first quarter and sales rose 7%. joining us is a potential c.e.o. who is about to become the c.o. thank you so much for joining us. let's have a big overview because when you look at the markets, it seems bond markets are crazy at the same time and q.e. and we worry about china, give me a sense of what you worry about. >> as you said, it's a very confusing situation because you have q.e. as being now for a

long time. i don't think anybody has lived in this environment of such low-term interest rates which have a big impact on the decisions people make. a good fortune as a long-term player is that we can look forward and take a long-term approach. a lot of our liabilities are 15-25 years out so we can take a long-term approach and try to give the benefit of that to our customers and at that level we think for the u.s. economy of course at the end of the day the powerhouse of the world and if you look further long-term, asia with a potential for productivity growth and ultimately drives the economy growth, is there you take indonesia and china, you see where it's going and between those two, plus potentially africa coming on stream behind that and letting america. you see a world growing and

globally becoming larger. sitting in europe we tend to be very focused on the euro zone and what's going on there. but if you look at the bigger picture, it's affecting our numbers. i looked at politics last year between local currency as a pound and last year was a head win and this year a tailwind. up 20% in asia, in other reporting, we're up 35%. for the biggest company in the region to grow 35% year on year is extraordinary. guy: do you worry the volatility a lot of people are increasingly predicting as rates start to get hiked, particularly coming out of the fed, will not kick back in asia. we've seen the asian market crisis come out of these type of bond market moves, coming out of the fed, and it took a long time to come out of it. the reserves are bigger now.

tidjane: the starting point is greater of. and if you hear from central bankers, the ethic reserves is stronger and looking to defend ethics parity which is was the story in 1998. i was very sanguine about i said indonesia and see it going down 20% which is exactly what you want to have it happen for it to be corrected. you see things coming back within 12 months and europe having a very long protracted crisis. if you have positive fiscal balances most of us contribute in fiscal surplus and strong ethics reserves and looking to accentuate plays. some countries are dependent on financing and those will be hit harder but we don't see this going beyond a year or two but of course there will be an interest. the markets doesn't like change and settles very comfortable in the environment and as extreme as it is it's gotten used to

it but as things change, you get the fact that people have piled up in the same trades and we've seen it moved by free standard deviation and october 15 on the 10-year freshly and at the same time regulation reduced liquidity in many key markets. you can expect liquidity. and it was underlined in the letter. and we agree it is a structural issue in the new world we live in. but these are short-term issues which are manageable. francine: how big a problem are yield for insurance companies? tidjane: they are an issue. what we've done at prudential is really try to decorrelate our earnings from the real curve and we've been very successful in doing that. if you look at most insurance companies, 50% to 60% are spread income. for us it's 25% and we've done

that deliberately by emphasizing real insurance projects, setting price risk which is what we do in asia. and also identifying asset management and fee income. i mentioned our assets are 15% year on year and drives the earnings and your cash flow. in asia we now have $100 billion of assets managed and are the largest offshore manager besides asia. we identify a good stream of real income and are exposed to a yield. guy: are you a u.k. or asian business, if you're the latter, why are you based in the former? tidjane: we're a british company operating globally very successfully and that is based

in london. francine: and will continue to be based in london? tidjane: we've been here several years across the time zones and good market and we want good regulation. you gave me a chance to talk about sovereigncy and in the past. two or three years ago we had huge concerns. with long term liabilities, we have a framework pushing us to liquid assets and an enormous mismatch in the economy which would have been the source of the next craze and forcing us market to market and going in and out of the market. we pushed very hard and got addressments which we think makes it less prosecutorial but we have concerns. francine: you also have taxation. how do you feel about the election? it's tomorrow and him almost impossible to know the outcome

and you'll have probably a hung parliament and something that could be messy and we hear c.e.o.'s saying they'rer withed about the safety of london as financial hub. tidjane: only a few more hours of wait. look, for 166 years we managed many electoral cycles so don't want to overstate the importance of the electoral cycles and we operate in a number of countries with our elections everywhere. we haven't found a way to have democracy in the elections but we have to live with it, we like democracy. it's four or five years. mentally, we believe -- we think over time economies wave balanced budget and lower taxation have outperformed, economies which are supported bied feds is not a political statement. when we operate we like to operate in countries that are business friendly with reasonable taxation and an

effort to balance the budget. i don't think i'm saying anything revolutionary. but that's our belief. no political comments on the election. i did say something but was in a personal capacity. the senior official, i'm here to talk about q-1 and will focus on. guy: your replacement is u.s. focused in the past will he be asian forecast when he steps in your shoes? tidjane: i'm sure you'll meet him and talk to his plans. guy: what is the biggest opportunity? tidjane: asia, we have 13 million. we're supposed to an giant in asia 3.2 billion. 0.03% of the population. in the u.k. we have 11% of the population as customers after 160 years. if you want a sense of potential, we're at 0.03% and headed towards 10%.

guy: he gets that? tidjane: he is very good in math. francine: how about credit swiss, where is the biggest potential? tidjane: i have a few ideas but don't think it would -- guy: we'll have you back. tidjane: maybe when i'm not being paid by prudential. i'll come back and be very happy and open about all of that. one of my imagination is worse than reality. there's never any downside to saying things as we are. it's not that i don't want to answer. francine: very quickly on a possible british exit. does that worry you? tidjane: it worries me, it's in the long term interest to be in the e.u. is it perfect? no. but the balance of the downside

is such for a two trillion economy is a lot to get out of a $16 trillion block is just not sensible. just not sensible. it's a harsh reality of numbers. we get out with $14 triion sitting there and $2 trillion is not arealistic strategy. guy: switzerland seems to be doing ok? tidjane: they have different circumstances and have done extremely well and don't think the u.k. is in the same position the structure of the physical economy is quite different. francine: this is what you have to look forward to suddenly it will be about swiss frank when you move to switzerland. tidjane: i'm learning. guy: i suspect he's good in math. tidjane: no comment. i leave the company in good

shape and the results in asia are probably the best i've seen 35% year on year. it's the 22nd quarter of both for 16% in asia, 22nd quarter in a row. francine: are you sad to leave? tidjane: if you're not sad to leave it's the wrong time to leave. guy: when you were making acquisitions, how do you look back on that period now you can reflect on it? tidjane: i'm very critical. my words were exactly, i'm sorry i didn't succeed. francine: at the time you told me as a new c.e.o., you have to make your boldest move within the first six months because then shareholders forgive and forget. tidjane: i believe in more than that. i'm self-critical and i have to bear the cross. francine: on to new things.

guy: new hats. francine: a swiss hat. guy: a picture of new a swiss hat. tidjane: have to give you an idea. francine: thank you so much. guy: to greece now, investors are worried greece and the creditors will fail to make a deal. we're joined from athens and frankfurt from our reporters. let's start but, nicholas. tell us where we are in the negotiations and give us a sense what will happen next. nicholas: well as north carolina news sported in a note to clients, confusion reigns supreme. over the past few days, we've been hearing policymakers and officials representing creditor institutions saying there is more money in the right direction. maybe not enough progress which would allow to release bailout

fund for greece but progress nevertheless. and then all of a sudden yesterday, a senior government official sent an email to dozens of government accredited reporters saying that under the present circumstances, a compromise is not possible. francine: how is the east likely to act today? guest 2: the e.l.a. is there to set positive outflows and it has been rising for many weeks. the question is under what conditions? paul: some members of the government council are getting concerned about the exposure to greece about $110 billion euros and part of that is e.l.a. they'd like to see some tightening. reducing it is needed with 2/3 majority and sends a worrying signal to the rest of the world but to reduce the collateral

discounts offered to greek banks that want e.l.a. and could be the case. cue increase toes discounts and mat greek banks work hard tore get their liquidity and tighten it that way. that's on the agenda and will be discussed but doesn't mean we'll get a decision to increase those hair cuts just yet though. guy: how would you describe that decision? you and i discussed this in the last hour about the politics surrounding that. you put further pressure on greece at the moment and has implications. like the commission yesterday changing the numbers, vis-a-vis, growth which has implications. walk us through the politics behind this decision. paul: you can't avoid the politics and was reflected yesterday by the fact the greek delegation was there the a the headquarters to meet mario. but afterwards they said it was

very bland and said we discussed the latest state of the talks and economy and take was it. that tells you the e.c.b. is distancing itself from the politics and sticking to what are rules-based procedures in how to handle emergency liquidity and doesn't want to take the lead for the politicks for that and wants the euro group to take the lead and the e.c.b. will offer expert advice and follow within its rules. that's the message from the e.l.b. francine: what happens if we don't get a deal on the 11th. nicholas: on one hand the prime minister knows any agreement that would help greece avoid the default and stay in the euro zone would require concessions. on the other hand he's own party's back benchers are not in the mood for any

concessions. they've already been saying the government has offered too happy concessions to creditors and we see them every day and matter making statements to local media saying that greece should opt for a default to the i.m.f. or offer rapture with creditors. yesterday's statement is that a compromise is difficult at this stage was a signal to the government's back benchers that the government is fighting hard. guy: ok, guys. we'll wrap it up there. thank you so much from athens and frankfurt. francine: we'll discuss how a possible approach by microsoft is generating new interest in salesforce.com. stay with us.

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francine: welcome back to "the pulse" live on bloomberg tv and bloomberg.com and streaming on the ipad. and they're weighing a bid. the interest has been sparked as a software pioneer. elliot has the latest. how likely is it that it will go through? elliot: we don't know at this stage. what seems to have happened is the approaches from other companies to salesforce.com

which we understand has retained the services of two investment banks has plushed out at least the thought of microsoft who may come along and try and get ahold of salesforce to boost their cloud computing division. it's the early stage and microsoft is just weighing out the possibility of doing a and aren't in discussions but the salesforce.com is worth $50 billion and just shy of that is in play. guy: in terms of why the deal would be done, you look at the manager and where he fits in. looking at salesforce.com, why would it be important to microsoft and why would others interested in it? elliot: it's a pioneer of software as a service delivering software over the internet as a subscription model instead of installing it on the computers. microsoft is keen to expand it and acquisition of salesforce

would catapult it to be the number one in terms of cloud computing and is something microsoft wants to do. salesforce has some $5 billion in revenues. and it would clearly be a rather big morsel for any company to digest but if one company can, microsoft worth $350 billion could possibly could. wells and the c.e.o. has 0 interest. oracle says the acquisition of salesforce would disrupt the numbers. and it's the place to be right now for software companies and would be a very good acquisition target for anyone but not cheap. francine: thank you so much elliot. we're getting breaking news for the trader who sparked the

crash and is in jail but his lawyer is asking for the terms of the bail to be changed and we'll have plenty more on that after this short break. guy: we'll take that break and be back in a couple minutes.

francine: welcome back to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua. guy: and i'm guy joy son. these are the top headlines -- francine: a proposed french law has failed through the lower house of parliament following the terror attacks in paris in january. the country's two main parties back it as necessary to combat terrorism. the bill now goes to the senate which can suggest amendments, but not overturn the vote. guy: today is the deadline day for the israeli prime minister, benjamin netanyahu, to form a coalition government.

the foreign minister is not to join his government, has left him without a majority after march's election. he failed to form a government opposition leader. he'll be given the opportunity to do so this. feels vaguely familiar. francine: certainly does, yeah, 24 hours to go until the election here. let's check in on the markets. jonathan has the latest. jonathan: what a morning for some of these markets. decent day throughout this morning. p.m.i. from spain and fran, germany disappointed with p.m.i., but high air cross the eurozone. spain, solid gains on the ftse in italy, and the dax pushing higher by .8%. here in london, .4% higher. the first profit drop in a decade, the stock getting punished slight this will morning. the data out of the u.k. was also better than estimated, an

eight-month high for services p.m.i. that matters. it matters for sterling as well. we go unchanged to 1.5170. pretty much unchanged. we've been discussing whether this will hit the campaign trail. david cameron, the prime minister tweeting about a strong u.k. p.m.i. goes to show you how close this battle is for number 10 downing street and how much these guys are trying to take advantage of some of the data. if i'm looking at crude, this has been the big move. brent coming to just 86 cents short of $70 a barrel. this is still around a 2015 high. the commodities market has been simple. crude goes higher, and guess what do you to bonds, sell them. yields go higher. that was the story early this morning, when european bonds fell out of bed. this market has been messy. when i came up to my terminal screen this morning, i was

looking at italian and spanish yields pushing higher by 15 basis points, then a complete 180. spanish fields now down by five basis points. italian yields down by five basis points to 1.76%. we've had a lot of discussions about whether this is the beginning of the end of that big monster rally for european bonds. this morning, try keeping up with that market. back to you. guy: john thanks very much indeed. you were talking about the story and how everything credits to t. maybe it's still hard to figure out. let's talk about another link with oil. when you think about oil you think about what's happening with iran right now. it's one of the big stories. actually, the oil story is not in some ways the most interesting one. there's a second industry that could be disrupted even more if we get a nuclear deal between iran and the west and sanctions start getting rolled off and the economy starts opening up. you think i was going to talk about this this morning?

probably not, but that's what we're doing now. we're joined by our senior editor at bloomberg doc europe pistachios. francine: can i rebrand the segment as guy's surprise? guy: or we're going nuts. go early with these things. it's a big industry for iran, isn't it? >> the second biggest export after oil. you know, when did you to iran, one thing you do is you eat pistachios. francine: who's the big loser? >> probably the u.s. and california. that industry didn't really exist in producing pistachios until 1979 after the iranian revolution, and so when the u.s. banned iranian pistachios, they needed a new producer, california stepped in, and it's as big a producer. california and iran vie neck-and-neck as the biggest producer of pistachios in the world. guy: is it a given that the u.s. will lift its band?

tim: it's come and gone since 1979 but this latest round has made it more difficult for iran to sell pistachios to europe and the u.s. it seems like most likely it probably would go. francine: we have the story on the website, so you can go on to bloomberg.com/europe and of course, it's called never mind oil, iran shrank the world's pistachio market. we eat them, but we don't realize how big this market is. tim: i think the u.s. crop value is something like $1.3 billion a year, so it's not nothing, pretty big. guy: let's talk about oil pushing higher. tim: it is. guy: is this the start of a rebound? is this just pushing up towards the top end of a ceiling which exists because we're not getting much from opec at the moment, we're going to test that, but we're likely to see another regular lower. walk us through what the market

is doing and why we're seeing what we're seeing. tim: most likely the market is establishing a new range. the old range had been 90 to it 110, something like that. so now we're going to try to define the top of the range. the inventory numbers that have come out there was a report yesterday that showed a decline in the u.s. inventories, the first in many weeks. guy: still pretty high. tim: absolutely, way too much oil. some of the reports that came out, they actually said they're going to grow again because the rebound in production has allowed them to start drilling again. so, you know, the market is rallying. that's breathing new life and that supply is going to start to come cook. francine: tim thank you very much our senior editor. imperial tobacco group will pay quarterly dividends after first-half profit rate. caroline hyatt discussed when

the company will complete their acquisition of $7 billion the worth of u.s. assets. caroline: is it not early spring now? >> i'm still very confident we're going to get this deal completed this spring and really looking forward to getting the people on board and the brands on board and really making a success of this business. it's going to be 25% of our revenues going forward, so really important. really important in terms of our cash returns for shareholders. caroline: how transform active would it number growing market share? it will uplift to you some 10%. how much do you want to grow from 10% market share in the united states? >> first of all, we need to get back to 10. we'll be a little bit below 10 when we complete the deal i anticipate. and this is the first target to get back to. i want to see steady share growth. i'm very keen that it's profitable share growth, and this is where you can grow very

rapidly and not make any money. we're going to do things to really build the sustainable, quality share growth, invest in brands, invest in the market, invest behind the capabilities, and really make sure we build quality, solid share growth in the market. caroline: when you look at your numbers, it's clearly all about profitability, even though we are still seeing globally volumes deteriorating. do you ever envision a day where we will see a pickup in volumes once again when it comes to tobacco? >> i think at the moment for me it's more around decline rates. you can see that coming through in a number of markets in the first half. but no, i don't necessarily see a growth in volume. what's important for imperial to do, gven our position, is to find where the growth opportunities are. that's why we classify our markets as growth markets. the u.s. is one of them. where we look to build those shares over time, so given our scale in the world, even though you might not see macro environment of growing volumes there are plenty of growth opportunities for imperial.

francine: caroline, you also spoke about the u.k. elections. caroline: i did. as chief executive of one of the key ftse 100 players, i had to ask her what she envisions for the next government. she wouldn't tell me who she wants to win, but she did say what she wants any government to try to prioritize. >> what's important to me, as i look at any government is for a government to really think about properly about policies in relation to business. i mean all business. i think also it's important that whatever party thinks carefully about regulation, in relation to tobacco, clearly i'm very focused on evidence-based regulation that's effective. but also i think in a number of other industries, that's going to become increasingly important. caroline forefront in her mind it's just been put into law they want by may 2016 standardization of cigarette

packets, but she says she they're contemplating litigation on that front. clearly regulation, a key point for them. but also i wanted to get a view on what would happen in terms of the relationship with europe. is she worried about, of course, the referendum on the u.k.'s leaving the e.u.? have a listen to what she had to say. >> there would absolutely be a number of concerns from my perspective. britain would leave the e.u. from a business perspective. we've got big businesses in a number of markets around the e.u. it's something we have thought about. we have got some contingency planning internally around if it was ever to actually happen, but it's something i would be concerned about, absolutely. caroline: of course, one of the very few women leading a ftse 100 company, i asked her about diversity. she doesn't want quotas when it comes to women but she does very much want any government in the future to continue to try to breed more diversity into companies.

she says she does that within imperial tobacco, not just women, so it's not a gender-based thing, but also an entirely on what background people are from and what ethnicity they are from. she wants to keep a drive for diversity when it comes to those companies and those working within them. back to you. guy: thank you very much, indeed. great interview. you can catch the whole interview online at bloomberg.com. francine: staying with the u.k. election -- should the party with the most seats form a government? tweet us. ♪

francine: welcome back to "the pulse." france has seen its its third consecutive month of expansion with services and p.m.i. falling in april. we're also get a lot more insight into how the economy is performing when first quarter g.d.p. figures are published next month. the country's biggest lobby, we're joined by the chairman from paris. thank you so much for joining us. it's great to speak to you, because these are very testing times for the economy as a whole. these are very testing times for france because of the political landscape, and we still talk day in and day out about a possible greek exit. what do you worry about the most?

>> well, i think it would be very important for french business community as well as for europe that greeks can reform and actually keep greece inside the eurozone, that's for sure. everything has to be done to push greeks to reform and make the structural reform that they deserve, that they have to do. guy: pierre, as a frenchman, do you worry about the british leaving the e.u.? let's talk about it. how big a fear would that be? how big a fear would that be for you? pierre: with what? i don't hear you very well sorry. can you repeat? oh, the u.k. election, u.k. election yeah. guy: are there fears surrounding it? pierre: well, i think it's important as well, u.k. is a great country, of course, and u.k. must absolutely stay in

europe. why? because first of all, you know u.k. brings something to building of europe. so all business people inn france are in favor in u.k. stay in europe. we would like to be sure the votes will be tomorrow, i mean, the con strings of europe, and we stay with the u.k. of course. francine: when you look around london there's so many french people. there's a real brain drain from the people that have left france to come here because taxes are better, because the business environment is better. how much would france benefit if we had a government here that was a little bit less internationally friendly? pierre: i'm not sure i understand your question very well, but i will try to understand. the climate in france is improving a lot, so i think

that more and more and frogively, what the business people need in france is competitive business on one side and trust on the other side. so i think as you know, the government put in place what we call the responsibility which will have an impact on decreasing the tax burden on the french companies of 40 billion euros before 2017. we are in the process of doing that. so now what we are looking for the government is to increase the business-friendly environment of france and the french people, so first of all, to keep on doing this on one side, and risk the trust environment on the other side. to do that, we absolutely need business people in france to avoid which are not this

friendly. so we are in the middle in my organization while fighting hard every day, every week, to make sure that they are taking business-friendly measures, which will destroy the trust that we have to build progressively week after week. guy: one final question. what can british business learn from french business to improve the u.k.'s productivity story? pierre: the british people learn? guy: british people, u.k. business, what can u.k. business learn from french business to improve our productivity in this country is not very good. your productivity in france is significantly better. what do we need to do -- what do we need to learn from to you get that number up?

pierre: well, i think we can learn from each other. first of all, in the u.k., you have a very good ratio at around 5% only. in france, we are above 10%. so we can learn from the u.k. how to create jobs. and this is the first priority of france, how can we create more jobs. so this is what we can learn from you. what you can learn from the french business, we are quite strong in creativity, innovation. we have very large companies which are worldwide, such as l'oreal, michelin. i think we can learn from each other. but i would say the first thing that we have to do in france is really to create more jobs, and you have done it quite well in the u.k. francine: all right. pierre thank you so much for joining us. guy: socgen is falling after

they reported a loss in sexrureb declining revenue from trading, but fixed income. we spoke to their c.e.o. about the outlook in europe. >> i would say things are improving overall economically and i would say particular until europe, and we see that on the ground. that might be progressive, but there's a general feeling that things are improving. of course there are some risks still in the system, as i said for freese and things like this, so you can feel some volatility in the market. >> greece is still not out of the woods. it's like every day we have a headline on greece. today again still no confirmation. is it never ending? >> i must say, again, everybody is trying to find the way to meet in greece and if it was a different scenario, i think the eurozone would make further political steps to further

integrate. i think we should still see that more positively in the market, the market is not that nervous. let's wait and see the outcome. >> are there still a lot of questions about russia loss of 91 million euro this is quarter? do you need to reduce your exposure to world bank? >> let me say the situation is under control, and actually this was expected. we're more content with the profit of the group, and let me remind you our exposure is small. secondly, we've seen a progress compared to the end of last year. the ruebel has improved. the interest rate at the central bank level, and, of course there was a reaction with the decrease of the ruebel to stop buying cars. so all this was expected. this is in line with what we had in mind. what we've been doing and we've carried on, further strengthening the balance sheet, the capital ratio has

remained high, and we have further decreased as expected as part of our activities the funding provided to the company, which is now limited to $500 million versus $700 million, so we are making also good progress. francine: all right. you're watching "the pulse" right here on bloomberg. coming up, we have plenty more. >> we are the home of modern democracy. we've been doing this for more than 700 years, sort of. >> sure, because did you such a good job designing the system in the first place. ♪

francine: welcome back to "the pulse" live, streaming on the ipad and on bloomberg.com. guy: looking at the rest of the day, we're joined by anna edwards, who's in westminster on the lack day of campaign ago head of tomorrow's general election. anna, it gets interesting now. anna: it does get interesting, doesn't it, guy? it's the last day, the league

is crisscrossing the country, trying get the last-minute swing votes to back their corner. many of those party leaders choosing to go to the constituency they dearly want to hold on to this time around, so places with a small majority perhaps. the polls don't really give us any clue as to who's going to win this thing. we've had a number of polls out overnight, none give us any clear direction, 33 34, 35 points to labour and the conservatives. that seems to be the sort of battleground that we're in at the moment, so very little to separate the major parties from each other. some of the spread betting businesses telling us they think that the conservatives, the torre party, will win more seats, and some of the computer models suggesting that as well. as we build to the last day of this election campaign, it's very doyle say who's going to win t. as we've been saying all along, the most uncertain election in a generation. we're just wait and see what happens after tomorrow. guy: and we got this great package coming up as well.

francine: i know explaining to an american how the election system works, as an italian, i feel like i'm way below. guy: we're going to do cricket next anna talking about cricket. francine: back in two. ♪

>> this is bloomberg "surveillance." tom: there is a bond route to be making. yields are higher, bond prices lower. never give up. cameron and miliband dash to an

election and tough negotiations. i deeply polarized united kingdom. and a conversation with the negotiator george miller on maine and boden and baseball. good morning, everyone. it is wednesday, may 6. joining me olivia sterns and brendan greeley. let's get to our headlines. olivia: central bankers are debating whether to impose tougher collateral rules on greek banks. greek prime minister alexis tsi pras has -- another bullet. it will be able to make today's payment to the imf. the finance minister is upbeat about next week's meeting with finance ministers. >> we are game to