that way -- guy: ubs is find --fined. this as for other banks are said to be fined as well for fx manipulation. the french billionaire snapped up the sudden link for $9 billion. is time warner next. a great twist, liberty global john malone said a deal with vodafone would offer substantial synergies. vodafone surges.

♪ guy: good morning and welcome you are watching "the pulls." --"the pulse." barclays, rbs, city, and jpmorgan are all said to be ready to plead guilty. the link here is fascinating between what happened with ubs and the fx story. explain the connection. >> ubs is being implicated in both the fx and libel scandals.

the ebs has good lawyers, or they are good at finding wrongdoing and fessing up quickly. so with libel, they were first to the door and he escaped criminal sanctions. here we are three years later, yet again they are caught up in the fx thing they were first in the door of the department of justice. ubs has avoided the scandal. they have not gotten off the hook completely, because the department has turned around and said it you signed a deal. you have not stuck to the terms you committed other crimes, we are going to hit you with a guilty plea and a fine. guy: do they have to keep their nose clean on the fx one? liam: you would think so. i think they have a three-year probationary. .

maybe -- guy: they are under pressure for higher pedestal is. liam: the penalties are going up. one interesting thing is that banks are being forced to take guilty pleas. before they could take a non-prosecution agreement. that said they would keep their nose clean and avoid any further. this time the department of justice said enough is enough. this time you will have to plead guilty but the irony of the situation is it does not make too much of a difference. in the past if you had to plead guilty, it could have real repercussions for business. for example, you might not be allowed to do business in a certain jurisdiction.

now the banks get waivers. the guilty plea has become a new nonprosecution agreement. i would argue it has not turned out that way. guy: do these institutions now face a risk? liam: this is the worst of it. there is the tail risk of litigation. it could drag on for years and years and cost huge amount of money. yesterday b south african regulator announced it was launching its own investigation into the foreign exchange market. it is different banks, some of the same banks. it is never over. guy: we have always had fx, are we through peak prosecution where are we?

liam: i think we're through the worst of it. we know about the investigations into the precious metals. lesson able impacted. i do think as a result of these investigations banks have had to sort their act out. you would hope that the worst is behind us. guy: nice to see you. let's take a look at what else is on the radar. japanese growth has beaten expectations. the economy expanded for a second straight quarter growing 2.4%. the nikkei grew the us it has in years. suddenly medications -- sudden link expands. time warner has received an approach from all sees -- all

tice.are verywhat else do we have coming up. the bank of england monetary policy might reveal clues of whether we can expect a rate increase. we will look at how marks & spencer has reported its first rise in profits in four years. then we will speak to the former chairman of the wood group a sirree and would -- sirree and would. ♪

also coming up, we will talk about greece. the greek conundrum, we will have the latest bailout talks after the break. ♪

guy: good morning and welcome back. you are watching the -- "the pulse."

the european central bank policy makers be meeting in frankfurt later today to talk about greece bank aid. the country veers towards a default. this comes after the leaders of a two biggest economies that their date -- deadlines. let's go to hans nichols for the latest. fans, let's talk about the deadlines. hans: we have two stories, the first is from captain nearing they are saying the emergency liquidity assistance they may change the rules on collateral, they may stiffen a little bit that would increase the borrowing costs for greece. they also made the available pool of collateral in the deadline is june 5. we just heard from the parliamentary spokesman in athens, he said

june 5 is the day they simply will not be able to make their 305 million euro payment. we have also heard yesterday from merkel, they want to see a deal wrapped up in may. two other important stories both behind closed doors reporting number one mr. tsipras is acknowledging to his own parliament, the sales tax proposal will not pass muster. that is important according to a couple of people. then yesterday, with the cdu meeting here in berlin they don't think greece quite recognizes the predicament they are in. yes we saw bonds of drop a little bit yesterday after we

heard from christine lagarde sang some progress was being made i would be skeptical of any talk of real progress. guy: we are certainly seeing uncertainty. hans: 619 job losses a day. they have a study that came out after -- overnight and they looked at the cost of every day that uncertainty in this market rusher is bringing. 559 please close every day. 613 jobs are lost. 22 million euros shaved off of gdp every day. they estimate in order to jumpstart greases economy you need 25 billion euros an infusion of cash, that is a big stimulus package. that is why there is talk of a third a lot package for greece, what that means in terms of

debt, and what that means for stimulus. guy: thank you very much. hans nichols joining us from berlin. the ecb executive board member told guest that the european central bank will frontload assets -- asset buying program. the euro dropped sharply when he market found out. let's talk about what's been want to rate was referring to. andrew wilson joins us. guy: what is the ecb trying to say at the moment? will we see fairly big moves in the euro? andrew: i think it was a knowledge and it. we started two weeks ago.

things were down in a single digits. it has been a dramatic move. they were watching this, they were concerned about the move. from their point of view, this is designed to make financial conditions easier. the bounce of the euro is working against the names of qe. it is a reminder that the objective is to get both going. get more liquidity in the system. guy: do you think the market over red? a lot of people are getting hot under the collar. do think they were pretty -- designed to be as provocative as the reaction we saw? andrew: i would guess not.

ecb is trying to think of things they could do, they frontloading of purchases. there were also comments that the qe program could be extended. i think it is some job owning to try to calm down a selloff. i am not sure they have a strong view on a particular level. the speed at which we are moving , i am sure we're on their radar. guy: what is the biggest point whether we soar out of the u.s. economy at the beginning of the year data shows it will bounce back. q1 was disappointing. to sum it is more than just whether. it is encouraging to see the housing market, those numbers he referred to yesterday, those numbers were up. it is a sign that the consumer is coming back. the consumer globally has been disappointing when you consider how much energy prices have gone down so disposable income has gone up.

maybe the weather impacts slowed the spending. this is the first and -- sign the u.s. consumer is becoming engaged. andrew: the odds are september, if we continue to see strong payroll growth and signs the housing market is hotting up, i think the fed will move in september. guy code do think the ecb could be in danger of frontloading now at the expense of later when we could find ourselves in a situation where the market will you volatile. andrew: it was tightening in september the same time the ecb has frontloaded. there is a risk that we see european bonds rank higher by the move and treasury. those two central banks will be having a tug-of-war. geico --

guy: do think there's enough liquidity in the system because of an event risk over the summer. andrew: i think it was a broad move over european yield. i think it was designed at the overall liquidity and the fact that they are seeing conditions tighten. guy: over the summer what is the trade? andrew: we had consensus of the start of the year that the euro would weaken, then we had the big bounce back, we have consolidated, we have taken out short positions. the next move is for the euro to soften. the message from the ecb is they did not want those conditions to tighten. i think we are likely to see some further weakening over there remainder of the year. i think european stocks, the

validation argument is not as compelling, but the evaluation argument is still there. the euro is still helpful for european companies and over half of the earnings come from outside of the eurozone. that is going to be a tailwind for the remainder of the year. guy: how do you trade that kind of events, talking about greece. how do you position yourself around that? andrew: we are long-term investors. i think we see throughout this whole episode there have been dates and they have come and gone. i think you have to take a long-term picture, are we going to get there or not? are we going to find a resolution? we still think there is uncertainty. we don't have insight into the political process. you look at the economics of it

and it is a tough situation they are in. guy: i talked to people in berlin and they seem to think that they have this one covered. we have qe in place, we have set up all of the mechanisms to make sure we can manage our way through that. i get rumsfeld, but are there unknown unknowns here? andrew: we are in unknown territory. i think it is hard to be too confident and say that we will be fine. we think about the risk of scenarios around it. you think about your downside. what could the outcomes be? it is a hard one to be confident in because there is a broad range of outcomes. we are taking a more cautious stance around greece in part because of that uncertainty. we really don't know how things will play out if we do move to that situation.

guy: i want to talk about japan as well. we saw that in the cai -- ni kkei picking up. let's talk about that japan rebound. the economy grew for the second quarter in a row. bloomberg's chief asia correspondent joins us now for more. talk us through what the numbers look through -- look like. particularly if you can give us a sense of what inventory did for this number? >> it is a good quarter second-quarter growth. it shows the recovery in japan is on the right path. as you mentioned, some of the positive components came from the company spending. they are setting on record cash piles held by the weaker yen. they are starting to spend now

in trickle into the economy. consumers are spending a little bit more as well. together it is helping lift things in the right direction. it is a modest recovery. guy: take a step back, what is it say about the wider story this runs words 2%, which looks allusive? grexit 2% feels a long way off right now. as he mentioned earlier, we had a good second quarter, but inventory has made it a big part of that. that is a result of the negative year from last year. companies are playing catch-up. you cannot expect that inventory payoff to continue. it's a modest recovery so far on the right path. bank of japan meets this week. the forecasts are mixed. in the bigger picture, people are expecting japan they might pull something out of the bag and a month ahead.

guy: when do you think that will happen? people up in pushing back when they think stimulus will arrive from the boj. and -- >> things are inching in the right direction. we are so far off the target that stimulus cannot be fully ruled out. people are saying later in the second half of the year. they have said before that they have a lot of options. it could be a live one to watch of the next couple of months. guy: thank you ray much. -- thank you very much. let's get andrew wilson's take on this. a lot of people can see japan being the best-performing market area do you agree? andrew: the headline number was

much stronger. i would say we feel like japanese growth looks more subdued. the surprise has been that the consumer has not kicked in as much. energy prices have gone down, i think a lot of it will depend on the weight around in april. we are seeing wage growth, an interesting number out of the gdp is that real wage has declined. you need the consumer to kick in. it has been remarkably stable, the consumer has been stable across the tax hike. you want to see more spending from the consumer to be confident. guy: if you look at most economies around the world, it seems the consumer is taking much longer than we anticipated. you see it here and the states, will you see it in japan?

andrew: if you have stimulus is in the back pocket, it is probably a 2016 event. it will depend on if we see massive yen appropriate -- appreciation. if you have that growth, the wage numbers, the boj is already doing a huge amount of stimulus they would probably rather not do more. if they can, any sense that that momentum is fading, that will bring them back in. we think there is a decent chance they will not need to do more. japanese equities have done well. guy: and is it built-in there will be more? andrew: there is some expectation there is more to come. more that there is a backstop. if growth does falter, the boj will come in. there is probably a view that it will be fine regardless.

i still think there's a lot of optimism around japan. i point guy: where would you put in japan across the allocation process. andrew: i would put europe at the top. spain and italy are strong. the indicators suggest that those countries are doing well. the u.s. is on a solid growth to -- trajectory. japan is not a big buy. we would go to war -- to where the growth is surprising people outside. for japan it is more steady as she goes. you have positive surprises coming through in europe. a lot of people are paying attention to what is happening in spain and italy. our own indicators suggest this activity could be in the 3%-4% range. guy: if you are to factor those

numbers into the equity markets where we stand? andrew: there is an upside to european equities. i still think there is a risk of that european growth is better than some people think. guy: is there a danger in that scenario? where does the qb story fit into that? how much is back in already? do you have to back some of that out if you get some of the numbers you talk about? andrew: i think they are committing to extending this program until september of next year. i think the ecb will carry on. there's just no signs of that. unless you saw some big bounce in the energy price, or a really sharp fall in the euro those are the only things that would cause the ecb to back off.

otherwise i think it will be happy for the growth. guy: thank you very much. up next, bank of england minutes, see you in a moment. ♪

guy: welcome back. you're watching "the pulse" live from bloomberg's london headquarters. francine is off today. the interest rate decision 9 mil. the central view is that slack be fully absorbed within a years. inflation weakness likely to be temporary and the decision was

finally balanced for two m.p.c. members. pound up a little bit on the back of this one. cable rate 1511. that's where you can see it at the moment. we're joined now by jennifer ryan and melanie baker. good morning to you. >> what is interesting is we have two members saying that the decision is finally balanced for them. there was unanimity. it didn't make sense for anyone to be voting for interest rates until you saw what the outcome was. there are still the same inflationary concerns. guy: they are not august about accounts are they? -- they are not talking about accounts are they?

>> no, no, no. guy: are we going to start to see a dispersion of the members? >> we'll probably start seeing votes to raise rates in the next few months. by august, we expect a vote for a rate rise. guy: they are talking about slack being gone by the end of the year. can i consider that to be a timeline for rate hikes? >> we think the first rate rise will probably be the first quarter of next year. it is very much that we're not in a hurry to raise rates and when we do, we're probably not going to do very much. guy: what is the bar for getting the rest or at least the majority?

we have a downgrading of growth. inflation is still very, very low. how high is the bar for that next move do you think? >> pay growth is going to be a key factor. you mentioned the downgrading of growth. if you see that momentum picks back up in the u.k. economy, it will be harder to see that there is a cause for weeping -- keeping rates where they are. >> they are concerned at the level of inflation and the pound does have an impact there. guy: the last couple of days we started to see a reversal of some of the trends. i get a sense of the sequencing of what they are trying to examine. they are looking at how the it

is going to affect oil. but if the pound is one of the movable factors, every time i see the pound strengthen against the euro, are we going to see the bank of england raising rates? >> the key indicator of underlying inflationary pressure. we have been seeing some encouraging signs in the last couple of -- guy: these two guys have been fairly keen to raise rates for a while. part of it is down to the fact that i think they want to raise rates which is understandable. and the other is the economic outlook in front of them. when you look at the other members, what individual arguments do you think is worth going through? how many of them are focusing on more and different aspects? as you break down this group and you look at them on an individual basis are there any

obvious ones that next time around could make the move if a certain piece of data takes over a threshold? >> forbes may be another one. seems sob hawkish side of the m.p.c. guy: how would you break it down? >> one thing worth looking at is inflation expectations. it has gone negative from the report yesterday. if you start seeing that expectations to get back up to the target are stock marketting to get dislodged, that is going to start to worry m.p.c. members. guy: thank you very much indeed.

jen ryan and melanie baker joining us from morgan stanley. in a moment we'll be looking at the move to expand in the u.s. first here if europe speculation about a deal between vodafone and liberty global. caroline hyde has details for us. what has liberty global's chairman been saying to bloomberg? caroline: the first time in public hes that discussed the potential of joining forces with road is phone and liberty global. we have been talking about vodafone eyeing up liberal global as far back as november of last year. investors have been throwing fuel on the fire. john ma lean loan the billionaire -- john malone, the billionaire put it forward and said there would be very substantial synergies. look at it.

germany, they have crossover. you have liberty global owning u.p.c.. in the u.k. virgin media already fighting it out with vodafone. they are looking to add to their tv and phone presence. analysts completely agree citigroups have been putting out a note of late. saying that 1.4 billion pounds per year could be saved by joining these two juggernauts together. it is fascinating some of the terms the john malone has been using. he associated it to being a big banana in a jar. the banana would be vodafone. how do you get it out when clearly there are some key issues here. we know there are huge differences when it comes to the companies and the way they are structured capitalized. he said road is sfone pretty

risk averse. how will the shareholders swallow the fact that liberty global, actually a smaller company by market capitalization, higher leverage, how would those two philosophies combine? how would you get that hand out of the jar and how would you get the competition hand out of the jar? many regulators would look at that and wonder whether those assets need to be sold off. would it be an all-share offer? clearly he is putting out there that he is interested but they are certainly looking at the deal but there is no deal on the table quite yet. john malone is a busy man. he is also of course wondering what to do with his u.s. assets as well, charter communications, to name one of them we're talking about that next. guy: thank you very much indeed. let's talk about what caroline was hinting about.

entering the u.s. market with its agreement to buy 17%. matt campbell joins us now. >> there were some reports overnight that altice approached about a takeover. i think the real story is the deal that is not small, to buy altice in the west. guy: you think the latter is more likely? >> the deal that is talked about all the time is charter

communications. john malone buying time warner cable. there was this approach by altice to time warner cable tells you a little bit about their usta ambitions. they are thinking big. guy: why would we do that? do you just want to have a chance? do you want to muddy the water? do you want the information? do you want to look at the books? what is the game? >> that is a good question. perhaps all of the above. i think these stories have a certain value. patrick -- the guy who started altice is really an entrepreneur and really a tycoon in the most classic sense. he has been very prominent and come from relative obscurity in europe to have an important telecommunications group. he wants to be one of the big goy boys.

guy: i think he is getting there. >> certainly. guy: somebody else who maybe fits that bill as well is john malone. >> he keeps bananas in jars. totally bizarre. more importantly look when someone does an interview like this and says i think a merger between my company and another company would be a fabulous idea he tends to be signaling something. this is one of the things that has been specklated about by those in the telecom space for years. it is somehow shorn of its u.s. arm through the verizon wireless deal a couple years ago. it is in shape to do this. liberty is in shape to do this. if he is saying he thinks it is a wonderful thing to do, then perhaps over in newbury some of the folks at vodafone are beginning to sharpen their pencils.

guy: how would it change vodafone if he were to put that deal together? it turns vodafone into a very different company. >> you end up with a true quadruple play company. vodafone has made some tentative steps into offering land lane -- land line services. they bought ono in spain. you would have a quad play player across the u.k. across germany and other places in northern europe. really it turns vodafone into this european center, quadruple play telecom. guy: people have talked about vodafone scype, transactions like that. it would keep them in the t.m.t. space. they don't really become a media company. >> that is exactly right. i think there is still a

philosophical debate. whether content is king or whether it is not, we're both old enough to remember when it was king. now some people think it is king again. vodafone has been pretty reluctant to play that game. my bet would be vodafone wants to stay as a networks player, truly a telecom company. as you say, a deal with liberty would mean closing the door on a big content strategy. guy: matt campbell joining us. i want to explain the banana thing. you keep the banana in a jar but you to figure out how the get your banana and your hand out. marks and spencers plans a share buy back. we'll break down the numbers after the break. ♪

guy: welcome back. you're watching "the pulse" live from london's headquarters. marks & spencer with numbers out this morning and it has announced its first stock buyback since 2008. charles, we have a profit in crease. m&s is delivering good numbers. we have it doing for its investors it hasn't done for

ages. >> the capital spend is well over 2 billion pounds in total. it is a catchup from a legacy of underspending. the warehouses. general merchandise warehouses in the u.k. they need to get it down to six or seven. i.t. was great in the 1970's. they had to spend on that. again, they are eventually getting there with that. the stores themselves, again, they are a bit of a legacy from where m&s was a default place for everyone to go and shop. they have to smarten the stores up to compete. guy: they have to keep spending money is the story? >> they are committing to spending. the question is whether the 16% that they are projecting to spend on store refurbishment

will be enough. guy: does it -- do the things keep getting better? >> they have got quite a few tail winds at the moment. one of the other things they are doing which is the gross margin increasing cher switching from their full service lenders. to go direct sourcing in china and india and bangladesh. they get a higher growth margin out of that. their online operation which was really poor last year when they switched to their own warehouse, sales were down three quarters in a row from sort of april through to december. they got some easy comparisons against that. the online should grow this year. there are still things going forward guy: over the years, you and i had the conversations. i've had them with other people. is it getting the fashion right? all of those kind of things.

actually what we should have been focusing on is why on earth was stewart rose underspending? >> he did spend on the stores. he didn't spend so much on the back end of it. i think he did do some switching of the merchandise. it is such a massive operation. 11% market share in total. it takes a long time to do it. there was a feeling that -- i agree, he should have spent on i.t. and warehousing. it has now finally had to be done. they also have to spend on the fashion inability of the clothing. m&s is still in danger of being stuck in a nearby where this is -- neach. -- niche. guy: thanks very much indeed. charles allen joining us from bloomberg intelligence. up next, as the hubble

telescope marks 25 years in orbit, we'll talk about how it changed our understanding of the universe. ♪

guy: good morning, everybody. welcome back. you're watching "the pulse" live on bloomberg tv. we're on the radio, streaming on your tablet phone and bloomberg.com. now the phrase game changer gets bandied around quite often these days but it is one that

truly does apply to the hubble telescope. this year it is celebrating a quarter century in orbit. it has completely changed the way we view our universe. bloomberg went to find out more. >> i'm the public astronomer. before i was here, i was an astronomer using mostly the hubble state telescope. it has been circling the earth for 25 years. it has revolutionized every area of astronomy and astro physics. hubble was launched in 1990 with the space shuttle discovery. very famously its mirror was

perfectly the wrong shape. nasa had to send a crew up to correct it so that it could produce sharp images. it was successful. it went on to perform beyond expectations. it has lasted 10 years longer than expected. it is really hard to choose the most important discoveries that hubble has made because it has been involved in so many amazing studies. i suppose one of the most important important things it did was to help us understand that the universe as well as expanding the big bang is expanding faster and faster. it is one of the first telescopes to produce an image of the planet around another star. it has shown how stars and planets form and in my own field of research, the centers of very violent galaxies, it has allowed us to see down to

the black hole that is incredibly intense and violent region of different galaxies. really, really exciting stuff. it changes the way we see universe. guy: hard to get your head around. rocket science. great stuff. astron my at its best. let me tell you what we have got coming up. we're going to be talking to ian wood. a man uniquely qualified to talk about what's happening in scotland and with the scottish oil and gas stray. looking forward to that conversation. in the meantime, i want to show you what's happening with the markets. for a second day running we have seen a significant move on the euro. another leg lower. we bounced a little bit. a combination of what has been happening yesterday, feeding through the orange going story

surrounding greece. the euro dollar down, trading at one spot, 1.1116. on balance, probably a bit more hawkish in the market with position for two members talking about a finally balanced decision. over the next few months you'll see maybe the m.p.c. drifting apart a little bit. three m.p.c. members considering a rate hike. two haven't gone for it yet. i think that will be a fascinating story. the unanimous vote may not last long. that is stir for the m.p.c. this morning. we're going to take that break. plenty more of "the pulse" coming up. francine is not here. but i am. i'm at guyjohnsontv.

we'll take a very short break. ian wood will be joining us very, very shortly. we'll see you in a moment. ♪

guy: bad bank! u.b.s. prepares to plead guilty to libor rigging. another deal for draghi. is time warner cable really next? that is the question of the morning. and staying in space. a great fit.

so good morning to our viewers in europe. good evening to those in asia and a warm welcome to those waking up in the united states. i'm guy johnson. we're live from bloomberg's european headquarters in london. my colleague, francine lacqua is off today. u.b.s. will pay $342 million to the federal reserve's foreign exchange misconduct. meanwhile barclays, city jpmorgan are set to do the same. let's start with u.b.s.

the u.b.s. story is interesting. it tells us a lot about the way the system is working at the moment. it got fined for libor rigging but didn't get prosecuted for it. >> right. guy: it is being fined for fx rigging but because of the latter the former nonprosecution deal is out. >> the first time u.b.s. has had to plead guilty to a criminal charge related to the libor thing. the reason they didn't get charged the first time is they were the first ones through the door saying look, we fess up and this is everything we did. as a result they got leniency for that. three years later, they were the first ones through the door in the fx thing. they also have very good legal advisors. but because of the libor thing they have not been able to escape the pain completely. guy: before it said it would keep its nose clean and it didn't, now it is getting the same treatment again. they must have crackerjack lawyers. >> it is a kind of

philosophical question. this is just the latest scandal. to be fair to u.b.s., not just impacted u.b.s. but a number of very, very large institutions and global investment banks they have taken a guilty plea. whether that affects their business going forward -- guy: they are a dime a dozen, aren't they? >> it took a huge amount of time before there was ever any guilty pleas. we had b.n.p. paribas, a very large fine and pleaded guilty to money laundering last year. now deutsche bank pled guilty. it used to be something banks would try to avoid at all costs. you never plead guilty because it could have an impact on your business. guy: the banks later on, what are we going to see? >> we expect to see another

four institutions, barclays, r.b.s. jpmorgan chase and citigroup receive about $1 billion each in fines related to fx manipulation. they were part of this chatroom called the cartel which you might have read about. their most senior fx traders used to get in the chatroom and talk about what they were going to do at 4:00. that has been investigated and they have to pay the consequence s of that. guy: are we through peak fines? >> i think it is the beginning of the end. there are still investigations apparently going on by the fraud section over the department of justice. there are other banks that are not going to settle today like bank of america. we understand it has said they are being investigated. there is also the litigation. companies that claims have been impacted are going to try and sue. there is always the possibility of you know further

investigations. depoip how much pressure is there politically particularly in the states to keep the pressure on these banks? >> i'm quite cynical about the whole thing. here i am five years after the crisis, you would think there would be a huge impetus to go down hard attorney banks and then you libor. now they are getting guilty pleas but they are still being allowed to conduct business throughout the world. yes, these are large fines. in the billions. but relative to a bank that makes $20 billion in revenue a year it is almost at the cost of doing business. guy: are they going to tighten up or look for -- >> to be fair to the regulators it is a very difficult balancing act. on one hand they want to be seen as coming down hard. on the other hand these are

financial institutions very important to the market. they employee hundreds of thousands of people. you can't simply stop a bank doing business in the u.s. because it is going to have huge repercussions for lots of people's livelihoods. they have to balance that up. i would argue they need to get that balance a bit more on the side of coming down harder on the banks. guy: we'll watch with interest. what else is on our radar this wednesday morning? japanese growth has beaten expectations. the economy grew 2.4%. the nikkei closed at its highest level in 15 years. there was a big inventory component within that number. draghi embarks on an expansion to the united states.

burberry shares are down. currency shift by 38 million pounds of last year's profits. coming up be the e.c.b. -- will the e.c.b. seek tighter rules? are we starting to see a breakup of the m.p.c. and its views? what is next for the u.k. oil sector? ian wood joins us next on "the pulse." plenty more coming up. we'll see you in a moment. ♪

guy: welcome back. you're watching "the pulse" live from bloomberg's european headquarters. we are live from london. policy makers will meet in frankfurt to discuss whether to define rules of emergency liquidity assistance. that comes after the leaders of europe's two biggest economies set deadlines. hans nichols is to be found there. let's talk about these deadlines. hans? hans: the greeks are saying june 5.

that is an important deadline because that's when they have a 305 million payment due to the i.m.f. a total of 1.5 billion. june 5 seems drop dead. we just heard from the e.u. commissioner in charge of the economy. he sees progress out there. that is on the positive side of the ledger. on the negative side, we have jason varitek just giving an -- vary factoras. he is questioning not only the analysis of the greek situation. he said he is flaut out wrong and also questioning the power relationship between germany and greece and at one point in this interview, he almost suggested that mr. shoible likes or wishes this was being decided on the merit. if you think he is the key to

getting a deal in europe juan way to get a deal is not to insult him or come close to insulting him. that is a little thought that i read here. guy: let's leave the diplomacy to one side and talk about the hard economic numbers. we're starting to see what has happened to the greek economy. hans: we have this new report out a an enterprising cooperation institute. they look at some of the daily costs. 619 job losses a day. 613 day. 59 businesses a day close up shop. 22 million in euros lost per day in terms of g.d.p. you take all of this into the aggregate and you need some 25 billion euros to jump-start the greek economy.

one other quick note they find out, of the commercial loans, the business loans that people apply for, right now greece, the rejection rate is 95%. we saw their economies slow down last quarter. less growth for the greek economy and therefore less revenues and potentially more hardship down the line. guy? guy: maybe you want to hang on to your money. hans, thanks very much indeed. hans nichols joining us from beuerlein. joining us now in the studio is christian schultze. the e.c.b. is meeting a bit later to talk about the liquidity stories surrounding greece. give us a sense of your thoughts on the severity of that liquidity story. >> yes well the e.c.b. is caught between its role as the guardian -- ability in the euro area and member states where it has to support the greek banks. the greek banks are probably not solvent.

guy: not lending any money out. >> they are not lending any money out and the worse the economic situations in greece gets the more solvency. the e.c.b. is also the supervisor of the banks and has to make sure that the banks are not taking risks that they should not take in lending to a government that is losing access to european funding as well. completely going bust. i think an ideal word the e.c.b. would love to have a political agreement between the euro-zone and greece as quickly as possible so that then it can get arrived that role as being the learned of last resort to greece. guy: this is getting personal it sounds like. you have varifakous -- this is

once again get all about the people -- around the table. >> we have to remember that he is really not around the table anymore. he has been sidelined in the negotiations. he is still very important and has a lot of media attention including in germany. it feels like the greeks haven't understood they need the help from the euro-zone much mar than the euro-zone needs greece to stay. the greeks are saying at the very last minute the euro-zone is going to give in. we though that there is lots of resistance. the german population is huge. the euro-zone he feels with the support of the e.c.b., it has big enough -- to deal with the

damage of the greek accident. guy: the comments delivered in london monday night released to the market tuesday morning. another example maybe of an institution which yet has fully to understand its communication strategy. >> well, if you're the guy at the e.c.b. running the market operations department, which is in charge of coordinating the bond purchases, i think it is quite logical to say with markets low you buy a little more in the months proceeding summer and less during summer. it rings all sort s of bell which is maybe the chief economist or somebody else at the e.c.b. would have been much more careful the use. what it does show is that the e.c.b. in terms of transparency still has some way to go. of course it can't reveal everything. what it is going to buy, where, when and so on that would

invite markets preempting that and making it difficult for the e.c.b.. we should know more about its intentions over time. guy: do you think they should have been saying actually we're going to back load it? the fed hiking in sept, now that is going to cause some volatility. >> that is probably what skwlowled continue to. because the issue right now, until last week, we had a rising euro. a rising oil price and that may be dampening some of the consequences. you may think that is how markets are interpreted. if you front load it now, you reverse these negative effects and boost the economy by doing that. you're this might be a new problem. if they start getting into being tactical about their bond purchases, that is exactly what they should not do. they should precommit to what they are wanting to do and stick with that line as much as

possible and if there is a practical reason to change and deeve reason to deviate. guy: stay with us. we have plenty more to talk about. still to come on "the pulse," the bank of england's monetary policy voted unanimously to keep rates unchanged this month. we'll talk about the rate debate in the u.k. after this break. ♪

guy: 20 past the hour. welcome back. you're watching "the pulse." we're on bloomberg.com. let's talk about the bank of england. if decision was finally balance. the pound rose on the back of the minutes. let's bring the conversation back to this subject. christian is still with us on the set and we are joined by bloomberg's jen ryan. you have read the minutes. walk us through what they say. >> there are a lot of similarities to the inflation report last week. the idea that it is temporary and pick up by the end of the year. as you said, the point about it being finally balance second-degree a repeat from last month's decision. one thing that is worth pointing out is the complexity

of the decision is becoming really much more acute. because what you can see is the way the members are disagreeing is the in particular, the composition of slack in the labor market and how that might evolve. guy: do you think the more we should push back the first rate hike? it is complicated like jen is talking about then it is going to take a while to sort out. >> as long as inflation rates stay as low as they are, you can of course wait for more evidence. is it because of slack or lack of productivity growth? as the bank of england probably rightly predicted, we're going to get higher inflation rates later this year. probably quite a bit next year. we all know that.

then the bank of england will be under more praur from markets. is there a productivity puzzle? is wage growth going to come back? ? it does is it going to be inflationary noninflationary? guy: do you think those -- sorry. >> one thing i find curious is about the increase of inflation at the end of the year, it will depend on the composition. during the financial crisis, inflation was well above the target. that might well be the thing that happens at the end of the year. we just had the report that core inflation had dropped down to a low since 2001. that might be a reason for thinking that rate also stay on

hold for longer. >> i agree. the only thing is of course the target is not to find -- core inflation. the target is to find it in headline inflation. i think when it comes to whether it is going to be two versus seven. the headline rate is going to play -- guy: but if wages are not going up at the same time, do you think -- >> there are some signs that wage growth is picking up. still at very low levels. productivity deprothe isn't there. ultimately it is all about is productivity growth going to kick in? they can weep rates low. if productivity growth doesn't kick in and the labor market continues to tighten and tighten and tighten and wage growth goes up, we are in trouble.

guy: we still don't understand the dynamics of the fiscal side that is going to be delivered from the chancellor. does that have a meaningful impact or are they just going from what they saw in the manifest? >> compared to what we thoukt before the election, i think bank of england would assume now is austerity will be tougher that it would have been in a coalition government or a labor-led government. i'm sure the bank of england is in a relatively tight fiscal policy scenario. guy: is it a little bit -- i guess the problem is we started off the previous parliament we have to be really austere and then we were not. do you think we're going to end

up in the same situation here and jen, how much communication do you think there is at this stage? how much do you think of what the bank is thinking at the moment is being directed by the political impetus? >> i think there is two things. the budget that the conservative government wants and then the budget that they get. it is certainly something that the bank will have to figure into its forecast. as you said what will actually happen? if it winds up being a business looser than we're being promised now that eases the path for the bank of england to start raising interest rates. guy: when do we think the first rate hike is coming? >> the risk at the moment is more towards it is going to be a little bit later. we have to watch wage growth every month. guy: thank you very much indeed. we are going to take a break. coming up, altice -- what does

this mean for its time warner aspirations? follow me at twitter at guyjohnsontv and francine lacqua is at flacqua. ♪

guy: good morning, welcome back. you're watching "the pulse." i'm guy johnson. my colleague francine lacqua is off today. let me tell you about the top headlines. u.b.s. will pay for manipulating the benchmark interest rate and pay $342 million to the fed's foreign exchange. u.b.s. is the first of five banks expected to announce settlements today. jpmorgan city bank, barclays

and r.b.s. expected to pay over $1 billion in fines. shares in the air bag maker takata fell in tokyo trading after the company agreed to the largest recall in u.s. history. they are continuing to search for the root cause of a defect that killed at least six people. ukraine aims to reach a deal with russia in june. the c.e.o. has warned that failure to reach an agreement would make a new crisis more likely. >> there is no deal reached which will cover the next winter. the likelihood of a crisis. guy: right. let's talk about what has got the markets gassed up this

morning. let's go to jon ferro. jon: thanks, guy johnson. the dax up by 1/3 of 1%. monday tuesday, the best two-day rally for german equities since january. down .10 on the ibex. the ftse 100 pretty much dead flat. yesterday was a big macro move. we'll show you some of the movers. biggest move lower, if i can bring it up for you is burberry. down 4.8%. downgrading the earnings outlook somewhat. vodafone up by 3.8%. will they get that dance partner we have been waiting for? liberty global's john malone said "they would make a great fit." that is one to watch for sure. monday, tuesday, weaker euro. the euro having its worst day since march.

the euro looked like it was heading the same way this morning. that stronger dollar not really evident against the pound this morning. sterile coming a little bit higher off the bank of those -- off the back of those bank of england minutes. slack willing eroded by the end of this year the potential for inflation to pick up, at least there is a debate on bank of england policy. in a bond market, big rally just like there was in equities. there was in bonds as well. this bond market is getting a little bit more interesting again. not just talking about front loading bond purchases but they are concerned about the backup in yields. not so much about the directional move but the fact that it happened so fast. how does that play out for this summer?

it is going to be a big theme. in the u.k., though it is a deice is i move. five day sis points higher on gilts on the 10-year. we go back to 2%, guy. six months ago, yes yes, they will hike and then it was nothing and now we're talking about it all over again. back to you. guy: thank you very much indeed. 25 minutes to go until "surveillance" takes to the airwaves. tom kean and the team joining us. we're excited about the bank story over here this morning and you guys are going to be picking it up. >> kelly will join us. yes, the u.b.s. deal front and center. reuters came out about 8:00 p.m. last night with their story with a $5 billion speculation of what the fines will be . we don't know what those fines will be. maybe we see the announcement today. guy, what really interested me and i know it affects barclays

and r.b.s. as well as jpmorgan and citigroup is this idea of criminal charges and the idea of whether the european banks will be able to do business in america. guy: everybody is getting criminal charges at the moment tom. it has become the new normal. if everybody get it, it is not so much of an smufment >> i think you're right. there has been a real big shift here. yeah, yeah, a bunch of banks. how many days in covering the fines, fines, fines. to where there is some meat and heft to what we will see today. this h morning on the shift that we're seeing, it is a london thing. it is a back story. this is real intangible as reported by bloomberg and that reuters report with a big number on it last night. guy: i'm looking forward to the coverage. tom keene and "surveillance"

coming up shortly. altice entered the u.s. market with its agreement to buy 70%. the report mcoss the french telecom is also looking to buy time warner cable. caroline hyde is here. and matt campbell is also with us as well. let's talk about the frefrpbl entrepreneur who is pushing his way firmly into the united states. kind of fits the profile with him, doesn't it? >> it is quite a remarkable story. patrick came from not exactly nowhere but relative obscurity. he has parlayed that into turning into a global telecommunications empire. that the u.s. was missing so far. this that smallish -- about a $9 billion deal in terms of

enterprise value. this deal gives him a foothold in the u.s. guy: there has been talk about time warner cable as well. that is not small and you can't make it into something big. because it is already big in certain respects. >> yeah. it is worth $44 billion. suddenly you a much chunkier market capitalization. you look at a $9 billion price tag, actually patrick draghi is known for getting out on his bicycle. he is only using $1 billion worth of cash. the rest has to be leveraged. the thing is this is a frenzy going on in the united states. time warner and comcast, too much competition. that deal unraled last month. suddenly you have got the number seven -- geting with altice and then chartered

communications looking at bright house, the number six player. it then could merge with time warner or altice could merge with time warner. suddenly you have all of these players coming in, all of these different deals. they are being disrupted. you have amazon coming in with production. netflix coming in. these huge cable companies have to work out what do you consolidate to survive? guy: i want to talk about bananas and vodafone in just a second. >> i think you do look at john malone as being by far the likeliest candidate. altice and a time warner deal at this stage is an immense longshot. we're really talking about an extremely low probability event on the other hand, charter has a professed and demonstrated

interest in time warner cable. it has probably the regulatory support to do it. i think that is probably what we're going to see. guy: john malone has his hands in a lot of jars at the moment. one of them has a banana in it. he can't quite figure out how the make a deal with vodafone to happen. >> this is a metaphor we have been trying to understand. he thinks a merger with liberty global and road is sfone a wonderful idea. he is shouting it from the rooftops pretty much. vodafone liberty is kind of an analyst fantasy speculation deal that comes up all the time. bankers love to pitch it. malone was always seen as the obstacle. he doesn't want to do it. he doesn't want to sell. he likes it where it is. if he is willing to make a deal, i think that has to focus the mind on whether this is

possible. caroline: he feels that putting a and in in a jar it might get stuck. he is saying look, i like to be able to leverage up my purchases whereas vodafone are basically boring. it is low leverage and low risk and it likes giving cash back to shareholders. that is what he worries about. yes, competition is going to be a bit of an issue. i think getting these two together from a philosophical point of view and getting that banana out. guy: matt, the interesting thing about that deal would be that it is not about contests. >> no, this is something i think is worth remembering. we're starting to see a bit of a dwergeance among the -- divergence among telecom players.

we want to own the content and some of the delivery mechanisms. vodafone has so far been relatively reluctant to go down that road. softbank has been very aggressive on the content. fear. you could argue the verizon a.o.l. deal is sort of a content play. comcast owns the whole value chain in a way. i think we're going to see a really interesting split. guy: we'll wrap it up there. thank you very much indeed. caroline hyde and matt campbell. bloomberg's reporter at large. still to come on the program we're going to hear exclusively from the former c.e.o. at sony about the hacking fuss and what is next for the industry. stay tuned for that conversation. ♪

guy: good morning. welcome back. you're watching "the pulse" live from london on bloomberg television. the former c.e.o. of sony has expressed his surprise that the company hasn't figured out "the dangers of putting sensitive information into emails." it comes after sony pictures suffered huge embarrassment of the confidential emails that hackers exposed. >> if somebody wants to get t

at you, they will get at you. cybertheft is everywhere in every company. cyberpenetration is in every company. the differences that i think people would no longer write e mails with content they shouldn't do. i would have thought that sony would have figured that out. people never expected that email in a picture company would be exposed in that way. we had a previous experience when i was c.e.o. of an electronics company having been penetrated and play station and so forth. i would have thought the email examination would be slowing down and everybody would be beginning to understand that emails are not loose conversations that vanish in the ether. email is there forever. none of us write emails very enthusiastically anymore. they are a bit like old-fashioned memos. you don't put your thoughts down willy-nilly. you have to be careful. i'm sorry that it happened with

sony. it has happened with others. caroline: even if it is not documented? >> the movie business is emotional. if you recorded every conversation out of the studio, you would probably be apaled and declare a -- appalled. people say the silliest things and it doesn't mean very much. very little of that content really meant very much. what a studio boss said about a particular producer, we all say. some are probably saying it about you while we speak. caroline: as a more serious parts of some of the revelations that came about the pay structure, some of the lack of fairness when it came to females and minorities, ethnic minorities. is that something that needs

rectifying? is it being rectified? >> yes, i think if there is one positive out of the experience it was to reveal the stupidity of some of the procedures. that will be adjusted. that is in the maybe every day. the gap between men and women. it is going to be nair nair owed. you'll never get it perfectly. i do think this is -- this will be a healthy switch and people will be less upset. caroline: hopefully spread throughout the industry, do you think? >> i think so. i think so. it will take more time because the businesses to a large extent has its moments and the costs will always weigh heavily on those in charge who may or may not lose their jobs if they get it wrong. you can't always agree on who is the best person. in any facet of the industry. guy: the former c.e.o. of sony talking to caroline hyde yesterday afternoon.

let's talk to another leader of industry. he joins us now in studio for an outlook on the oil and gas sector. he is the chief executive of the wood group ian wood. post the election, how different is the economic story for the oil and gas sector north of the border? >> i don't think notice ply different. i think all parties going into the election would genuinely agree some change has too take place. as long as it happens, we are stillwell down in the oil price. who knows what is going to happen there. we're back to $64, $65. i think there is a change. a change came about a month before the election with a budget. the march budget, which i think effectively has changed the mind set of operators in north

sea. a lot them were thinking of leaving the north sea. they could not see a good future. it is in better shape. it is not going to start investing until the oil price begins to move up. but it has a mind set to stay and invest. guy: and your sense of how the story is going to develop? >> i think one thing we're all really sure of in the medium to long-term, the oil price will go up significantly. the shell chief executive yesterday was saying by 2040, a huge increase in the demand for oil and gas across the world unless there is some magnificent form of energy. in the recent term,, it is going to be strong oil price. i think there is probably a

year. a bunch of uncertainties. iraq is having a tough time just now. libya is having a tough time just now. the key is from the u.k. point of view we now have an industry that is prepared to stay and -- guy: we have another coming up shortly. >> there are more important things. more can be done on education employeration. we have been looking at education employeration. there are disincentives now for the big operators to pass their assets on to the smaller operators. there is some clever thought into how they might adjust it. there are some clever ideas and cler thinking. guy: boast this election, let's talk about the political story. the housing market in scots

land is starting to surge now. do you think that is a representation from scottish industry at large that actually we now have a stable footing politically on which to look forward? >> i don't think we have a stable foundation. let's move forward now. it was aable election. quite remarkable. the move in scotland clearly had a massive benefit for snp. new labour is nozz as left wing as they would like to see. a r a number of reasons for the vote. the other thing that was remarkable i think frankly

that was almost on the cards sadly. i think it was a good thing to have a strong third party across the u.k.. sadly because of the very fact to have coalition. they want to be seen doing something different. a remarkable outcome. what does it mean for scotland? in terms of stability, we're now into a serious game of political poker between the two strong parties, the winners. and snp which can claim it got control of scotland and the just what can they get from the evolution that is going to take place? david cameron said we will give you these conclusions. nicholas says we want more than that. how much more can get? from scotland's i.p.o., the worst thing that can happen is another referendum.

guy: if all of that is true, yes, all of that is to be argued about but the fact that we're arguing about that and not about a referendum may put scottish industry into a more stable -- >> yes, yes, except we are arguing with a referendum. the discussion taking place inevitably is going to have we either get more on the revolution and have full fiscal independence or else. i really hope it doesn't play that way. i think it would be very easy for the u.k. government to say you had a referendum last year. we don't think there is -- in 10 years. snp have some good ministers and good people that can do a good job in scotland and focus on scotland's economy and the u.k. economy. guy: how much to you hear relating back into that. you mentioned shell.

the oil price is going to rise. that is a part of the political debate. >> if you look at a number of issues, the economic debate as it took place over independence a very divided scotland. it was very divide. it was a negative thing to happen to scotland. we have done it and gone through it. the oil price is just one significant factor and i was forced into it i guess. we haven't got as much as oil as with you think we have. actually it is a lot truer today. a number of other economic issues that were discussed frankly, scotland is miles better taking the best of both worlds. it has a reasonable deal now from the u.k.. it will do a good job doing its

-- it was a remarkable result in terms of the snp vote. i still think, at least the polls still appear to say in scotland that people don't want -- guy: we're facing two different stories, aren't we? >> yes. i think probably it is fair to say that -- there were -- the u.k. played that extremely well. i still think right now there is probably not a majority. frankly scotland under an snp government should get on and do a good job of developing and take advantage of that. guy: what about the u.k. and the e.u.? >> well, in terms of the oil and gas industry i think it is

trying to -- correct industry line to take on that. here is what i hope will happen. clearly there is a lot of mood for change in europe. across a number of countries. i think that gives david cameron a better stage to go and do some reyegs negotiations. -- renegotiations. what i hope will happen is that david cameron will get a meaningful renegotiation which will enable him to say ok. we have got that now. i think it is right to stay in europe. i think i'm very much focusing on the gas business. i don't think europe will have a big factor on that one way or the other. i think we're better off in the economic -- the economic partner in europe and not in favor of -- guy: to you for braving the traffic to come and see us. the former chief executive of

the wood group. that is its for "the pulse". plenty to look forward to. the fed minutes later on. i'll hand you over to our colleagues in the united states for all of that. see you tomorrow. ♪

tom: ubs, barclays, the royal bank of scotland, jpmorgan, and citigroup. the combined fines may top $5 billion.

many may plead guilty to criminal charges. can european banks operate in the united states? stocks surge ever higher. the fed releases minutes. they do that within the fed double. baghdad loses ramani. -- loses ramadi. we are live from our world headquarters in new york. it is wednesday, may 20. i'm tom keene. joining me, brendan greeley, and everything pushed aside by almost the cacophony of news and numbers and tangents. brendan: i was just worried about david letterman leaving. i mean, it is very hard to disentangle because you had a lot more settlement, now you have the four x settlement. i think we lose sight of what actually happened. tom: we will give you clarity on that, important ramifications for the european and american banks. let's get to top headlines with vonnie q