Transcripts For BLOOMBERG The Pulse 20131213

You are watching the pulse. I am guy johnson. I am Francine Lacqua and this is what is coming up. We have another exclusive interview to bring you. We are live at the ceo of airbus. We are live with the ceo of airbus. The house of representatives has passed the first bipartisan budget in four years. The twoyear, trillion dollar deal clears the way for the president to approve spending to avoidingll lead a shutdown. Is not the grand bargain were expecting but it is something. Were seeing spending rising. I love the line from this morning. Rise, we are not dealing with entitlement or corporate taxation. Have a look at this. Jamie dimon made a comment which was carried in the financial times. It was, thank you, thank you and may god bless you. When it comes to politics, i think boehner who is that House Speaker is all about progress. This budget is a positive step in that direction. It is progress. It is doing what the American People expect us to do, which is coming together and finding Common Ground. That Common Ground comes weough in the vote date hundred 3294. Of course there is dissent within the tea party and the heritage party. It is a reduction in terms of sequester. It is dealing with some of those issues. Monetary policy is going to be affected by this. That is a story will be focusing on as we move toward the feds decision. The political shockwaves it sends out in many ways are also as important leaning forward from here. In reading everything of the story, i think political progression and rehabilitation of the grand old party or the republicans. We know it is split. What comes through clearly is paul ryan is a contender for president ial has he put himself on a pedestal in terms of assuming high speaker role, a great mediator of bargains or has he compromised his position in terms of running for presidency because he has acquiesced, because he has done a deal they will send to the senate . To that and if you look at the ratings, they were floored, they were bombed. The red lifetime lows the cousin of the shutdown of the government. They were at lifetime lows because of the shutdown of the government. Manus, thank you for that. Gm is selling at seven percent stake in persia oh. In peugeot. Ryan chilcote has more on that. What exactly did we find out today . Peugeot is getting hammered. Shares down almost 11 . If you look at the year, investors of usual have done pretty well. Share price by up more than 70 . What a rocky ride it is. Shares down more than seven percent yesterday. Look, gm and peugeot are going to continue their partnership and continue to buy and develop products together, but i think everybody understands this partnership is not going to be on the same grand scale that was originally envisioned just last year. That is not because peugeot announced theyre not saving as much money as they anticipated, but they are competing for customers, right . That is not helping them. Gm bought the seven percent stake last year to underpin its partnership. It says peugeot no longer needs that Capital Support. The background is peugeot talking to its chinese partner g. Gfang there i talk to me about what this says about gm. A lot of news coming out of gm this week. We have dan ackerson moving on. Hes using this to tick off his boxes before he does that come announcing all kinds of exits including his own, right . It will come on january 1 when the new ceo in 2014 takes over. We also learned that theyre going to exit ally financial, the remaining stake being sold for 1 billion at a healthy profit. Here in europe, i think this is are limiting their exposure, getting rid of the chevy brand which will be gone in two years. Europe has been a bloodbath for gm. Not just a shortlived one, but it has gone on since 1999. They have lost 19 billion here. Back to you. Ryan, thank you very much. Ryan chilcote on the latest from the car sector. On the ourmberg exclusive, European Business correspondent Caroline Hyde joins us now with more on the google story. All aboute, this is optimizing performance. Google can basically better control the interaction between hardware and software, but it is also about cutting costs. Giants such as google and facebook are looking for lower powered machines for their more basic applications. For those applications you dont need massive amounts of computer power. You can use a cheaper chip. Now they can steal market share and service. This is all about disruption of the established order. The established order being intel . Exactly. Not such good news for intel. Google is amongst the largest buyers. It could threaten intels market dominance. It currently provides 95 of chips for server processors. Google is intels fifth largest customer. It spends at least 500 million, 500 million of server chips every year. That is not too much need to panic yet. Building from scratch is going to take at least three years. If you need really big supercomputer type crunching numbers and data when youre still going to need a for ari, you will still need an intel chip. Caroline hyde with the very latest on technology companies. Using bitcoins could bleed , according to the European Union which is considering regulating the currency. The basic message about buying bitcoins is caveat emptor, buyer beware, because the European Banking Authority has put out a report and has outlined a whole lot of risks for consumers. First of all, these are traded on unregulated platforms. If that platform were to fail or close for some reason, you arent guaranteed to get your money back if you happen to be your bitcoins arent lodged there like a bank. You are at risk of not having anywhere to trade your bitcoins. Is second point they make that these coins are being held in digital wallets. Every digital wallet is susceptible to being hacked. Theres no deposit refund scheme in place, so if you get your money hacked by a hacker, you might not get it back and we have artie seen some people losing as much as 1 million worth of money which is being hacked from the digital wallets. Finally, another point they make is that because the whole trade is anonymous, that means it is susceptible to be used by money launderers. So the authorities decide someone is doing too much Money Laundering they may just go ahead and close down the platform. That is another risk, guys. How much would the market be worth now . Do we have any estimates or guesstimates . Are outinate bitcoins there and they know what theyre trading at, with about 10 and five alien dollars if you were to buy them all up at once. As for who owns the mall or who knows about them, bloomberg did who owns them all or who knows about them, bloomberg found out that six percent of people thought it was an xbox game, other studies in iphone app, 42 of americans actually know it is a Virtual Currency. Of news for you, norway said they are not going to count this as a Virtual Currency. It is going to be an asset and the know each and services are going to tax any capital gains. Another risk. A story to watch. David tweed from berlin. We didnt pull the europeans who think it is an xbox. I thought that was funny. Heres what else is on our radar. The ceos finally resigned as rsa slumps. Jpmorgan is nearing a 2 billion dollars settlement to resolve investigations into whether it ignored warning signs about ernie made office crimes. He was behind the largest ponzi scheme in history. A deal could be announced before the end of the year. The board is working to decide on a ceo as early as this year. Ballmer said he planned to retire within a year. What have we got for you in the next part of our program . Rx queue look into the luxury yacht maker seen as the ferrari of the seas. We at the water with riva to learn how to ride in style. That is coming up next. Good morning, everybody. Welcome back good lets get to our big focus for the program for the next couple of hours we are going to take you inside makesthe italian brand million euro yachts for the rich and famous. Fot was a fan. S a let me show you what all the fuss is about. Glamorous, romantic and refined. Rivas boats are made for beautiful people, and more importantly for beautiful weather. This is not what i had in mind. That means is two things. The first is that the rain coaches on. At 44 feet, the riva rom a is sophisticated. It would be somewhere between a for ari and a rollsroyce. Two 800d, there are horsepower engines back there. If you want this thing to go, it can go. Top speed is 41 knots and that on a day like this feels a little abrasive. I still cant wipe the smile off my face. There is a fully fitted kitchen under here in the head over here is all you could ask for. It all becomes too much. You can forget about the mod cons, this boat is all about joining a club. Its membership has included Sophia Lorraine and sean connery. The price of entry is high. I learned two things in that package. You pretty good on the riva and. Ive great balance very would love to do it all again on a sunny day. Youre being battered by the weather. The italian lakes are still pretty cool. Now it is time for our exclusive interview with the ceo that owns riva. Me what he wants to do is make more of rivas heritage and fulfill its potential as one of europes top Luxury Brands such as lvmh. Boats ofst beautiful the last century is our kelly. Are the best for the same brand. We have the same designers of the boat to develop something else, something we have called the riva experience. Something like an object we have developed for our owner but can be purchased by everybody that loves the brand and loves the expressingva is itself. We are working right now to open ourselves to the public by creating a sort of gallery. We want to share the great heritage and great story of riva to the open public. You do the same . Ferrari is a Wonderful Company and they have just closed the most fiscally successful year ever. We would like to be perceived as the ferrari of the sea. Were going to bring you more of that exclusive interview later on. Why america is still rivas number one market heard this business is no chinese owned. Were going to take a look inside the factory and show you how you build one of these beautiful boats as well. To planes itoats is been a tough week for europes Biggest Aerospace company. Still, it has a new plan to keep things simple. Jonathan ferro joins us with the very latest. It is all about communication. We start with the name itself. It would change in january. Streamline the name and simplify the business. Take a step back from the defense side of the business. 5800 jobs will be shed from the defense side of things. The government are spending are cutting their spending ou on defense. Ceo ran airbus and he knows how to streamline and focus on where the money is. The guy who took over for him is upstairs at the moment. Is an operations guide. Years are going to be significant for this business. Thes been a tough sell, 8380. He developed the 350 which is yet to fly. What is the next 10 years going to be all about . After the a350 there are new lanes in the pipeline. Is all about milking what you have. You get more bang for your box. Wet be interesting is that talk about these companies restructuring. Theyre about as nimble as tanks. I want to get his insight as to how difficult it is to turn around. He doesnt run that it of the business. He runs the airbus business. These guys are going to make some serious money over the next few years. Everything is changing in this industry. How does it look in 10 years time is going to be fascinating. Thank you so much very at beyonce has just released a Surprising New album on itunes. Welcome back to the pulse. Streaming on your tablet, your phone and bloomberg. Com. To our markets editor, manus cranny. London is the only laggard among the markets. As a twomonth low for london but as for the rest of the markets, the dax is down over 1. 5 this week, paris is down also. Let me show you what the terror of the london markets is. It is our as a. We knew they were going to have to put more capital in. Today the ceos gone. This shows you just how dramatic the move has been for rsa, guide. We have an eight. 5 year low for the stock we havent eight and a half year low for this. Tock another tough day in terms of rsa. When you cross over to the states, a lovely gift of a story this morning. About 0. 25 . Up there is a traitor who spent 5 million buying a pet that volatility will rise over the next four months in april. He is taking the view that what you will go through a tough time in the first couple months of the year. It is year of transition. Wherever heard that before . Back to you. Still to come on the pulse. Would live with the ceo of airbus. We will discuss new strategies in 2014. We will be delighted to have you along for the ride. We will see you in a moment. Welcome back to the pulse. Im Francine Lacqua. Here are bloombergs top headlines. The u. S. House has passed its first bipartisan budget in four years. The trillion dollar budget removes automatic spending cuts including 20 billion in cuts for the military starting next month. President obama says he will sign the final measure. Has executedays it the leaders uncle for treason. He is the most senior figure to be purged since kim took power nearly two years ago. Union has offered the ukraine funds to overhaul its economy. Cash would be available at the country signed a free trade pact with the eu. Guy, you have more on the ukraine now. We certainly do. In the battle for ukraines bloombergrchs zero editor rob lafranco is saying how billionaires could have a big part in taking down the president. Well talk about the names in just a minute. They have a vested interest in this countrys future, a big vested interest. Presumably, that is been tied to the president. Exactly. Most of that fortune has been accumulated by purchasings date assets. Similar to a we saw in russia. The economy is concentrated in a very small number of hands. The richest man is worth about 13 billion dollars for use the Metals Market. Is alsond richest man the Metals Market is worth about three billion dollars. It is a really small number of people who are concentrating this economy. In russia if you went against his how are you went he ended up in prison. There was an armed revolution that leaned towards the west. These men are producing metals and energy. They do have to integrate with the rest of the european economy. The problem is that when the , thee revolution came previous president was not for successfully managing the economy. A very prorussian president came in and he snubbed the eu and allied himself with russia. It is about stability right now. Yes, to get business done. Well learn more later. Europe editor rob difranco. Major of italys last independent jewelers is investing heavily in newer markets in search of new or young wealth. Caroline hyde reports. Dummy on he is a Family Business now in its third is ation damiani Family Business now in its third generation. The ceo sees himself as an ambassador for italian style in italy rich people are old. Instead, the jeweler is turning to central and east asia. Quality anditalian heritage is an asset that people will pay extra for. Inasian people love made italy and high quality items. Is investing heavily. Hes planning to open 4050 stores in the next fourfive years. The damiani family, theres more involved in money. More involved than money. Caroline hyde joins us for damiani. Is well known for the family goldsmith it has in south milan. Is not only being designed but made. They get the gold and by the gems from nonconflict areas. They buy all their gold from they took over the country when he was 26. Use keeping very much to the production and sales in italy. We asked a few seeing a turn in corner in sales in italy. Sales up 16 across the board because it is all about asia and emerging markets. China, malaysia, the main thinking is still that they are not selling out. Out. Ari selllagr it is the last of the independently held italian luxury companies. Their product being italian but theyre looking to emerging markets. And to the younger clientele. As a younger person i wouldnt buy these tools. Im not sure that the chinese would buy these, either. In moscow,eiling malaysia, china. They went on a tour with sophia loren. That was back in april. They really are trying to woo in the asian crowds. Theyre not looking to sell out overall. Theyre looking to the east, but also they still have 76 owned by the family. They do have great big logos. Maybe there is a market out there for something not european. Thank you, carolyn for the st on damiani. It makes milliondollar yachts for the rich and famous. We brought you part of our exclusive interview with the ceo. He tells us that riva wants to be one of europes top luxury hermes. We lvmh or take you to the factory where the craft boats that stand out from the rivals. I am riva product manager. You whereo explain to riva boats are born. Realize the 44. We start to install the first cable. There we start to install the engine and the fuel tank. Then we start to see the boat. Here we placed the deck on the hall and we start to see the shape of the boat. Finish the days to whole piece of work and we apply 20 layers of varnish by hand. This is the last step. And testheck the boat all the systems on board. The electrical system. When all systems are done and ready, we start to test the boat on the lake. Izio. Has a very long history and we will bring you more of our interview with the ceo. He will tell you why the american boat i are is still number one despite the companys evenhinese owner. Princess grace of monaco had one. Yes and theyre going to sell that boat shortly. I wish i could buy it. We have asked ceos to name their favorite books of 2013. T is great if you like and sounded by library. This was chosen by alan and the two men who are the architects of the federal reserve. Is a juicy book. It is a juicy book. Everyone went with history or and i am stunned that someone has the downtime to read these books. Picked for brooks, one of them was my way, the book by frank sinatra. He read one on a group of native americans and how they run with their feet. A book on how gm and at t were reinvented. When youre a billionaire you 4n choose for books. We got what have coming up . We have our exclusive interview with the ceo of airbus. Were going to talk to him about the Company Strategy moving forward and of course the battle with boeing. We will see in a moment. We are live from bloombergs london headquarters with the are pleased to welcome airbuss chief executive bregier. Weyice have seen the 380 and the 350 take to the skies and hopefully be delivered next year. The risks that are been taken have been enormous. You have taken the bets of big money on big projects. How different in the next 10 years look like from the last 10 years . I think it will focus more in production, deliveries, rapid growth. As you said, we need to deliver the a350 next year. The next 10 years will not see a new aircraft developed by airbus or any other company. Less risky, more generation of for profitability. Lets talk about the a350 being the inheritor. We are on track with our programs. We will be cautious to the very end, but two aircraft are flying very well. To 700 flight hours logged. We have still about 2000 to carry out and then we will deliver the first aircraft to our first customers at the end of 2014. In a bit less than one year. Putting ans of airplane into the air is incredibly complicated third we saw that firsthand with the a 380, the superjumbo. There is a concern about that aircraft and its feature moving forward from here. Whether or not you will hit the financial targets, the breakeven levels you said you would hit in 2015, again, we are on track for those because there seems to be only a couple of companies ordering it. Who will be ordering this plane moving forward from here . A niceght yourself cushion, but you wonder what the longterm looks like. Yes, tim clark has added 50 aircraft. 15, 16, 17 we4, will have close to 30 aircraft delivered to our customers every year. The break even objective in 15 and beyond is achievable. Doric . How to sue d change the game with the a3 80 . Pointtopoint was always boeings approach. We should not oppose one to the other. The a350 can be a pointto point. Though we cant deny that the by about fiverow percent year on year thanks to asia, china, middle east. It will double every 15 years. Imagine two times more traffic from heathrow. This is the aircraft for the future. How to change the perfection of that playing . Can you take it into United States . To see a big push from you selling that aircraft into the United States. Are we going to see that aircraft having a story in the United States . This isnto the point. We have about 300 aircraft ordered. We have still 150 to be delivered. Exists for the a3 80. Youre right. ,hen aircraft are restructuring theyre not looking for growth. The a3 80 is the year they are now looking for growth. The a3 80 is the aircraft for growth. Already, butlane it looks like it is ready to be stretched. If tim clark asks you to stretch it, would you, could you, has he . I wonder what the size of this could look like in the future. Sure around 2030 we will stretch the 380. In the meantime its focus on the aircraft which is available. Lets try to have optimized cabins and optimize layouts and then i am sure that we will convince not only emirates but many other airlines that this is the aircraft of choice for the future. Us. Abrice, stay with ceo of bregier the airbus. A new study may explain why james bond her his martinis shaken not stirred. They found that this by drinks liters of alcohol a week. That is four times the recommended amount. Good morning, everybody. Lets get you straight back into our bloomberg exclusive. Airbus chief executive Fabrice Bregier still with us. Boeing are going to very similar ideas. Yes theyre bringing out a new version of the triple seven, of the 777. You lead the charge. Nevertheless, you have to wonder where that will leave us in 10 years time. Have very different solutions. How different are the aircraft offerings going to look like, do you think . Youre right, it is similar but different. A350, the 350e family has been centered around an aircraft which is bigger than the 787. This is an advantage for long term because the market is looking gradually for slightly bigger aircraft. Slightly bigger has always of do youe think youre been too reliant on the emirates . Only eight percent of our orders goes to middle east carriers. But by value that would be different . Absolutely, but even if you double this is very limited compared to china. In china i sell more than 100 aircraft a year. Focused onmargin to the middle east . Know, when we sell aircraft were supposed to make margins everywhere. It is nicely balanced as a backlog. We have around 40 in asia, 10 middle east, the rest in the u. S. And europe. We are much less at risk than 15 years ago when the market was divided to train europe and america. Nowere was a crisis we only depend on the growth of the world gdp. As long as there is growth we will manage wherever there is forfive percent growth. Sidewayss a slight question. Materials have come a long way, but Material Sciences havent caught up with what you want to do. Maybe youre at that point now. In the next 10 years how much improvement are you going to see in Material Sciences . Is it easier to make a prediction about where you will be in 10 years time . There will be improvements in both metallic and come positive. If you take composite material, one problem is that it is not conductive, electrically. It will change and it will simplify installation of all Electrical Systems in an aircraft. Our job is to also Work Together with all the raw material providers to make sure that we will incorporate the best technologies at the right time. Innovation is key in our business. End, will come to year john leahy be on top or with this opposite the top and boeing in terms of the number of orders this year . I dont know. I think it will be very close. And does it really matter . We are already at 1214 aircraft sold met at the end of november. The book, it not is to deliver the growth of my customers expect very thank you very much indeed. The ceo of airbus. Francine come over to you. For everyone else, the pulse is back. We have this great exclusive day inside reva. We talked to an auction specialist. Just a reminder, you can follow us on twitter. A u. S. Budget breakthrough. The house averts another government shutdown. Chipping away at intel, google considers designing its own server processor. All aboard. We cruise with reva is the million euro yacht builder makes new waves in yacht luxury. We like to be perceived as the ferrari of the sea. Good morning to all of euros in europe, good evening to of euros in asia and a very warm welcome to those just waking up in the United States. This is the house of representatives passed the first bipartisan budget in four years. The twoyear trillion dollar deal clears way for the senate to approve. It is not the grand bargain we expected, is it . It is so far from the grand bargain. It was stacked and ready to go to try and get the house behind it. That is what happened. If you think what we were originally going to be expecting was between he 1 trillion 4 trillion budget, justin happened. The House Speaker talked about progress. This budget is a positive step in that direction. It is progress. It is doing what the American Public expects us to do which is coming together and finding Common Ground. When you look at the voting numbers, it shows very clearly that it was about trying to convince america, Corporate America and the voters, look we have moved. 33294. Sequester cuts cut stay in place. Three quarters stay in place in 2015. But for definitely it doesnt or theeficit reduction debt ceiling. Get ready for rerun, rehashed, recycle in january or february. Looking forward to that, something to talk about. The political margins are significant. Are, especially when you look at the protagonists or the leaders of this grand deal and of course there is mr. Ryan on the republican side. His in essence raises stature as a bargain maker and a dealmaker as someone who can rally republicans, even if it is behind closed doors, elevating his status to the next House Speaker. I tell you what, i will give you a run for your money as to whether the republicans will stand behind this man for candidacy. The bottom line to take away is that ryan has almost rolled the political dice for himself. Can he get the poll ratings off the floor come off the scrap heap in terms of Public Opinion which hit rock bottom lows for the gop after the last debacle. Manus, thank you very much indeed. Lets move onto company news. In a bloomberg exclusive, google are is said to be looking to own processors. Caroline hyde is with us to give the details. Google andft advantage. It is all about optimizing performance. Google says it can better control the interaction between hardware and software. I think crucially it is all about cutting costs. Theyre looking for lower power machines for less complex applications that they run. You dont need masses and masses of computing power. You can therefore use a cheaper chip and that is where arm holdings comes in for google. Mobileips dominate phones and tablets. Now the trend is still the market share in the world of ofvers. This is disruption established order, guide. It certainly is. Established order being intel. Of course intel is the dominant force. Google is among the largest buyers of server processors which use intel chips. Intel chips are the ferrari of chips. Threatentherefore intels market dominance. At the moment intel provides 95 of chips for server processors. 95 of the market rate and google is intels fifth biggest customer. 500 million in intel server chips each year, according to Capital Markets. ,f you are a stockholder perhaps not too much need to panic. Designing and building server chips from scratch, that can take up to three years for google. If you really need take supercomputer crunching of numbers and data, we have to use intel. This could make customers a little more push down prices for intel in the future. Back to you. Our European Business correspondent Caroline Hyde. Francine over to you. Gm is selling at seven percent stake in peugeot. The American Company but the anke last year as part of alliance to cut costs. That alliance did not pay off. Ryan chilcote has more. Ryan come in terms of share price, it is him is the fifth or what it was four years ago. Today,etting hammered down on 10 so far today. To be fair come in 2013 if you balkedves of steel and on jennifers commute so the 70 return which, compared to volkswagen with a 10 return is not bad at all. It has been a rocky ride. There has been a lot of news for peugeot. Where is his announcement leave peugeot and mgm . Gm is selling their stake here so going to buy and sell products alongside peugeot. It is not going to be on the same grand scale as envisioned a year ago. Basically these two companies are realizing they will save less money than they thought and it is going to take them longer to get to those cost savings, but they are finding their competing for some of the same customers. Maybe not huge issue for gm, but if you think about peugeot, i didnt see one single peugeot. Carssell the bulk of their in europe unlike gm which sells globally. That is an issue. As far as the stake sale, jim said they bought the seven percent stake to underpin the partnership. That Capital Support jim said is no longer necessary for to show. The background is that peugeot has another partner in china. There is a type of them doing a larger deal with that partner. Ryan, thank you so much. Guy, from cars to planes. Lets get back to talking about airbus. A few minutes ago we finished our conversation with airbus ceo Fabrice Bregier. Hes is a new year will be focused on production rather than developing new planes. The last year was about new planes, the eight 380 and the a350 which is the competitor to boeings dreamliner. The next decade a lot less risky. I think it will focus more on upduction, deliveries, ramp with a series of aircraft. We need to deliver the a350 next year and after that i believe for the next 10 years will not see a brandnew aircraft to be developed by airbus or by any competitor. Jonathan ferro has been following the story and wrap up other news on the sector as well. Basically the 350 looks like it is on track. We will get delivered next year. About executing on the aircraft that they built in the last decade, making sure that they sell more of them to key customers. You have nailed it guy. Big bets with big money is done. Now you have to deliver. Was interesting is the next 10 years. The year am not talking just about airbus what about competitors as well. This isnt going to be some isolated story for airbus, this will be an industry story with a focus on what they have got. The s bus looking to streamline the business. This is where theyre going with this. He talked a lot about traffic growing by five percent year on year because of what is happening in asia and china in asia and china and the middle east. Doubling every 15 years. He thinks he has the tools and products to address the traffic in the a3 80. The a350 is going to sell itself hurt airlines around the world what a dreamliner or a350. This is a dual engined, easy to operate, efficient airplane. With with high composites and therefore light and really energyefficient. The 380 is a challenge in my mind. That came tha before that. Hes got to get that aircraft in the different markets. He said that ba could take them forward. That is what has been considered such a risky thing to do, to put all this money into these big launches. This is something they are going to stop doing. They take the risk out of that. It is still a challenge to get that a3 80 out there and sell it hard. The a350 will sell itself paid the childs for these guys is to milk the products they have got and that is what theyre trying to do, streamline the business, use existing products, welcome for all theyre worth. For the investor to get more bang for your buck, they hope. Hes going to get into america. You could use this aircraft. He has to get the americans buying. 91277 airplanes, in asia as well, similar story. They come in metropolitan areas, huge distances at 380 is built for those. Absolutely and that is where the traffic is going to be for asia and china. Imagine two times more traffic out of heathrow. How do just that . You need is to story for engine lanes. He hopes he has a solution. We hope we have bigger runways. Lets not go there. That is next week story. Well talk more about that than. Francine come over too. Guy come in here is what else is on our radar this friday morning. No the name at microsoft. Steve malakoff is said to be among candidates getting serious consideration. Jpmorgan is nearing a 2 billion settlement. Made off was behind the largest ponzi scheme in history. A deal could be announced before the end of the year. Facebooks instagram is adding messaging to his photo sharing app. The new feature is called instagram direct and lets users send photos and video strictly to their friends. Last year facebook bot instagram for 700 million. Still ahead we are inside lecture he got maker reva. A look at the history of the boat that was lusted after by liz taylor. Were live from bloombergs European Headquarters here in london. Lets talk about the Foreign Exchange market. We started to lift off the floor. We are trading at 103. 58 right extremely elevated levels. Clearly, the monetary push out of japan is going to continue and continue aggressively. We have a deal on the hill in washington. One of the implications for the fed tapir . Everyone is getting very excited about that story moving forward. The does this mean for longterm story for the dollar yen. His is a fiveyear chart we easily up above that for the level and the numbers keep coming through. Next week will be fascinating. If we get the taper, the next year will be absolutely amazing as a worker would do the story. The dollar yen is certainly one to watch very is all about december 18. Investors are optimistic about Global Markets in the coming year. More than they were this time last year. That is the take away from this years Global Market Sentiment Survey from the cfa institute. The groups director of Capital Markets is with us. Thank you for coming in. Yous not surprising when look at 2013. All the risks that were on the eurozone have kind of this. We have had a nice rally. What are the people that took the survey. With a what were they worried about for 2014 . There are a couple of things that came out of the survey. The first is a risk of political instability continuing to weigh negatively. In the u. S. . Is just a global finding. It varies among different regions. We found that political instability was confirmed in emerging markets and developing markets like the u. S. Where there were fiscal problems in congress. Another factor was the possibility for weak economic conditions. Broadly, pictures are of. It all depends on whether there is a large correction the markets when the fed taper starts. What was the most surprising finding in the survey . Is something that surprised you when you went that and read the results . It was not something that was surprising but the optimism came through in europe which we havent seen in years. Expect strong Economic Growth next year which is up from 33 last year heard that figure is Even Stronger when you look at local markets. The u. K. , for example, the sentiment there was that 74 of our members expected Economic Growth next year in the u. K. Which is the highest among the markets analyzed. The currency in europe, if you are to be negative on europe, you would say we risk being the new japan, where the euro is very high and we risk inflation. Followed by deflation. We have an analyzer currency markets particularly in the survey. It is going back to another risk factor they came out. 60 remember stout the unwinding of quantitative easing policies would have a negative impact on local markets. That figure was highest in places like india and brazil where they had account problems. We arty saw issues with that earlier in the year when the fed announced plans to begin tapering as it urges his. Tapering as it purchases. Lets talk more about our exclusive interview with the ceo of airbus. Bregier inth fabrice the last half hour. We asked him about the game thinks and if he still the 380 is it. We think traffic will grow by about five percent per year, thanks asia, china and middle east. It would double every 15 years. Traffictwo times more from before. You need the a 380. This is the aircraft or the future. The perfectione of that playing . Can you take it into the United States . Are going to see a big rush for you selling that aircraft and see United States now that we have consolidation done . Were going to see that aircraft having a story in the United States . How to change perception of the airplane . This is the point. First of all we have about 300 aircraft ordered and we are a hundrede still have 50 to be delivered. The market exists for the a3. Were not looking for growth in the a3 80. Im sure some of them will be much more interested in the a3 80. A slightly stretch question a3 80 is ready to be stressed. If tim clark asks you to stretch it, would you, could you, has he . Talking about what the size of this could look like in the future. 2030 wille around have a stretched 380. In the meantime lets focus on the aircraft which is available. Lets try to have optimized cabins, optimize layouts and then im sure that we will convince not only the emirates but many other airlines that this is aircraft of choice for the future. Ceo talking to me in the last hour about the a3 80. Coming up, luxury yacht maker reva still sees the u. S. As its most important market. The pictures are beautiful. Find out why they want to focus on emerging on the American Markets next. Welcome back. Lets get back to our big focus of the day, boats. We have been taking you inside reva today. In 2012 this. Makers owner was bought by a chinese firm. The whole company has refocused its attention on asian markets. The ceo still sees the american boat i are as his number one customer. Theres a new wave of pickpocket investors that are looking for a good bargain right now in europe. Excellent quality, excellent brand and this is a huge potential in the company for exporting this branson to asia. For sure this is the case for reva. This Incredible Opportunity to develop the brand in the Asian Pacific region. That is the main guideline of their investment. Stephan winkleman at lamborghini, a great iconic italian brand said event to refocus our business on the United States. That is where we see the future. You share that view . United states has always been the most important market for us and it still is the most important market. Since the mid 50s. We had a reva showroom at the Rockefeller Center on fifth avenue. Now we are also in palm beach, south beach, in the hamptons. The American Market is very important for reva and the ferretti group. We see asia as an opportunity for the longterm. Not now, but we are sure it is going to be an important market in the future. Next i would take you inside reva and how they cash in on celebrity fans like bridget. You had fun. And a lot of fun. It was raining but i have a lot of fun nonetheless very talking about fun, lets look at some companies on the move. Manus cranny joins us with the touchscreen. Stocks down 17. 8 are sent as we speak. Ae u. K. And irish insurer had number of anomalies in ireland to say the least. Along. Ove stick with banking. One of the key shareholders objecting to the capital raising. We leave it there. Back to you. Manus, thank you very much, indeed. Manus cranny running you through the corporate movers very at christmas early for beyonce fans. Released at Surprising New album with 14 songs on itunes. Z, drake, Justin Timberlake and more. Welcome back to the pulse. These are the Bloomberg Top headlines. U. S. House has passed the first bipartisan budget in 40 years. The budget removes automatic spending cuts including almost 20 billion in cuts for military start next month. The senate will vote on the bill. President obama says he will sign the final measure. North korea says it has executed un forcle of kim yong treason. Use the most senior figure to be purged since kim took power nearly two years ago. European union has offered ukraine funds to overhaul its economy and says cash would be available at the countrysides a freetrade pact with the eu. Ukraines president triggers the biggest reproach us to nearly a decade by backing out of an agreement last month. But stay with the theme of the ukraine in the battle for the nations future, it is oligarchs running away from the government. And now to tell us why they do play such a critical role. They basically control the pain economy ukraine economy. Thisas publicly called negotiations with the eu. These guys really want stability. Once the richest man in the region has seen his fortune drop by almost 6 billion. A lot of it has been the Metals Markets, which has declined. This instability is not helping out. Theres a huge amount at stake for these guys. How serious can a battle become between the businesspeople, the elite, and politicians . If you look at other regions, it be preserious. The executives was arrested and detained. It is a pretty intense place to do business. Ironically, these guys are billionaires because of assets they purchased in the privatization era at very good prices. Their billionaire fortunes are based on government connections. This is the tussle between the two. They want stability and the president wants alignment with russia because that is critical to the economy. They want in alignment with you and was so they can export. Which way do they face . Im sure they have a relationship with moscow. And these are markets in the west. What is their alignment . They need their relationship with moscow. It is a global world. There are ready selling exports to western europe, poland, hungary. They need to maintain that. They are trying to walk a fine line. It seems like a very public and risky negotiating ploy that is going on now, basically, the billion or saying to the president , russia is great, we need this other stuff, too. Who are the main players . Who else do we need to watch out for . Is a very small number of people. The richest is worth about 13 million. The next is a big metal industrialist and worth about 3 million 3 billion. After that, it falls off quickly. Could it affect trade outside ukraine . Is certainly could. The biggest risk is to ukraine. The largest chocolate maker in ukraine says he can increase its exports to western europe from 10 now to 40 . Bucks ukrainian chocolate. Yes. Bring us some. Not swiss chocolate, but perhaps better than we will leave it there. Lets move on. Treading bitcoins could bleed. Ou dry according to a report considering regulating the currency. David tweed is in berlin with the latest. David, we have been talking about bitcoin. Give us the latest. Theme message coming from is giving consumers a very strong message, caveat emptor. There are risks associated with buying the currency. First of all, it is traded on a platform which is not regulated. If that platform were to close down, there would be no recourse for people who wanted to continue to trade or bitcoins. Secondly, you keep these bitcoins, which are actually a software, and virtual wallets. Theres nothing to stop the virtual wallet from being hacked by a hacker. If that were to happen, theres no guarantee you would get your money back because the money will be gone. There is no deposit guarantee here. The third thing to watch out for, because of the nature of the trading of bitcoins, it is anonymous, it is very attractive to criminals. Which means you can see quite a bit of Money Laundering taking place. If the european authorities were to decide there was quite a bit of Money Laundering taking place on a particular platform, they could move to close the platform just like that and you would not be protected. These are the sorts of things you need to watch out for. Something else to worry about, just this week has decided the Virtual Currency is not going to be considered under norwegian law as a currency, which means it will be considered as an asset. In any big increases in the value of that asset will be subject to capital gains. So anyone who wants to trade or buy big going needs to know exactly bitcoin needs to know how it is related in their country. A lot of problems associated with holding these. Some regulators are taking a very different view in a much more positive view. David, these things havent ownership chain. These things have an ownership chain. We have got an idea that if you wanted to buy all of the bitcoins in the world at the moment, it would cost you 10. 5 billion dollars, which is a significant amount when you think about it. It is not that far wide it is not that known out there, really. There was a survey done by bloomberg which found 6 of americans think of bitcoin is an xbox game. Another 6 inks it is an ipad app. What i thought was interesting the survey, 42 of americans actually know it is a Virtual Currency. I think that is rather a lot considered it is only been around since 2009. Lots to look at. The other thing i found interesting, the web conference they said they spent almost a day debating Virtual Currency. So it is not going away. Onjpmorgan is filing patents Virtual Currency. Much, david. Y manas, what is going on in the markets . By theliant attempt United Kingdom to claw its way back from a decline. We have turned green. Equity markets try to claw back. About 1. 6. Wn taper tantrums, taper neurosis. You have the push and pull on the ftse. Talking about google and potentially more business. This is the top, this is the bottom. , more losses because of the storms of the u. K. And ireland. In the possibility they will see the dividend called into question. And they lose their ceo. That was the u. K. In context for you. We will have a look at a couple of the industry groups. Basic resources, virtually flat at the moment. Theyre saying it will be another tough year going into 2014. Another year of transition. Amazing what i can do it this thing. You are so good with technology. And just 20 minutes, surveillance with tom keene. Lets put the serious stuff aside for a second. You have an electronic visit producer coming on the program, a danish one, right . He will join us. He is outstanding. It is like this you got it down cold. We will talk to him about a huge amount of money with spinning records. We will do the serious stuff as well. David plouffe will join us. My a mcginnis will join us on a greate where it is exclusive. Agreement in washington. The house and senate very close to voting on a budget. It is not been like this in four years in the United States. Richard falkenrath will join us. And one of americas great monetary academics, jerk cleared aof Pimco Richard cleared of pimco. Im going to get richard can you see it . Great move. Jim oneill wouldnt do this. It would be something in the air. I should point out, overnight, around the world and particularly in california, there was a massive uproar on twitter on their blocking strategy. Twitter relented at about midnight east coast time and they changed the blocking. This is huge news within social media. We will discuss that as well. Im looking forward to hearing more and that story. Thank you, tom. for that dancing. That has got to go viral. If it doesnt go viral, i dont know what will. Up next, writing the ferari on the sea. And how it cashes in on some of its celebrity connections. Welcome back to the pulse. Bloombergsfrom headquarters here in london. Lets get back to our big focus of the program. We have been taking you inside riva today. Italian luxury makers are often making most of their product. Riva is no exception. From the 1920s and 1930s to the classics created in the 1950s and 1960s, this your this yacht has produced some of the most iconic pose ever built. Riva caned in 1842, this symbolize the glamour of the postworld war ii era. Captivated by yachts handcrafted out of mahogany and designed to be cadillacs on water. These sleek lines certainly sold. But despite the glamour and the jets have fan base, it has been a bumpy ride from a business perspective. After a series of owners, riva was spot in the year 2000 before the entire company, including riva, moved into International Waters being bought by chinas group in 2012. Lets continue the conversation about the future of riva and the boats is building now. And has built in the past. Lets talk about some of the interesting options coming up. Our guest is a specialist with rm options. Peter, good morning. This boat was owned by the prince and grace kelly at the same time. That is correct. Walk us through how important heritages when it comes to looking at a boat like this and how much value it adds. I think rose, my classic cars, certainly benefit from having celebrity problems. I dont think when we are talking about brands such as riva and the glamorous both of the 1950s and 1960s, to have that rob announced from prince rainier and grace kelly is exceptional. That is the ultimate playboy in the ultimate playboy story. Certainly, that connection does add to the value. It is a relatively new business for you. We assume no rise in the classic cars we have seen the rise in the classic cars as a business. This is absolutely incredible. Rivas, you sense, maybe not in the same league, but are they going to be . Theyre made in limited numbers. We believe there are fewer than 2000, 2500 original still surviving today. They are wooden boats, so they basically can be destroyed over a period of time. If you do not restore properly, it will sink. It is not like a classic car, if you break down, someone will come to get you. It is very important air properly restored. There is a parallel for sure. However, the practicalities of owning a classic riva a rather different than those of owning a classic car. Wateryou have to be near or take it to the riviera. I dont see that as a real obstacle. Who is buying them . Mainly bought by italians, italians and germans, those who have homes on the legs are those the riviera. S in traditional locations these boats were used inperiod. Is in his 90s, still around. Theres future collectible value here. Have all the same qualities as a classic ferrari. An alternative investment. We have looked at the car as an alternative investment and people it made good returns on these. Are these the same way . We have always approached the alternative investments argument as it is in investment in pleasure. If it goes up in value, then it is a side benefit. However, for sure they wont be going down in value from a particularly those who have been restored by the right people. Talking about restoring, where are they showing up . For many years, the italian were unloved by the italians. When George Clooney moved in a few years ago, a sort of brought things back into focus. Most of the restorers are still based around the italian lakes. The traditional artisan skills. Theyre still the best people to restore them. That is worthy those are mainly turning up. This 1958riva you will be monaco, what are you looking at . Around 4000 euros, 5000 euros. There was a ferrari a few years that may double its presale all because of the problem wants provenance. We saw that with liz taylors diamond collection in new york. No one really knew how much extra someone was going to pay for that. Sophia lorraine had one, Peter Sellers, can you track those down . Do we know where most of them are . The boats are logged. They can be found. If somebody really wants to buy Peter Sellers boat bad enough, they have to make a strong offer to the present owner. Market when you have a boat that is unique. In terms of how this relates back to the riva of today, would you look at the bows of today, do they fulfill the same sort of andration story the 1950s 1960s both do . Do you think and 20, 30 years, we will be saying the same thing about those boats . Very difficult to say. Heritage brands, we know from the chinese, the emerging markets, they are into heritage brands. Aston martin, ferrari, those are the brand selling the best in chinese. When is the option . In may during the historic grand prix. Family willy, the turn up and look at this as well. Lets hope so. It is a fascinating story and we will hear a lot more about it. I brought this along because i thought this summarizes what riva is all about, in my mind. Hold it up to the camera there. It is the best advertisement for riva for me. 1950s, 1960se stream. Have a couple of ladies. I think theyre all very good friends. Thank you for joining us from rm auctions. I could see us on a yacht, guy. Time for todays number, 122 feet, the link of the new megayacht by riva. Yachtl be the largest from the company. Astonishing figures are going into its constructions. It will take 15,000 hours of painting, 10,000 hours of carpentry work, and a thousand hours of electrical work. Up, friday the 13. A very lucky day for someone in america. The mecca millions lottery check in thethe secondhighest history of the game. We will show you the remarkable odds you have of winning. Welcome back to the pulse. Lets look at the Foreign Exchange markets. This is the dollaryen. Theyear chart is probably more interesting story. This is what youre looking at. We have got a fiveyear high on dollaryen, trading a very elevated levels. 219. 6 nine basis points is the spread. Were going tory continue to watch. Jonathan ferro is back with what you need to know for the rest of the trading day. Just a couple of weeks ahead of the holiday season, many films are being released, anchorman day. Theoking at hobbitt first movie chicken over 1 over 1 movie chicken billion. This is the second of the trilogy. Becausewhat it is meant ive never watched a single lord of the or rings. The books were a must read as a child. Would also like for you . The lottery. In the United States, mega millions, 400 million. You need 5 numbers and the mega ball as well. 20 drawings, no winnings. This happens 11 00 eastern time tonight. In italy, 13 is a lucky number. I hope it is an Italian American in the tristate area. Christmas. E for but the odds . Fascinating. One in 259 million. You have more chance of making two holes in one on a single round of golf, more chance than being hit by lightning, and seven more chance being attacked by a shark. And more chance of being attacked by shark. Over 600 million. Im looking forward to maybe meeting the winner on the program. Hopefully, tom keene. Get good right here on bloomberg. Surveillance is next. Tom keene is going to be dancing during this program. He is are ready given us a sense of his moves. Europe in to electronic music. Follow us on twitter in the meantime. Have a great weekend, everyone. Years for the house and senate to agree on a budget. Yes, virginia, there is a santa claus. He was worse than a dog and perpetuated thrice cursed ax. North korea eliminates a leader. It is what it feels like. Dj dave buren. Good morning, it is bloomberg surveillance. Live from our new york headquarters. It is friday the 13th. I am tom keene dancing on stage with scarlet fu and she had to buren. Nto hang with van for those in the United States, older than 29, dj is not like we remember. Those of you in the United States . We just saw the ipo a few weeks ago, it is huge in the United States. Last night the white house past the first bipartisan budget and four