Europe, good evening to those in asia and a warm welcome to those just waking up in the United States. I am guy johnson. I am francine lacqua. This is the pulse in europ bloombergs European Headquarters in london. The coldest weather in 20 years is heading towards east coast right now. Are extreme. Their high is 18 degrees. Snow and ice that other major cities as well. Officials are warning people to remain indoors as much as possible. Dangerous conditions are causing chaos for travelers. More than 9000 flights had been canceled over the last few days. Even more have suffered long delays. New yorks jfk has a huge backlog of flights. The report forced to shut for a couple of hours after a plane skidded on the runway. There is some good news for some children. Thousands of schools have canceled all classes this morning. We will keep tracking situation and bring you updates on the impact of the arctic weather. To whether or not so great in britain. It is warm and wet over here, ironically. That is not stopping londons boat show from sailing into town. Following hard times after the financial crisis, britains boat industry surges back to profits. Ryan chilcote is on the ground. Maybe not on the ground, are you actually on a yacht . Almost on the ground. You can give flight, maybe he can take sun seekers 92 footer. This is a 9 million boat here disses the dating deck are you dive into the sea from. London boat show just kicking off here. I will give a little to her. Im learning all of my boating vernacular. Site is the saloon. Pretty nice. They have a nice 55 inch screen there that is a lot less than the rest of the boat. If were going to be a little ambitious. Return to go up onto the flight bridge. Ray is a good man in endeavoring to do this. It is pretty extraordinary appear. This is a trilevel boat, or so heres aively table, which is no fun. It has three decks, right . Obviously they put a hot tub appear for me. You have got your bar and of course normally you have a crew of about four with the chef, a captain, a stewardess and somebody to help you with all the ropes on board. You can ask a operator yourself. This is one of the two homes. They make one of these boats a month. 10 of them last year. It takes about six months to make this both start to finish. Sun seeker, interesting company. The soma than 200 votes last year, employment at 2000 people in the u. K. And in a few minutes well be talking to their managing director. Francine, guy . Fantastic work, ryan. Never work with children, animals or large odds. Hes setting out his vision includes tax cuts by reducing spending. He may not be the chancellor at the point to which is now beginning to reference. Theres an election coming up in 2015. He is looking beyond that very he thinks the pressure will be on any party that comes into power after the next election. Nevertheless, this really is about politicizing what were seeing right now. Were seeing is a recovery. An improvement in the economy, a downtick in the economy. Be message today is going to on the contrary, we can step back from austerity. We will not be stepping away from listening this pursestrings either. This really sets us out for an Election Year next year. Is going to build throughout the next 12 months. Everything will be very political. Absolutely, francine. It will be on two fronts. Not just on the economic side but on immigration as well. When you look at some of these polls, ec 30 of those who voted conservative back in 2010 to you kip, which is an antieuropean party in this country. That is going to be a big fame as you go into the next year. Is going to be interesting he has got a core constituency of voters. Recall the mo a piece here usually a big part of the conservative movement, theyre worried about their pensions. Theyre all kinds of changes afoot. This looks like it will be a core era for this as well. Guess where they sit guess who they are saying they will protect . Pensioners. Many people who arent pensioners. When you see many people who are quite well off and they are receiving benefits such as a bus pass and may not use, such as a Television License and that that they probably dont need, it is difficult for people on the other side of the spectrum who arent pensioners that are struggling to make ends meet. This is what they are calling a costofliving crisis. You can see other two parties are really going to face up against each other in next years election. John, thank you so much. Jonathan ferro at the very latest on the u. K. Tech companies and google are looking to transform Smart Technology to four wheels. European Business CorrespondentCaroline Hyde joins us now with more details. Today we had an announcement from google that they launched an open automotive alliance. Carmakers, General Motors is in there, honda, on develop looking to Android Software and customize it for cars. Samsung similarly partnering software thathave will run in car systems as well. Why these Tech Companies falling over themselves . Because her market could be huge. We understand that ihs thinks 150 million in excess of 150 million cars will be on the road and connected to the internet by 2020. Thats more than all the cars that will be reduced globally this year alone. In fact, we are seeing the amount of chips, the value of chip Net Technology in each car is just wrapping ever higher. In fact, the value is Something Like 65 higher than it was a decade ago. The way younating, can get technology into phones. Panels willflat allow you to see displays was still sitting to the windscreen. Sensors will analyze how youre feeling. You can match your music your mood. Of course while analyzing traffic, helping change your route as youre driving. The potential is fast and no wonder you have a Record Number of nine Car Companies presenting it. If you get into a tesla is like somebody put a flatscreen telly in front of the dashboard. Some companies are already doing it heard a big week this week for technology. We have some some reporting numbers tonight, but a to c, not exactly getting things after a great start. A numbers onsed sunday, maybe trying to bury the bad news. But the bad news is there for everyone to see. Chinese phone maker, sales down 29 . This company has a quarter of the entire u. S. Market in terms of smart phones now, sales less than three percent globally in terms of overall market share. They have lost sales for nine straight quarters. There been you have a first for your loss to the company, besides ordering ironman. A toy 14 will be a very tough year according to analysts. Caroline hyde our european Business Correspondent. Price of bitcoins the past 1000 again. Zynga said it was start accepting virtual currency. The coins first crossed the 1000 threshold in late november and thomas is to be worth six and 40 million dollars. Gauges of manufacturing fell in december and its higher market money rates. Mercedes is back on top. New entrylevel cla led mercedes to post a seven percent gain in november. The brand sales rose 14 to 313,000. From cars to boats, coming up our interview with sun seekers managing director heard fido at a prestigious john maker is looking east. And later this hour, pharmaceutical giantteva may leader. New we will talk to the top contender. First. Bloomberg. Youre watching the pulse. We are live from bloombergs headquarters here in london. Bloombergs European Headquarters in london. Pound versus your screen back. As we speak, the british chancellor George Osborne is on his feet in birmingham, laying out a vision of more austerity for the british economy. This is not the time for releasing the pursestrings. The story is developing in the u. K. As we head towards a 2015 general election. Also this morning we are seeing some slowing in the Service Sector in december. Come down to a 58 number on the pmi. That is still fairly elevated. You need to think about what is still happening here. Weird have seen fairly strong growth relative to other economies. Thursday were going to see the bank of england. Was the bank of england going to do . Announcement from the committee could be interesting. Rbc saying it believes it could lower the unemployment threshold , lowering percent that for the first rate hike. Bank of america and Merrill Lynch talking about that the threshold is not a trigger. Lots of moving parts, 163 points 1. 6060 is where we are trading. Guy, thank you so much for that. Britains most prestigious yet the list looking east to secure its longterm future. Since it was bought last year by a chinese billionaire. Ryan chilcote reports on their moves to convince rich chinese that super yachts are the toy they are missing. Sun seekers there is jack wilson fans back 3. 5 million bucks. If the company is right, buyers of its brandnew 75 footer and a modest to follow will come from halfway around the world to buy it. Sun secure made james bond roads. In the world is not enough, the luxury maker even made the villains vessel. Real worldd to the and you will find a kind of people who own sun seekers could change. Last year chinas largest Property Developer was going to buy 30 of them when he decided to buy the whole company instead. This is really beautiful. This is the 40 as and 40 , and a sun seekers boat for billionaires. It goes for 20 million. Give me one example of how boats are changing . Sun seekers is not selling many vote many boats in china yet. The new owners betting the half 1 billion to buy the company for, that will change. Well, daddy has a new boat. This is the sun seeker 92 footer. Is in an milliondollar boat we have the sun seeker director dirk mcintyre. Can you give me a discount . No. [laughter] all the bookmakers up and tell me that they are cautiously optimistic about 2014. Basically, everything up to now, since the financial crisis has been pretty ugly, yeah . It has been challenging, but think the world is being cautious. I think the violence of these two words are important. We are optimistic about what is happening in 2014. What is taken some very strong to 2015. Rders we are looking good. Gretzky may example of the financials. We are still working on our financial u. N. Our revenues will be challenged, as most of as most of our neighbors are. We made Huge Investment here in the new product and new product development. What we see is the outcome of that. That invested in texas forward to 20 14 and beyond. It looks like lecture in the sense that the highend, your hundred 25 footer, those always do well, but the smaller of more affordable boats we produce in excess of 20 boats a year of over 92 feet. Most of the higherend sizing is have hadstomers who many sun seekers before and use them for a variety of different purposes, either for personal use or charter. Clientgy of a chinese since last year. How big a market can china be . China can be as big as it wants to be. When we talk about china, we year be we have a 10 relationship with china. , potentially, i think america has 16e, million votes. Europe has over 12 million. China has a long way to go before it hits the dizzy heights of the free markets. Want asdoes china opposed to buyers elsewhere for stocks. China has [inaudible] them in situ in china is fantastic. It is fantastic to see the menus. There are many strong uses a boats there. Lets check out the saloon here. What is the saloon here . When does it tell you about how boats are changing . This is ultimate luxury. This boat is being used for it has all the functions you could expect for a private family house. He said open space for seating and you also see luxury dining with an enclosed galley. You can drive yourself very if youre fairly emphasis and you have some experience, you could drive it. Our charters guided by rules and regulations. Not wingefinitely it. This is not our biggest boat. The biggest boat at the show as a hundred 72 footer. Youre going to build even bigger one. We have a hundred 75 foot boat we have a 175 foot load. What is the biggest challenge of all . Keep going. Is a rule they should never spend more than 10 of your disposable income on a depreciating asset like a boat what you make of that . There are lots of rules. Some rules are meant to be broken. Generally speaking, you should be a pretty wealthy individual. It will cost a few million quit to run every year. He and i going to talk about my discount for this boat just now. Then, ryan, you just need this to3 million just to get running. You should never own a boat. As the job market suggests. First. Bloomberg. To the pulse. Live on bloomberg television, radio, your ipad and bloomberg. Com. Manus cranny, our market editor, joins us now. U. K. And irish insurer. The irish subsidiary needed over 200 Million Pounds in capital. What were hearing today is that they have three proper wording three proper warnings by and them. It will not need any further capital. The company will not need a full rights issue. Knowis good news if you about stock. Biggest oneday gain in five years. Deutsche lufthansa when it comes to airlines reduced its capital. Down over one percent. Youre making cost savings but their costs are rising. Outweighing any benefit. You have transatlantic yields under pressure. Spencers. Rks theyre doing well with the food offering over this mess but the general merchandise side of the business is a big negative you right there. We are going to see drop in terms of the numbers. We would get those on thursday. Back to you. Manus cranny, our markets editor. Up, dave announced a new ceo. Announced a new ceo. Very shortke a break. Well see you in a couple minutes time. Welcome back to the pulse. We are alive from bloombergs European Headquarters in london. I am francine lacqua. And i am guy johnson. These are bloomberg stop headlines. Bitter cold sweeping across the u. S. The high is up to 18 degrees celsius. More than 9000 flights have been canceled. A jet skidded that new yorks jfk airport which cause it to runway for two hours. U. K. Chancellor of the exchequer has been speaking in birmingham this morning. He says 2014 is the year of hard truths. He says one billion pounds of welfare cuts are needed. Teva is getting close to naming a board member as head of the israeli company. He is currently heading the company that makes generic chemicals. For more details on the story, lets bring in our mideast editor. Elliott, at least you have some news for teva. Francine, if its not bad news i guess it must be good news. Certainly, people hope this will bring a bit of stability to teva. Lets not forget a few months ago jeremy 11 parted company with teva following a spat with the board over a restructuring plan. And very wellknown business circles. He is already a board member of former member of the strauss group. He is the still the chief executive of the Worlds Largest agrochemicals maker. Very wellknown known in the Business Community in israel. Respected as well. Vicki will be for him to translate that over to the United States whereteva is listed in where most of its shareholders reside, francine. . Challenges is going to have a series of challenges. Blockbuster multiple sclerosis treatment brings in 4 billion per year. That is due to face generic competition as early as this year. If it faces generic composition generic competition, and how many of them do so, it will depend on the dent that tevas earnings take. The second is regaining her confidence is regaining investor confidence. A sixow hovering around year low. You really need to do something to gain investors confidence once more, that this is a company that has a bright future. Finally, there is some support already. There is an activist investor known as benny landor. He has written two other investors encouraging them to support the appointment of the inchief executive of teva. That respect, at least he should have it their backing to hit the ground running, especially this time when people are suggesting that maybe he will even be broken up third this is israels largest listed company and a real flagship for the israeli economy. Guy . Thank you very much indeed, elliott. Edward snowden may have been bad for germanamerican relations, but his leaks have been good for some german businesses. Our International Correspondent has nichols joins us now. Our International Correspondent hans nichols joins us. They would have to be secure. But the other people on the the line that merkel is speaking to also have to be secure. That is why you need to components for this. What were seeing in response to this revelation is two kinds of companies. Such as applese and cisco. And those on offense who see this as an opportunity to sell new products and new customers. Lets take a look at two of them. Bombshells,owdens modifieds, a blackberry and the Samsung Galaxy were competing for one customer. The german government. Angela merkel and the ministers who texture. About nsareports listening post atop the u. S. Embassy in berlin, two companies are experiencing a surge in private demand for what may be this years diverse status symbol. A secured smartphone. Israel has always been very keen on security and confidentiality. We think that this is attractive to them. At a subsidiary of richard telecom, there are lines of code to virtualize the android operating system. Rice . 1700 euros. The crypto card, the so card security anchor, is inserted next to sim card. On screen you can toggle back and forth between the secure zone and the public one. If you switch to the light ispartment, then youll see a normal and. Their competition . A modified blackberry engineered by sacred spark, listed at 2000 europes, the after discounts for flow buyers. They claim their voices more secure. Voice becomes important. Snowden, voice was not important. There is value in your voice. Germanyspproval from office of security. Is a closely guarded secret which device will become the official chancellor phone. Merkel poses with the blackberry and public. Guy, the Company Makes a samsung version of this is in the process of getting approved for the tablet which is also secure. We have is to markets. You have the german government. I suspect the companies are going to sell 10,000 devices. It is the private sector and other governments that they want to expand to. , otheres like banks federal governments. The tines of french. It is rather real opportunity is for growth. They may have competition in the so markets, but they really see we bankers as the place asked people in dollars, do you talk on a secure telephone . You can picture it now. We communicate on a whole range of devices now. Having one of them be secure as you pointed out is not enough. What also these guys looking at . Unita sisson to be secure and thats where these companies have slightly different approaches. The samsung is samsung to samsung. The black raises a slightly different approach. It comes down to the onq department of companies. Twitter they want to go. Today one ago the samsung black area. I. T. Guys have all the power. Guy . Thanks are much indeed, hands. S. Tom keene joins us from new york with a preview of surveillance. The status symbol for dow posts is the market fun. Of god to get a new phone. It has to be secure phone sonoran will know how much swiss chocolate yuan i. E. We are in dow closed. There will be an interesting idea. I was will be fascinating this year. Davos will be fascinating this year. Hosting the Football Game in subzero temperatures. The cold moves over to new york. Is going to be frigid day on this monday in wall street. Weather includes travel disruption. That is having a knockout effect. Some of the things were seeing here in europe. Littlee you focusing a bit on bitcoins . Were focusing on them as well. One of the efficiency parts of that. Daniel albert will join us. We will look at his acclaimed the age of oversupply. As you know, francine, one of the great surprises of 2013 was the better than good United Kingdom economy. Thank you so much. Time im looking forward to the program. Tom keene with surveillance in 20 minutes from now. Lets take a look at how european markets are trading. Manus cranny is that the touchscreen with more. Just jockeying between rising and falling, london him of the year of reality, or is it the year of higher rates . By march of next year, youre going to see u. K. Interest rates at over one percent. That is a fourfold rise in rates. That is what is being bid on here in the u. K. Services are expanding for the fifth straight month around europe. Not everyone is equal. U. S. Futures have gone from a negative opening indication to just getting into rising market. S p 500 at 1827. You also get isam nonmanufacturing in the u. S. Nonfarm payroll is 195,000. That is where the market really contents. The dollar trades just off a fourmonth high. Guy, back to you. Manus cranny our markets editor. Whenever you got coming up for your . Darron burkes chief economist joins us after the break. Urg chief economist will be with us after this break. Lets first. Bloomberg. Welcome back. Youre watching the pulse. Youre watching live from london. We are on the tv and radio and pretty much everything else. Lets get some company news. Singapore airlines diverted the plane with more than 400 passengers to an airport in azerbaijan. It lost cabin pressure and was flying from london to singapore. Walt disneys animated film frozen. Was headed for the top spot in the u. S. And canada. It is in its seventh weekend in theaters. It topped the latest installment of the hobbit which has held a spot for three weeks. The popularity of the ford focus helped Companies Sales expand faster than any major competitor. Latebreaking news over the last couple of minutes. Angela merkellor has heard herself quite significantly. The scooter berlin and our correspondent hans nichols. She will be in berlin and will not be traveling for three weeks. It is a hairline fracture. The important thing about this for the next three weeks is that no travel. She did have some travel plans. She will be staying in berlin. We will be listing to this press conference and finding a little more and how serious it is. It seems to be some sort of injury to her hip that she suffered from crosscountry skiing. Guy . For threeresting weeks in berlin. During our she had an important appointments in the next three weeks . Davoss supposed to go to , actually. I believe she had one International Trip land, but i saw that before the news broke that she was injured. I dont know exactly where it was planned and how significant it was. We will get more from you as it comes through. Thank you for joining us from berlin. The meetingions, schaublefgang sharple could be interesting. It taken how this meeting will go this time with berenburgs chief economist schmieder. The u. S. Is in the habit of lecturing other countries about what to do. Show prettyata do resilient and robust growth in german domestic demand. Addingernment is indeed a little fiscal stimulus with some extra infrastructure spending. As a German Economy is fundamentally sound and has a really good rise in domestic demand, the germans will not take for a lysate to outside toice to incur more debt boost a miss demand even further. No country ever takes farewell to outside pressure. We have from china and italy and we are at another from germany. Will anything sink in . Because germany, if you look at the transitions of capital, maybe it does need to spend more for the good of the euro. German is spending more. Germany is spending within the in itswhich is as set own constitution, namely that it ought to balance the budget or to nearly balance the budget. Within these limits, germany is doing what it should do for its own sake and for the sake of europe. We do see the serious rebalancing, spain raising its exports much faster and also going up germany importing more and having its imports rise at a pace faster than its export gains. The rebalancing game is happening, largely driven by market forces. A frosty reception in berlin. Lets talk about the reception youd like to get in paris. The data showing that the French Economy remains troubled, contracting. What reception do you think youll get in france . Im not sure that u. S. Policy advice would go down well in france. Indeed, there is a point. France is a country that needs to change. The change needed in france has nothing to do with fiscal policy. What france needs is labor market reforms, structural on that a little outside advice can be good. Too much outside pressure would not advance that. Is france it may concern for 2014 . The Political Class seems to be putting things into place which are counterproductive, right . They are not spring competitiveness. If anything a lot of commentators are saying they are stifling it. Francis the biggest concern in terms of the european economy for 2014. A major reason why that is is greece arein, italy, much smaller concerns now than they were a year ago. It was not really that france has deteriorated, it hasnt. It did have another labor market referral. France now extends out as the sick man of europe because he is because so many other countries have moved ahead. In france oh we have to watch is more the political debate about the reforms, will they deliver anything, than a mere economic data. The economic upswing is there as long as we live the french data eventually. You must be delighted about the new fed chair. You said that greenspan and bernanke were two of the worst central bankers ever. That is a bit of history. The u. S. Monetary policy last decade was pretty bad. Blowing up a huge bubble and then handling the lehman theation in a way that western world fell into more problems than they have had in the last 7080 years. , edna comes into situation where at least in clearing up the mess, the fed recently has made significant progress. She comes into a situation were probably really have to i only have the past chart of the last few months. Gradual tapering. Much forhank you so that. Chief economist at denver area Angela Merkel has herself a skiing accident. Shes hitting that from berlin. We will have more news for you after the break. Welcome back, you are watching the pulse. Lets see how the markets are performing now. Out for thes british pound this morning. First up, we had a pmi number that came in at 58 and changed a little weaker than anticipated third still, a fairly strong number. We saw earlier on in the morning concerns about what would be announced by the the chancellor George Osborne. He is talking austerity and he is talking about it for longer than people anticipated. He said it is going to be a british year for the british economy. Beo, on thursday, may lowering pressure when it comes to employment. 16280. Hans, we have had some breaking news on Angela Merkel. She is resting in berlin for three weeks. She is bed ridden. She cannot afford to reinjure her hip. This happened december 30, skiing in switzerland. The important thing about this is that no travel for Angela Merkel for the next three weeks. That means a january 8 meeting, a planned trip she had to poland will be canceled. That it is to be the most significant thing on her diary, on her schedule. No travel for merkel. We will find out how serious this is heard of it is effective if it is a factor, what the issue is. Boy, three weeks in bed without moving something seems to be like a fairly serious break. Francine . Yes, hans. Rating from the spokesperson theres no need for regular medical bulletins. It is serious but it couldve been much worse. That real quick is that the spokesperson is explaining why they waited so long to announce this, because the accident happened december 30. Looking today to a potential vote on janet yellen. Will she be the 15th fed president . Die . Given the weather in the states, maybe she could be crosscountry skiing as well. Is the pulse. Keep it right here on bloomberg tv. We will see you tomorrow. The president returns to a washington fixated on and even an unequal economic growth. It washington fixated on the 2014 elections. John malone and Liberty Media want to buy time warner cable. And bitcoin, i am sick of it. Some say it is theoretical hogwash. In the meantime, get out your bitcoin wallet. Good morning, this is bloomberg surveillance. We are live. Liu. Ng me, betty she has never been up this morning. Wonderful to have you. Great to have you. Are you going to do 68 . And the 9 00 to 10 00. Exclusive for betty liu. Cristina alesci with us as well. We pushed the camaro out on friday. That was impressive. We pushed it on 3rd avenue. Not a good advertisement for camaro