Transcripts For BLOOMBERG The Pulse 20140117

I am guy johnson. And i am francine lacqua. If you have 250,000 for a night out, we are back with the vegas whale who says sin cities most expensive table is worth every penny. Looking forward to that one. Lets begin with our big story of the morning. Shares are on the decline. Europes biggest oil and gas company has warned that Fourth Quarter profit will be significantly lower than recent levels due to a mix of lower than expected production and higherthanexpected costs. N. Joining us is bria thanks for joining us. A surprise, what happened today. It is very unusual for them to put out a statement two weeks before they were supposed to do earnings anyway. They have not done it for over a decade and they had a big scandal. Faceds new ceo has never the press. His first arrest conference will be quite entertaining even what he said this morning. How we gone from a situation where the numbers were cruising along ok, not great, but ok, to this . Has anything changed in the last 17 days . Forhe reasons they gave earnings missing estimates are the similar one that they gave in the Third Quarter, problems they have had all along. They have had problems in nigeria. They have had problems in the states with the value of their shale assets. Problems in australia, where costs are going up it is all the same reasons that they cited today. Apparently, it is worse than anyone thought. Specifics a company problem. The issues they are facing, their rivals are facing the same. The problem is, how do you increase your volumes now that oil prices are higher than they were before us to mark before . Returns on the projects they are doing are similar to where they were when oil was 30 per barrel. The cost of getting oil out of the ground is much higher. They have got to execute and keep costs under control. They face a big challenge in capital discipline, making sure they do not spend too much to get there reduction numbers up to production numbers up. Thank you so much for that. Lets turn to apples major expansion opportunity in china. As of today, they are selling their iphone with china mobile, the biggest mobile carrier in the nation. Jonathan ferro joins us with the details. It is an important market for anyone. How important is it for apple . Deal, 700s particular million, that is how many subscribers china mobile has. It is a big deal for iphone to get more penetration in the worlds Biggest Smartphone market. Wondering where the people were today, because there were not many at all at this launch. Ues, about ao que dozen people inside the store. That is because you can already buy the iphone in china. It is about boosting scale now. When you look at some of the numbers, the preorders, china mobile says one million on pre order could go on to set to sell 10 million this year alone. Already, it is looking promising. Promising, butg they are number five. Yet the margins are going to be higher. You do not have the store base for other apple products. It is an androidfacing market. What is the opportunity really here . How big can this become for apple . The way i look at it now, you have two hurdles. Functionality, all of this talk about the screen being too small and the chinese wanting something larger. Number two is pricing. It will take you back over 800. Traditionally, the phones that have done well are the low, entrylevel pricing phones. The bottom line is this. This is a luxury product. You have seen apple commit to the premium pricing, even with the 5c. Yes, market share has been dwindling in china. That is about 650 dollars u. S. That is where apple has 50 of the market. Perhaps this is the story going forward, a luxury product, a rising middle class in china, more disposable income and money to spend. Down the line, this is where apple starts to do well, just as they have done in developed markets. Fascinating to see those graphics on where it is most expensive to buy an iphone. The u. K. Is phenomenally expensive. States, 600 against 800. If you get it with a plan, you do not pay those prices. But you still have your nokia. Fairpoint. Touche. President barack obama will speak today on efforts to limit nsa security programs. The speech is a longawaited by edwardo the leaks snowden. Manus cranny has more. Tell us about the scope of the havee, the collection we seen. Let me show you the front page of the guardian newspaper, which has a relationship with Edward Snowden. What they have done is talk about scale, the sheer quantum of text. Texts a day being collated in terms of the data. It is almost like everything you can eat at mcdonalds. It is like a buffet of data on a global basis. How many times have you crossed the border . The contacts in your phone. Financial transactions. The sheer scale of what the nsa is doing. What comes into play here, it is about obama trying to deliver transparency, trying to say, i have listened to the panel and taken on the views. Week,led cameron last david cameron, the Prime Minister here in the United Kingdom grade he also called Angela Merkel. Again, for their opinion. He is trying to reach out and have i have listened, i heard, i am responding. It is up to congress, rather than be dealing with the eager issues of access, bulk, and collating data on the scale we have done. Ofsibly because this scale backlash, the backlash against the scale of data that has been consumed or retained, could be 20 million for the United States of america. There are still issues to be resolved. ,ne of them is bulk records still allowed to do that at that size. You mentioned access. What exactly are we expecting . And you give us detail of what we can expect from obamas speech . Day, the end of the number one priority for the american president and obama is the presidency is the of privacy in the United States of america. He will most likely retain the security agencies can have access without necessarily having to go to court to get them. Way,o somewhere along the the american data or the data they have collated, but the access, it looks like he will still push on to allow unimpeded access to it. For the vendors, microsoft, yahoo , facebook, aol, what they are lobbying for is, if you want access to the data and you make these requests, you must allow us the opportunity, afford us the opportunity to go public when you have made the significant requests. To that end, that will be a hard one to get across the line. Transparency and spying, those ,re very different issues arent they . Thank you so much. Manus cranny with the latest on this possible nsa overhaul. I say possible. Is it a real overhaul . That is what we want to do want to know. Is it big enough to be a real overhaul . I guess we will not know until someone tells us. Obama. Or Edward Snowden. Google isl you, diversifying into contact lenses. The company said in a blog post that it is testing an ocular device designed to measure glucose levels in tears. Glucose is said to provide readings nokia is focusing on insiders in its search for a new chief executive. The company is seeking a manager who will set a new strategy in its Wireless Technology company. It is looking to replace the former chief executive officer, who will rejoin microsoft did nintendo has revised its forecast for the fiscal year to a net loss of 25 billion yen. It cut projections for the wii u console and said yearend Software Sales were far below expectations. Coming up, great things are coming to china. Chinas the message to mobile users. Are these sales just a start in what would be the next apple upset . Differences,ural such as having a wider screen, get in the way . We will discuss that next. Welcome back, everybody. Happy friday. You are watching the pulse on bloomberg television. A lets carry on our conversation surrounding apple. They begin selling the iphone to millions of china mobile customers. A sixyear wait. Apple is already available in terms of the iphone, but in terms of the scale that china mobile brings, this is a game changer. Will the iphone be successful in china . It has been incredibly successful elsewhere. You can already buy it through a different operator. Are we going to see a different story . Join us to discuss this is pelham smithers, a tech specialists. Good morning. Apple is targeting is currently number five in china. Clearly today is a game changer. Once you get on china mobile, you have access to significantly more subscribers. Are we going to see them leapfrog up . I think starting off by moving gently forward. The first thing they want to do is do what they did when the original iphone was launched, get people accustomed to the world in which apple wants you to operate in. We go back to 2006. Talks were of the iphone selling 500,000 units. This launch is one million units, which gives you a rough idea that the starting point is very similar. When the iphone first came out, people had no idea what they could really do with it. People in china think the iphone is a phone. The users who have it use it in a way that is different to how everybody else uses mobile in china. They are almost used as entertainment devices with the phone ringing. If you look at the statistics for the chinese market, 57 of mobile searching is done on an ased machine. Despite the small installation base, the people who want to use a mobile phone like a computer use apple. It is not about volume necessarily, but it is about apple. That is one of the key differentiators out there, in terms of the apple against android story, the apps market. Is the app market there to support china becoming a bigger story . Android,have seen with the china Customer Base does not want to pay for apps. If you want to make money that way that has been one of the key french waiters in developed markets. Inthe key differentiators developed markets. Apple is going to come back with its Core Products and tried to drive the value added through where they have succeeded on the nonapp side. A lowp side itself is game. Talk to me about screen size. This is something that has been flagged time and time again. The Chinese Consumer likes a bigger screen. That may be goes to the story of using these things for entertainment devices. There are two issues with the size of screens for chinese markets. This is an asiawide story. First, the tendency to hold the tablet with one hand and use your other hand to type or the stylus. We tend to hold it in one and finger type at the same time. That is two different mentalities of how to use the phone. The second thing, they use the phones as an entertainment device. Like you do use another one of their products as an entertainment device. The ipad. Exactly. The apple technique will be to see if you can buy the iphone for its core flexibility use and on top of that, buy the ipad is that going to work . That is going against cultural norms that are very hard to crack. The advantage of low expectations and being able to set their own pace on this. If the original strategy does not prove to be as successful, they can adjust the strategy to. Oming out with a bigger phone i suspect they will want to do this in conjunction with what they are doing elsewhere. I do not think they want to create a separate universe for china. A want to bring the markets to them rather than they go to the markets. When you look at the razzmatazz that surrounded this launch, very different to that around the launch in new york or london. K to me about the kind of you talk about the lowkey entry strategy. It was incredibly lowkey. Apple has done very well generating buzz. Generated this and cook has carried it on. Samsung has mimicked it. Why different when you approach a market like china . They do not want to get it wrong. You go back to how the iphone was launched in 2006. It was almost seen as an ipod with a Wireless Phone to it. It was not this revolutionary it was an evolutionary project. Nobody really knew what they could do with it. It became this issue, lets go softly. Thats not mess up the market. Lets try to work out what works and what does not and build from there. Thank you for joining us. Back over to you. Now lets get some company news. And orange arem not pursuing a share sale of their u. K. Unit. The companies have ended their Strategic Review of the nations largest wireless carrier and there is no time for further action. 1. 2 billionest dollars to expand its cloud services. The Worlds Largest provider of Technology Services has been relying on the business for growth. Its been 2 billion last year to acquire software technology. Ubs is said to be boosting and annual bonuses by about 10 . Total compensation for star bankers could exceed 2. 5 million in the region. Something here is those bankers could blow some of that cash on, a new club in vegas. They have unveiled a table worth 250,000 a night. Johnson Shows Bloomberg why it is worth every penny. Inside the bellagio casino at the exclusive hyde nightclub, one of the most expensive tables in the world. Wow. I like this table. Absolutely gorgeous. Part of its value is the view. 1200 waterspraying robots. Feet,ost asgh as blasio. Cost of untains, million. Inside the club, the fountains are made of champagne. Hyde is the most profitable club foot. As per square the average table costs 8,000 a night. This 1, 200 50,000. What makes it different . This red button. Here we go. Set off these bounds, 10,000. These fountains, 10,000. The number of people who have reserved these tables in 2013, 2. And you can tune into our vegas special on january 21 at nine a clock p. M. Eastern time. Ryan had to break, jack today. Actor chris pine follows in the footsteps of Harrison Ford and ben affleck. He will take the role in the franchises 24year history. In todays hotshots, the Monte Carlo Rally is over. Drivers battling wine the roads and icy conditions. You cannot see that there, but only a handful of drivers used snow tires. It was necessary in some portions of the circuit. Quite a race. Hundreds of horses and their riders, part of an ancient festival in northern spain. The ceremony celebrates the feast day of saint anthony. Unsurprising. Riding a horse through fire, not necessarily a good idea. Lets find out exactly what is keeping the markets unlike this morning. This morning. Manis granny is here. Equities have had manus cranny is here. Equities have had a very good week. The drivers. Ks are autos along with construction. The stoxx 600 up over 1. 25 . Basic resources caught my eye. Then i had a look at what drove the stoxx 600 and basic resources. It was angloamerican. This stock is storming away this week. The imf have upgraded their views. The world bank has upgraded their views for growth. Angloamerican absolutely pacing the way. When you drill into the numbers, it tells a very interesting story. In terms of u. S. Equities, you are going to get a little bit more of an indication later in the day. You are going to get the Michigan Consumer sentiment index, the housing starts. A swirling ball, how about we popped some numbers in . There we go. You also have Industrial Production and little bit later on. Actor you. Thank you very much indeed. Manus cranny on the markets. Still to come, a rude new boss. For shells the chief executive says 2013 was not what he expected for the company. More on their profit warning as shares continued to slide. Do you want to follow us on twitter . We would be delighted to have you along for the ride. See you in a moment. The 1. 1 trillion bill to fund the u. S. Government till the end of december has been cleared by the senate. President barack obama is expected to sign it into law on saturday. Began stanley is set to reducing the honest if roles for top banks. Banks will pay some portion of the rewards for last years laws. And show shares are lower this morning. Ell shares are lower this morning. Squeezed byeing losses in america. Bloomberg industries makes up 140 analysts who provide research so it is different from the news department. First of all, what exactly happened . Came out with a Statement Today surprisingly saying that these earnings would be much lower than they had guided or anyone had expected. Its the first time they have done a profit warning like this in 10 years. The reason they said profits would be so much lower was because production was a much lower. The refining margins were hurt. And the whole year 2013 was disappointing to the new ceo. He has been in the job for 17 days. It is quite tough one for him. When you look at the numbers, when you crunch the numbers, the analysis, they had issues already. Were they not addressed or is it bad luck that things are compounding all at once . The costs are rising especially for these highyield fields. They are increasingly coming from offshore and costs are rising throughout the industry. It is a clear sign that this issue will be tackled by shell and other companies. But others have tackled it at her, right . , from what i understand, a problem that shell has. I think the confluence is difference. Stilloblem with costs is relevant for all the companies and they will just have to were close together with Services Companies and among themselves through themselves to generate more savings potential. Chevron has guided lower for the Fourth Quarter as well. Everyone has the same problems. Tavis rising they are also hurting industrially where costs are rising very quickly. They said that hurt their bottom line is well. The new ceo has been in charge for 17 days. How does he tackle this . Well have to see how they will continue with the show gas exposure in north america. European auto majors are not too happy with their activities there. So they will have to see how they will continue with that. And just get rid of hard jets that are not that yielding and just focus really on the high impact projects. Question so the highrisk projects they will have to get rid of . The oil industry is about chasing value over volume. Everyone had these big production targets. Theyhey are saying that shouldnt worry about the overall production but how profitable we are. Having problems on both sides. , you you dont take risks wont make it big in the oil industry because you can have an amazing find. Every oil Company Needs a assetsportfolio, risky where the discoveries come from. You need to be able to really split it or spread it among your portfolio. Some companies say, for example, that they want to focus on these countries in a summit on the middle east. That is an option. Or maybe go into theorems instead of single projects. A number of big longterm projects. Gtl in qatar has been great. Its about executing it in keeping the costs under control. Thank you. Over to you. Lets talk about the u. K. Retail sales. Much stronger than anticipated at 2. 6 from november. This is the strongest december month we have seen on record according to the oms, the office of National Statistics here in the u. K. Tesco did not have a particularly good christmas. These numbers make their figures look even worse. The Department Stores had a cracking christmas and boutiques had a really nice time as well. It was the middle that really got squeezed. Us talk about that a little bit later in more detail lets talk about that a little bit later in more detail. Deutsche telekom and orange are putting their plans to list ee on hold. The owners are waiting for their services to take off in order to get valuation. More on the story. Why it the real reason is being delayed or postponed or put off . There are any numbers of putting this. It is bad news for ipo bankers in london who have had a few bullish months. There are also some things floating around ee. There is the question, of course course, doesof at t come in . Be thinkingekom may we want to see how that plays up before we decide what to do with our doing with our joint venture. Tmobile usa is widely speculated to merger with sprint. Perhaps Deutsche Telekom does not want to leave two big markets all at once. So that is going on in the background. Aboute more questions four g mobile services. The potentialso for consolidation in europe in the Major Players may be getting together. Thats right. One thing you year, if at t come here, phone companies will have to get better. There be global has been on an acquisition spree. Vodafone buying in germany. The germans have historically been a bit less enthusiastic but you can certainly see how the thinking goes. If these two parent companies, orange and Deutsche Telekom, are ever going to come together, dissolving from their only is a sting joint venture might not be their greatest art. Thank you very much indeed. Up up i still to come, the latest leaks from Edward Snowden show that the nsa may have been picking up 200 million Text Messages a day. President obama is set to address the scandal later on today. We will discuss the Business Impact at the top of the next hour right here on bloomberg television. Money is not the only substance and only [indiscernible] you need really good professional staff, great players apply and skills great players co, and skills. To you think the league has become more global . There is a great interest in many countries. I know a lot of Foreign Investors are looking to keep an i in investing inmb. The berlin air owner of the Brooklyn Nets speaking to ryan. The atlantaed off hawks in london, taking down their rivals 127100 whatever that means. The Brooklyn Nets are on the move. This is no ordinary away game. The nets are facing off against the hawks. Its a home game for atlanta only it is in london. Its the National Basketball associations eighth ever regular season game in england and the latest arduous step to take the franchise global. We looked at some of the assets that weve had. Brooklyn itself, 150 nationalities of global brand. Now we are at the point where we want to leverage attend on a ties it. The nets owner is russian. One of the players is russian. Two of the players are european. I did not know that there were so many macedonians in america. Garnett may be the biggest draw, hundred Million Dollars behind them is the business. , air jordan. Occupied theurope soccer players dont have much to worry about just yet. Thet least in europe, soccer players dont have much to worry about just yet. It is big in russia. Is just not as big a soccer. It is hard to get a question in. Game. Ts won the putting the lessexpensive Basketball Team on the right foot. That gets my vote of the year for question of the year. Ok. As much can it pick up as much inertia . Can it pick up as much in russia . Absolutely. , its great. He hasnt been to bed yet. It was so much fun he stayed up all night. A forward answer. Out to get. In the u. K. , we know a Little Something about football. Can you explain how the points work . Is interesting is david stern, the outgoing commissioner of the nba, he has been there for three decades and he stepped down at the end of the month he wants to really badly globalize the league. And there are two parts to that. This is where the premier league comes in. One is bringing in teams of them then like they do less than for the its time in the last several years. The other part of that is bringing foreign enders foreign owners into the nba. You have an indian owner now as well. But its nothing like the premier league. David stern was talking about how Many American investors there are in premier league games. And he was marveling that he says it is because the Business Model of ownership in the premier league is in some ways much more compelling. Had to ask them if you want to change the way the nbaworks the way works. No, he does not want to compromise the way the nba works. We were expecting a soundbite, what we . Werent we . Its arrived. Thehe premier League Awards top teams both economically and their ability to move on and play in the Champions League and other competitions. Ands a different sponsors names on jerseys there are a whole lot of ways you can make money. It attracts capitalists. If you own one of the bigger and better teams, you can do extremely well in perpetuate the gulf between the top and the bottom. Can you imagine if i announce today that we are relegating this team or that team . Play in theng to go regulated team. Than we give them a check so their feelings will be hurt. We couldnt do it. But its that very difference that is attractive to people who like to take up a shot and invest in a prematurely team. Quest does that mean that the to become more attractive to investors should be what the premier league . No. Those same wealthy individuals have a competitive streak that says i cant play by the rules and im very competitive and im smart. , but theyont say it think they are smarter than everybody else. You have 30 people who are each smarter than everybody else who have made a fortune in another business. It is a fun of competition for them. I think the point that is very lost on the side of the pond. It is an entirely different concept. No one gets kicked out of the league. Most of the money is shared. There are salary caps. So he has spent more than a hundred Million Dollars on the salaries of the stars this year on the nets. But there are salary caps and he pays a syntax. Heap pays above. A feentax, there is you really cant do it for very long. There are 30 teams. When you enter into a lottery to get one of the first draft picks. Quest that kind of works. That kind of works. Or sunday inurday a car park in dubai or you had a dubai oro, johannesburg or rio, what are the kids playing . Cricket. It is really about china surprise, surprise. 300 Million People lay basketball regularly in china. That is five times the number in the u. K. That is a must the entire population of the United States. That is because it is cultural . There are some big chinese nba players that made the sport very popular. What does that mean for the nba . This guy wants to grow the pie, david stern. Every year, it is growing Something Like 10 . Half of the money that the nba makes, all of these teams come all these owners, it will be made outside of the United States. Not europe because football still reign supreme. This is a football continent. Interested to know africa feels like a football continent. Bachchan in particular. But china in particular. I think that is the big story out there. That doesnt mean you have to have a Chinese League that is associated with the nba or even a part of the nba like a conference. The bill cosby show he told me was the big show in france but it was never filmed in france. So the nba can be that popular in china. Tech the perfect sort of way for a facebook because they have that global platform. So they will buy the rights and use it. Thank you. From avatar to xmen and new energy. We will discuss the genius media moves into renewables. We will find out more about that in a moment. Shell shares slide. Will come in significantly lower. We will discuss the surprise later. Welcome back. You are watching the pulse on bloomberg tv. Energy, it has been known for making films like avatar and xmen. But now they are offering a new Renewable Energy fund. They raise 900 Million Pounds last year. From on this recent trend in clean tech, i am joined by louise downing. What is different about this fund . Of this fund exposes investors to three different types of Renewable Energy technology. Funds launched last year that were only fixed in one sector. Diversification, it lowers the energy price risk. There is a lot of skepticism among the people i am talking to over whether or not funds like this will be six and a successful when yields start to rise in other parts of the financial sector. Why should i invest your . What is so attractive . They are already operational. Offering investors longterm, long risk, and stable returns. Energy efficiency helps save customers in energy bills. Industryable energy can offer investors with better yields than government bonds. But we start to ceos back up now. Look at we are starting to see yields back up now. What are the risks . Presumably that other assets are yielding more. Because these projects are dependent on government subsidies, if those subsidies change, that can alter the revenue stream. In terms of the market crowded, not crowded . Getting busier. Getting busier. It was kicked off by a green cape last march which are raised about 260 Million Pounds to invest in wind farms. Investment became the largest Clean Energy Company the Largest Energy ipo last year, raising about 300 Million Pounds. Thank you. Francine, over to. For those over to you. Onfor those listening bloomberg radio, we will be talking about shell profit warnings. Shares are down 3 . Obama response to the nsa spying and a crackdown on warrants and what it means for daytoday business in the u. S. Just a reminder that you can follow us on twitter. We will see you in just a couple of minutes. 17 days into the job, shells new c. E. O. Issues a profit warning. Shares down on the news. The iphone hits the shelves at chinas biggest carrier. Apple gets access to more than 700 million potential subscribers. And snowden strikes again. There are reports the n. S. A. Collected 200 million Text Messages a day. Well hear from president obama on his plans for the spy programs. Good morning to our viewers in europe. Good evening to those in asia. A warm welcome to those just waking up in the United States. Im guy john sofpble and im francine lacqua. This is the pulse live from london. We begin with shell and its shares, very much on the decline this morning. Europes biggest oil and gas Company Warning that Fourth Quarter profit will be significantly lower than recent levels due to a mix of lower than expected production and higher than expected costs. Now joining us for more on this story, our Bloomberg News energy reporter. Weve been talking about, basically its a number of factors, the combination of all of those. They also mention shell gas in the u. S. The problem there is that gas prices are very low, and thats hurt the value of the assets that shell has there, hurt the profit on gas in the u. S. They warned on that several quarters ago, but they did mention they had problems with profitability in the americas. This is a company thats due to issue numbers next week. The c. E. O. Has been in the job 17 days. Talk to me about the timing. Yeah, well, it kind of looks like the new c. E. O. Has inherited a bit of a mess that hell probably spend the rest of his tenure cleaning up. Hes got to try to contain costs, get volumes up, and obviously restore these margins. The problem shell is having, while they have a lot of good prospects, its costing way too much to actually get the oil and gas out of the ground. So keeping costs contained is going to be a big issue. And on the personality side, weve never actually met him, or hes never given a speech yet. We havent interviewed him yet. How much do we know about him and how hes going to handle this crisis . Well, he got the nod for the top job because he had done a really good job turning around the chemicals unit at shell. Maybe the same skills that he can apply to the group as a whole, its a bit unusual for someone who is not necessarily in the biggest unit of a company to take the to be job, but he turned it around very quickly, and thats what they hope to see him do again. Read across into the rest of the integrated oil majors. All companies have basically the same problems. Theyve got high costs of doing a new projects. Hoses are higher, and yet the returns are much lower. Theyve also got to find a way to get profitability up to take advantage of oil prices being higher than they used to be. Brian swint there, our energy news reporter. Barack obama will speak today on proposals to limit National Security agency surveillance programs. The speech is a longawaited response to the global uproar set off by the leaker, Edward Snowden. Manus cranny is here with more. Manus, first of all, the revelations just keep on coming. How many texts a day do you send, guy . I send maybe five or six. The n. S. A. Has been consuming, gobbling up 200 million Text Messages a day. A date. 200 million Text Messages a day. They take your contacts, financial transactions, when you cross the border. It just goes on. Its stunning. This is the guardian, in association with Edward Snowden, the man who leaked the files. It gives you a sense of this scale of what the n. S. A. Has truly been up to, if these allegations are 100 correct. Now, thats the adverse scenario that president barack obama is facing, in other words, trying to overcome this perception that the n. S. A. Is this great, far gant kwan squid thats over your lives in america, so much so that hes got to get on the phone with david cameron, to Angela Merkel in germany, and basically discuss this whole issue that hes going to stand up today and address. There may even be a section for foreign leadership. The guidelines for spying on foreign leaders. Interesting. Theres a number of other big issues. Theres a recording of information, where will that be held . By a third company. Will the companies be admonished from that responsibility . And more important, theres the question of access. Yeah, manus, what exactly can we expect from obamas speech on concrete things, warnts and access . I think access is perhaps going to be one of the critical areas that we keep an eye on. The view is ultimately the number one objective of the man or woman in the white house is note the point i said or woman is the protection of the United States of america, security. Security is number one. With that in mind, why should security agencies have to go to court to get a court order to access the data that has been compiled . It looks like he will stay on the side of allowing the security agencies access to the information. Its where the information is warehoused, whos controlling it, whos watching you, watching you, watching me, watching you . Are you watching me . Im watching me. Are you watching me . Youre watching me. I dont know about you. Were on tv. Lets hope everyones watching us. Everyone is watching the pulse. Ratings spike when i come on. You make a good point. Sometimes. Lets move o. Apples expansion in china begins today. The company has started selling its iphone, the biggest carrier in the nation. Jonathan joins us now with all the details. John, this is 760 million potential subscribers. China is important to apple. And china mobile, much more so as well. Youve gone over the number, 763, its a terrifically large number. Didnt used to sell the iphone. Now you can buy the i phone with them. This could be about scaling up what theyve already got with the likes of China Telecom because they already carry the phone. The thing that was interesting is the lack of fanfare. You see tim cook in those pictures. He was there for the launch. Very few people outside the store queuing up, very few people inside the store. Can you read much into that . Remains to be seen. But really, this is about pushing into the worlds biggest mobile market, a market where apple iphone share has actually been shrinking, down from 10 in 2011, to 6 just last year. They need to improve on that. Tim cook is telling the chinese he expects great things coming to china mobile users. He wants great things going back apples way as well. What is apple going to get out of this . What is the bottom line benefit for apple in china . Well, its pretty clear. You want to sell more phones, guy, and the story, and doing that, you also want to take advantage of the emerging middle class. People get a little bit richer, maybe they can afford those mobile phones. Just check out the comparison of how much a mobile phone actually costs in china. Look at the iphone. The iphone in china is around 800. Much, much cheaper in the u. S. , 649. Surprise, surprise, a little bit more pricier here in the u. K. A lot of people think this is a bit of an issue, the pricing issue. Emerging markets, china is not alone. You want a low interlevel frice take advantage of those customers. Heres the big thing. The average price, 4,000, any price north of that, apple has 50 of that market. Thats about 650 u. S. Dollars. If you want a luxury phone, a status symbol, you buy the iphone. Apple has already committed to the premium end of the pricing with the apple 5c and with the apple iphone5 as well. Perhaps this is the story over the next five years. Its not about taking advantage of this largescale market, but taking advantage of those middle classes, the richest people, gaining a little bit more money, a little bit more disposable income yeah, following versus value will be interesting. John, thank you very much indeed. Thats apples expansion in china. Here is what else is on our radar. Google is diversifying into the contact lenses. The company said in a blog post that it is testing a device skiesed to produce glucose levels in tears. It uses a tiny wireless chip and sensor to provide readings. Its a different product than there, which is the google glass. Nokia is focusing on insiders, including a search for a new chief executive. The company is seek a manager who is set a new strategy at the technology company. Its looking to replace the former chief executive, who joined microsoft. And nintendo revises for casts to a net loss of 240 million, cutting its projections for the wiiu console and saying yearend sales were far below expectations. Share sales under pressure today. Europes Biggest Oil Company says the profit will come in significantly lower. Were going to discuss the surprise warning with an energy analyst. Good morning. Welcome bask youre watching the pulse live from bloombergs European Headquarters here in london. Quick look at the cable rate. Why are we looking at the british pound versus the u. S. Dollar . Earlier we saw much stronger than anticipated retail Sales Numbers for the month of december. In fact, the best weve seen since records began. But that only takes us back to 1996. Nevertheless, significantly above the analyst expectations. The market was expecting something about. 3 . Who did well . Well, the big Department Stores did well. We already knew that. Small stores did very well. The bit in the middle got squeezed, tesco, etc. Now lets get back to our big focus of the day, shell shares are down today. The company says profits will be significantly lower than recent levels. For more on the profit warning, lets welcome ian armstrong, an oil and gas analyst. Great to have out program. Thank you so much for coming in. Give us a sense of how surprised you were by this. You were saying that you werent surprised about the bad numbers, you were just surprised they did it two weeks before the trading update. Well, what they trend to do is they go round the sellside analysts and give them guidance, and the last couple of years the guidance has been negative. And this is for the first time theyve actually come out and just told the whole investment community, look, the numbers are not going to be as good as we thought they were going to be. Sandaup they are significantly worse than most of the analyst community. You werent expecting on a quarterly basis, they are. For the full year, given the fact youve had nine months, yes, they are much worse than expected. Hes been in the job for 17 days. What prompted this, do you think . Ways, we were warned at the Third Quarter numbers. If you can remember, the reaction of the shares on the Third Quarter, they were down about 3 on that day as well, and we were warned that the significant difficulties, particularly in the upstream, not necessarily their undoing, because nigeria has been a big problem for them anyway. U. S. , theyre still having problems trying to make any money there at all, one of the few players that dont make any money in shell. The other thing was that cash, for example, started, then stopped, so theres a whole bunch of things, particularly within the highmargin regions, something was going to be negative in the Fourth Quarter. The numbers, we know that refining is an awful place to be unless youre east coast of the states, yeah. We havent heard from the c. E. O. Yet. He took over 17 days ago. What exactly is he going to say . Is this just bad luck . Or are we going to see an overall, significant cost cuts . In terms of the cash flow and probably the cap ex, theres a little bit of bad timing involved. Again, its due to the fact that we knew that the cap ex was going to be higher than the original guidance at the beginning of 2013, partly because, as they said, there were a couple of opportunities which they just couldnt afford to turn down. So, for example, buying the business from repsol, the petrob nt in libra with ras in brazil, those were not in the forecast, so we didnt know they were in the forecast. At the same time, theyve got a massive Disposal Program in place in new scombreer i cant. Some of the Health Assets in the u. S. , etc. , and they havent come through yet so. Theres a little bit of mistiming of that. Talking about timing, how much time will the market give him to fix this business . Hes been on the job 17 days, yet when he ran the chemicals business, he turned it around really quickly. Are we going to see a replication of that . Well, the point is that shell isnt run on a quarterbyquarter basis. Its on the big, longer, medium term scale is what they run on. And what the previous c. E. O. Was suggesting is that they could make about 90 billion over the next two years in terms of cash flow from operations. Theyre only going to make 40 billion this year, 50 billion next year, but most people anticipate that oil and gas prices are going to be lower rather than higher unless there is a substantial improvement in performance and in volumes, theyre not going to be anywhere near that number. But you think that the c. E. O. Is the right man for the job. This was a little bit of a controversial decision when he got disappointed, because its a much smaller division. But guy was saying this is a Chemical Division he turned around. Does it mean that he is the right man to tackle these problems . Of course, light most of the executives in shell, he hasnt just worked in chemicals. He also worked in l g as well. Although we talk about the most recent one, the return on chemicals. Hes actually worked across the board as well. He has significant experience in all the departments. So hes the right man for the job. I think in terms of the way that shell works, internal appointees normally work better at shell, and other companies expand on the appointees, a new fresh face. I dont think youre going to see anything dramatically change at shell, as i said, they think thief actually got a very good operating model, which in terms of the deal with them, big projects bring them stream, on time, on budget, nd they will supply shell with longterm cash flows, which enable them to reinvest in the business and pay good dividends. Thats the model. If thats good enough for investors, thats the question. Ok, final question, according to the terminal, which i checked out this morning, there are 14 buys on the stock, 12 sells, and two actually i think its 12 holds and two sells. Do you think that all those buys are going to get reversed on this . Is there a better option in the sector . Well, we feel there are Better Options in the sector, but no, i dont think as i said, it would be strange to have the kneejerk reaction on one quarter, but what you could say, of course, this is not one quarter, this is two quarters, because the Third Quarter numbers are also great. If you go back over two years, i believe that well Beat Estimates one quarter out of the last eight. Thats not a good track record. Thank you very much indeed. Now, this is whats coming up on the program. Oneonone with david stern. He prepares to pass the torch after 30 years as head of the nba. The Brooklyn Nets faced off against the Atlanta Hawks here in london last night, taking their rivals down 127100. Ryan was there. Brooklyn nets are on the road. But this is no ordinary away game. Nets are facing off against the hawks. Its a home game for atlanta, only its in london. Its the National Basketball associations eighth ever regular season game in england, its the latest arduous step to take the franchise global. We looked at some of the assets that we had. Brooklyn itself, 150 nationalities, a global brand, and now were at the point where we want to further leverage it and monetize t. The nba is already going global. The nets owner is russian. One of the nets players is from russia with love. Two others are from europe scommarbgts roster includes a german, a mexican, and the leagues first macedonian. I didnt know in america there were so many macedonians. Kevin garnett may be the iggest draw, but his chinese made shoes is the business. Even the nets black and white kicks, the nets say, is designed for a global audience. At least in europe, though, the soccer players dont have much to worry about just yet. Can basketball be as big in russia as you are tall . It is big it is big in russia. Its just not as big as soccer. Basketball does have one fan who has so many fans of his own. Its hard to get a question in. How excited are you about american basketball . Oh, its great. The nets won the game, but in the most expensive Basketball Team in history on the right foot. But basketballs battle for the worlds hearts is just getting started. Ryan chilcote, bloomberg, lone done. Ok, my highlight of that was the macedonian question. I didnt know there were so many macedonians in america. Me neither. So you dont have a point. Fair, fair. And the best question definitely youre tall. Does that mean theres going to be a lot of success in russia . Last knits game also marked another nba landmark. It was the last News Conference of david sterns 30year tenure as commissioner of the league. Ryan also got a chance to catch up with the basketball legend as he prepares to pass the torch. Ryan asked him whether were going to see a smooth transition. If you judge these days of corporate leaders, you judge them not only on the job they do, but in the Succession Plan that theyve done n. Our case, adam silver will take over on february 1, and he has been with the nba for 22 years. So much of our success is attributable to adam. A lot of people say youre going to be a difficult act to follow. Not so. I mean, adam and i will be a difficult act to follow, but while the nba still has adam, they have the complete continuity and the knowledge and the work ethic and the expertise to go to new heights. And the biggest challenge in front of adam, the Unfinished Business youre leaving him . Is how to manage an enterprise that continues to grow. Its just every successful corporation has to deal with that, because there are going to be so many markets calling out for so much, you know, Development Asset allocation, and you have to make sure you get the people and you deploy them correctly. Its the same problem we had when we were 24 people and we have it now when youre 1,200 people. And youre going to be on a boat and turn off the tv and not watch . I will always watch, and i dont sailing or yachting or ships that much. He wont object your speed dial . No, he wont, but ill be enjoying t. Ill be available to help in any way i can, because i think that its fun to watch this thing continue to grow. Can i just say, when i retire, i will carry on watching the pulse . Thank you so much. Lets see who retires first, of course, up next, the response the world has been waiting for. President obama set to announce plans to deal with the spying allegations later today. That is coming up next. As we head into break, jack ryan, shadow recruit hits theaters today. This time the actor, chris pine, follows in the footsteps of Harrison Ford and ben affleck by playing the c. I. A. Agent. Hes the fourth actor, in fact, to take the franchise in the five movies 24year history. Welcome back. Youre watching the pulse. We are live from bloombergs European Headquarters here in london. Im guy johnson. And im francine lacqua, and these are some of bloombergs top headlines. The british are spending a lot. U. K. Retail sales rose more than economists forecast in december, boosted by a surge at Department Stores during the key christmas season. Sales increased 2. 6 from november. I always like to do it. The 1. 1 trillion bill to fund the u. S. Fwovet until the end of september has been cleared by the senate. President barack obama is expected to sign it into law by saturday. The measure eases the harshest effects of last years budget cuts. And finally, obama will announce his plans for dealing with Data Collections concerned later. That is a response, of course, to the global uproar set off by leaks from Edward Snowden q. The guardian has revealed the n. S. A. Has collected an average of almost 200 million texts per day. Francine snds a fair few texts, but not that many. Not even me. I cant send that many. Lets look at how european markets are trading. Manus cranny is at the touch screen. Stocks have had the best start to the year since 2008. This week the stock markets in europe are up over 1. 89 . Nice to be precise. Basic resources, banks, and autos took it away. I made guy johnson chuckle this morning. I said a lot of people go shopping in boutiques in the u. K. And Department Stores. Thats how retail sales really charge ahead. But how do you play that in the market . Look at that. Im going to be able to absolutely crack away. Sterling is higher. Have a look at the euro. Euro is down. The bigger bulk is in the euro trade rather than the cable trade. The euro is dying proportionately more than youre seeing. Theyre trading much stronger on the crosses than it is on the outright. U. K. Retail sales, Department Stores, small shop. Lets have a look. Lets have a look. Where should we go . Lets go to the United States. 25 . Rica, up we made record highs. 1841 is where she trades. We will get a little bit more data. We have housing stocks, which will come in, were looking for a number at 990,000 Industrial Production. Well swiftly follow that up with the rise of. 3 . And in michigan, consumer sent the, we used to trade that quite aggressively, so Michigan Consumer sentiment is one of the big drivers. When i look behind the markets, look behind this cracking stock weve had in the equity map, you notice it is basic resources where youve had an absolute storming week. Basic resources across the map with vast performing Industry Groups up almost 7 . The leader of that was anglo american. The c. E. O. Resigned, lets just show what you its done on the week, and you begin to understand. Were having a good start to 2014. The real engine is back into the basic resources, commodities complex. Theyre all doing quite nicely. Back to you, guy. I need to see this. You can take guy johnson to a boutique. We can go shopping together, the three of us, you, me, guy, and compare the two different wardrobes. Theres a thought. My wife has to drag me out shopping. The prospect of going shopping with you two, quite small. And wed have to buy for each other. Should we change gears . Lets return to our focus on the n. S. A. Spying revelations. President obama is set to announce his plans for dealing with the situation later today. Joining us to discuss the effect this is having on businesses is a professor from City University in london. He specializes in Internet Security and organized cybercrime. Thank you so much for joining us on the program today. Just give us a sense of what you make of the latest revelations by Edward Snowden. Theyre now i mean, theres lot of reports that they have no warrant, so its basically satellites and s. M. S. Messages. That means they can read anything we write. It should be put into perspective there are probably around six billion mobile phones around the world, and saying that about, lets say, five Text Messages per person, thats 20 billion. And if you then turn around and saying collecting 200 million, thats 1 of all the Text Messages around the world w. That large number, could you read them all . An algorithm can. But nevertheless, theyre doing it without authority. I dont think thats the case. I think theyre doing it with authority. They certainly do it within the law. Right, ok. So theyre doing it within the law. Whats the problem . Well, you have to ask the question, what is the problem . Is it that they are collecting them within the law . They are analyzing them within the law. I assume that the authorities in this country are acting within the law and, in fact, they certainly do. You could then turn around and say, what is the problem . Well, people dont know about it, right . Thats the problem. Its a law that we dont know about. But is it well, is that the problem with politicians, not telling us what the law is and not be open with us and turning around and saying that this is whats happening within the state, within the states of europe or the state, the United States as well . Should they be telling us . This is cumulative. All this comes on top of some fairly damning reports which suggests that the n. S. A. Was spying on the leadership of europe and elsewhere. This comes as something of a surprise to those leaders, i suspect. And as a result of which, there has been significant fallout. Can you give us a sense behalf you think the economic implications of this are going to be . We have seen people in the states not being allowed to compete for contracts. There is a concern that the Chinese Companies are using espionage to better the economic prospects of china. Can we read it the other way around, and do you think, therefore, there will be a fallout that will affect u. S. Companies when they try to compete for contracts around the world . I dont think so. I think that the economics of the companies themselves will, in fact, just allow them to compete, because they have very, very large companies, and theyre big players in their own right. But google has a back door that allows the n. S. A. To come in. You can say that for other companies as well. If im the germans or french, do i want to see deals with google or apple or whoever it is on the assumption that there is maybe not complicit, but there is some sort of link between the n. S. A. And these two businesses, and these businesses . Its a good point. Google has denied that they have back doors. Sure, they have. And theyve increased or improved their encryption devices with inside google itself, so you could say that they are fighting against this. But fool me once, and thats fine. But to go back and do further deals with these companies when theyve already shown maybe a lack of Security Awareness would suggest that maybe there are Better Options elsewhere. You could say that, but then if you look at this Search Engines, which Search Engines are better . So therefore, from the publics point of view, if you dont turn around and say, well, if you choose that particular Search Engine, which one would you prefer . David, very quickly, do these Companies Need to really be careful, basically go out of their way to explain that theyre not linked with the n. S. A. , to make sure that they keep on to their businesses and find more contracts . I think thats important, and i think google have gone some way of doing that. Theyve certainly been coming out in the press saying this is what were doing to ensure that your emails are safe, your searches are safe, etc. , etc. And so, therefore, they are fighting against the damning criticism. But the issue is that do people care . What else about . If you then put a survey around the world, around the United States, etc. , and you ask people, do you mind the fact that Security Services are keeping an eye on things to keep you safe . Most people, i would say, would say i dont care. Others would turn around and say, wait a minute, this is an interesting point, i thought they were doing that anyway. Depends how you ask the question, i guess. Professor, thank you very much indeed. Just 20 minutes from now, its surveillance with tom keene. He joins us from new york with a preview. I know youre focusing on the n. S. A. And what president obama will say later on. Really, front and center in washington and in new york and across the nation, francine. The president speaking at 11 00 a. M. You just heard that. That was a really smart conversation. Lets talk to our bloomberg contributor, his great perspective on this balance between the nations privacy and regaining trust in our intelligence services. Theres a huge overlay. Its not front and center, but francine, theres a big overlay this morning on the president , as well as speaking to the nation, speaking to World Leaders on the nations security. Well also have morgan stanley, earnings out. Well talk about the enthusiasm for the American Industrial recovery and, of course, howard ward is high on apple computer. Well talk to howard ward about tim cook. Mr. Cook is in china this morning. Yeah, hes signing autographs on iphones, but we didnt have the queues we were expecting in china, which started selling iphones today. Thank you so much. Im looking forward to seeing your show in 20 minutes from now. Thats surveillance with tom keene. What have we got coming up on the pulse . Its a good day to be an apple fan in china. After six years, the applechina mobile deal is finally coming to fruition. The stakes are high. Were going to discuss how high they are, next. Wosme back. You are watching the pulse. We talk about tech, why not . Artificial intelligence, a. I. , has well, its not dramatically changed the way we communicate and lived. But now its going to change the game we game as well. A San Francisco startup is definitely driving this. Theyve developed the very first a. I. Driven robotic toy cars, and business weeks sam got on the grid to find out whats going on. Most of the time when were talking about robots and Artificial Intelligence, we tend to think about robots in the work place, or the terminator. What were not usually talking about are little toy cars. But thats exactly what a new toy is all about. It was twopped by engineers out of carnegie mellon, it looks like a radiocontrolled car sets you might play with while waiting for the cosby show to come on, but its way more advanced than that. Sure, your smartphone can work as a wireless steering wheel, but whats more interesting is that same smartphone controls all the cars on the track. They know where they are and where you are and are adapting in real time, so each race is different. Weve seen this kind of Artificial Intelligence in video games. , but this takes all of that and brings it into the physical world. Not only can you outrun your opponents, you can actually fire imaginary weapons at them, hold down a button on your smartphone, and watch the car in front of you come to a screeching halt after you zapped it with your virtual cannon. Now, all of thisen ovation is pretty impressive, but what its not is cheap. A starter kit will run you about 200. For that, you get a track and you get two cars. You want more cars . They run 70 a pop. Also, it only works on i. O. S. Devices right now, although the company says an android app is in the works. Furthermore, game time is not ever lasting. Cars will use up their batteries after 20 minutes of play. But robotics, a. I. the future is here the future is now the future is kind of expensive. Really expensive. Only available on i. O. S. , which, of course, is the operating system of apple. Lets talk more about apple there. Its expanding into china. I wonder if theyll be driving those cars. They begin selling the i phone today, ending a sixyear wait for apple in this crucial market. Its already in the market with a couple of other prearts, but it doesnt in terms of scale, this is the big one. Are iphone sales in china a gateway to better brand loyalty . Are we going to see the apple experience retaking off in china . How will this company adapt and change when it comes to the chinese marketplace . Joining to us discuss all of this is a telecommunications analyst. Good morning to you. This is a big deal, right . Its a big step change. Its the last market, the last major market where apple wasnt present, the last big operator they didnt have distribution on. So it kind of fills in a gap, the last gap in apples distribution. All thats left now are emerging markets, where most people arent going to be buying iphones. Bet these phones dont work there as well as some other phones work. Apparently the chinese like to hold with one hand and text with the other hand. The screens too small. The app store, which has been so successful elsewhere, doesnt have the same level of experience in china as it does elsewhere. Why am i going to buy an apple . Well, those are the same arguments we heard about how nobody in japan would buy an iphone because it didnt do this, that, and the other thing. But its the bestselling phone in the market, and docomo ended up having to go back and sell iphones. So i think there are a set of Competitive Dynamics in each country, and clearly there are products that compete quite strongly with the iphone, but its nonetheless very appealing. I think the question really for apple in china is, how many people in china can afford to buy a Super Premium product. Its the same question for the galaxy. They have 750 Million People who can afford to buy it, probably 150 Million People in china in total who are buying these kind of premium products. Half of them are already on the two other operators that have been carrying the iphone for the last year or two. So you work through the numbers, chinese smartphone sales are 70 million youre in the a quarter going forward, and china mobile is about half of those, so its 30 million, 40 million, 50 million units, so what portion of those made up by people who can spend up to 900 to pay the chinese price for an iphone . Clearly there are people there, but thats 750 Million Subscriber numbers is the wrong place to look. Its a Super Premium product. This is about value, not volume . Yeah, it will find the Super Premium customer. The question is, how many are there . I think the broader point for apple is this is a step change in volume. The quarter ls sales will go up, but they wont change the overall trajectory of the company. Its not going to turn it into its not going to solve the problem of is the iphone a great product anymore . When people buy apple in europe, in the United States, theyre joining a club. They probably got other apple products that work seamlessly with these products as well. Youre going to have an ipad as well, other apple products. Is it the same story . Well, i think apple outgrew that a couple of years ago. Now, there are now 5500 million live i. O. S. Devices on earth. Weve kind of moved past the point where it was the apple club quite a long time ago now. To the extent that it is, i think there is a club that applies in china as well. The joke in china is that the spoiled teenager going off to University Needs a threepiece set. She needs an iphone, an ipad and mac book, otherwise shell scream at her parents. I think there is still an element of the apple club. But i think the broader point is its a premium, highquality product. Theyre not trying sell you talk about the kind of they want to semiyou other stuff, and the value now is going to be different for the value in the future. Its going to be about a much more seamless Wireless Phone and all these other aspects that are going to change. Theyre not trying to do that yet. Well, i dont think anybodys really got the story in place, certainly not yet. There are a lot of phones being sold in china, but those are generally being sold by domestic manufacturers at a much better price point. Its not like anybody else is selling them in china. There are also a lot of android tablets being sold in china, but only be used as tv substitutes rather than postp. C. Replacement devices. Apple has got a very strong ecosystem in china. Android does as well. In fact, android is probably stronger in china because ought companies customize it so much to integrate their services. But as i said, i think the key problem for apple is not the product, its pricing, because an awful lot of people in china cant afford that kind of price. Look at that. Thank you very much indeed for stopping by. Benedict evans joining us. We leave on whats happening in the currency markets. Earlier on we saw a very strong retail Sales Numbers coming through. This christmas, we saw stores like john louis doing very, very well. Why did they do well . They sold highend tablets, and that was the big differences between them and some of the alsorans. Tesco didnt have a great christmas. Apparently the boutiques did very well. Weve been talking about that this morning. Anyway, ill leave you on that note. 1. 6441 is where we are trading. Ive seen people like throughout the years in life, and i recognize, you know, this kind of person within society and realize that i think there are a lot of whats wrong with certain elements of society. Jonah hill has played a major role in the film the wolf on wall street. For more on that and what else were watching today, Jonathan Jones us now. Ill choose to ignore that, but im going to give you a stat. 569, thats the number of times the f word is used in the the wolf of wall street. The most use that have word in any feature film ever, according to a Search Engine disclaimer, it is a long film. Its three hours, francine, but because of the amount of swearing and because of the 2014, the sex or nudity, this film in dubai has been cut by 45 minutes, which is quite a significant amount, and that was just so they could distribute it. The film has been absolutely butchered in the middle east. All right. The oscars are coming up in a couple of weeks. I definitely want to watch. I want to see this film, absolutely. The speech no f word there. Not yet. Depends on the questions hes going to get. We want to know, or at least i want to know, who the first lady s. The euro is particularly high. Of course, no one cares. Im joking. He said he wants to comment further on that. The euro . No, we want to know who the first lady is. Will he tell us . I dont think hes going to tell us. I just wonder whether president obama knows, because hes had access to all the phone records. Well, great segue, because manus has been holding up all day. 200 million texts a day, the allegation of how many texts the n. S. A. Was gathering. It feels like blanket surveillance. Well, we had a guest on earlier who said its 1 of the texts sent every day. Its a massive amount. You wonder how many people have pecked out. Thats exactly what our guest is saying, 1 , and actually 200 million. Its 200 million, so they probably dont read them. But i still want to know whether or not they know about whats been going on. Me, too. I have not been drawn into this. The next one to watch, and i really need francines help for this, is davos next week. Theres lots going o. Tune in next week. Unfortunately, our show is almost over. John, thank you so much. Thats it for the pulse. Keep it right here on bloomberg tv. Surveillance is up next. Davos is next week. Have a great weekend. Its the president s speech this morning on the american right to privacy and the need for a robust National Security agency. Tim cook and the apple entourage in beijing. Billions ofen chinese consider sam some are apple. There will be a girl you and there will be four at every crossroads. It is friday, january 17. I am tom keene in. I am tom keene. A lot of going on. Happiness on the high street. The u. K. Summed up the recovery that retails rising more than forecast. In fact, you a lot more than forecast. Anonymous nine percent surge in Department Stores during the holiday season. If you want cleaner, it will cost you. Boehner protection could cost