Transcripts For BLOOMBERG The Pulse 20140210

This is the pulse, live from london. Step for mankind, one giant leap for Bloomberg Television. Breaking down the business of zero gravity. To our top stories, Francois Hollandes visit to the u. S. Begins today. Politics, taxes, and Technology Top the agenda. Man is pretty joins us with more. This is very important manus cranny joins us with more. This is very important after his personal scandal. No drama obama white house. On a more serious note, the protocol is not top of the agenda for Francois Hollande. The worst ratings of a sitting president , below 20 . A personal mulling a personal mauling in the press over his private affairs, and in the press someone who increased millionaires. He has 70 industrialists with him. Apany that kerry i company that carries more people, alston ceo. Iran, theria, ukraine. They are very in line with the u. S. , they are hawkish. Is pursuing Tech Companies for over . 25 billion, he wants to curry favor. He is a contradiction in so many ways. A very unpopular politician. To go after tech giants and say you should be paying more taxes, he wants to emulate them and bring some of that Silicon Valley entrepreneurship back to france. I wonder does he really . He needs to revitalize the economy. Is saying he is probusiness, i want to push that agenda. The two do not necessarily go handinhand. Forou hit upon the issue Francois Hollande, he is trying desperately to reengage in terms of france as a destination. Nowhere else in the world was there less money invested last year, according to the oecd. Not destination number one for capital investment. He is going across america to tech valley to try and begin to open up the position in terms of what they want. It is about repositioning as a global statesman, business, politics, and tax. 20,zeitgeist word at the g this is where he and obama wants to get together. Friendswas a push the were trying, he is so unpopular. Lower than 20 . I cannot run for any european leader so unpopular. The latest on Francois Hollande in d. C. What present will he take . What do you give the president . Lets hope we find out tomorrow. We will continue the conversation with the chairman industry body,d what does it make of the relationship between the u. S. The French Economy . Switzerlands relationship with the eu could have setbacks. Zurich. Nichols is in still figuring this out, what kind of impact are we talking about . Credit suisse came out with a new report, they have shaved off. 3 for the 2014 gdp growth forecast, they say it will cost 80,000 jobs over three years. That is the time period that the swiss government has to implement this referendum. At the same time, they may need to renegotiate the 1999 treaty with the eu. Heres the eus challenge, they cannot think of this renegotiation with just one country, they are concerned it could set a precedent elsewhere in europe. Seeing some right wing politicians already seize upon this vote, talking about the importance. One tweet, 120 bravo. A razor thin vote, 50. 3 . Fromof the support came the germanspeaking country regions, it failed in the cities and in the french speaking part in the west. The eu must be quavering in their boots this morning when they wake up. , saying france might need to renegotiate with the eu, David Cameron has called for a referendum. This goes way beyond switzerland. Are seeing the eu take a stern line. They may have to renegotiate the entire treaty. That switzerland cannot pick and choose a route which part of the treaty they could actually keep. You need to redo everything, free flow of goods, traffic, free trade him and people. You have this one provision, what the new referendum does, having a cap, they do not specify what that is, on immigration, the entire treaty will need to be renegotiated. It is a hard line, they might have a mind towards influencing other potential votes throughout europe. You are seeing Business Leaders attacked this vote and say what happened is not good for the swiss economy. Credit suisse put numbers on start down atty break,. 3 . That is what this will cost the swiss gdp. Guy, francine. Thank you so much, hans nichols from zurich. Breaking news from barclays. Some numbers, Ryan Chilcote has the details. Barclays has disclosed some numbers, including a 2. 9 billion 2013. Pretax profit for barclays disclosing that number ahead of its fullyear earnings tomorrow. That came out within the last five minutes on the back of announcements we got yesterday from the sunday times saying that tomorrow Anthony Jenkins, when he delivers the official report and the annual presentation, will also say the company intends to reduce the size of its Investment Bank by 1 5. From the already reduced size he had promised. Fell 150llion billion pounds of securities and cut thousands of jobs. Why . The sunday times is saying he wants to cut the banks costs by 1. 7 billion pounds. There is a gap between operational profit at the bank and what it is reporting on its bottom line, net income. The issue is liability. Barclays cannot get away from this. Problems continue. One way to solve that cut costs. Thesem curious as to why numbers are coming out now, we will get to the bottom of that. Ofit is probing the leak thousands of clients personal data, i wonder whether these are related . They want to put something out before the figures tomorrow to counterattack backrests. Counterattack backrests. Counter attack bad press. There has been a lot of news over the weekend. The story from the mail that barclays leaked data for as many as 27,000 clients is not the kind of news the ceo wants to hear. Will it cost the bank anything . Looking at the share price this the answer tonk that is investors are not concerned. This is a reputational problem. On the back of endless reputational problems, ppi, libra, it goes on and on. That is what Anthony Jenkins is hoping to repair in his annual presentation tomorrow. No way to see that information about a client data other than as a setback. You, Ryan Chilcote on barclays. It is being put out because a certain portion of the British Press has already gained access. It was due to report numbers tomorrow morning at 7 00 a. M. London time. Tomorrow we will get the breakdown. Here is a bloomberg exclusive, nestle said to be exploring ways to reduce its 30 billion steak and loreal. Shares are rallying on the back of this, Caroline Hyde is here. This has been an ongoing and long running stake. Scale of sense of the the crossownership we are dealing with. Involved,re families two consumer juggernauts as well. The crucial figures are that oftle holds about 1 3 loreals shares. , april, restrictions listed on what they can do without. They no longer have to offer the family that also owns 1 3 of loreal, they do not have to offer them first right of reply. Seeing a speed up in what nestee is looking out. They are talking to banks, discussing how to offload that stake, worth more than 20 million euros, about 30 billion. No wonder oriole share price is at the most in 2. 5 years. What everyone hopes will happen, loreal will buy back those shares that nestle will sell. They are taken out of the market, each share that is currently available in loreal becomes that much more valuable. What does nestle have to gain . They make money from owning this. They get about 10 from their net income from their state and inreal their stake loreal. They say cosmetics are not a longterm part of their vision. This investment ties up a lot of capital, what could they do with that . They could go on a spending spree, have a bit of m a. The returns have already been sizable with these share prices rallying. Maybe get out now when it is worth the most. It could be in loreals interest. The ceo has said to the french media that it makes sense for it woulduy the stake, help his earnings. There are not that many synergies between the two companies. They have a couple of joint ventures, in terms of Balance Sheets it is not that important. Thank you, Caroline Hyde. In france. The french president heading to the u. S. For a crosscountry trip with president obama. He is meeting tech executives. The internet giants tax practices. More on that when we come back. You areme back, watching the pulse peter cook a few days ago, some respite for the turkish lira. Starting to come on stitched, the dollar gaining traction. Of thisade and fears week that we could see something more dramatic for the turkish economy. Financialee the action task force, effectively sponsored by the oecd, blacklisting turkey. Turkey has been warned that its regulations are not up to preventing the financing of terrorism. If this were to change, that could make it difficult for banks dealing with targets with turkish institutions, putting pressure on the currency will stop that is the dollar lira. Some gains after big losses. Negative news for the currency this week. Withancois hollande meets president obama today. He will also sit down with executives at facebook, google, and twitter. That is after he said the methods used by large internet giants to minimize tax payments are not acceptable. Joining us from harris, the ceo paris, joining us from. Eo of the Entrepreneurial Fund what is the message hollande will bring to the u. S. And the message he will oversee back . His goal in visiting Companies Like google is to andote France Technology innovation scene. There have been some crazy decisions made by his government in 2012. Name of to restore the france, which has deteriorated in the last 24 months. How seriously will these Companies Take Francois Hollande . Taxes ont their profitability. He says he wants to be probusiness but does not act like it. How are they going to view him, see this guy showing up on their doorstep after all he has done . It is important to notice that Francois Hollande is switching from a pure socialist way of looking at the economy to a more pragmatic and probusiness view. He is now a supporter of supply innovationbased economy. This these changes have to be known outside of france. Ans visit to the u. S. Is Excellent Way to promote that. And make people know about this recent change. Is it really an Excellent Way to promote question is it really an Excellent Way to promote . A president who is less popular than anyone else in europe, below 20 . Are the americans going to take them seriously . No president in france would be popular today because the economy is not doing that well. The economy has to rebound, it is not rebounding yet. Francois hollande has understood that. He is doing what he can to restore the credibility of the growth of thee economy. The situation is clearly not good. Publicizing and making it public that france wants to be part of the game and to experience wealth again. Iscan i ask you he traveling with a large entourage of business people. What are they going to get out of this . The president s relationship will be a difficult one with tech giants like google and twitter. There are a lot of businessmen who are able to communicate with these companies. What can we expect from that relationship . Not know the concrete discussions the president will have with the google office, i think the goal is for us to as a destination for investment and for business. Second, for the president to learn what it takes to create globalironment to lure leaders. I am thinking about speed, things thatst, the have made Silicon Valley very successful and that we need to replicate in france. Thank you so much, ceo of isai from paris. Lets continue the conversation. Isomberg newss greg traveling with hollande and joins us on the phone. He has an awful lot to do. You have had certain contacts with the people he is traveling with, business people, that will be with him. What are they saying about the trip and the prospects for this trip to generate positive news for paris . I would not get too carried away on the business side, most discussions in washington are willing to be much more about geopolitical things, about French Military intervention in africa and syria and iran. Is when he goes to San Francisco in a few days that the business will come up. I think they are hoping the overly negative view of the French Economy, they can show it is not all about 75 tax rates, it remains the fifthlargest economy in the world. It has a vibrant internet startup scene. Obviously, there are problems of excessive taxation and excessive things that salon has come realized they have to become a more business friendly environment. They will be trying to drum up a little bit more interest in france and try to dissipate what they see as excessive pessimism about the French Economy. Behow much of it will conversations about his personal life . We have not really spoken about it on air, people still want to know, this is his first trip abroad since he does not have universal first lady he does not have an official first lady anymore. Tohe is not the first person have come to washington alone. Berlusconi did not come with one, merkel comes along. It is not insurmountable not to have a first lady with you. There will be curiosity about it. We have asked about it in the briefings and get these answers that he is coming along, that is it. That life private life. Hans nichols likes to tell us stories about air force one, do you get to go on air force one . No, we fly behind the president. He will be on the real u. S. Air force one today and marine one because he is being picked up at Andrews Air Force base by obama, they will go to monticello, and ofginia, which was the home thomas jefferson. He will get to fly on the real air force one, we fly a press plane at least a few hours before him. There is always next time. Tracking Francois Hollande in the states. Alwaleednaire prince having a good couple of months, a surge in kingdom shares have increased his net worth and his Investment Banks are beating warren buffett. Billion back, 18 that is the number welcome back, 18 million is the number of facebook shares dont invite mark zuckerberg. The largest Charitable Gift on the Public Record in 2013. Ike and two minutes. Back to the pulse, live from bloombergs European Headquarters in london. I am francine lacqua. I am guy johnson. The saudi arabia and billionaire prince al will lead has benefited from a fivemonth rally in kingdom scales. The Saudi Arabian billionaire prince alwaleed has benefited from a fivemonth rally in kingdom shares. What has he been doing right . He has made some very smart bets in company like twitter and a chinese online retailer. Twitter had a very successful ipo in november. That has created positive sentiment around kingdom. Invested in steady states, cola cola, railway. These are more volatile. Is this a blip or something 12 months down the road that we will say was turning a corner . Kingdomslook at history, it is volatile. You have seen the stock price stay in the gutter the past three years. In the past 1. 5 years, you have seen it spiked, come back down, now it is on another spike. It will depend on how the latest investments, jd. Com, twitter, how they pan out. These are the ones that are taking him up, what took him down, what did not work . Citi. Citigroup was the biggest one, he blew it. He was he was stuck with it. He defended it for years and years. Im friday, he said it is behind us. He will not be talking about it anymore. You might think he made a mistake on apple in 2005, he sold most of his steaks. He says that was not a mistake, he invested and saudi real estate, which he says has done better than apple. It is a market not many people get to access. It is not very transparent. Thank you very much. Joining us from our billionaires team. Lets move onto the future of wearable technology. You are looking at pictures of a headset that projects images directly onto your eyes. Expect to be available late this year. We are joined by christopher nicholson, thank you for joining us. Wearable headsets . We talk about wearable technology, little bracelets that count how many steps you do , they count glucose in your contact lenses. How excited are you . Where thingsech is are going in our view. You talk about the quantified self. Of datacollecting a lot about your biomedical conditions. In a longterm, you will feed this into your own kit, it will give you warning sides when things are not right. They can give you indications about critical medical conditions. It gives the medical professional a chance to give you a more positive outcome. It will also cut health bills enormously because prevention is an awful lot cheaper than cure. I had this one conversation, there is so much hype around wearable technology. People say this could be the new facebook, the new twitter. If it really takes off. We are still in the early trial period. With the interesting thing technology, if you can get incorporatedsion within what you see, your experience is much more lifelike. I dont know if you have ever tried sitting really close to a large screen. That is quite nauseous. I feel sick. To doersuaded my wife this experiment, we sit at the back from now on. You do get the peripheral vision effect. The issue is can we get that peripheral vision of fact, that makes a difference to peoples gaming experience. Beyond that, it is really interesting but it is on the gimmicky side. Have you seen how it looks . Not something you want to wear on the street. Cant could be home kits, i think of people who would add this to their xbox. Why not . If the quality is good you do not get the pixelation problem, that is what they are claiming. That would be a better experience. One issue is that when you are gaming at home, people can still get your attention in the current setup. With this system, it does not look like that will be so easy. You really lose your teenagers. Guy come over to you. Lets talk about reality, athletes at the sochi winter olympics. They are competing for a hefty pay off how much is an olympic medal worth . Ryan chilcote joins us. Great britain lets start with the austrians. Only three eu 23 years old. He was going 80 miles for our. He gets a 17 piece claims that over 21,000. Gottenller would have 25,000 plus up to 1 million in endorsements. Not like he is going to be left out in the cold. Also true that because of the size of the u. S. , the wealth of the u. S. , there is more money in terms of miller. Ents behind britain is not known for its performance, pulls off a miracle in sli opestyle. Her 30s, shein flipped burgers, nobody deserved cash, she gets they do not pay anything. Debut inon for this the olympics, she has dominated. Who do they envy . Therussians pay 113,000,. 25e extend government pays Million Dollars if you get a gold. Norway is a rich country. Yet they pay nothing. Maybe they get tired of passing out money. The real story, you can switch countries. Point two 5ys out million per metal, people chase that. There is a by athlete a up withe who hooked kazakhstan in 2010, before that she was with russia. Now she has betrayed them again, there is a south korean who chose between americans and russians, the russians could deliver him a passport more quickly. Plus they were going to pay him a salary. 113,000 and you get the president showing up at the ceremony giving you a standing ovation. We are in the wrong business. The back story of the olympics, Ryan Chilcote. Over to you. In 20 minutes, it is surveillance, tom keene joins us from new york. Looking at the equity markets, a lot going on, chairman yellens testimony tomorrow. History in the making as the first woman to be fed chairman attends congress. Look for that on Bloomberg Television tomorrow. We look at the equity markets, Michael Holland will join us. Us. Rd ward will join great people and who has been persistently in the markets. In the about dovetailing economics, the tough jobs report with equity markets. A conversation with elizabeth and michael over their new book on china. Isking forward to this, this my must read for late winter elizabeth economy, i will talk to her about pollution in china. What a great last name. Right on the money with that one. Bear to haveoss to that name, a phd from the university of michigan. I best her shots about it all the time. Tom keene with surveillance. Asked me about figure skating. I have not been following figure skating. It about the olympics, i am so glad a woman from the u. K. Won. I do not Pay Attention to figure skating for four years and then all of a sudden i am an expert. It is amazing. Tom keene. Her twirl was magnificent. I have to go you ttube it. Lets look at how european markets are trading. Minestrone has latest. Manus cranny has the latest. The only thing saving france is lori ellen the fact that nestle might divest. Missed industrial production. Investment markets are giving a spirit attempt at a rebound. Checking in on u. S. Futures, equity futures indicate about. 25 lower in the u. S. A bet in the u. S. Volatility hit a 13 month high. Et on protecting myself . There is a trade, traders are buying put options, saying volatility is going to fall. Cisco delivers to my. Yellen is on the blocks tomorrow in terms of overall viewers. There is some repositioning going on in the fx markets. Short yen, people taking positions against the yen, yen going down, dollar rise. The market is leased bearish since november of last year. Look at the euro, traders have gone net short, turning their position. Since july last year. I cannot figure skate as well as tom keene. The video overh and over. Winky so much, manus cranny. Much, manus so cranny. Ok. Tom keene was very into figure skating. I heard it. Switzerland slamming the door, curbing immigration. What does this mean for business, the economy, International Relations . Welcome back to the pulse, live from london on bloomberg tv. Switzerland has voted to curb immigration, this could undermine the economy and hurt its relationship with the eu. Joining us from zurich, director of the Science Industries group. Thank you for joining us. Through, frome your perspective, the damage this is going to do to a country that is not only reliant on foreign people coming in from the eu and bringing the skills they need, but also the relationship the country has with the rest of the eu for markets . Have to see two problems. One problem is we need immigrants, highly qualified immigrants, especially in my industry, chemical and pharmacy. Access to freeed movement of persons in the eu. The second point, if our government decides to introduce a quota system for immigrants, we have a problem with this. Of whethera sense you are concerned about switzerland as a whole. Take into out and account what you said, what does it mean for big businesses in switzerland . The most important thing is that it creates uncertainty. Uncertainty is never good for business, especially not for the investment climate. The uncertainty must be resolved as quickly as possible. We need to know how the government will introduce this quota system, that is one part. For the other part, we need to know how the eu will react on our move in switzerland. And whether the bilateral treaty that we have 10 be adapted to the new situation or not. Is this uncertainty . It seems pretty clear what they want to do, they are basically saying i want to renegotiate the terms with the eu. That is true. The problem is that the concept of free circulation is in contradiction to the concept of quotas. There is the problem. We do not know how to resolve this problem at the moment, we are fairly confident our government will find, together with the you, a way out of this situation. If you were running nestle right now, any of the Big Companies that operate out of switzerland. How are you waking up this monday morning thinking about the future of your business and its relationship with switzerland . Do you think that is going to change . Think it will change fundamentally, it has added a new element of uncertainty, which is not good. Hard. Working very we are disappointed about this result. It is not a germanic change. It is a change, a challenge for us to find a way out. So muchight, thank you for that. Science Industries Director in zurich. No gravity, no problem. How one company is faring space tour tour for a how one company is preparing space tourists. Lets talkback, about the currency markets. The turkish lira under pressure as a result of late current account deficit and political problems. A new one, the Financial Action task force, which make surecountries the financing of terrorism is difficult. It could get blacklisted as a result of this. Ons already putting pressure the turkish lira. Francine . Richard bransons Virgin Galactic is set to make its Maiden Voyage this year. Evilly laughed bought 250,000 ticket might want to get people who have bought 250,000 dollar tickets might want to get acclimatized to zero gravity. Comes in. Corporation i am cory johnson. This is one of the most enjoyable moments of my life. [laughter] wow. Just a few minutes ago, i looked like this. Canaveral,n cape experiencing zero gravity with a Company Called zero g. I am the wrong person to be doing a zero g flight. Zero g it has partnered up with zeroransons version g has partnered with Richard Bransons Virgin Galactic. Flights also offering to anyone who will pony up 5,000. The plane flies at 24,000 feet a series ofo parabolic arcs, 45 degree angles , it feels like 1. 8 gs. Then it begins to dive at an seconds. Ngle for 30 passengers experience weightlessness. And then they do it again, and again. There is a reason this plane is known as the vomit column. Less than 4 of participants get sick. It is very rare. Is one of ourster guides, i need some numerical handholding. Suborbital is becoming more of a reality, companies are bringing their customers on board to experience microgravity. It is really a wideopen market being created now with the commercial phase. That brings us to where we all started. This is crazy. This experience comes at a price. A Virgin Galactic ticket costs 250,000 dollars for six minutes of weightlessness, 600 94 dollars per second. For g is charging 5,000 7. 5 minutes of weightlessness, 11 a second. Weightlessness on the cheap. Zero g has its eyes on more. There is big money looming from nasa. Several companies are vying for a contract from the increasingly outsourced space agency. Isthe government space race over, the private corporation, capitalist space race is on. Private companies now. Russianss paying the 70 million each time a u. S. Astronaut hitches a ride to the International Space station. Private space maker xcor says it will charge 90,000 for suborbital flights, but only has room for one passenger at a time. Jeff bezos is still in the testing phase for his company, blue origin. He hopes to take three astronauts in their new capsule. The odds of that working before i can figure that out, we are back on the ground. Paying 5,000 might seem like a lot, but think of the extra perks. You keep a flight suit and then there is the set of twitter pictures that will make you the envy of your friends. Can you really put a price on that . One small step for me, one giant leap for Bloomberg Television. A great line. I want to go. Hans nichols, Ryan Chilcote, what to watch for the rest of the day. The french president following your footsteps, air force one. He is going to monticello with president barack obama. Jeffersons home in virginia. There will be awkwardness, no one knows who to seat with h ollande at the dinner. Jefferson lived his life on the margins. We are watching barclays. 7 00 a. M. , Anthony Jenkins will be in the hot seat. He likes to get ready for presentations by listening to music, tomorrow he will face the music. We will find out. We should listen to music more. That is it for the pulse, keep it right here on bloomberg. This is bloomberg surveillance. Trial and error, republicans face a debt ceiling decision. The clock is ticking for the gop and democrats. Can yelp move the needle for yahoo . Marissa is a distant third. Snow, theinter the cold, a shortage of pilots. Good morning, this is bloomberg surveillance. Will live from new york. Monday, i am tom keene. Joining me, adam johnson joins us. As olivia sterns. Scarlet fu is taking figure skating lessons. We have got to get our morning brief . Abc news weekend. Currentaccount deficit widening to a record in december on soaring imports. This adding to Prime Minister s challenges to drive a recovery. Half is the weakening yen. They are phasing out Nuclear Facilities and importing energy