Transcripts For BLOOMBERG The Pulse 20140212

Welcome to the pulse. We are live from bloombergs European Headquarters in london. From batman to james bond, every good hero has a secret door. If you want one in real life, you have to speak to steve humble. We get him to make us the ultimate hideaway. It is a great package. Talking about secret doors and the need for them, lets talk about the bank of england. As the governor presents his quarterly Inflation Report later today, everyone will be listening for an update on Forward Guidance. Listening asl be well. He joins us for what we can expect. For guidance 2. 0, are we stretching it a little bit too much . He is going to kind of finesse it a little bit, but nevertheless, the bored strokes of policy remain in place. Expectations are high because six months after a landmark policy for the bank of england, they are now. 1 away from the threshold they did not think they would hit until 2016. How are things going to change . There are so many options on the table. No one knows what theyre going to do apart from the guys at the bank of england right now. You could redefine the thresholds. That is seen as unlikely. You could say that unemployment has come down, but wage growth, we have not got any. Or you could go really bold and do something that the bank does and put out where you think rates are going to be over the next couple of years. Each individual policymaker thinks. It is seemingly very unlikely at this point. What i think is interesting is the Inflation Report. What are their forecasts for the next two years . The mandate for the bank of england is price stability and inflation is going to be the key. If they say inflation will trend lower, there is your message. We do not need to raise rates for the next couple of years. There is no pressure as it is. You were mentioning some of the options to change Forward Guidance. Is there anything else they could come up with . They could just come up with a threshold of 6. 5 . That does not look on the look likely. You could just do what you always said you were going to do. It, howadically change credible is it at this time . I think you do what you said you were going to do. They also said that what they were going to do was make assessments of why they think they were here and that is what they do. To examine that and look at the components that make up unemployment, participation all sortsarts of aspects of the unemployment story. We will put the pieces together and try to understand where this economy is. Nothing radical. We threw out a metric. That metric has changed a little more. Other parts of the puzzle it all depends on what kind of recovery they seek. There is always this productivity puzzle. That is key for the inflation picture as well. It is all about the reason we are in this position. Now the pressure is on to do something else. What if they meet those expectations and find out in 1. 5 hours. Thank you so much. A reminder, we will bring you the bank of england inflation u. K. T live from 10 30 a. M. Time. Italy is dealing with a political power struggle. The prime ministers future is in doubt as a result of a passing rift. Rome euroelcome our cheap. Give us a sense of, in italy, every couple of months, we talk about the government possibly falling. This time, you have a real contender and he could challenge the leadership. That is right. Here we are again. Hello. Zi, who is we have ren a young leader and an exciting dive for italian politics. We are used to old gentlemen in suits. He considers the challenge because he has the backing of the people behind him. What we are asking is, why now . Wouldnt it be in his interest to go to elections and get the actual backing officially from the people . It is a very interesting situation. You need to see exactly what will happen. They are going to meet letta, the current prime minister, and renzi, in about an hour. We are waiting to see what they say to each other. Letta is rather combative. He does not want to go. Understandable. What will nicole itano do with itano do with this . Another power struggle he has to negotiate. Basically, he said that he wants them to slug it out. He wants them to figure it out themselves. As independent as possible. They have both gone to see him. We will have to see what happens. Tomorrow, there is a big meeting of the pd party. They are in the same party and renzi is the head of the party. There is the possibility that, at some point, they will tell this it is time to go and will actually happen. Interesting. Thank you so much. You have to time these things perfectly because renzi possibly wants to get into power. If you mistimed it, the finger gets pointed at you for making the government fall and possibly driving yields back up. Berlusconi did that at his peril at many points. Toyota is recalling over almost 2 million prius vehicles worldwide. That is almost half of the vehicles ever sold. Craig, another recall. Talk to me about why this is happening. There is an issue with the software on the thirdgeneration of the prius, which they have been selling since 2009. The software may cause some parts of the vehicle to overheat , which puts the prius in a mode where it saps it of power. In some cases, toyota said, because of this problem, that the car will come to a complete stop. Drivingin particular cases where you put a heavy load on the pedals. Say you are coming from a stop to and accelerate, this is when this problem may occur. So toyota is recalling every one of the priuses in the thirdgeneration of the main prius model. What is toyota doing to try to tackle these issues with recalls . It is interesting. Has toldefore this toyota no, we are not building more plants and has not announced a new plant anywhere in the world since the beginning of 2012. You are seeing a lot of very aggressive plans out of volkswagen and General Motors to add plants in china to add capacity in other parts of the world. Toyota has not done that. It is using it facing existing Production Capacity to keep pace. With these recalls, to try to get them under control. Thank you so much. Our toyota reporter, craig from tokyo. Now lets go to heineken, who reported earnings earlier today. A decline in profits, but remain positive on the outlook for 2014. Theyve tweed is in berlin. Market is responding well to this report, but talk to me about where to find a good news. The good news is in the outlook. You can see that reflected in the fact that we did see a bit of a jump in the share price. For he. 2 at one stage, the biggest gain in about a year. The outlook is all based on their assessment for the Global Economic recovery, which they. Ay is tended it tentative compared to last year, they had a profit warning saying they were extremely concerned about the outlook for emerging markets. This time around, they say that the Global Economic recovery should help them in the emerging markets. I am talking particularly about africa, asiapacific, and latin america. He caught up with the chief Financial Officer a little earlier today and he was talking mergers and acquisitions in latin america. That is helping growth. Also, organic growth. They are moving into a new , ethiopia. E myanmar speaking of africa, he was positive generally on the continent. We have made big acquisitions in latin america. The beer business and more recently, the big move in asiapacific by getting full control of asiapacific breweries. Only large is not consolidation. It is also about organic growth. Buildingee that we are wheatfields. We are entering myanmar. We are expanding in countries like ethiopia. The other area which is slightly optimistic is the fact that they are on track with their 629 million euro costsaving program. That is a program that could easily boost their bottom line. Another reason to perhaps buy the shares. We will leave it there. Thank you very much indeed. We will carry on the conversation that david had started. We will get more on heineken later this hour. We will be joined by a drinks analyst. Now onto an exclusive interview. The Qatar Investment authority, one of the world against sovereign wealth funds. It has stakes in many companies, including barclays, sainsbury, and credit suisse. With him and asked him about his plans for the store and other opportunities that he may be considering. It will be four years. Since our acquisition. And i think we have done a lot. The numbers show that improvement. 70 on the sale. We invested a big amount of money. We are doing our best to take it to the next level. Iconic britishhe brand. How do you bring it to the next level . The next targeting number, which i do not want to say, but we have a clear plan for what we want to do, how we can do it. Lets does this also showcased your commitment to britain plc . It is one of the main destinations for investment. You have a great population and regulations and we have big and we are welcome and we are happy to invest more when the opportunities come. Is, im trying to tell you we invest locally and divers five are assets geographically and by asset classes. And we have asset allocations. Whenever the opportunity comes. It was the first time he ever spoke on camera. It was an interesting insight into what they are thinking. He would not commit to talk about companies. A shame, but maybe next time. Lex as he told me, this guy is the perfect investor for your business. I want to invest for the longterm. I am not interested in getting involved with the management. As long as he goes fine. He is the perfect Angel Investor for Bluechip Companies across the world. Lets talk about another bloomberg exclusive. Morrisons shares surging today. A family has contacted twoway interest in taking the grocer private. Far, no buyout partner has been found. Concerns about the slow sales growth. Secondlargest bank has smashed estimates. The prophet was almost double that expected. Its corporate and Investment Bank unit was hurt by a fine from the European Union for the libor rating rates. We spoke with the deputy ceo. Socgen is not under formal investigation regarding its trading activities. From have been questions some regulators, but not a formal investigation. Head of the, the Worlds Largest asset manager sat down with charlie rose. Larry think spoke about emerging markets economies. As europe continues to have very high debt issues, these emerging markets have growing and stronger balance sheets. And a faster gdp than most evolving worlds. You can watch the full interview on bloomberg tonight at 10 00 p. M. U. K. Time. Coming up, Forward Guidance 2. 0. Marconi presents the u. K. Inflation report in just over an hour. Present the u. K. Inflation report in just over an hour. We will discuss what he needs to say with unicredits chief economist in a moment. Welcome back, everyone. The bank of england publishes its quarterly Inflation Report today. Mark carney will present an updated version of his Forward Guidance policy. We will bring you the whole press Conference Live at 10 30 london time. The report follows Janet Yellens testimony to keep rates near a record low. For more, joining us is the unicredit chief of janet yellen did a great job. And going to continue this reign by consensus. Anything that lets you on easy or are you feeling more comfortable that this is a person that has the situation firmly in hand . It was a continuation of what they had. Nobody thought that janet yellen was going to come out and change anything around really. She has a little bit more then ben that bernanke had because of the change. Sam fisher coming in, a powerful man. A very got to drive careful road, but she is super competent. About isle ask me whether she is going to be as elegant and communication as we have had in the past. I think that is the big question. She has not said anything until now for about a year. We do not really know what she says or how she says it. You have always been fairly down on Forward Guidance when it comes to the bank of england. That is the understatement of the year. [laughter] nevertheless, you make a strong argument from Carneys Point of view. Than weckly anticipated, we are getting close to the unemployment threshold. Why we got here more quickly and look at all the other measures. This was a metric that we throughout their, threw out still havewe inflation mandates and we need to understand that a little bit better. Everybody is hyped up about the Forward Guidance has not definitely an option of taking a step back and going, lets investigate and see what is going on. I think that is fair. Was, in mydance opinion, a disaster in terms of communicating policy. Now a bit of a highclass problem. I think he is doing the right thing now. And say ome out lets do phase two. Everything else is back to normal. You have the whole thing and see how it develops. I think were moving back to a better communication policy now. Job i been in the am a little bit harsher. He has not been in the job that long. He has had an easy ride because things have kind of work for him. How did he get it so wrong . Economist it is just one of the things were looking at. How does he get that wrong . Because it is not a science. He came in like a rockstar. Pretendo come in and that he had a magic wand. He was flirting before he arrived in london with gdp targeting in a speech and the term fixable inflation targeting. What the heck is that . He landed on Forward Guidance, probably got the inspiration from washington. That is unfair. He was put in a place where the expectation was to do something. It is not a science. There is no magic wand. I think he got carried away and had to deliver something magic and it backfired because the unemployment numbers that he was hanging his head on let me put it this way. Glad i am notam the guy at the bank of england who forecasted that. Very briefly and then we need to wrap up. The guy in the next cubicle forecasting inflation is not doing a good job either. We are going to end up back in a situation where we are forecasting inflation. You look at all of the other aspects of inflation and they are completely on concerning. This is important. With our forecast, inflation will stay stable throughout this year. The low inflation we have now compared to before is the unwinding of the special effects that keep correcting. We have other special effects to hold it down. It will increase towards the end of the year. They ought to raise Interest Rates. You want to look through temporary effects and temporary effects are going to hold them down later in the year. On the lowasting inflation now through this year. Agreedsaid, i completely that no prospect of raising rates for a long time or our numbers, they should do it before the end of the year. We will speak more about that next. , still to come on the pulse we will take a look at an ancient technique to modernday farming problems. See you in a moment. Welcome back. Lets give you a quick market update. Stocks are rising for the six straight day. That is the longest winning streak of 2014. Yesterday, nowen what will he get from the bank of england . One story dominating in the u. K. And it is this. You have morrison will take over private equity to take the company private. That is the view from the markets. Under a lot of stress that the family may go to private equity. What would they do with the assets . Maybe sell them to tesco and sainsburys. That is the corporate story of the day. Stay with the pulse. Back very shortly. Welcome back. Crocs im guy johnson. These are the number top headlines. The new fed chairperson is maintaining Ben Bernankes policy of rolling back stimulus. In emerging markets, the could states shales gas provide investment opportunities. That is the message from qatar sovereign possible fun. That is not him. That is him. Than weve Global Growth will consider it. Another bloomberg exclusive. We spoke to cant extends president about the oil fields. It is the largest discovered in 40 years. There were technical problems at the site. That cannot happen and that is impossible. We have an oil price in our budget and we will do it as additional. Nothing of the sort can happen. The problem is with the associated gas and freezing temperatures with quality issues that have been checked now. The oil pipeline will be used. In terms of the time, it could take until the First Quarter that it can be done. They can see what needs to be done. Everything is in place. Output, drilling, a Gas Processing plant. Everything is in place. They will be ready and working. Giving the problems, will it lowerayed or begin at levels . Whats that is a question for specialists that is a question for specialists. I will be at headquarters next month and they are working hard on a process that depends on the technology they choose. They have the best experts and they are checking them. As soon as the process is complete. The order will start and this is a technical process. That was the president of catholic stand. Kazakhstan. The region narrowed and output drop. Hans nichols has been digging through numbers and is going to tell us what they mean. Good morning. Down and theye are increasing the dividends. Theyre cutting back on Capital Expenditures and that is why we are seeing the stock trading higher this morning. Were seeing the integrated Oil Companies and those that do refinery. It is a split between companies on appetite for risk. The oil as high as it is, Companies Want to go out and find more high risk and high reward. Nobody knows where oil will be in the future. Investors want a safer approach and you will see the numbers where profits meet estimates. Withave some problems refineries and they hurt on the currency side. This is a question between shareholders and the company on how you ask for and where you explore. Whether or not you find an elephant well. That . T about out torly, we need to go an oil field and investigate for ourselves. Here is the problem. They do not own it. Hey own 15 they are not in charge of the production of the oil and that puts him at the whims of another organization. The challenge is to find their own wells. Findber the slogan, cant petroleum. That is the old initials from the 1970s and this is the challenge. They spent a lot in 2012. They spent 2 billion and exploration. It was up and they say that they will have billions of barrels of oil and they are sticking with a bullish forecast. They need to have an elephant well and a big cat well. Elephant well and a big cat well. We will find out. I can think of a number of reasons. We will not go into that right now. This is a must do event. The movie. It wont be for polite conversation. Thank you so much. And, the invitation on the road trip. We will go later this year. And haveis contacting an interest in taking the supermarket. Marketsng us now is the editor, manus cranny. Who are they talking to. Equity, they say to have been in the frame. There is a potential size of this date. This has caught the market imagination. Them be late to the party online. Divestedson, who have themselves, could do private equity. It would take more than one. It brings you back to a conversation i had a number of months ago. Will private equity come back inside . It is a little too big and too much of an appetite. The carlyle could be in the running. The Property Portfolio and they wanted to unlock that. There are a number of different issues. It is three. The question you have to ask yourself is, if the company has been that well, it changes the way. That is part of the deal. Once i was looking at some of the articles. They talked about the position in morrison. This is a familyrun business and it went public. They cannot compete with everybody and you cannot please all the people all the time. There is a risk that you chase the whole world and you lose sight of the original intentions in the original customers. That was an article he wrote ed loses a family. It will be a tough one. The perception is that if morrison goes prime, they could have the zeitgeist of the analyst community. Company that is in a distressed position at the moment and it would be extremely surprising and a cautious company. There you go. A nice little boom for the whole industry. They arising on the back of it. Back to you. Lets talk to. Visit in San Francisco is the First Official trip to the city and 30 years and years trying to convince tech giants to convince more. It is making a splash in the valley and it is a guy named burnout. He is the cofounder of a firm that is generating a lot of buzz. An app that is shooting its way of apples ranking. App is called it has taken smartphone photography to a whole new level. Francine is in charge of props. Not today. We will see the works. This is a phone that vibrates in your pocket. This guy thought he could do something with that. This is what he came up with. This is a phone that is standing out. There we go. Theory,brating and, in if we can get them to zoom in on this, you can see that it is moving and using the vibrate function to go through a 360 panoramic. It is taking a picture around and you can download it on your iphone. Ands looking at a device thinking of another use for it. They had the republic on the headphone maker. They say we should stop thinking about them as headphone. This will tell you your heart rate and your glucose level. It will take your temperature and all of those eggs. Eric looks worried. What comes after this. We are on twitter and facebook. This is a photo and it is incorporated with other wearable technology. It takes existing technology and transfers it. It is fantastic. There are questions that come out of this. Good job. We will carry on. Another potential customer. , here is a french one. Gone from france into the united states. This this encapsulates the problems that france has at the moment. Smart people are going elsewhere hollande is praising pressure. It is not a french problem. They need to go to Silicon Valley. You saw them go from america and you saw the facebook guy go from and the moment you get into this, that is where the action is. This is not a french home. They are going out to say that france is a great place to invest. And createback something. What does he need to do to attract these . It is a problem we have in europe, in general. Geniusesalley breeds and there are Big Companies that do Digital Advertising and have a headquarters. This is still a problem that they have. And even the infrastructure is not great in france. The guys come out with these great apps. And frequent deliveries. It is unfair to ask. Is still moving. This is cool. My concentration has gone down. It is a big challenge and, at the end of the day, what we need to deliver are educated people and a completely different environment. I think france is doing as well as anybody else. Have in the lease and they asopic of infrastructure well as anyone else. Youre the issue of taxation and restrictions you have the issue of taxation and restrictions. This is a rapidly moving world. Less. Of europe, more or ende will get there for the of the show. It takes a while to figure it out. Ill talk to you about the impact of technology on employment and drawback there. And watch there thing spin around. We will have to go back to the robotics conversation and the technology affecting gdp. Stay with us. The chief mobile economist will be talking more about tech next. We are taking a break. A door. Perhero needs what if you need one in real life . You have to speak to this guy. We talk about the ultimate hideaway. Welcome. It is an ancient farming technique. Growing andcrop fish power. The water is recycled and drought proof. We report. Broccoli and we have tomato plants with a variety of different types of lettuce is of lettuce. Once a different type of vegetable patch. I told him no and i saw the root system. It is a nice clean white root. Fish and produce. Together and a symbiotic relationship. They are available at all times and its ends less energy and expend more into growth. In this pond, there are 800 catfish being raised on organic fish feed. The water is carried and plants grow on floating rafts. Their roots soak up nitrogenrich fertilizer. They use the nutrients and the clean water is returned to the fish tank. It isewed for five nutrients. Fisher cold london. It is not possible to have e. Coli or salmonella. Those fish can be harvested and used as a protein source. They are expensive to construct and when theyre built, they are less expensive to build ron penlandbased farms. It illuminates the need for fertilizers, pest of thought that pesticides pesticides. 90 less water than conventional farming and the water is continuously recycled. It is not lost in the soil or to evaporation. Our water andduce it would not affect us. It is older than dirt. The chinese used car. And the rice patties. This ancient farming methods may be the solution to drought. This is the solution to farming and it can grow faster and more densely. It will be the method of drawing in the future. Growing in the future. It is pretty impressive. It is. We will have more on that throughout the week. Agriculture 2. 02 Forward Guidance 2. 0. Toare expecting more updates the controversial policy of Forward Guidance. We will bring you that live and in full on bloomberg. From batman to james bond, every good hero could use a door. Life, want one in real speak to steve palm ball. He makes trapdoors. He has cool shakespeare has that become switches and he explains to bloomberg why the business of passages is as tricky as spotting one. When i started this, there you could not get a secret passageway were secret room. There was no one would build you one like the one i had seen the movies. That is what i said that i could do it. Something like i saw in the panic rooms. I did not realize how many a secret passageway. It is like half of all movies. Are for a security application. Either a panic room or a place where they can store valuables. I occasionally get ethical concerns. Can i have a secret door that is so good that the cops will not find it ever . Every so often, people say that they want a shakespeare bust from the original batman show to be the triggering device. We have a few shakespeare busts on hand ready to be converted. When i started this business, i talked to one of my professors and one of the things that he told me was that it is not scary and you will never become a millionaire. I shrugged it off and i started the business. Did. Lad i he is dead right. These are not massproducible. Unique, custom, oneofakind. It takes a great deal of time and attention to detail. I consider myself an artist. I do not want this business to be a factory. Each project is a labor of love for me and i want every project to be such that that is a steve humble original secret passageway. Want one ofdo you those in your house . I would love a secret or trap room and having a secret door to get to it. But right. Up right. As the picture. I want to show to you. It is spinning around and amazing. Forward guidance and mark carney is expected to give an updated version of his controversial policy shortly. We will bring you the policy in full. Francois hollande goes to the tech coast. Volatility in the emerging markets could provide investment opportunities. Wherevere global value it comes up. We will consider it. Good morning to our viewers in europe. Welcome to those who are waking up in the united states. I am guy johnson. This is the false. To bond,atman everybody has a secret door. If you want one in real life, you to speak to steve. Present theey will quarterly Inflation Report and it will be watched for any update. 0. 1 . Oyment hovers at the dude telling us that is not a trigger and just something they are looking at. We have the latest. This is a secret that knowledge is growth and says that we are not going to raise rates. Yes. It is about how to communicate the message and, six months after the attempted communicated, they are facing neardeath. Unemployment will stay at seven percent and will not fall until 2016. 01 and their defining the forecasts. It is about refining Forward Guidance. They are packed into a corner. Minutes, it is just a guessing game. Report. R the inflation we will have it live and in full. But today, it is back to work for francois hollande. Your signature to Silicon Valley to talk tech and taxes. They will not be all whiny and shes. Explains thedent carrots and sticks. You are with me. The party was last night and he is going out to california to meet with tech executives to urge them to bring tech business back to france. Heres the challenge, he wants to talk about them paying their taxes. It is difficult challenge for him and we will see how he pulls it off. I suspect he had fun. Dinner. D talk about love this diplomatic protocol. At people. Rubbish who is next to president obama . Golden who was the head of a harlem studio in new york. , it was first lady stephen cole bear, the comedian. , sorenson. N musk he supported mitt romney in the campaign. Ray maguire is a deals guy and a banker from citigroup. He was considered to join the treasury department. Jj rooms. Banese the student that menu. A variety of courses. The first course is american caviar . I dont know about that. Casht know if you for dries unpasteurized caviar. A lovely creamery in vermont. I suggest both of you go. Chocolate. Is a wild you have a widescreen and, here. Re the ones the one i can speak to an authority is the redlands. Columbia valley is known for and not their lands. It was a good vintage for them. I think hans nichols experience is beginning to pay off. He knows that the player party. Jobless, it would be deal. Apparently, the swiss only a deal. That was the thing you took yeahm it was mark and some problems with emerging markets and who knows whats happening with current state. And, yield. The yield is the takeaway. Im rebury him the host with the most. He did do a seating plan. Yes. And a great wedding menu. Francois hollande have enjoyed the party last night. Today, yes his sights set on tech. The french man who is generating buzz in the valley is a guy named bruno. You are looking at witchcraft. An iphone that is spinning all by itself. It is going around and taking a picture all the way around. You can get a 360 of them room. Weve been trying that. I was taken by that. You press the button. That is why the props are your responsibility. And itremove my feet spins on its own. He found that he can take that and spin it around. This of the great if you sold a flat. Or, to pictures of the grand canyon. Yes. There are lots of different uses for this. This is a french guy who founded this business. There you go. We loved this in the newsroom. This is a problem. And he hase great people and a lot of them valley. Ng to silicon i cannot speak to this guy. I know his story and he is a french man. Is not based in france. We know that now. We do. Investment is one of the biggest funds. And heht up with the ceo said the volatility could provide investment opportunities. The opportunity of commodities are forecasted and real estate. Europe is doing fine. The emerging america is optimistic and they are doing well. There is the shale gas that is the big story. Emerging markets could be an interesting source. Portfolio. Lobal where you see the next opportunities for yourself and investors. It is not about age. It is about the quality. When it comes, we remain open and we are ready to work with. Ther institutions that there is a good opportunity, we will study it seriously. Deals involved in many we are married to glenn core and extra. Glenncorp and xstrata. You always want to be associated with the company names. Is that the secret to the success . Make thecret is to deal longterm and make it winwin for everyone. Makesth parties, that Sustainable Investment and longterm investment. Ceo of qatarhe investment. A popular man in europe. The recall of 2 million priuss worldwide. Lets find out what is going on. We are joined from tokyo now. Why so many cars . Part of it starts with how cells. Ius cars to it is to more you sell and you had recall the vehicles, that means the number will be they. The problem is that it is related to the software and the glitch with the software. In some cases, when you are at a stop and accelerating, there is a lossting that causes of power or shutting down. This was something found on its own and not have any reports of accidents or injuries. They found it serious enough to recall 2 million vehicles and more than halve of the vehicles that they have sold since the introduction of the previous. Do tot is he trying to tackle these issues with recalls . It is something that he is blamed on over expansion. In 2010, when the recall crisis was at the peak, toyota said that they grew too fast and since that time, they have really looked at themselves in the mirror and decided that they need to slow down, in terms of expansion. They have not announced a new plan in two years and the interesting thing about where we go from here is that toyota has continued to have recall problems since 2010. If this continues, it will be something to watch, whether or addingy decide against too much to capacity to avoid this from being a lingering issue for the company. Great. We will leave it there with the latest on the recalls coming for toyota. Is fit for aoor superhero. We will show you the man is a tuples top the littleknown business of trapdoors and trapped everything is coming up. Good morning. Welcome back. You are watching the polls. One stock about the current markets and rochus. Mark carney will be walking into dilatory in press room. Howley finesse his central policy . How will he finesse his central policy . It is a reasonable story until we get in to that event in or around 30 minutes time. Orward guidance what will it look like and how will the market react . Heineken reports results today and there was a decline posted in 2009 profits. Bloombergs european editor is in berlin with the latest. The market is responding well to the report. Where was the good news . You see it. They are of. The biggest oneday gain. What happened was that people reassess heineken and, in october, they came out and they warned that sales would slow. Theyre worried about india and brazil. The Global Economic growth, though it is tentative, could in emerginges markets, asiapacific, latin america. We spoke to the cfo earlier today and we talked about how they are doing a little bit of of mergersd and acquisitions. Markets like myanmar and africa. These are things to look out for. Will be the world cup in brazil. From batman to bond. Every buddy has from batman to james bond, every good hero could use a door. If you want one in real life, speak to steve humble. He makes trapdoors. You get the picture. Oftells us why the business passages is hard. Almost as hard as spotting one of his stores. When i started this, there was nobody and you could not get a secret passageway were secret room. You could not get one. There was no one would build you one like the one i had seen the movies. That is when i started thinking that i could do this. People would say they wanted Something Like they saw in panic room. I did not realize how many movies have a secret passageway. It is like half of all movies. 70 of them are for a security application. Either a panic room or a place where they can store valuables. I occasionally get ethical concerns. Can i have a secret door that is so good that the cops will not find it ever . Every so often, people say that they want a shakespeare bust from the original batman show to be the triggering device. We have a few shakespeare busts on hand ready to be converted. When i started this business, i talked to one of my professors and one of the things that he told me was that it is not scary and you will never become a millionaire. I shrugged it off and i started the business. Im glad i did. He is dead right. These are not massproducible. Everyone is unique, custom, oneofakind. It takes a great deal of time and attention to detail. I consider myself an artist. I do not want this business to be a factory. Each project is a labor of love for me and i want every project to be such that that is a steve humble original secret passageway. It is pretty cool. The man who has everything, i place to hide it secretly. But you want a trap door . Up, the bank of england governor is excited to warn that the economy is too weak. He speaks in a few minutes. We will bring you the Inflation Report live and in full. Mark trying his the Inflation Report and we will bring that to you live. Now from thened National Australia bank. Books not very much. And it yellen gave as an indication of what you could say. Unemployment may fall below the threshold. Inflation expectations will in the start Interest Rates when they are below the target. As long as they believe them, if they do not, you will have to say more. How can he persuade . Forward guidance is about persuading households and firms that rates will be low for long. They do not care about markets. They need to convince them that the rates are on hold. The best way is to start looking at the other toolkit and the macro prudential policies. Pc, the fecthe and and is the npc go after the fec . That is who we have to hear from next. The fec is the ugly sister. They need to get a bit more traction and show that these are policies that they are seriously considering. Will we get a flavor of that today . There are reports and were looking at increasing size. That. Are signals like thank you. Will take a short break. After that, we will be back. You can follow spoke on twitter. You can follow spoke on twitter. You are looking at live pictures from the bank of england. Just laying out proceedings. Mark carney, we are about to hear from him and how he sees Forward Guidance evolving. We will be taking this press Conference Live and in full. But for our u. S. Audience for the first halfhour. Growing at its fastest rate since 2007. Jobs are being created at the fastest or quickest pace since records began. After four years above target, the inflation rate is back at 2 . The recovery to date has been underpinned by revival and confidence, reduction in uncertainty, and an easing in credit conditions. This has led households to save less and spend more, and prompted a strengthening and housing market. Business investment has so far been subdued, recent data and surveys suggest it is likely to gather pace this year. Phase of the ford guidance was put in place last summer when following fears of a triple dip recession, the u. K. Economy was just emerging from a long period of stagnation, persistent above target inflation, and subdued business and household confidence. The principal aim was to secure the nascent recovery by reassuring households and businesses across the u. K. That the bank would not raise Interest Rates until jobs, incomes, and spending were really growing. Specifically, they said a 17 Unemployment Rate as a threshold for even beginning 7 unemployed rate as a threshold for a beginning. Mpc was not taking undue risk. Ford guidance is working. Expected entrance rates have remained low even as the economy has recovered strongly. Uncertainty about Interest Rates has fallen. Most important, u. K. Businesses have understood the message. Surveys confirm what mpc members have heard as we travel the country, virtually all businesses understand guidance and a must 3 4 say it has boosted their confidence in u. K. Economic prospects. In many cases, guidance is encouraging businesses to hire and spend. It has also helped anchor Inflation Expectations. Finally, the Forward Guidance framework has highlighted a Clear Division of responsibilities between monetary and macro credential policy. Free Monetary Policy to focus on the jobs and output without being burdened by multiple other objectives that are best addressed by more targeted measures. As a result of exceptionally strong jobs growth, almost half a million more people have found work since august. The unemployed rate has fallen much faster than the bank had anticipated to 7. 1 . It is likely to reach the 7 threshold by spring. Mpc said last august that once unemployment had reached that threshold, we would assess the state of the economy more arrayy, drawing on a wide of indicators. That assessment is provided in todays report. The question is, what have we learned . First, productivity growth has been disappointing. Given recent downturns, thempc has taken a process taken more cautious approach. The second thing were learned is theres greater slack in the labor market than we would have expected given the very strong jobs growth. In part, this is because a substantial share of the fall in unemployment has been driven by a fall in the number of longterm unemployed. Ist means a lower level consistent with stable inflation. In addition, the sheer people working parttime because they cant find a fulltime job. Emains close to record highs almost half the recent increase in employment has been driven by self employment, which is now a record level. The committees overall assessment is fair capacity of one percent to 1. 5 of gdp remains concentrated in the labor market. The effect of this slack is evident in lowwage inflation which is around 1 . The third thing we have learned is inflation environment is more benign than we had anticipated. In particular, inflation has fallen from 5 in 2011 back to target for the First Time Since 2009. Local inflation is subdued with core inflation about the euro area and u. S. Close to 1 . Commodity prices have fallen in sterling has appreciated by 10 since march. All of these developers will hold back imported inflation pressures, which have been, to a great extent or to a great extent have explained the above target inflation over the past five years. In addition to all of that, administered and regulated prices now appear less likely work youre likely to put less upward pressure over the forecast period. Fourth thing we have learned is the recovery is yet another balanced nor sustainable. A few quarters of above trend growth driven by Household Spending are a good start, but they are not sufficient for sustained momentum. Activity is still below its precrisis level, wage growth remains weak, and the household saving rate is likely to fall further. The pickup in Business Investment is still at its relievers earliest stages. Although the outlook is improved in the advanced world, details Downside Risk in emerging markets. What is next . Has done today is outlining next phase of guidance. Setting up the factors that will guide its decisions and how bankrate is likely to evolve once the 7 threshold is reached. That guidance has five elements. For the first time today is providing guidance that is seeking to absorb all the Spare Capacity in the economy over the next two to three years. That recognizes the Spare Capacity is both wasteful and it increases the risk that inflation will undershoot the target in the medium term. Second, the mpc is given guidance that absorbing Spare Capacity before raising bankrate. Third, giving guidance that if and when the time comes that the economy can sustain higher Interest Rates, bankrate is expected to rise gradually. For sustained and balanced recovery, the degree of stimulus will need to remain exceptional for some time. The timing and pace of an increase in bankrate will reflect the degree of Spare Capacity and the pace with which it is being absorbed. Monitoring abe broad range of indicators including the claimant, participation in the market, average hours worked, and extent of voluntary parttime working, surveys of Spare Capacity in companies, Labor Productivity and wages. To monitor how the economy is evolving relative to our projections, today we are publishing for the first time forecast of 18 more economic indicators. One thing we can guarantee is future out turns will differ from these forecasts, but publishing them should help others understand our key judgments and anticipate how Monetary Policy will respond to the evolution of the economy. The fourth thing we are giving guidance on is that any increases in bankrate should be limited. This recognizes many of the Headwinds Holding Back the economy will remain in place for some time yet. Public and private hours shes continue to be repaired. Weak world for man demand will but the expansion of net exports and there remains strengthen the Financial Systems despite the progress on post crisis repair. These persistent headwinds mean that even in the medium term, the level of Interest Rates necessary to sustained low unemployment and price stability will be materially lower than before the crisis. ,ow, it is hard to be precise the one illustration of the possible level of a great in the medium term can be derived from the latest forecast of the bank that is based on a market curve which itself approaches only 2 Interest Rates three years from now. And this forecast, inflation is near, but a little below, target. The Spare Capacity gap that were looking to close narrows, but doesnt quite lows. The finall thing is the npc intends to maintain the stock of asset purchases until the first rise at a great. The first phase of guidance was about the conditions that would have to be met before we would even begin to think about raising bankrate. Now we are outlining what we intend to do, which is to close a Spare Capacity gap over the next few years. Why we intend to do it, which is to keep inflation at target and avoid wasteful Spare Capacity, particularly in the labor market, and how we intend to do it. Raise bankaiting to rates until Spare Capacity has been absorbed us further and eventually through gradual and limited rate increases. Bankrate may need to stay at low levels for some time to come. The first phase of guidance day businesses confidence that bankrate would not the raised at least until jobs, incomes, and spending were growing as sustainable rates. As guidance involves, that remains the case. The mpc will not take risks for this recovery. With that, i will answer questions. I would be grateful if you could identify yourself before asking a question. Please wait for the microphone. There are lots of you here, so in the interest of many people as possible getting a question, keep yourselves to a single question and then hand the microphone back. Thank you. Bbc news. Last august, you set out a policy on Interest Rates that was linked to one indicator unemployment. Now youre giving a whole range of different variables. What are borrowers to make all this . As i said, the first thing is that the policy we set out in august has worked. We put that policy in place at a time when the recovery was just beginning, when there was tremendous uncertainty about whether he would have legs. And there was the real prospect, in our view, that as he proceeded, there would be increased uncertainty about the past they great and there would would pullhat this the rug out from under the recovery. In a position at that time when there was uncertainty about the degree of Spare Capacity in the economy, but there was a high degree of uncertainty that there was still considerable Spare Capacity in the economy given the performance over the previous five years, we made what we would say was a relatively easy call. We said we werent going to even think about raising bankrate until a certain condition had unemployment 7 threshold. Now we are in a different place. The economy has been growing strongly in the past couple of quarters. Impressive job performance. We have taken stock. We move into a phase where we are still looking to maintain the momentum in the recovery, but where we have to make more nuance judgments. Thatovide a framework for to my for the first time were being clear about where we see the degree of Spare Capacity, particularly the labor market. We are being clear we see their scope to use that more of that Spare Capacity. And were being as clear as we possibly can about the nature of ultimate adjustments for which we would all like to see because it would be a sign of normalization in the economy. Ultimate adjustments in Interest Rates when that point comes. I will make one last point, be thes that this wont last discussion about these issues. We have laid out more information that we ever have. My colleagues and i will be back here in three months hopefully, you and your colleagues will be back in three months. I think we are giving something on the order of 20 interviews over the course of now and then. 8 speeches are scheduled between now and then. We will be speaking on average once every two days on interviews and speaking once every five days. There are lots of opportunities to update how the economy is evolving. [inaudible] marketplace in these edges forecast, and households and businesses are going to understand what is is the target . The first thing is to look at, what did we get wrong six months ago . Forecast forhe are twoment, there components of it. One is the economy has been stronger than we thought. Good thing, obviously. I would note that when we sat here in august, we had a forecast that was the upper end of consensus. Most optimistic of forecasters for the economy. The economy was stronger than we had expected, to some extent, that could have been contributed by what we did. But the big thing that hasnt transpired that we had expected has been productivity. We had expected the productivity growth would pick up alongside recovery. In fact, we thought if the economy was stronger than we had expected, there will be more sort of matching that. And that hasnt happened. Productivity is the torso difficult to measure and difficult to forecast. What we have done with this forecast is we have been more cautious in our assessment of productivity growth. Productivity doesnt get back to its precrisis trend until three years from now, until the end of the forecast. And further, when we conduct a Sensitivity Analysis and report around productivity, and you will see in that analysis that our assumption of how productivity response if the economy stronger or weaker, is more conservative. In other words, if it is stronger, we expect less of a productivity response. Conservatismn some to our forecast. [inaudible] the point about households and businesses understanding what is effectively an output gap target . Assessment of Spare Capacity, give that to you today. We will update regularly. You will see continued progress on a broad front, not just for one variable. We are also providing a mediumterm perspective. One thing were trying to do is provide a mediumterm perspective to households and businesses where rates are likely to go. I think one of the points we would like to get across is that we are still operating and quite exceptional times. There are these headwinds that expect to resist against persist against our economy. The consequence of that is that the mediumterm level of Interest Rates that are consistent with the economy operating in its full potential and inflation remaining at target are materially lead lower than they were in the past. We have given one illustration in the report. Skied news. In hindsight, it is a wonderful thing. How do you know your forecast on unemployment has been so woefully awful, would you still have gone forward the unemployment threshold you chose six months ago or would you have gone straight to this kind of fuzzy Forward Guidance . No, no, no. Say, wet ive got to have one of the strongest economies in the advanced world with very strong job growth, inflation at target and Inflation Expectations at least as well, in fact, more well anchored than they were in august. If you look at outcomes than those against which we should be good placehis is a to be. We are starting from a good position as we sit here in february a much better position than we were in august. And certainly a better position than we had been in previous years. Perfect information about what we would have seen in now,conomy then as we do we would have had a greater sense of the degree of slack in the labor market that weve seen how the labor market has responded to strength. And that might have had some had set thehere we threshold. It might have. But of course, we didnt. And part of the point of guidance as we set it out was to learn as we went along the way. We have learned as weve gone along the way and got to position where we did not expect to this point in time in other words, we expected my answer to phil on the productivity side, we did not expect to be here at this point in time come up but we have learned things. As a consequence of that, when we take our broader assessment, we cant provide the type of guidance that we have done today. He can provide the type of guidance that we have done today. Without question, if i knew then seen now,thing weve absolutely, would have had a threshold from a provided a very clear, clean message, simple message to businesses, message they understood, message to which many of them responded and it has helped reinforce the recovery. As i said, can you keep it is single question . Larry elliott of the guardian. You will go out and about to explain this Forward Guidance. If i remember if a member of the public comes up to you and says, you fail to spot how quickly the economy was going into recession, failed to spot the economy was going to flatline for two years and now fail to spotlight unemployment has come down as quickly as it has, why on earth should i believe a word you say about this . I would flip it around. The bank of england saw the recovery was going to gain momentum, took steps to reinforce that momentum. It has worked. We are taking steps to ensure it continues to work will stop i would say as well my predecessors, many of whom are here and can speak for themselves on this, saw there was a series of oneoff, largely external price shocks that the mpc should work through with some suggested they should look through and they did. They kept policy where it should be in order to help set the stage for this recovery. So on the big calls, when the economy was turning, whether to look through oneoff external price shocks and including the tactical calls around how quickly to get bankrate down, whether or not to engage in largescale asset purchases and provide guidance again, i will come back understood by people who make hiring and spending positions, it has reinforced the confidence in the recovery. It has assisted in delivering a recovery about which we are not complacent. We are pleased to see it, but we are not complacent. And looking to reinforce. Bloomberg news. Bullish assessment of growth has pushed the pound up quite a lot. What do you think that means for exports and the rebalancing . Could you expand on that a bit more, please . There are two issues there. In terms of the challenges to this recovery and in terms of specifically rebalancing, the net exports, clearly, the export performance and that export performances is the most difficult. That is a product of several things. Main the weakness of our trading partner, which we expect we see twosided risks now for the first time around European Growth of the still quite modest levels. We dont expect to be or get relief from the demand side at any point saying. There is the persistent strength of the strength of sterling, which i referenced. Each ad still is challenges. But, really, underlying this issue of whether productivity is going to start to pick up and win, the extent to which Business Investment response to the recovery, and the response of Business Investment, which we think is a reasonable forecast, it is also quite important to the dynamics of growth. And we are going to find out over the course of this year we see early signs of a pickup. We will see to what extent that pickup is reinforced. Independent. The government expects the market raise to come about april 2015. Last trees of the Market Expectations to the first rate rise were unwarranted. Are they still . Last year he did not say that. Last year what we noted was a change in market conditions. It was a change relative to a change in fundamentals. It was a comment on change on change. Quite specific. I dont think we should reinterpret what we said back then. Look, were specifically not giving time contingent guidance. We are giving state contingent in providing as much clarity as we can and will continue to do that incoming days, weeks, months, quarters, years potentially. As necessary, to secure the recovery. Financial times. Given the first phase of guidance was supposed to last for the mediumterm and lasted six months, can you explain to the public how the second phase of guidance is going to last and when we should expect it to be involved again . Well, the first phase of guidance wasnt time contingent. Of thea condition economy, specifically the 7 unemployment threshold. What weve done. To some extent, we are relying on our forecast and reassessing in february. We could have waited until may, but we figured there would be more it would be more helpful and or be more transparency to anticipate the likelihood of achieving a threshold over the coming weeks and months. So we provided that. Were in a situation where there is a notable spec capacity in the economy. We put figures around that. We built up that assessment of Spare Capacity to the labor market where we think a principally lies. We will all watch the evolution of that. We will be commenting on that. We think that we can draw down that spec capacity with black that is bank of england governor our current presenting the allimportant Inflation Report. One thing he was saying as he basically updated the markets, but especially the household of Interest Ratesd will remain at record low, even after unemployment reached 7 threshold. Surveillance is next for the u. S. Viewers. Boehner abandons his republicans. Raise the debt ceiling. The Republican Base is to moralize. The president and first lady hold a state dinner for president hollande of france. John to reports as Industrial America considers them because Economic Data out of china. Good morning, this is bloomberg surveillance. Is wednesday, february 12, lincoln birthday. Adam johnson, three days in a row, i cant stand it. Adam johnson is with us with an eclectic morning brief. What a market yesterday. Thats right. We are riproaring. Everybody loved what janet yellen had to say. Overnight mixed data from around the world. China export and import growth inxpectedly accelerated january. Overseas shipment rose about 10. 6 worse is a year earlier. Different story in japan. Orders fell in december the most since 1998. They have ch