Transcripts For BLOOMBERG The Pulse 20140218

European headquarters in london. , renzi to the up rescue as italys new Prime Minister tries to form a government. Hospitalityaltitude. We will show you the hotel that is pushing the limits of good service right up there in the swiss else. Alps. You a lets bring bloomberg exclusive. We have been speaking with bank of england policymaker david miles. They should not be tightened because there is so much Spare Capacity in the u. K. Economy. To my mind, there are clear signs that there is slack in the labor market. First, although unemployment has come down fairly sharply, it almost certainly remains above the level consistent with our hedging inflation targets. Flak there. Egree of runemains above the long equilibrium rate. About britains property markets. He says the bank of england is doing enough to stop a housing bubble. The situation we are in at the moment is the Financial Policy Committee, as a firstline line of defense, against the risk as the Housing Market starts to generally overheat. If you did get into a situation where the tools of the Financial Policy Committee had seemed not up to the job of stopping the Housing Market, we would turn to the instrument of using the bankrate. We are a long way from that. But the mpc has confidence in those tools at the moment. There is no reason to doubt them. There is a range of tools that they have. It seems to me that some of those tools would be powerful and effective at pushing the lid on overheating if it cropped up. Have, as a last line of defense, the blunt instrument, the big stick for the interest rate. So the bank of england does not sound concerned about the property market. It is a great interview. Did you get a sense that he is not worried about a lot of foreign buyers . If you strip out what is happening in central london, he is much more relaxed about what is happening in the wider Housing Market. The trend is now improving. We are still not back to where we were before the financial train wreck, as he describes it. Therefore, there is still a significant journey that we need to go on before we get to that level. He is sounding more dovish than i have heard him sound for quite some time. Capacity there is in the british economy, he really sounds of this. A lot of economists saying we have not ever focused on the outlook. It is a fairly nebulous concept. Great exclusive interview, more with david miles later in the program. Germanys central bank is a little more worried about what is happening in the south in the housing sector. It thinks properties are overvalued by up to 25 . Itinterest rates remain low, says there are risks emerging of a real estate bubble. That is a different conversation. The boj maintain the face of its bond buying program. To tell us what it means for the markets, here is jonathan ferro. Overnight session, the dollaryen higher, the nikkei higher as well. It is more about the symbolism of this world of this move. Who are they going to lend to because companies are already sitting on record cash piles and record deposits . They do not need this money anyway, that is one way of looking at it. Here we are. We are the bank of japan. We are ready and determined to do more. The expectations for the bank of japan, 25 out of 34 economists say there will be more easing by september. Huge. Mini squeeze. The boj and the Chinese Central Bank are concerned about credit and the funding and china. They are trying to do something about it. Some really punchy figures for credit in the month of january. A lot of people say this is seasonal. This is well above what a lot of people forecasted. If you think lending is too cheap, you have to do something about it. You just saw the moving chinese stocks on the back of that. Big concern for a lot of people outside of china. The leave me. It it ash believe me believe me. It is a concern for everyone. A 25 billion agreement could be announced as early as today. Lets get the details on the deal. Ryan chilcote joins us with more. This is an extremely activist company. Before last, it acquired a Swiss Pharmaceutical Company that was called Watson Pharmaceuticals. Of deals, not including this one, which may be announced today stateside if the deal does not fall apart before then. Valuing thee company at as much as 25 billion. Forest labs closed on friday, the last day of trading in the United States, 19. 3 billion. This would be a healthy 25 or north of 25 premium. That would make carl icahn very happy. He has an 11 stake. He got a seat on the board in 2012. Shareholders say he does not think forest can go it alone and that the Company Needs larger scare larger scale. He stands to make half 1 billion. Even though he is worth 22 billion, it is not chump change. F the deal does happen the ceo of the combined company would be the ceo of the acquired company, and you do not see all the time. That is brent saunders. He got into the ceo job at forest thanks to help from carl icahn, who is very fearful that there could be that the preceding ceo may pass on the reins to his own son. That was a big issue for carl icahn. Bush before been at that. He led some acquisitions of his own. You look at the pharmaceutical injury industry, it is all about scale. Everyone thinks you have to have more of it. There is an issue with Companies Developing new drugs, getting the pipeline going through their own research and development. It is the fastest way. A lot of Companies Say you do that, go out there and buy them. Thank you so much. Ryan chilcote with the latest on the possible deal with activists with actavis. In europe, car sales continue to recover after a sixyear slump. January sales rose more than five percent. That is the fifth straight month of gains. Lets find out what is driving it. Hans nichols joins us from berlin. Walk us through the numbers. Engine . Is revving the is an increase. It was 13 last month, so it is slowing a little bit. To get a sense of how far down they are, as is the Second Lowest january on record since 2003. They sold just under one million cars. Fluctuations month to month, but that puts you annually at around 12 million, which is much lower than they were at tree crisis highs. Crisis highs. If you are looking for good numbers across the major economies, the u. K. , seven. 6 . Spain, seven point six percent. Germany, 7. 2 . Italy in the 3 range. Even france had an increase. In spain, some of that is being driven by cash for clunkers. In about what happens when spain withdraws that stimulus, if you still see auto sales in positive territory. Doign peugeot doing . They had a great month. Renault was up 13 . Daimler had perhaps the worst month. Gm was also down, but they are in a separate situation. Toyota, the leader, 15. 4 . Of course, later today, the peugeot pew joe of will be meeting. Will they accept they cash . Nfusion from dongfang it looks like they will and they will have a lease on life to maybe fight another year. Much. Nk you so hans nichols with the latest news for carmakers. Just finding out what else is on our radar this morning, cadillac will sell shares in a london ipo. Credit suisse and jpmorgan are the joint book runners. Intercontinental profit jumped after the Company Expanded in the americas. Benefiting from growing demand for accommodations in the region. As we look at the u. S. , we saw good growth in 2013. Good signings, a lot of activity , an uptick in expectations to travel and you look at the data, which we survey regularly, of our guests, people are more likely to travel in 2014 than 2013. Overall, a lot of noise around the debt ceiling or anything else that can happen on confidence, which impact our business. Other than that, i think we are seeing momentum. Of ukraines government are marching on parliament today. Jeopardizing compromises that recently eased tensions last week. Coming up, the pressure is on italys incoming Prime Minister. Matteo renzi faces the crucial task of gallery allies to form a government of gathering allies to form a government. Candy isoming up, nick in that house. We will speak to the multimillionaire robert e designer about the outlook for the luxury Housing Market. Welcome back. You are watching the pulse. Matteo renzi meets with party meters today. Party leaders today. For more on what is next for italy, lets welcome the chief renziive, a friend of mr. , and a contributor to his campaign in the past. Thank you for coming in. Inot of people are excited italy. They say this might be the right man, but the way he has gone about it is difficult to read is difficult. Do notcial is he that we see the same faces . Analysisk italy is an paralysis conundrum. Everyone is analyzing the problem and no one has done anything about it. The last three years, the nation 7, 8, 9 reforms. Letta was issued a mandate to go through these mo these reforms and not much has changed. At matteo, what is key is least the two key reforms. He gave himself an ambitious timetable. In the last 20 years, we had no reforms. I think that gives you an idea of setting a pace. And what needs to be done, ultimately, are not overly complex, but very difficult things to achieve. We need to take away the status quo that most of the lobby did not want to give up. Easiere going to find it working with people who are currently in the system . Berlusconi possibly or people who are real outsiders. Do we need a complete change to make this work . First of all, he is a total outsider when it comes down to what to do, how to do it, and the speed with which to do it. The best example is he took the leadership of the Number One Party in the country within four weeks and had a proposal for a new electoral. Seven years they were discussing about it. Proposals and execution that is the difference. A vote inposal needs parliament, but at least you can vote on something. Until now, they could not vote on anything. That gives you an idea of the change. 50 of what is needed is the ministers who are totally fresh, who have not been in politics, and 50 of people who know how to move the bureaucratic machine, which is one of the problems. The best way to tackle what i think is one of the key problems , you need a few of the best bureaucrats on your side. Otherwise, you run the risk of just going to war. You need accommodation. Is so political system complicated. They have tiny little factions which could be almost useless that you have to negotiate with. , matteo renzi is going to try to form a government in the next couple of days. They need to start with reforms next week. That will surprise people. As soon as you get to the trap of trying to negotiate politically with your adversaries, that is when you have a much tougher job. , firstink what you said of all, he has given himself a week to come up with a government. The timeline. It is an example of execution. She had a clear majority. She won the election, clear majority, Prime Minister. Here we have not had the election. Partynot have a single with a majority in the lower or upper houses. The country is giving itself a week. The sense of urgency is that. Most importantly, is there a sense of urgency . Yes. Secondly, the reform agenda is very compelling on paper. That you not issues can say, we need to deal with this issue. , do you want to put them on the agenda in parliament and ask for a vote . Do you want to run the risk of being voted down. Most politicians prefer to take the easy step. Nobody wants to go and face the lobby and take away the privileges. Is the finance minister the most crucial job . This is the guy or the woman who has to steer the economy. , thed a number of names former chief executive of telecom italia, who would you pick . I think who you need here is not just one person. I do not think the finance minister is not necessarily the key answer. In order to be effective, i think you need 1020 people between the economic minister and the finance minister and the ministers for Economic Development to work together. Not just a key star, you need 20 people. To tackle the remaining 200 of the bureaucratic machine with one man, you are done, no matter how good he is. Someone, i hope we pick with real world experience. Someone that can integrate and understand the problems of the real economy. Are you looking for a job . The answer is no. Are you part of that 20 . No. Candidate support a who did it is a conflict of interest of wanting to take a job. Fair enough. Years in england have taught me something. I am glad. [laughter] my asked my accent has improved much. It has happened in planning for quite some time relatively quickly. Do you think the people you are talking about, and there are around,ing bandied young people, that could potentially take up jobs . Now that it has become a reality , do you think all the people will go along with him . Is there enough momentum behind him to create the kind of cabinet that you are talking about . You, havingl followed my home country 20 years, never, my generation, your generation has been so close to politics. Secondly, i think it is somehow unifying rights the cothe issue is not whether you want to talk about communist or fascist, but to talk about today and tomorrow. The generation comes in. Third business is that matteo is pragmatic. Create more jobs and get more business . He is the mayor of florence. He has been negotiating to get the second four seasons in florence. No ceo in the world no city in the world will have 2 four seasons. It creates more jobs. Is it good for the city . I think that is very important and there will be enough people to get himself ready for the job. Discussed. S been i have no idea of the discussion. Think about how it would be done in england. This time, the same will happen in italy. Which is a surprise in itself. A refreshing surprise. Thank you so much for now. We are back in just a couple of minutes. Lets have a quick check on these markets. Equity markets declining. The way to look at it is squeezed from skis. The peoples bank of china squeezing the markets. First, the bank of japan is unsettling the equity markets ever so slightly. The Consumer Price index in the in the big shift currency markets, all 19 industries on the move today. Dollaryen breaking. When will it hit 110 . Some say by the end of the year. Thank you so much. Still to come, London Property gurus look these. Nick cannon he will be joining us. He and his brother are looking to take their brand global. Welcome back. You are watching the pulse. We are at 1. 9 . Is going to be interesting to see if the bank of england can raise rates. We have been speaking with bank of england policymakers and he told us that he is not worried about rising prices. Find that it looks like inflation whilst they close to the target, probably be a little bit beneath it. The slack in the economy will decline gradually. You can hear more from that we will be playing it later this hour. Want to know how much ad revenue a rival website makes . You have to guess or indulge in industrial espionage. There is a startup that means you can find information in a couple of seconds. Lets join Elliott Gotkine for more. They have never done any news media interviews before. They have been under the radar up until this second. I have the founder with me now. It is good to see you. Tell us how adimap works. Public . Ake information each party sees only their own metrics. , anyone sees everyones metrics. We have developed core capabilities. We similarly simulate real users and generate real ad targeting. We develop Technology Recognition and detection on any site. We track the trackers and we measured and recognized es on any site. Ads, andnd detect the recognizer attributes. Everyone wants to know what their rivals are up to. Are you going to be annoying some people and be a blessing for some others . I think were going to disrupt and change the marketplace. Were going to the large and small marketeers on the same playing field. It is meant for advertisers, publishers, analysts, buyers and sellers, and even decisionmakers in the company. Who were you competing with . There are several advertising and Business Tools out there. Companies measure technologies on any side. Others measure the general traffic and ranking. Arers show which ads running on any site and where they are running. It provides all of this data and information and provides the metrics which matter. The ceo and founder of adimap , thank you for joining me this morning. Thank you. Elliott gotkine, the latest from tel aviv. Designers behind the most expensive apartment complex. They are planning to take their brand global. Hyde park. The most expensive apartment block in one of the worlds most expensive cities. It is the brainchild of nick and christian candy. Fits quare meters sits on a prime quarter prime corner, bordering hyde park. Starting price is nearly 11 million, going up to well over 160 million. They plan to license their name for luxury residential apartments and are planning to look for international partners. That we are ined danger of becoming swamped by developments. As concerns are matched by prediction of price increases in the luxury home market of almost half this year. Up for our next conversation. Nick candy joins us in the studio. Good morning to you, nick. Thank you for coming to see us. London is unique in so many ways. A reserve currency around the world. You expand that story into other markets and the safe haven story that is london maybe does not apply. How are you going to work this expansion . There are other safe havens apart from london. Kong, london. G the cities have had massive growth. The problem they have had is governments trying to control the bubble. In this country, we have seen increased from one percent to seven percent. Prime residential is still growing. Most people say you have a 700 increase in any business, that would put the brakes on. They have at the same problem in singapore and hong kong. London will always do very well. Are we in a bubble . I thought the crisis would have topped out two years ago, but it continues to grow. The difference between 10 or 20 years ago is that 10 years ago, or 20 years ago, there were only a few people looking to buy. Buy everyone is looking to property in london. We have more rich individuals because the nation is getting richer. Theyre all chasing the same assets. That puts the prices up. Theyre having the same problem in new york, hong kong, and singapore. I have heard a lot of stories around london of the developments coming in, and foreign buyers, especially asian buyers, not seeing the apartment and buying it as a security. Is that what you are seeing . More thek that is House Builders that go to singapore and hong kong. 1ery perch that is bought in hyde park has come in and seen the apartment. We have, do any of these people live here . Six months of the year outside of london. I have a home in los angeles. If you live in 1 hyde park, you do not need all the lights on at night. There is security in concierge monitoring your building. Sometimes people go out and leave the lights on because theyre worried about a breakin or theft. These people are international. Concerned about firsttime buyers getting on the robbery latter. Ladder. E property make sure we build Affordable Housing and all the things we need to do, but at the same time, the investment into london economy is huge. That benefits the whole of london. Sustainable . I think it is. The benefits of quantitative beneficial ton less than 1 of the population. 90 of the game went to 1 of the population. The beginning of a third Industrial Revolution with robotics and technology. , there isk at history concentration on wealth. It is the way it is. It is the only way to bring the whole world up. The last six years, gdp per capita has gone up. To do that, unique concentration of wealth from those that can excel and bring productivity down to everyone else. , think the market niche ultimately, it is a market that he may be able to keep on a remaining business. You want to take your plan your brand more global. Are you worried about licensing . How do you expand the brand and keep that close eye on it . Asked to go into many different countries, mumbai, singapore, new york, with developers. We have to choose the right local partner. We have to have the right financial competence. We will put the marketing and branding around that and package it, but do they have the expertise to develop and do they have the financial warranties in place to finish the job . When you look at places like moscow, are you concerned about themore unstable nature of region in which you are operating . In some, yes. Moscow, i would be more concerned than dubai. Dubai is based on english law. We talk about building buildings, but they have built a country. With the 2020 expo coming on there is volatility surrounding that. Countries, they all want a space in dubai. Moscow has a huge concentration of wealth. They could be the right they wont be a primary target. Do you already have customers that say, i would like you to do something . Various parts of africa. They will not be on our primary list to do business with. We need to get stable first. Ok with the strategy . You have houses around the world. Where do you see the hot spots the world . If you go back, the beginning nian war, the u. S. Declared the patriot act. That freaked a lot of people out. London is the Global Center of where people come, follow u. K. Law, you are respected and protected. That is why london is attracting so much. More billionaires. You pay taxes. Everyone is tracked in the same way. Rket, you may not be able to get your money out. If you can get it out of the country there has been a tightening rules here. Omicile a sense that maybe if we were to see a labor of administration forming the next government, the rules tend to get even tighter. That puttingee people off . As i have a meaningful impact . Towards the back end of this year when the election is mu visible, the market will slow. Unless you need to buy because your children are going to school next year, theres less urgency around it. Why take the risk . Stepped back, look at the market, see who has been enacted. Elected. Elected, london will continue to do very well. If ed miller band is elected, theres a big question mark over it. Worst disaster that you have had in and decorating . Houses is together not easy work. We are reliant on third parties. We do not employ the lumber director the plumber directly. We have had lots of problems. You gain from the problems and you put controls in place. The industry has a lot of issues going on. The big House Builders, what they need to do is make sure experience back into jobs and train people. Years ago, we work with the Princes Trust to train. We need to put these people back to work. Thank you. I feel so much better. Nick candy from candy and candy. Will be talking about fiscal deficits next. Pushing the limits of hospitality. We will show you around the ws new location. That is coming up later on the pulse. Our guest host is still with us. Around. U for sticking we talked about u. K. House prices, italy, what we didnt talk is fiscal deficit targets. There is some kind of leeway if the Prime Minister of italy were to focus on jobs and growth. Our fiscal deficits passe . I think the answer is no. The 3 target should be achieved this year. Is, from nexton year, and this is something no one has experienced, can italy reduce its spending by 50 billion euro . an they have a 3 contraction . Is it smart . Should italy do it . In my view, if they keep on talking and do nothing, next year, the ui ask you to cut. Will ask you to cut. Have doneask what you in the three years and if nothing is done, they will cut. Andou do Structural Reforms if competitiveness is back and you have growth, then you can probably cut because you have growth. Secondly, maybe you can go to u and have a discussion, should we cut now or do we get another one or two years . That looks more sustainable. That debate, you can only have it once you have done your homework. If you dont do your homework, there is no way talk to angela merkel. It is not just a problem with italy. In germany, it is the most invested out of its own market. The one that has the most to lose his germany. There is more money invested in the rest of europe. Ultimately, the one im backing the euro project, the one that has to lose and gain the one backing the euro project, the one that has the most to lose and gain is germany. If you dont come with reforms, you do not get leeway. 2015 might be a nightmare area. People will be losing competitiveness and you have to cut. It is in the constitution. You have to do it. We look at this item on the constitution and say we dont want to do it. Thank you for your time today. Davide serra. We are back in just a couple of minutes. Welcome back. In todays new energy, increasing priority for countries. Investing in the noble Energy Schemes to provide the demand. Jonathan robinson joins us now with the latest. Africa is difficult. Look at renewables and demand in general, how much can you actually make . Big story is solar. There is a lot of investment looking to go on into solar power. That is the big story coming out of this. This is investment from abroad . It follows the infrastructure conversation we have been having on bloomberg for west africa. Attractre looking to private investors and they are setting up with fees and tariffs for private investors. Solar fits well. You do not need centralized generation. You can go straight to fitting it locally, which serves the communities well. How much will actually be done . We think about africa as the new emerging continent and it has not panned out. Power forecast is 11 for 2020. 5. 5 . Re fallenower prices have significantly and the last three to four years. One big challenge is access to electricity is very low. Kenya, 20 . The cost of getting electricity connection is still very high. Was there in september, and i met someone who told me he just got it and it cost him 400 and that was three months of his salary. It is a massive investment for someone that works there. What about hydropower . The cost to make that is much lower, i understand. The costis the of the Capital Project is quite high. A lot of these countries have of drought and they have had to rely on diesel fuel oil. This sometimes cost thumbs up to. 5 of gdphem up to growth. Thank you. For those listening on bloomberg radio, bloomberg the first word is up next. For our viewers, a second hour of the pulse. We focus on hotels and intercontinental profit jumps. Sayse bank of england there is so much slack in the u. K. Economy that a rate hike is priority. The doj boosts loan programs. Chinas centralbank drains funds. A 25 billion drug deal. Actavis makes an agreement with forest labs. To our viewers in europe. A warm welcome back to those waking up in the United States. I am guy johnson. This is the pulse. Pulse, wep on the have more than 6 million millionaires in the United States. Were going to take a look at where the wealth is concentrated. How one hotel is bringing its brand of luxury to the outs. To the alps. Been speaking to the bank of england policymaker. He says Monetary Policy should not behind right now titans right now because of Spare Capacity in the u. K. Economy. There are clear signs there is slack in the labor market. Although unemployment has come down sharply, it almost remains above a level consistent on average with our hedging inflation target. There is a group a degree of slack there. This morning, we have had date out from the u. K. Economy, indicating inflation is now sub target. We are at 1. 9 on the inflation rate. Great interview with david miles. He did not mind that there was change, but what do we look at now. It is hard to understand when output gap is. The bank of england does not have a good track record when it comes to forecasting key metrics. This is a tricky metric to forecast. Can the bank of england consider a rate hike and now. We will have more from the interview later. Lets focus on the bundesbank. Rates theres a risk of a real estate bubble. Lets stay with central banks. Ontheyre keeping their foot the gas and maintaining the pace. Lets find out what it means for the markets, jonathan ferro. Tokyo yout in are getting a sense of a weak gdp read and now i policy response. One of the arrows is firing on all sold theirs. It is Monetary Policy in the bank of japan. Interesting part of this is that they have doubled the funding at the bank of japan. Japanese banks get double the amount of easy money. The problem is, we know the Japanese Companies are sitting on record cash piles. Who are they going to lend it to . This is symbolic. Expectations for them to do more is high. They stand ready to do more. Whether they get that, that is another question altogether. How high are our expectations . 24 out of 34. That is the amount of economist that think there will be more action by september. That is high. There are high expectations, considering this started in marchapril of last year. What will happen further down the road is that we have sales tax coming in. I will take another chunk out of the gdp numbers. Anna terry policy and fiscal policy working handinhand. Monetary policy and fiscal policy working handinhand. If you look at the u. S. Government, and all of the pressure over the last four years, it was put on the fed to keep the economy going. You see that happening right now. Is about Monetary Policy, but wheres Everything Else . The turnaround for the japanese economy needs to come from somewhere else. Thank you, jonathan ferro. Lets move on to what could be a 25 billion buyout in the pharma sector. Actavis may be close to a deal to buy its rival, forest labs. Spent moreny has acquiring drugmakers in the last three years than actavis. They have spent 14. 5 billion. It is one of the largest generic drug makers, and has given a significant foothold in branded drugs. Namesake,s its only the year before last, it was Watson Pharmaceuticals became ac tavis. Billion dollars would be a premium of more than 25 . Be a win for carl icahn. He has an 11 stake in the company. Has a seat on the board. 18 months ago, he sent a letter to shareholders saying that worst could be a spectacular takeover target, saying that forest could be a spectacular takeover target. That would give him a couple billion dollars more in terms of market capital. If this premium does go through, he could stand to gain another half billion. That is is the deal does not fall apart before we expected to be announced later today. Does happen, who would lead the new company . Brent saunders. He was brought into forest by icon. Icahn. That stallmaned would bring in his own son as ceo, so he brought in saunders. Done antime, he has acquisition of his own in the tune of under 3 billion. Saystory says anything, it it about acquisition. Is to develop their own drugs through research and development. If this goes through, it will be of ad biggest acquisition publicly traded company of the year. Ryan chilcote on the latest. We are thinking we may get some news on this acquisition as soon as today. If we do, we will bring it straight to you. January sales picked up. Icely, rising 5 the nichols is behind story. The skoda berlin find out what is going on. Overall strong growth throughout the entire euro zone. , the biggesttries five economies, have positive numbers. It is due to the overall headline number. Bit, but it little is the fifth month of consecutive growth. Growth. By country, 7. 6 spain has a little stimulus juicing that area and 7. 2 in germany. Three point two percent in italy. France,. 5 growth. We are talking about an annual Monthly Sales figure of 900 87,000 units. 967,000 units. A little bit of cause for optimism. Peugeot is up. They are meeting on whether or takeo accept this offer to a 3 billion euros stake in the company. The overall picture in france, positive. When you look at some of the other figures, it is only mercedes that had disappointing as well. Nd gm that is a little different because theyre pulling out of the market. One cautionary note on figures we have gotten on german Investor Sentiment, it is down. Unclear what is happening. We have strong auto sales, showing a positive trend, but the Investor Sentiment may tell a different story. Hard to figure out what is going on. Maybe they are investing in cars, not stocks. Yes, car collectors. Hans saying you feel more confident when youre behind the wheel. As the latest on carmakers. Heres what else is on the radar. Italy talks with leaders today. Renzi has pledged to overhaul the labor market and to change the countrys election law. All of this in the first 100 days of his administration. Opponents of ukraines government wants lawmakers to put the country back on the path to. Itstercontinental said trough its jumped 10 . The owner of holiday inn and crowne plaza. If you look at the u. S. , we see the numbers, good growth in 2013. Activity, anof uptick in expectations to travel with. Theyre at the data, more likely to travel in 2014 than 2013. The travel trends are good. I think we are going to see good momentum. More of our conversation with intercontinental ceo and we will check into how hotels are handling the market slowdown. We will focus on one hotel for the rich and famous. They are not afraid of heights. The newest fulltime residents high up in the outs. We will show you around a little bit later. Welcome back. You are watching the pulse. The pound is under pressure. For the First Time Since 2009, u. K. Inflation has slowed to below the bank of englands target. Read down. Yesterday, i spoke to a member of the Monetary Policy committee. It was an exclusive interview with david miles. I asked him about Monetary Policy and inflation. The crucial thing is not so much where inflation is right now. It is where are our expectations as to where it might be a year or 18 months, or two years down the road. Its main impact on inflation, not within a few months, but within 12, 18, 24 months and beyond. Where does it look like the inflation prices are going, where does it look like inflation might be 12, 18, 36 months down the road . As inflation comes down, house prices are going up. It is generating concern about an overheating Housing Market in britain. England has assumed a new powers when it comes to managing the macro prudential side of the economy. It does not need to rely on interest rates. Those are managed by the fpc. Miles andent is david how those powers will work . If they do have a range of instruments, they have begun to use some of them. They can give guidance to the Bank Regulators on how they should assess whether banks are being prudent in their lending. Have a range of different powers. The spc are the first line of defense against the risk they against the risk the Housing Market tends to overheat. We would turn to the blunter and sherman of using bank. Blunter instruments of using bank. The range of tools that they have comment seems to me some of them would be really powerful effective in prove putting the lid on overheating. Have the blunt instrument of moving interest rates. Your senses what in terms of how close we are to some of those more Bigger Picture ask ec tools fpc tools being used . Some of the used tools already. One of the tools they have is to inform the assessments that of the have to make affordability of mortgages. They can perform stress tests and consider what would happen if moves to different levels. They may find themselves wanting to use it. Tools that range of i expect would be quite powerful if they need to use it. Will beng the bankrate the last line of defense. Thated to think about how trajectory is going to work further down the road. That is what he wants to use first. He seemed pretty dovish. I think he kind of when carney came in, he moved into being more in line with the consensus. We do not need any extra stimulus. Im just beginning to wonder whether he is reverting to more dovish tendencies. He is talking about this output gap. It is a hard thing to get your hands around, but he says it is larger than even the bank thinks it is. Therefore, we need to use that capacity before there is a potential for a rate hike. Lets check in on the currency market. In we looked at the house, lets take a look and show you what is happening in terms of the details. 166. 71 is where we are trading. 1. 6671 is where we are trading. We are retracing some of the losses, but cagle is still down. Were going to take a break. See you in a moment. It is time for the olympic edition of hotshots. Winter olympics athletes battle it out in sochi. Was very close. Came down to style points. It is the third time in a row that germany has one goal. The american pair takes gold in the american pair event. Antone from belarus wild the crowd in the mens ariel. The crowd in the mens arial. Germany holds the most gold medals. Russia and the u. S. Have running have won the most in total. Ryan chilcote joins us to break down what we need to know. Justyear ago, profit was under 6 billion. It came in at just under 8 billion. Iron ore contributing 6. 5 billion of that nearly a billion. It is a diversified mining company. Rice is in the second half of the year jumped by 15 . If you look at the seaborne china of which dominates about 70 to 80 of the market. The demand for iron ore continues to grow in china. The bad news is, this year, in less than two months, prices have fallen by about seven percent. We have looked at the numbers and the forecast is that the price is set to fall every year for the next four years. That is notng good. Chinas part of rebalancing its economy. Modernizing, stuff like that. Bhp could do ok. They are a lowcost iron ore producer. They could ride that out better than their competitors. Also about costcutting. It is an industrywide problem. During the boom, all of the Mining Companies made money. They ported back into investment. Now, they want a new model. The hp said it cut 5 billion last year. It is set to cut 5. 5 billion this year. Capital expenditure going to come in at 15 billion this year. The problem is, they announced it will increase its dividend by 3. 5 . Down to 25get billion of debt, maybe they will do a share buyback. Thank you. Ryan chilcote with the latest on the bhp trade gains. Million are more than 6 millionaires in the United States. Were going to look at where the wealth is concentrated. Chain ise hotel bringing its brand of urban luxury to the outs. Alps. The todays pulse number. 27,000. How many miles for our that a potentially disastrous asteroid will pass near earth. Is considered a very close shave. You can follow us on twitter. guyjohnsontv. Francine is at flacqua. We will see you in a moment. Welcome back to the pulse. We are in london. What. I am francine lacqua. Renzi wants to win Party Leaders support for his political program. Theas pledged to overhaul labor market and change a countrys election law on the first 100 days of his of estrogen. Opponents of ukraines government are marching on palm and today are marching on parliament today. Japanese stocks close higher to ¥7 trillion. Individual banks can borrow twice as much lowinterest money. The move underscores the pledge to do whatevers necessary to lift the country out of deflation. About how the markets are trading. Lets find out what else is going on with manus cranny. Squeeze iske trumping ease. European equities are dying. And equities are down. We come in at 1. 9 . We still have inflation, but it is declining. In germany, confidence heading nothing lasts forever. Move the money people of the bank of china to get a hold on rates and what is going on is trumping. The desire by the japanese to actually add stimulus or show momentum in that direction. Are prepared to lend more money, but is that to move the currency rather than the reality of lending more to the real economy . There is pols of cash on the balance sheet. The balancecash on sheet. The objective is 110. Yen. Is the dollar the aussie dollar, coming off its original levels. ,lackrock is saying this area 90, overvalued. They reckon that the longterm value is around 85. The language has changed and they are not focused on currency. It does not mean it is still not an issue. Back to you. Thank you very much. Roughly 6 million millionaires live in the u. S. Which states live have the most . What does that tell us about where wealth is being created in america . Percent of the households in the United States are marilyns are millionaires. Maryland has proximity to the nations capital. Second, new jersey. Two hundred 42,000 647 million their household. 242,000 647 million millionaire households. The povertye below line, making it the poorest station state in the nation. New york has the most. 19 billionaires. Silicon valley has made california a close second, with 18 billionaires calling the golden state home. Among them, mark zuckerberg. About 24. 2and billion. Bill gates is worth approximately 75 billion that 75 billion. Rob lafranco joins us now. Did anything catcher i . Is anything surprising . How many millionaires there are working outside of washington dc. When were looking at the super high net worth, the richest of the rich americans, theyre scattered. It is emblematic of the countrys economy. California has the tech guys. Theyre scattered. Focused on the billionaires. Some of the millionaires are going to get richer. Billionaires dont really live anywhere. There is lots of commentary about how they are a superclass of people. Their nationality and home residents doesnt matter. Many have predicted this was going to be a good year for billionaires, for wealth creation. Have a great 2013, but they have not all captured the gains that they saw in 2013. When you look at the fortunes, they are tied into what the stock markets are doing. Do you see new billionaires being created . Going to be a reversal of that, are we going to see give me a sense of what 2014 will bring. We will see ank lot more of a luxury. Tech is going to be a big thing this year. The markets are turning around. January was a rough month. The market is starting to come up we found to and china in the last two days, simply on stock rises. It will be a good year for wealth. Thank you. Rob lafranco. The editor for bloomberg billionaires. Tom keene joins us from new york with a preview. What are we looking at today . Memo were looking at a fourday workweek in the nine states. Resident lincoln and washington costolo rated their birthdays celebratedton co their birthdays. I am never going to retire. That is true of a lot of americans. Bob kerrey will join us. Hes the former senator of nebraska. He is working on a panel on retirement. We will also look into the next hour, the political economics of our markets. Robert wolf will join us. He is a supporter of president obama and we will talk to him about a lack of investment in america. Sure i Read Research saying that as soon as you retire, you age 30 years. Those Early Morning wake ups keep you young. I will never get used to that. It is a big thing for us at surveillance over the next couple of years. Research showing americans cannot retire the way that our retirement scheme organizes. Not that it has been a failure, but everybody is going to have to save more. Bob kerrey is front and center in this debate. Is a fascinating debate. Here in europe, we retire your we retire earlier. I am looking forward to surveillance. We were talking about the billionaires hanging around, lets talk about where they will be hanging around. In hotel that is pushing the limits on hospitality at highaltitude. Were going to show you around the new full time resident. That is coming up next. We will check into intercontinentals latest development. That is next. Welcome back to the pulse. It is London Fashion week show. Musiciansins perform. The runway tracks were available on itunes. A bargain retailer will have a free flow of at least 25 . J. P. Morgane and are acting as book runners for the offering. And Time Warner Cable talks are said to be on hold. To discussions are unlikely progress before comcast completes its acquisition of thanwarner cable for more 45 billion. Netflix is trying to secure a place for its Subscription Service on Time Warner Cables set top boxes. Resort, ans ski exclusive story. When it comes to european skiing. The written the famous holiday there during the winter months. Chain has moved in. It is getting german in the mountains. The hotel chain is hoping to stay open all year round. Hans nichols has more. Of the our installment highlife. Meet the newest the newest fulltime resident. W that will stay open when most of the town shuts down. Designers all through the slope so guests can ski to the front door. Bubble chairs for cocktails at sunset. A spot for partners that dont ski. The chalets behind me dont look like a typical w. They had to alter their design to fit the alpine profile. It is a test to whether or not their brand can survive at altitude. Under snow in stone, there is an underground nightclub. A bunker that keeps its secrets buried. What do you need to do to make this the spot . We have three inhouse djs that are amazing. The atmosphere. I think we have that. The design of the bar is great. It is much more International Moment you could find right now. Read rooms and suites that start at about 500. Balconies and fireplaces in every room. The challenge will be to fill them in the sunnier and slushy or months. There is money in the Convention Set as well as the jet set. Theyre betting that this conference space, which has a capacity of 300, will help sustain it in the offseason with the event business. It is a gamble that a fullservice hotel can thrive in a parttime town. This will allow us to attract other business and than what we are used to. We have specialists in every sector. Get theirle will business through us. Town reliesvery ski on the snow gods, this w will need some help. It will take a lot of energy. Cost tally and occupancy in a Mountain Resort when the snow melts. Occupancy iny and a Mountain Resort when the snow melts. This is aiming for individuals we had ning candy saying this is a Perfect Place and because a lot of people go skiing. Is the goal. They want to expand this. They want to get pharmaceutical groups to come in in the middle of may. I know you have a standing invite at a variety of the chalets. Tomorrow, we will take you inside one of the chalets. It is Richard Bransons lodge. A 29 Million Dollars chalet. The couple is in no rush to sell. In part, because the property laws have changed. The owners of big property are in a sellers position. Keep the right there. We want to keep talking hotels. A 10 ontinental posted gain after expanding in the americas. Us chief executive spoke to about the impact of the emerging markets lowdown on his business. They are volatile and we are used to that. We saw 1 growth. We see ups and downs. If you look across the world, we signed 440 four hotels into our system across the world. That is the highest number for five years. If you look broadly, theres a lot of momentum in our industry. We are getting a lot of shares. Joining me now is the editor of the Hotel Analyst publication. Andrew, thank you for joining us. It seems that Highend Hotels either go back to the emergingmarket. Does it make more sense to go after known places or does it make more sense going after emerging markets where there is still a demand in five to 10 years. I think Richard Solomons spoke to that very well. Youre not going in there for a quick flip. The tailwind is fantastic right now. It has a hockey stick affect in terms of demand, travel, and tourism. Marketsthese emerging see an increase of the number of those households. China is about a million households at 25 k or more points. You go from one million to 200 million, you can see that will see what that will do for demand. Is is the new chinese torus class, will they be coming to europe hotels, and what is your take on w opening up at altitude . Will this be successful . It is a risk. It is a risk more for the owner of the hotel rather than starwood, coming in as a manager. Wheres the demand going to be in terms of chinese travelers . It will be domestic initially and then the countries around. We are seeing a huge volume coming into europe. Spread across be the piece, but the biggest bulk of that is going to be domestic demand. Companies like intercontinental, that is their biggest Growth Market right now. Very soon, china will be a lot bigger than the u. S. , in terms of the number of hotels. A former chief executive was saying they wanted to replicate what they did in the 50s with route 66 in china. What we understand is that the government can the big hotels. In the open a hotel city . You lose a little bit of tactical management. How worried about this are you . There will be local risk. There has to be political risk. The back to the initial point, youre in it for the long haul. You are balancing the shortterm political risk. It is a potential, longerterm gains in play. If you look at what is happening, you are right about the infrastructure being put in place in china. We know the numbers in terms of the bullet trains going in, the roads going in, their ports going in. That creates huge amounts of the man. Of demand. The same thing is going to happen in china with the airports, the motorways, and the rail infrastructure. Is there one Hotel Company getting it better than the others . Where they have very high and, in the medium, or you go for your your luxury. Some dedicated and focused luxury players. Four seasons as the bestknown. In terms of where the big cash is going to be, it is at the economy level. Holidaywhere it is your in zen below, or the cash is going to be and where the bigger returns are going to be. If you look at the global players, what they have done is go into emerging markets and establish an upscale brand and then they filter out with the smaller brands. If you have the desirable one, the faerie dust filters off to the lower brands. It is risky. You are not going to do that for a holiday inn express. Thank you for that. Andrew sangster. As well. Ols we are back in a couple minutes. Welcome back. The pound taking a knock earlier. U. K. Inflation came through at 1. 9 . Out 1. 6704. G need to know for the rest of the trading day. Three days of talks in vienna. These are the next round of talks. We got the temporary agreement. Etween iran now comes the real deal. There are negotiating to try to reach a permanent agreement with iran over its nuclear program. They have had about 7 million worth of relief. These negotiations are to try to reach a permanent deal. The deputy Prime Minister says it is challenging, but doable. The Prime Minister of canada will be at the three amigos summit. Does mexico and canada count as a foreign trip . If you get that one, you dont get to go to asia. These are important things to talk about when you go when you are a reporter. That is it for the pulse. This is bloomberg surveillance. Incumbent republicans focused on primary politics. Big political battles await. We are living longer. That 401 k plan it wont get it done. Dont ask what is in the sausage. We look at meatpacking in america. We are alive from our World Headquarters in new york. I am tom keene. Joining me today adam johnson and alix steel. She is with the yankees somewhere. I bet you. I bet you. Time for the morning brief. We will start with the morning brief in europe. Over in asia, the bank of japan boosting lending. 7 trillion yen. Economic data and the u. S. ,