Transcripts For BLOOMBERG The Pulse 20140312

Remains an acquisition target. Down three point desperate. 7 . Lets go out and talk about the companies with tom Forward Guidance going through tough guidance. Blaming the Energy Vendor and are going abroad. Down andends will be the net income is down. These are bad numbers and they are putting blame on the government. It looks like a stock is dropping this morning. Whats we will get back to you for a full report shortly. Im keeping an eye on a tiny banks that are in focus. The italian banks that are in focus. Have a competitive banking sector. Lets check in on the price of some of those. We have the seventh Straight Loss and we have unicredit and the view is the worst that has passed. Is bigger than the market had estimated. Lets talk to jon ferro about what else is on the move. It is creeping higher. The ecb talked yesterday and they said that we misunderstood. They can do more and people are not buying it. Im excited about ipo day. Im going to get to the markets. The equities are lower and the futures are pointing lower. That is exactly what you have. The ftse 100 is down. Likewise for the dax. And half of one percent and the ftse is moving into italy lower. I will talk a little bit about that later. For the first 10 minutes of on the move, china will be a focus. Iron ore is in a bear market. Look at this selloff here. Down 12 so far. There is a concern about what is going on in china, a country that consumes 40 of this mess. What goes on there matters. The the decline of the made in china label. It is showing signs of fatigue. Lastave seen it over the couple of days. They are struggling to a race the losses. Keep an eye on the bottom of your screen because there is breaking news from spain. Earcpi index rose from the year earlier. Admin adminis edmund. It is great to have you with us. We were talking about copper and it is moving higher. The focus on the market seems to be what is going on in china. Talk me through what you are thinking and how that plays out. I think that the Chinese Government has been deliberately stressing reform overgrowth and they have made a clear choice. They had started by saying they would achieve 7. 5 growth in 2014 and they have been stressing that they need to reform and rebound economy. Im sure they will make seven percent and i think you have underplayed the hand. I think the copper move is an overreaction and what is more important is not the exchange. Were seeing the shift lower and iron ore. Zinn zinc and aluminum have moved higher. To me, i think it is more of a new want richer than you make out, by looking at copper. Copper is collapsing. I think that is an overreaction. It is an excellent time to be buying globally because they are making huge efforts. I think it is not a disaster. We do not get as excited as other new station. News sew stations tations. I am reading that they may get leniency. That is tugging at the margins, really. There is serious endemic problems in the chinese banking sector. Their r a has been for some time. That is not really change and the Chinese Government is quite sure that they are going to reform and they have reforms wally desk slowly slowly. They cut off credit when they needed it the most. We want them to not do that because that is why they are trying to dr. Balance by allowing liquidity counterbalanced by allowing the quiddity into the markets liquidity into the markets. There was an exciting stock and there was more pressure to come on utilities. That seems to be the message. I dont think that is a great surprise because germany has a commitment to and nuclear. Of what is happening in the ukraine and russia, that is difficult. 50 of gas comes from russia by the ukraine. Ouch. However, replacing nuclear is going to be difficult and they do not want to do that with something that is polluting. What choice do they have other than to use natural gas and where will they get it without russia . They will move towards shield oil in shale gas. Il and shale shale ou gas. We will get into some of your big thoughts. It is not time to sell the u. S. Market. That is good to know. Stay with me. The equity funds manager over at tcs. Bcs. Here is what is coming up. Big losses at big banks. We will talk to lenders later in the hour. Protests throughout turkey. We will bring you the stories. The latest on the ukraines Prime Minister. The goes to washington to meet with obama. What is at stake . We will go into that later in the hour. Once in london, this is on the move. Streaming on your phone, your tablet, and on bloomberg. Com full up still with us is the Global Equity funds manager. Or in the break, we discussed a couple of ipos and what is your that at home. You have a lot of valuation in this area that is a little stretch. Flex we had a rush to the market by a lot of by the equity groups on. Have tried to hang but you are disparaging a private equities. Are all very rich. That is what i have to say and i think that these are scary. You look at the recent valuations and that was off of the scale. Is always about the valuation and what worries me is that people are getting a little overheated with the valuations and are chasing the mark. The Investment Bankers are happy to push the valuations. Going getting through and through the price trap. It looks to me that it is 345. Ng at that is where we are at the moment. That is quite an indication. Let us move it along. You have sent in a piece that talks about Global Equities. U. S. ,g off with the household exposure is back to where it was. Up andr optimism is margin trading is ramping away. To tell meing something . Im pointing out there are signalsy clear warning and one should not be over optimistic about the future of the market. If you think about the u. S. Stock market, there are 30 returns that do not happen very often and you cannot expect that they will repeat for a second year. The earnings are stronger than they were in 1999. Whats they are. There is an earning story. I think valuations in 2007 is a good news. Theuld argue that valuations are outside of the u. S. You have the ability to run higher and you look towards the brakes. I would say that it depends on who. Do not look at the screens every day. Look at the countries like russia that are trading at four times pe and have structural challenges. There is no doubt about that. That is reflected in the valuations. 27 ofket is still below its peak in 2007. There is plenty of value to be had and perhaps you do have to look among the wreckage. You may be go country by country and sector by sector. There are places like taiwan or south korea that have a number of world leading technologies that may be the place to start looking. So, be discerning when you are looking at the markets. This is the most confident statement that i have seen. That is at the periphery of you talkedt is, and about italy, greece, and spain, could be the new defensive. That is quite strong. Justify yourself. Start with iua shouldnt. The valuations of these countries, if you took them cyclically start with the valuations. With the valuations of the countries, if you look at them cyclically, they are good longterm. Austerity has really bitten in those countries and they are deflating their way out of out of the overinflated wages that they had that were the problem. There is no growth. Do you justify the index or do you get more discerning about questionsh Companies Mark i would not go that far companies . I would not go that far. There are a lot of banks and insurance companies. What we see with the banks is a huge amount of restructuring and reviews coming and. They are going to want to make the point that the big european banks concluded including the. Banks the per referral eriferal banks are sound. Isbe point about equities 1999. Tech is structurally different in 2014. Most make money and some of them may be deliver healthy profits. Talk me through your thinking. 1999, except for social media socks stocks. About those. Ng i think they are ridiculous. Im talking about the boring tech. We have the cash balances on their Balance Sheets that are enormous and they are trading around nine times pe. Talking1999, we were 40, 50, 60 times. I think they still offer growth and healthy dividends. Again, you want to buy things and they will all participate in one way or another. Shale gas is something you like. I love it in the u. S. Ould suggest that you play i love it in the u. S. And i would suggest that you play it by company. What is more certain is that there will be equipment and services and that is guaranteed. Is put back on shale Gas Exploration in the u. K. And poland. They are trying to surge ahead and encourage investment. I think china needs an alternative to russia. Quickly, the mining industry, we touched on china and i love your line, cheap as chips. They are. They are. They are, as you pointed out, affected by the pessimism over china that could turn around. Selling are looking at assets and refocusing on profitability, that is what you want to hear from any company and that is what they are doing. I like what you said, for investors, you look towards the bigger trend. It is always good to have you at bloomberg. Thank you for coming in. The Global Equities fund manager at bcs. Credential is the Insurance Company in the United Kingdom and their operating profits are 2. 9 billion crowns pounds and they beat estimates. Trading up and some of the top headlines coming out is that they see the future prospects in asia that are wellpositioned to deliver good value. The operating profit, as they had shares rising and we will have an interview later on. Were 33. 5 and stay tunedcast for bloomberg on the latest. They have beat analyst estimates. Going public. We will bring you the details, the newest Public Companies after the break. Welcome back to on the move. Here are companies on the move. Profits thatorted came in at 158 Million Euros and were better than analyst estimates. They said that the trend in the first few months concerns growth forecasts. Exploring thebe sale of their unit. That they are reviewing the Company Portfolio before a strategy update in may. Will lettalia shareholders vote on the new chairman at the annual meeting on april 16. Maniacally the minority shareholders more control. Loweran utility reported returns and blamed the government. We are in berlin with a little more. They are doing a little better in italy. Them, they look at have the market outside of western europe and that may explain the strong growth numbers. A is a different story and 45 reduction in dividends. The ceo took clear and at merkel. The ramifications of policy decisions in germany and market prices continue to have an adverse impact on our generation portfolio. That is a mainstay of our business. That is a longwinded quote and a way of saying that it is hurting shareholders and we need ability to to our generate power to sell on the market without too many distortions from the government. Ok. Thank you for that. Let us move it along. We mentioned share sales in london and they shop everything. Unless you are annoying customer who picks up something and says, how much is this . It was priced to go 300 pounds. Where did it open . 365 and it came back a little bit. We did not get that. And youtake your dog in can buy various accessories. What they want to know is that the companies were priced at the top end of the perspective ranges. Companieste for these is quite large. Originalere one of the private Equity Companies and i edmund and he is questioning the validity of some of these. The retailers are up this year and the appetite for equities is there. I spoke to Richard Dunbar and he talked about the private Equity Companies. Behind some of these companies, waiting for the right window to push the ipo out. They think it is right here and right now. Date, look at the year to 3. 7 billion is what companies have raised so far this year. How with the appetite . For some amount of time last year, it was less. Bet on the u. K. Economy recovering and whether it energizes high street. The loss is a little bit later. Thank you for that break down of the most recent ipos in london. Lets give you a look at the market into the trading day. The equity markets are a little bit lower at the moment. Basically, you have the u. K. Andping for the fourth day the British American tobacco falls in london. Generally, the stocks are coming off a little bit and we see some pressure in the chinese market. We will leave it there and after the break, well talk more about it. Welcome back to on the move. I am manus cranny. We have him back in london and we are talking about the ukrainian interim Prime Minister. He meets with president obama in washington and one of the topics on the agenda is the 1 billion Loan Guarantee that the u. S. Has offered the ukraine. Ryan chilcote is here with the details. Talk us through what the u. S. Will do to back up this. It is the only Financial Assistance that is already on the table and will go to the senate. It has been approved by the house and it looks like it will happen. Issue debt andl the u. S. Will guarantee the debt. The idea is to lower the borrowing cost for the ukraine. The risk premium that investors demand when they lend to the ukraine, versus the United States, is more than 10 Percentage Points. It is high, second only to venezuela. If ukraine is going to stand a shot in this tumultuous time, obviously, the borrowing cost have to come down. They did this in the middle east and the u. S. Guarantee some loans that jordan issued. The risk premium was 60 basis points. In 2012, it was the same thing. The United States guaranteed its debt. The debt thatt the u. S. Guarantees. On all that. There is a halo on that and an assumption that that is ok. The u. S. Is never defaulted. It has always lived up. They have a big punch. Talk to me about the sanctions. Haveow that the states already moved a little bit further and quickly, in terms of sanctions, relative to europe. There are two objectives. To stop the russians from annexing crimea and going in to eastern ukraine. The parliament did not approve a piece of legislation that wouldve allowed them to annex crimea. That is perceived as a positive sign. The sanctions are likely to come in any case and they will be limited in scope. The United States has banned some russian officials from traveling to the United States. You can expect the group to grow a bit and we can see this for the europeans as well. Or people of assets associated with gruden. That is a bigger threat, isnt it . It is. It would go after associates in the Defense Ministry and the National Security apparatus that. S seen as critical is good to have you back. A good job. Latestilcote, with the on the developing situation in ukraine. Let us turn our attention to turkish cities and the death of a teenager injured during a crackdown last year. Elliott has been following the story. The angeris adding to over the government and corruption allegations here, isnt it . That is right. It is adding it could get worse. There are allegations that implicate everyone from the Prime Minister and other ministers to families and associates. Prompted the Prime Minister to say that he would ban youtube and facebook. The 15yearold boy who went out shopping for a loaf of bread at the height of the protests and istanbul. Thens been in a coma since and he died yesterday. Today is the funeral in istanbul. There are concerns that further violence will be inevitable when the funeral of takes place today and there are further clashes. Thank you very much. Elliott gotkine in the middle east. Ok, these are the top headlines. The Malaysian Air force chief 370 deviated that their path and the comment add to the confusion surrounding the search for the missing plane that enters its sixth day. Search efforts, as more information is weighted on from malaysia. Links toion euros are fx probes. More than 1000 people, including areers and consultants working on investigations. Pimcos holdings of u. S. Treasuries. The investor bets that the Federal Reserve will conclude bond buying this year. The commented on twitter. Sell what the fed is buying because they will not be buying them when the taper ends in october. George soros sits down with francine. That is the reason why im here and she is not. Do not miss that special interview that you really want to be tuned into later on in the day. Let us just briefly update you now with some live pictures coming to you from the media center with the Malaysian Airline rest conference that is set to start the next 20 minutes. Well get more detail with what flightg on with the after it went off the radar screen. We will stay abreast of that situation. Italy is in focus and two of the biggest banks posted big fourthquarter losses. What do the results mean for the lenders, and terms of the credit story and the equity story. The head of Macro Credit Research at rbs. Great to have you here. Unicredit. About the message from the ceo is that the worst has passed. Would you agree when you look at the situation . Have a division, effectively and they announced 40 billion and a massive increase in loan loss provisions. This is course funding to the tough environment in italy where there are rising bad loans from businesses and consumers that are struggling and rising unemployment. Do as much thinking as possible before that and they have a Strong Revenue base of 24 billion in your the revenues that have only gone down. They have from the kitchen sink in. For unicredit, the message is clear and we do not know if this is the end of the provisions. We have seen banks turn the corner in spain and ireland. The government has basically pressured banks to do the process and in italy, there are weaker banks that do not have the capacity to do as much cleanup as unicredit. For all the rest of the banks, excluding unicredit, this exercise is much harder to do. That brings me to the question. I caught up with the new finance minister and he needs to start thinking about setting up a tidy and bad banks. Should they do that . For the first time, the bank of italy, a ago, said theyys were open to the solution and that was the first time they floated the idea. In ireland and spain, banks that have restructured through the bad bank process now trade at multiples of the u. S. And u. K. Banks. Trade at 50 to 60 of the book value. The bad bank improves a situation. There are other things that italy can do like a stress test or securitizations. Unicredit has done this so far and there is a lot of demand for assets. Some Smaller Banks are looking at that. Taking assets and securitizing them to get off the balance sheet. Whats the key is to separate the good from the bad assets. You havee a farmer and a landmine in the field, you are not going to step on the field. If you know with a landmine is, you can use the rest of the field. The farmer is like the investor who wants to buy a tiein assets and does not know where the landmine is. Assets and does not know where the landmine is. Italy remains behind reforms. There is something moving. There is a discussion on new electoral reform. It is not passing as strong as initially planned. Something is moving. On the bankside, there could be more initiatives to clarify where the loans are and sell them. I think the italian banks are still a by. We continue to be long and we would like to see more forms from renzi. We know there is a Hung Parliament and a lot of challenges. Things are moving a bit slowly. They do. Let us talk about the issue. We listen to the European Central bank News Conference last week and we have time to digest it. I caught up on monday and it sounded like there was a bit of nness towards easier easier terms. You had a couple of days to think about it all. What is your take much mark what i think the focus is on getting money to the real a plumbing real economy. Fragmentation is starting to decline and we are starting to see signs that the gap between loan rates in europe is narrowing and the periphery paid twice as much. This cap is starting to narrow and you are looking at abs and credit easing. They are looking at borrowing and it is out of their mandate. What they need, with the assetbacked security markets, is more lending and governments to clarify the market to ease the rules and create a level Playing Field for companies to issue loans ever banks to securitize them. For example, when spain did was a new financing load loan. It eased the bankruptcy process and protected creditors, facilitating securitizations. This makes it easier for banks to issue come with more legal characteristics banks to issue with more legal characteristics. If you are investor and buying mpl and italy, you know you are getting your money back and five10 years time. The return goes down a lot and you are demanding a lower price. The bankruptcy framework needs to be cleared and facilitated by governments and the securitization loads need to be leveled over the european state. That is what needs to be done in order to do credit easing. It was great to have you with us this morning and thank you so much for coming and giving us the latest there. The head of european Macro Credit Research. Injuryctronic cigarette that industry is on fire, if you did not know. Fire, ifry is just on you did not know. We have the patent war next. Movelcome back to on the on bloomberg television, streaming live on bloomberg. Com, your tablet, your phone, and any windows phone. The pulse is coming up at the top of the hour and guy johnson is driving alone because francine is off on a big interview. We will play that during the pulse towards the back end of the show. Looking forward to hearing what george soros has to say. It is getting everybody on the hop. That is a big story out of malaysia and we will get an update on the confusion surrounding the story. We have resulted from prudential this morning and will talk to the ceo. Where does he take the business next to mark the numbers this morning look good and what is his aspiration with Africa Thomas asia, the u. K. . A number of questions and we will look forward to that conversation. Well will be talking about the s expectations for a referendum on europe and we will hear from a leader of the opposition party, ed miller band and we will talk to one of his chief lieutenants. That story is coming up. Be talking about the labor relationship with the city. Maybe a raid on the city and maybe taxing bonuses. On what thea take labour party is thinking. Lose an ability to top off pensions . Move. S companies on the pay forsaid they would the control of the company. Chinas Biggest Ecommerce Company gets access. A seventh straight quarterly loss due to provisions and restructuring costs that at more than 920 Million Euros. They are seeking to raise 3 billion euros to repay some of the government rescue. Deutsche post benefited from online commerce and then it markets. With millions of Electronic Cigarettes leading up across the fore, there is a new term that is brewing. Tobacco is suing nine manufacturers of the devices. Here is caroline hyde. Being taken on . Nine companies that are smaller Electronic Cigarette producers. Therial tobacco is late to party and they make Monte Christo cigars. Ago didouple of weeks they get the Electronic Cigarettes on the shelves. Potentially, they are now focusing on fending off the competition. The result is them saying that they want to protect intellectual property and they are saying that nine makers of Electronic Cigarettes are infringing on patents. This is an attack on the smaller competitors that are in the market and that is on top of the ,act that these Large Companies the likes of imperial tobacco, are busy getting producers. A issa great unit was bought back in september and you can see what i want part of the market. And heoing to be cigarette unit was bought back in september and you can see why they want part of the market. It is going to be huge. And the u. S. And the United Kingdom, 10 50 already use 15 already use these. Pe because i wanted to stop smoking. That is a whole other agenda. Something that regulation is picking up and could be a concern for the smaller players. Regulation means financial firepower. That thesaying strongest Electronic Cigarettes we are seeing as a way of getting off smoking and it is more cost efficient. It is not as nice as smoking. It does not take the same. And is why Phillip Morris imperial are doing vast amount of research and development. They wont when that taste better they want one that tastes better. It does not taste the same and does not have the same effect yet. I have friends who bought one, version, an expensive and moderately cheap one. Is the nicotine. It is the nicotine. I, for now, im not. It does work. Tobacco kills 700,000 a year in the eu. We need to find a healthier and safe your desk safer route safer route. Stay with us. We will come back with a roundup from the team after the break. Welcome back. Lets give you an update on the Market Movers this morning. Her dental has stocks moving higher. Prudential has stocks moving higher. Evidenceeat and we saw up. Dividend dividends gone up and they have cash to splash. We expect money to go back to the investor base. What is moving markets . General risk aversion in turkey at the moment. We have been talking about that and it is playing out in the bond markets. There are concerns about what that means for the commodity markets. You are seeing risk aversions. Bond yields in turkey are running at 11. 6 . Thank you for the roundup and stay with bloomberg television. Guy johnson is next. After shee interview has finished speaking with them. Ministerraine prime heads to the United States to get the russians out of crimea stop crimea. Another conference is about to start and the air force chief says that the flight was not tracked going off half. Oneonone with george soros. Francine interviews the billionaire investor. Good morning to our viewers in europe. A very warm welcome to those waking up in the United States. This is the pulse. We are live in london and i am guy johnson. The search for the missing Malaysia Airlines jet continues. The authorities are holding a News Conference that is expected to start in the next few minutes. You are looking at live pictures. We are anticipating the event starting shortly and an update on what happened to the flight that will sort out some of the details and confusion that has come up in the last 24 hours. Let us find out what we need to know. Caroline hyde is tracking the story. A lot of confusion. Series are of bounds. Theories abound. What is interesting about this is that the aircraft had to go in the opposite direction from where it was going. It was going to beijing. It, it is in the stra an entire reversal of the course without detection from the ground. This is all about the Malaysian Air force chief who was cited in local press saying that it may have deviated. Now, if he refuses to confirm it was the case. There is a real quandary here. Companyrnment and the that manages this flight has dozens of ships and planes still searching from 10 countries that are getting frustrated. A lot of criticism is growing about the way the malaysians are handling the situation. My deskhat they are the handling it like domestic i hear that they are handling it like domestic politics. Mismanaging the crisis, that is what many are feeling andthe chinese leaders vietnam are saying that they want assistance from malaysia. This is a country that wants to be deemed a developed nation in six years and needs to be more transparent. There is a lack of transparency. They are used to having a tight control and they are getting a lack of clear messages from the government. They are getting a series of false leads and a question of court nation comes down to Malaysian Airlines that is government controlled. It needs to be faster. The academics said it was hard to find and one academic is a director of terrorism and Security Studies at the aeronautical university. He says there is no such thing as 100 Accurate Technology when you are flying over the water. We need the press conference to give us some clarity to the situation. We do not know when the plane was last spotted and it was turning a course. We certainly do. Thank you very much indeed. The press conference will be starting shortly. When it does, we will listen in and bring you Key Headlines as it develops. Let us move on for the time being and turn our attention to developments in the international standoff over the ukraine. In a diplomatic date at russia, the United States is hosting the new ukrainian Prime Minister at the white house. Ryan chilcote joins us with more on what we can expect from the meeting. A diplomatic date is a good way to describe it. Tableing that is on the is a Loan Guarantee that we have been hearing for the last week or two. A 1 billion Loan Guarantee. The ukrainians are issuing debt and the idea is to lower the ukraines borrowing costs to at 10krainian debt Percentage Points above what treasuries are paying. Obviously, 59 61 cell, they have to lower the bar when costs. There is the borrowing costs. There is a playbook for this. The u. S. Guaranteed debt and the risk premium is 60 basis points. They did this two years ago in tunisia. Again, the risk premium and the amount of money that investors demand over treasury is 70 basis points and very effective. Not just on the debt that is guaranteed by the United States, but on the halo effect that brings down yields. So, it is part of the solution. Big event is the referendum and nobody is trying to blink before that happens. Policy is beginning to get firmed up. There is increasing talk of sanctions. How are they going to work . Sections are still talk and what we know is that the referendum is going to happen. What is unclear is if russia will annex crimea. One does not necessarily lead to the other. The russians will have to make the decision. The parliament and russia making annexing easier. Some are saying it is a diplomatic overture, that they will not push on it. What we are going to get our sanctionslight. Dozen, andg to get a kremlin officials banned from coming to United States and expect that number to grow. But the u. S. And europe are working in concert to do that. Ran ns, like for a iran, are down the road. That is the latest surrounding ukraine and protests have erupted across turkey. People are using Water Cannons against demonstrators. Joining me is the producer of bloomberg turkey. Are we a one off or expecting more pictures like this to emerge . Hello. We expect more pictures like this to emerge today. The trigger of the protests with the death of a 15yearold boy and his funeral is in a few hours. We expect more people to hit the street in protest. He has been in a coma for the last nine months. He was struck in the head a tear gas canister. That he wastester not a protester and had just gone outside to buy a loaf of bread for his family he was not a protester and had just gone outside to buy a loaf of bread for his family. In terms of how this adds to the overall picture, talk to us about the overall story and the series of demonstrations against the government. How does this fit into that . The government is in hot water since december last year. They are involved in a corruption scandal. Three government ministers have resigned and there are alleged leak takes for the prime thatter and his family implicate him in the corruption scandals. People are angry because the government has refused to acknowledge any or accept any responsibility. Or, punish any of the Police Involved in this. We will leave it there. Thank you very much indeed. More demonstrations are expected later today and we were joined in turkey. The turkish yield curves climbed up to a fiveyear high. Is certainly reacting, as well. Lets talk about another Market Reaction that we are seeing today. London trading did you had them open at 350 five and 18 above the offer price. That is get more details. A market cap approach of 900 they have ads and boundary and 1990. It has been a massive success and it has momentum around the times we had a recession in the u. K. They are up. They are queuing up to offload. Is great numbers and the ipos before today were 3. 7 billion dollars in london. That is five times as much of the same time last year. Youre looking at the ftse 350, the general retailers index and as you said, look, i spoke to Richard Dunbar and he said to me that there is a huge pipeline of ipos. The pipeline of Companies Want a exit investments and private equity firm wants to get payback. There is a little window to push them out and people are doing just that. Thank you very much indeed for joining us on the ipo story. What else is on the radar . Record 15 billion euro loss theres a plan to cut 8000 jobs. Theres a lot of work to be done. It is important to improve the Balance Sheets on this provision of capital is stronger and were turning the page to focus on stability. That is the main target of the next two years. Gross has said that hasstors will told investors that the Federal Reserve will complete bond buying later this year. Has told investors that the Federal Reserve will complete bond buying later this year. Plans for fannie mae and freddie mac. Highest are at the tumbled 44 . We will speak to the chief executive of the insurance giant, prudential about growth opportunities. As we had to the break, there is a News Conference and cool all lumpur. R kuala you are looking at live pictures from malaysia as we wait for the start of the Media Conference that is delayed this morning. There are a number of key questions that have to be answered. There is a lot of confusing messages from the government about what happened with the aircraft and the path it was on. Hopefully, we will get some clarity. There is Corporate News that we have been following and shares have a fresh high this morning. Dividend 50 the and that sounds pretty good. Put a smile on our next guests face. Good morning. It is hard not to smile. Look, your company goes from strength to strength and one of the key things that is added is the sense that more money is coming at shareholders in the next few quarters. Can you give us a sense of what shareholders expect. You talk about cash targets. What can we look at . Profitable growth and a transmission of tropical growth into tangible rewards for shareholders. On high returns on capital and sure payback opportunities. Investing in capital in excess and paybacks between two and three years. It is a good use of capital. What were seeing is the velocity of capital and an ability to invest in profitably and recycle it. Is that sustainable . Looking at an amazing opportunity in asia and i can take it from any angle. The big thing that we produce in asia is a strategy to focus on the markets for protections. And aalth care protection curve of a Straight Line in the last 20 years with a contribution. I am picturing a straightline curve. Cant goes through and you see the straightline. The Health Care Expenditure went from 28 billion to 92 and that is coming again. It is an enormous opportunity and we grow. Partnershipunced a and when youre looking at a report, it is about distribution. Every Insurance Company can see a nation and it is about the ability to execute. We have the Largest Agency force. Singapore andia, 280,000 patrons patrons. That we have a network and a head start. For 15 years, we have grown at 45 and is 100 city times bigger than we started. Is threeration percent. I keep saying that it grows faster than our ability to eat. Business can be 10 times bigger and we would still just be scratching the surface. This is what makes it sustainable. We are facing an enormous opportunity and the big struggle is to get that across to the market. Given the store that you are telling me, you have, over last few months and years, talk about africa and the potential to deliver. Exactly. It is identical. 1520as the gap . Years. It is asia in the 1990s. The demography used to be negative and now is a positive for africa. How much money are you going to use in asia . They do not consume a lot of cash in basement. Investment. It is if and when they sell. For an Insurance Company that is traditionally high fixed costs and low margins, it turned back on the head. Hat we have is an opportunity it works in the same way in africa. Inwe are doing it in places january and with all respect, is not very different in the environment that we are facing. Youre starting to get a footprint in ghana was up we are ghana. We are very patient. 15 years ago, the business was a fraction of what it is. Faster than our ability to eat it. Ok. Yeah. Yeah. It is a straightline stock straightline. Me thatians always tell what they find so hard about business in africa is that you cannot get around and there are logistical pieces that are problematic in africa. Is that a problem your face you face . We need to set up an infrastructure and the beauty of our business is that it is like mobile telephone will stop it is individuals moving around and it is on a countrybycountry basis. I can make one comment on africa, it is more than 30 million square kilometers and you can put the usa, china, india, and brazil in physically. I do not like the word africa, in general. Exactly. It is a country story and a city by city story. It is also in urbanization story. There is a wave of urbanization that is important and exactly the same forces are and work at work and move around relatively easy. Finally, if i can at one point, we are indispensable. Im involved in development toues and have been invited various beatings by president obama. I thought about insurance because it isnt it is vital. Romney economies have is how to convert investment. They do not have the mechanisms. We will leave it there. Thank you very much. The ceo upper dental. Of let us find out what is happening in the financial markets. Let us find out with john arrow. But pharaoh. Ferro a one percent drop in more than that. A group that has been following over the last three or four trading sessions is basic resources and they are down this morning. That is the fee. Down. Re and copper are there is concern about a country that consumes 40 of Global Demand for the metal and that is where the focus is. It is all about china. Thank you very much. We will continue with events surrounding copper. Lets talk about a live event that we are anticipating shortly. We await a News Conference from flighta surrounding the and the aircraft route. Hopefully, answers will be delivered. We will see you in a moment. Welcome back to the pulse. I am guy johnson. Let me update you on the Bloomberg Top headlines. Authorities are expected shortly to give a News Conference about the missing Malaysian Airlines jet, this after the air force chief denied saying the missing jet deviated from its path. His comments adding to the confusion surrounding the search for this aircraft. Minister isn prime headed to washington today, scheduled to meet with president obama for john kerry, and leaders of congress. He is seeking aid for his country. The Opposition Leader is knocking out an early referendum on an eu membership saying they would only hold a vote before 2020 if more power is handed to brussels. He said he would rather focus on his economic agenda. Lets talk about that. It is about the cost of living and clamping down on utilities and banks making it harder. Talk to me about the referendums. ,t kind of fits increasingly this has been coming on, talking about their concern about this. The voices are beginning to be heard. To what extent is it internal label labor politics . Is ina response to what the best interest of our nation, National Economic interest. Many Business People ice big to have been extremely concerned about the future of the u. K. In europe, the prospect of our exit or many businesses is the number one risk. We are clear on what the british people and businesses want us to focus on in that his growth, jobs, sorting out the economy. A major part of our longterm plan Economic Growth agenda 2030 is having an outward, open looking bridge to the world and u. K. Staying in europe. We recognize people have concerns about the prospect of tother being transferred brussels. We think it is unlikely, but not impossible, but unlikely. In that situation we would have referendum. What british people come investors, Market Makers want us to focus on is sorting out our economy and working in europe to reform it so it is more competitive so that we reduce large levels of youth unemployment across europe so we did these institutions, which, lets face it, we were set up when it was 15 or so members, earlier frankly, and now it is 28. They want us to talk that out instead of doing what our current Prime Minister David Cameron is doing, which is having a referendum in 2015 and arbitrary moment predicated on a renegotiation of the treaties he does not know he can secure from our European Partners or what the outcome would be or when he would stay in or out in the circumstances. Want to state in and would only have a referendum in the event there was a further transfer of powers from National Parliament to brussels. You sound very probusiness. Yet the other thing Business Leaders say when they come on is that they feel the labor is hostile toward the Business Community, in particular, toward not at all. Lets not forget it was a labor chancellor win because some of the responsible behaviors had seen amongst the minority of people here in the city, it was a labor chancellor who, frankly, Services Financial sector from itself. I think many people have a huge amount of respect for the interventions he made, which frankly, secured many of the jobs people are still in right now. What we want the city of london to do and the Financial Services sector to do and i am proud of that, proud to have the worlds leading Financial Services set here in london, what we wanted to do is the best of the job for the real economy and make sure it is secure. Lets not forget, we still see some of these things that were happening being exposed in our this is an issue, for my point of view, bashing bankers, for example. I think it is incredibly important we restore the reputation of the city of london. New york is carrying over our corner and seeking to take advantage. Frankly, they dont like the challenge london has been posing over the last that is absolutely given. The problem is, there is the sense your banker bashing in the latest rehearing as we are going to see another one off it when it comes to bankers bonuses and that is going to find a jobs a jobs program. There are still the sense london is trying to be competitive in your maybe potentially going to make it harder. What i would say is the biggest thing that has compromised the citys competitiveness of late of the reputation or consequences that flow from some of the responsible behaviors weve seen. That is why we are taken across the board in the u. K. Parliament, taken a fairly hardline and the respective regulation. I dont think it is too much to ask the sector to make a bigger contribution to help get our younger people into work. The Global Financial crash cost us about 1. 3 trillion pounds and precipitated a downturn and increase on debt and deficits coming from a following corporation i think what were talking about it respected the city is ensuring we secure it and restore its reputation, and i think it is not too much to ask for the contribution or a bigger contribution in light of all of the problems that flowed from what happened in 2008, 2009, before him. If you could guarantee the money would be spent respectively, i think people would have more sympathy. But the problem is the latest the future jobs fund. The evidencew was afterwards suggested the jobs that wouldve been created wouldve been created anyway and the money was spent probably in exactly. How are you going to guarantee the money is spent more exactly at the moment . I dont accept your analysis of what happened on the future jobs fund last time. Im just posing things what i dont recognize what youre saying. If you look at the independent research done, first of all, it seemed to be effective in getting young people to work all stop secondly, it was decent work which they continue doing. Of course we want to ensure under future job scared program that we will have people getting into good, meaningful work. The broader issue here is what were seeking to do, if you look at the u. K. In the context of the oecd, theyre only five other countries that have an example of this than us. We want to transmission from to highertransition wages and higher skill and that requires innovation. We are very good at that. We need to boost that so we can get more to the emerging markets , india, china, and the african lines youre talking about nigeria a moment ago. We want to get more to those markets, but we have to innovate even more than we are already to succeed in doing that. We will leave it there. Thank you very much, chuka umunna. Were going to take you now to the News Conference taking place in malaysia surrounding the missing flight. To join thepan team. This is a multinational operation. Where faithful to the cooperation of our friends and thankful to we are the cooperation of our friends and neighbors which is quite overwhelming and we welcome even more expert assistance. The way forward, ladies and gentlemen, is to bring more experts to analyze both the civilian and military details in the east or the west, on land or water. This is exactly what we are doing today. We are working with many experts including from boeing, the u. S. Federal aviation authority, and the u. S. National transport safety board and helping us with this investigation. Any questions . Can you state your name . [indiscernible] i cannot confirm that. [indiscernible] this is the new template where i will attend on a daily basis at this time of day. [indiscernible] what are the chances of survival . We are still doing the searchandrescue. We still have hope. Chances of survival, it depends on a lot of criteria. Because we dont know where the aircraft is, that is the main obstacle. Can i just add to that, i would like to confirm that our immediate focus is defined the aircraft is to find the. Ircraft unless we find the aircraft and get the black box, we are unlikely to answer speculative issues that a good race out there. Our focus is focusing on that. That is our main priority. Can you confirm if the plane we are focusing in the and the sea statement i issued, there been 42 ships and 39 aircraft and this has been divided into the two areas i mentioned. This is part of our initiative with the Prime Minister indicated the areas of searchandrescue was going to be expanded. We expanded it to the states of mecca. [indiscernible] i fully understand that. This is unprecedented what were going through, pulling so many countries together is not something that is easy. Manye looking at so countries to coordinate and a vast area to search. Each time i fear the searchandrescue just becomes a search, but we will never give up hope. We owe that to the families. The longer it takes for us to find the aircraft, i think the imily members are the ones feel for so much. Effortste all these [indiscernible] can targetthink we to any particular nation. China feels grieved because they have so many nationals involved. In theis also natural tragedy of this magnitude, as some time passes by, emotions, frustrations. From ourot distract us main focus, which is to find the aircraft. Can you tell me when was the last known recording of where the plane was . The military radar . [indiscernible] thank you. Last known time was 0215 local. [indiscernible] we say it is possible. Why possible . We are working with the other available radars. [indiscernible] you say theres still a possibility. [indiscernible] no, no, were still doing forensic we been very consistent. On saturday, the Prime Minister indicated we were going to expand our search and rescue operations. On that day also we made a statement to say there is a and on that same day, we expanded the area. I indicated to you the noble number of vessels and your craft in both of these areas. To date we have not found anything, but we are expanding a further. We have been very consistent in what weve been saying the last two days. [indiscernible] im afraid not. Communication and reporting systems, when and where did it last transmit data . Did it stop at the same time the transponders box ok, in the secondary right up, we look at our data and it was coasting about 1 21 in the morning. [indiscernible] our primary data does not pick it up at that point in time. It was analyzed the same day and there was an indication [indiscernible] [indiscernible] we stated it was a possibility. Could you help us understand something . Altitude when it was on the other side of malaysia . [indiscernible] as i mentioned, i reviewed again, it was posting from 1 21, but at 1 30, it disappeared from our data. Nothing . Nothing at all. , 200 mileslock northwest. Leave thise going to press conference here and will continue to monitor it for any further headlines that develop and will bring them to you. Indicating there does seem to be some confusion between the various greater points that exist and theyre conducting for insect analysis to understand better forensic analysis to understand better. Continuing to look for the aircraft, both in the South China Sea and the malacca straits. Plots continuing and two tracks continuing. We will continue to update you as more news evolves. Were going to shift gears completely now and talk about trading performance, hiring performance, coaching and how to use software to gain an edge when it comes to making your portfolio work a little bit better. Walk us through this talking about taking what has become common in sports into the hedge fund world. Increasing number of Fund Managers and traders are trying turning to coaches to boost the performance to work on a whole range of issues, to sort of diagnose Cognitive Biases that may be affecting the performance and then work on improving the performance. In doing so, theyre also turning to new software, which can provide really indepth analytics and how they constructed their portfolios and how theyre making investment decisions, and combining the power of that software with the power of these coaches. Him as is critical bloomberg knows. Lets talk about that data. Our guests company uses the data to help investors uncover the hidden strengths to my weaknesses, how to trade more effectively. There is some luck involved. What you guys try and do is put that to one side and understand exactly what is going on and try to make exactly. Were taking the view that if theres any luck involved in fund management, then the guy who maximizes his or her luck is the one that will win over time. Nothing you can do sorry, if there is any skill. Theres nothing you can do about the luck art. Skill, yes, you can. What you need to know where it lies and what you can do to improve it and to maximize the energy. What you provide is the baseline, the data that other people can then take and use to understand what theyre doing right and wrong. How easy is it to produce that data . Is very easy. The data is already being intured, i Trading Systems the first instance. Every time you do a transaction, youre capturing data. You can start with data about what you did. You can dig deeper into it thing for patterns around how you make and lose money. We live in a world of big data and quantified self devices, measuring how many steps we take and how is it that night and all of that. The data about the physical context and emotional context in which you are making decisions can be added into the mix, not to mention market data, of course, which is the environmental context. In terms of the key metrics, what makes the difference . We start with what i called your moneyball stats. Like sports. Goes to the movie about Baseball Players saying, there are basic steps you can use to tell whether youre any good at what youre doing. Do you get it right more than wrong . Right and wrong have different definitions depending on what are your benchmarks or absolute returns. Do you get it right more than you get it wrong . When you get it right, do you get a more right and that is critical, isnt it . Both of those together are important. You could be getting it wrong more often than right as long as when you do get it right, it is more right. Ideally, you get it right more than wrong and you hit it harder the symmetry. You can get it wrong a lot, as long as it is asymmetrical in terms of return, youre looking pretty good. How important is this for the industry Going Forward . This is prevalent you look at sports. How important is this in the Business Community . The data is growing in importance and there is more acceptance of the data. Using the data with coaches, there are stills statement in the industrious associated with having a coach, but that stigma is declining over time. The more forwardlooking hedge in theactively story we spoke to man group. Raven how are has used coaches before. There are some disconnect between the coaches in the data, but what is driving it is actively managed money in general is going through a bit of a crisis. It has been since 2007 hedge funds collectively be the s p 500 with positive returns, most actively managed neutral funds fall short of the benchmark indexes and that has driven a lot of money to the socalled alternative data switcher using algorithms to essentially match and then just eat an index. Just beat an index. And the state is an edge. Thank you very much, indeed. Let me move you forward. Lets go back to sports. We take you behind the wheel of this formula one team. It has produced its fastest, most extreme model for road car ever. I went trackside with this road going racer. Let me to reduce you to the 620r co the fastest theyve ever built. North of 60, 2. 79 seconds in first gear. This retro rocket styling confirms its history from a based on the original design of the lotus seven in the 1950s, which they acquired in 1972. But while its looks may go back to a different era, under the skin, this car is all 21st century. This will challenge almost any driver. The only question is, are you prepared to push the start button . Dakar makes a very nice noise that car makes a very nice noise. Coming up next, surveillance. What we have coming up as a second hour of the pulse. Monitor theinue to situation out of malaysia. We have an ongoing press conference and more about the missing flight. I can take as well my colleague has been talking or is talking to george soros right now. We will have the first taste of that interview a little bit later on in this program. Interesting things coming out of that interview already. You can follow us on twitter. Is also on twitter. We will take a break and be back in a couple of minutes. The president of ukraine greets the president obama at the white house. On wall street. They can figure out which republican to support in 2016. It is a mess. The search continues for Malaysia Flight mh370. Good morning, this is bloomberg surveillance. It is wednesday, march 12, i am tom keene. Joining me as scarlet fu and adam johnson. A busy day. We have the Malaysia Press conference going on as we speak. We will look for the headlines. Here is adam johnson. Overnight, japans consumer covenants level fell to the economic data,11 not a lot going on here in the u. S. As 7 00, the weekly more jude mortgage up location. Earnings after the bell. An important item to note, ukrainian Prime Minister, has only been in office for over a week,