Good morning to our viewers in europe. The warm welcome to those just waking up in the United States. This is the pulse. Live from london. Sire will be live with terry leahy, the former tesco boss. We will be talking tires. A watchmaker dripping with innovation. In the meantime, lets talk about the data that is crossing the screen now. that is the latest reading on euro zone inflation. It does put the pressure on the European Central bank. Question for mario draghi , ather we are in a spiral selffulfilling spiral, whether the pressure on prices is enough to whip the ecb into taking more extraordinary action, Something Like negative rates or Something Like quantitative easing. Fell. Prices upper hall, food, tobacco climbed 1 . Alcohol, food, tobacco climbed 1 . This is all down to Energy Prices and unprocessed food. Look at eurodollar. It has had an impact. What are the expectations . Is the ecb going to do something this week . Consensus is no move. There was an argument out there that is building in favor. The banks are paying back emergency cash that they got at a fast rate. The ecb is contracting. You are in a counterintuitive situation. The ecb is not yet buying bonds. There is an awful lot of bluster , doves flying, a lot of rhetoric going, give us some action. Many are looking for lower yields in europe and more money in the system. I dont think you need lower yields. The market collapsed recently. You are right. At the fiveyear level, collapse. There is eurodollar. That tells they probably slightly different story. Never argue with the chart. This is the job they are given. Spain is in deflation. The overall european number is below estimates. I will leave you with this thought. Traders are cutting long positions on the eurodollar chart for the first time in seven weeks. Traders are taking money off the table. You can say whatever you like about foreign exchanges, but they tend to be a little bit ahead of the curve, excuse the pun. Manus cranny with the very latest. Lets get straight to our special election coverage. Weekendeen a busy in turkey. Live istanbul. In istanbul. We are also live in paris. A massive victory for the turkish president. A huge victory. He could really have asked for much more. Kept the capital, they have kept the stumble, they have one around 45 of the votes, more than they got last time in local elections. However, if you like to view the glass as halfempty, actually, much of a won as share as in the last general election. Said that these elections have highlighted the divisions and the polarization in Turkish Society and the could be more trouble to come. There is the prospect of general elections next year it might be brought forward. Certainly, the last glass seems to be halffull, as far as ise turkish president concerned. He said he will go after the people responsible for leaking allegations in the Corruption Scandal. He said that his victory was a defeat for the politics of lies. Ultimately, the largest block of voters trusted the Prime Minister, his stewardship of the economy, which grew 4. 4 in the last quarter of last year. Over the leaksm on twitter and other social media. Do have any sense about what this crackdown will look like . This country has suffered running battles between protesters and police. Twitter has been shut down. Youtube has been shut down. How far is he prepared to go . Any sense of that in the press . He is not a man known to back down. Will see this election and these votes as vindication of his policies and a green light to carry on in the way that he has been going that far. We have already seen a purge of the due judiciary, of the prosecutors come of the police, where he sees many followers of the usbased cleric and the man he blames as being behind these lakes. Leaks. Mostast one was the damaging of all. Discussing potential tax inside of syria. Syria. Cks inside of people are saying that maybe they will start cracking down on users of twitter, rather than just twitter itself. Most people know what a vpn is now and they know how to get around these blocks. If he is really serious about that kind of crackdown, he may start going after users. They may start to try to weed out who these anonymous people are who have been specifically damaging leaks onto social media sites. As far as the economy, investors seem content. Stocks are bouncing back. Is going to grow now, says the finance minister. See if have to wait and that situation holds up until president ial elections due in august of this year. Thank you very much, indeed. Lets switch over to france. This has been the first real nationwide 20 test for the socialist president. What are the main lessons . Hollandery to turkey, cannot point to successful economic management. The government got a bit of a shellacking in the local elections. They held onto paris. A whole series of cities, they lost control of. They lost control of toulouse. It swung over to the right. One main lesson to take in this is that the party that benefited from the problems with his socialism is the mainstream centerright party. That is the former president of nicolas sarkozy. The far right party did not win much. Overall, the message for the socialists was not good. Lets talk a little bit about what happens next. Beingof question marks raised about the leading politicians and his government. Are we going to see any changes . When are we going to see them . The big question is when, not if. The if is certain that there will be a cabinet reshuffle. Do they keep the Prime Minister or change the cabinet . There are rumors he will go on tv tonight it has not been confirmed yet. It is likely to be this week. It is an old french tradition tough,en the going gets the president sacrifices his Prime Minister. It has rarely worked in the past, but that is the tradition in france. Thank you very much indeed. Joining us from paris. Now, onto ukraine. John kerry pushed Sergei Lavrov to withdraw forces from ukraines porter. Porter. Border. The two men met yesterday. They have basically decided to come back another day to discuss it again. That is the main take away. They decided that they could not agree on anything and that they would try to meet after speaking to their respective leaders. You have two cold war adversaries meeting in paris on neutral turf to discuss the fate of a third country. That is notable in itself. The meeting happened at the russians initiative. Obama. Alled president the russians want three things. They want the russian language to be an official language in ukraine. They want devolution. They want the eastern part of the country to have more power. It will ukraine to agree to never be part of nato. The United States wants to things. It wants russia to pull back its 40,000 troops from the ukrainian border. It wants russia to negotiate with the ukrainians, something that the russians have refused to do so far. Erkel thinks the threat of sanctions is what brought the russians to the table in paris. She thinks they have entered into a period of reflection. It is interesting that this was between america and russia. This did not include the europeans. The europeans being much more cautious when it comes to sanctions. She is referencing those. You look at the German Companies and the involvement they have had recently. You can begin to understand why. Said, thesian cfo more skin Foreign Companies have in the game, the less likely they are to back sanctions. Trade wise, there is not a whole lot going on between the u. S. And russia. Different story. 11th biggest market for exports. That does not sell mike a lot, but it is. Sound like a lot, but it is. The ceo of siemens met with putin. Shortterm volatility is not as important as longterm. The trading relationship. I think food and always keeps everyone waiting. Event will keep us all waiting. I think food and always keeps everyone waiting to back always keeps everyone putin always keeps everyone waiting. We are back with terry leahy. Welcome back. Youre watching the pulse. I want to start off with eurodollar. Normally, you would expect some action from the ecb. When the number came out, we saw euro dipping. Since then, it popped right back. The ecb meeting is on thursday. There will be a Mario Draghi Press Conference right after that. Will they blank . Blink . Today afterent down the turkish elections. The market is reacting quite positively to that. A shortterm move, some would say. Lets stay with turkey. The nations Prime Minister doing well in this weekends elections. Even as this Corruption Scandal and the crackdown on social media energizing his critics in advance of that poll. We have this report. Twitter does not have much to do with the price of fish. It has dominated discussions about the selections when it was blocked a week earlier. I dont think this was a good move. People were communicating with each other. It was not a good thing to do. He did the best thing for other people and for him. He is protecting their rights. Blocking twitter and youtube, the Prime Minister managed to deepen the vibe he between his supporters and his divide between his supporters and his opponents. The people who immensely dislike him are the ones who are mostly outraged and affected by the spam. Ban. And rest are so mesmerized radicalized by his persona that they are ready to do anything that he wants them to do. This time around, he just wanted their vote. Allegationsrruption implicating him and his family. The selections came down to who turkish voters trusted more, the Prime Minister and his party or social media and the allegations they carried. For those keeping the faith with twitter and youtube, what happens next could be equally as epic. Probably, there will be a move after the elections to criminalize usage. Otherwise, technically, it cannot be stopped. Alternately, the government could unblock twitter, in line with court rulings. Lets stay on turkey. Lets bring in the head of emerging Market Research at standard bank. Good morning to you. The Prime Minister did well over the weekend. His party did. What this means shortterm for the economy and relationship with turkey, what are we looking at . Markets like it. Have appreciated what he has done over the last 1012 years. He is appreciated. The question mark Going Forward about the president ial election. His comments overnight were fairly aggressive. We are very polarized. A pretty brutal campaign. Very high stakes. If he wins the president ial election, then he dominates this country Going Forward. He has been buoyed by the victory. He has also offered a stronger economy, politics, and more democratic state. Should investors believe him . Meand they think this may that this is a safer bet on the economy . I think short term what we are seeing from Bond Investors is rebalancing. Current accounts are beginning to narrow. I think there are good opportunities if we see some political stability in the runup to elections. Longterm, i think their model of Development Changes because of this. I think we see over concentration of power around they Prime Minister. There are big question marks longterm about the corruption allegations and the social media bands. Turkey is changing. Maybe the rule of law is weaker. For me, it is a shortterm story in terms of the selections. Over the longterm, there are more question marks than there were a year ago. How does that fit in if youre investing in the region . How does turkey fit in . How do you invest in turkey . Reality is that turkey is a great story from a broader, macro perspective. Good growth, good demographics, good bank, good Public Sector finances, good balance sheet. There are many reasons why you would want to be in turkey. A big market, very dynamic to read the main risk is the politics and the over concentration of power. Does that mean bad policy Going Forward . Away from stay turkey. That is clear. From a debt perspective, you have doubledigit rates, you have real positive interest rates, the currency has adjusted already over the last year. It kind of looks attractive from a valuation perspective. He just of to feel comfortable with the political risk. In the end, who do you think is going to win the president ial and parliamentary elections, if they come forward. What about the stock market . It has traded off a bit on the back of what we have seen over the last year. The bottom line is that the Growth Drivers for the economy are pretty good. You have good corporate and good banks. I think people are looking for opportunities to invest in turkey. If the politics is down a bit or it is a bit calmer, you will see a lot more coming in. Thank you so much for that. We are back in a couple of minutes. We will be talking to terry leahy. We will be talking tires and what is next for the british retail story. He will be joining us shortly. Good morning. Welcome back. That is hows much money and fake bonds two con men had trying to enter the vatican bank. They were likely planning to use them to open a line of credit. Of stuffingking fake money, going to the vatican think, one million, 2 million, no. Lets try 3 trillion. A bit of a giveaway. We will take a break. We will talk to the former tesco ceo, sir terry leahy. We will be talking tires. Make sure you tune in after the break. Welcome back to the pulse. The Bloomberg Top headlines. Turkeys Prime Minister vowing to chase socalled traders behind ones of corruption allegations. Thats after his ruling party cannot on top of the National Polls over the weekend. To brussels for talks with several european officials. Belgian is looking to increase its trade with china. She announced major deals are ready during the visit to europe. Michael lewis says highfrequency investors have made tens of billions of dollars by taking advantage of legal loopholes in u. S. Stock market. The author has a new book. He told the cbs show 60 minutes his research for the book revealed some stunning conclusions about traders. The stock market is rigged. In globalconic market capitalism is rigged. By whom . A combination of the stock exchanges, the big wall street banks, and highfrequency traders. Lets talk about the stock markets from a different angle. Equity markets are building on last week success, except for the paris market which is being dragged down. It is that a downgrade from barclays. It comes down to the spanish and the italians. The italian market over 13 . Over here, look at u. S. Equity futures indicate 1 3 of 19 higher. Higher. Momentum builds toward the end of the week in terms of the nonfarm payrolls, the unemployment numbers today. The currency, weve had the lowest inflation level in the eurozone in four years. Down the eurodollar went. We were on one month lows. Traders are covering the physicians for the first time in seven weeks on the eurodollar. Markete went in the shrugged it off because the assumption is your can central bank will not act. A great deal of rhetoric last week, but no action. Back to you. Surveillances with tom keene. He joins us with a preview. What are we looking at today . Us asm parker will join we look at the equity markets. Know where the first three month of the year went, but adam parker will tell us what it means for equities. He is always a bowl. He is decidedly not 100 cash. We will look at the geopolitics. Stephen roach will join us from you university. Our this wonderful book on balance. Particularly on china, the state of the economy, also the relationship with russia. And we will also talk about american capitalism. He is one of the most respected economists on italian politics. Thank you. Im just worried that adam and i are not wearing the same outfit this morning. I guess somebody wore, sony out outfit that the duchess war as well. How big is that in england . I have to say, i dont talk about mens fashion. I can do womens fashion. Seen onehink ive ever of those suits on men before. We will have to see. They look good in massoni. Well that is good for massoni. Now it is time for bloomberg exclusive. Is abuzz you can shop for everything, including tires for your cars or your bike. Is to benefit benefiting from the shift. Were joined now by the founder of the business, Michael Welsh him and its newest board member. Good morning to both. How did you meet . How did this relationship start . He came into my office forced his way in the talk about the business and ask for a bit of advice. It was a tiny business then. I was impressed. A young entrepreneur starting the business from liverpool. From liverpool. I eventually became an investor. From your point of view, you have a business that you believe in, you think, i want to make it grow and make an impact so i need the grew of all retailers guru of all chillers and he reach out to terry leahy. I guess i had a bit of naivete. Andas really accessible very generous with his time. I just sent a letter. To this day, i find a lot of value in writing a letter to people because you tend to get a response. Emails dont do it as well. Oldschool. What you had to fight your way into the office. I saw a picture. Big, lumpy pieces of equipment that you have to have a large inventory of if you are a garage. Explain the business model. You have figured out a way of hooking up lots of small independent garages, of which there are many across the country you dont actually hold inventory, youre just a facilitator. Ago, there were a couple of sizes and a couple of brands. Fast forward 20 years and there is a blur of sizes in the market that the guy can hold the tires on the shelf anymore. A range of warehouses across the u. K. , centralized distribution, product on consignment, approached the best independents and there are thousands in the u. K. Engineers, and brought them on the franchise. We source the product, source the customer im confused. I thought you did not hold inventory. You have warehouses and they come to you . On a consignment basis. The whole talent in terms of supply chain and has been able to forecast product quickly. Forecast and turnover product quickly. Were talking today about last year sales. We look at the business and praise the capacity, we think there is probably about 10 times in terms of the existence majority. Guessr part owner but i also mentoring mike. What you think about most . We think about execution thank you. How do you grow this business . Does ago internationally or make sure everything is spot on first in the u. K. . You look at the basic business idea. Can it win . Then you look at the person. Is this a person with a character to see it through . Often i find you want to encourage the founder to stay with it. Actually, not to give up too early. One of the problems with british entrepreneurs as they check out to early before the business has gone to full international scale. I think that is a great shame. I try to encourage people like im to stay in it and just use the law mathematics and Company Growth to make as big as it can be. You mean sell the business . They get diluted so much that they lose interest. Stay in, keep a big chunk of the business. If you have a winning competitive model, hold onto it and seek at a leading share both at home and internationally. The great thing about the ecommerce business, they can go international at very early stage. Today ecommerce businesses are going abroad in the first or second year. I year three, they often have more overseas health in domestic sales. It is a tremendous advantage for this business model. This may sound like a dumb question, but is it a tech company or resell company or can you just not separate them anymore . Uses it circles effectively. But he would be a retail multiple rather than a tech multiple. Trust is the core of the business. What we been able to do is really fun to the business through Great Customer savings. We have repeat customers. The savings we can offer because of the supply chain of significance of the 40 on the high c in that powers the growth. If youre looking from a market point of view, youre probably considered to be an internet retail business. It is fascinating. Ipos,been a quarter of Retail Businesses and tech companies. You look at the valuation differences, sometimes they are hard to separate as businesses. They get wildly differing valuations. How do you see your business from here . We built a business in the oldschool way. We have grown our sales and profit. There is no debt in our business. We gauge our success by what the customers tell us. I know it is a cliche, but it does power the growth of sales. We are at the stage where we are looking to the wider marketplace and saying, how can we really grow this business more quickly . That will require some form of funding. It is an interesting time, it really is. We will talk about internet expansion of moment. Stay with us. Welcome back to the pulse. Lets continue our conversation with blackcircle. Com Founder Michael welch and the newest board member and investor terry leahy. We were talking before the break about how scalable your business is and where it goes next. Then we talked during the break about potentially Continental Europe has a few advantages that you could use. The problem is, we are in a country that could think about the future in europe. Im interested to get your take as two businessmen trying to do business in the u. K. And looking to expand into europe, whether that is the place that britons should remain. Does it worry you, more politicians talking about leaving . There is going to be a referendum. You people will decide, and that is the right way of framing the conversation. For business, we would like to stay in. The uncertainty and the disruption of moving out would be bad for business. Of course, britain has to look beyond europe for its markets. The emerging markets around the world will probably see more growth for british business, or within europe would be a great platform for exploiting that global trade and global involvement. How worried are you about the Scottish Referendum . There are so many answers not answered, so i think the debate rumbles on. We have to see important questions like currency and taxation, and really understand what the medications will be. You are building a business. What you need a stability, you dont need massive amounts of change, right . Your job has to be tough enough as it is. Difficult, but there are always difficult issues to consider. That is the beauty i think of being a chief executive. You have to take these things on and do what is best for the business and best for your customers. I think we will be in a great position to make decisions. The great thing about our business, we are a technologybased business and the infrastructure, the majority of it, is online. We havent got massive decisions to make about warehousing and distribution because we are a u. K. Company in that respect. But as i say, into we have the answers, we can really draw the true conclusion. Terry, we were talking about one of the things were concerning to the most when you look at Young Companies is the ceos either leaving or selling off or diluting their interest looking for money. Is there Something Else that needs to change for entrepreneurs in this country to thrive even more . How do you get the next facebook . To even want the next facebook and u. K. . Things are improving, but we need to complete a mindset change. I think britons should embrace entrepreneurship, celebrate and enterprise Wealth Creation more, and challenge people to take a risk and start businesses. We have some of the greatest universities in the world in this country. Too many of the products of those universities go for the safe options. They go into the professions, banking, law, management rather than taking a risk early on and starting a business. Which those Advisory Companies can then advise in years to come. It is a message to parents to say, look, support your children let them take a risk and start a business. I think of we saw more of that, so more power talented, best educated, that would be good for the economy. But how do we make that actually happen . You government or guys like to mean in and making sure there is an opportunity to finally give businesses started . In reality, how is an economy that is largely slaved to finance and Large Companies turn itself into a sort of grassroots bottomup type economy . All of those things. The government needs to be more supportive. People like me need to get back bronco and help business. I really enjoy doing that. ,ut also more role models people like mike that demonstrate this is very viable and very exciting and very rewarding. All of those things lay a part. And also the education system. It should have the opportunity to advise on that and encourage starting a business. Mike, you said to grow you need money. Where will you get the funding . We are at the stage we have managed the business to a point in oldschool way. Were now in a position where we have a range of options. Including ipo . If you wouldve asked me that six months ago, i wouldve thought so. Equally, debt finance, private equity there are a number of options that will be considered over the next few months. Onto the, to push us next level, there will be an event of some form. In event of some form. We look forward to that. The Digital Economy is something we often think about when it comes to tech startups. You talk now about the fact we need to do more, but is it easier now . We have a Digital Economy that allows you to start a business so quickly and so easily and gain traction not just a mystically, but internationally, how different is it now on the landscape . If you are to project 10 years forward, how do see things working . Now. Is very different the Digital Economy allows businesses to start much more quickly and grow much more quickly and grow internationally much more quickly than a traditional business. Digital, even the economy has gotten simpler and quicker. There are platforms you can use. You dont have to build everything yourself. You can subscribe to other services that allow you to create the business. That causes much more knowhow. We are lucky in this country there is quite a Knowledge Base around the Digital Economy and ecommerce. Britain is a world leader for the penetration of ecommerce businesses are greater than any other country in the world. Interestingly, any older countries look to the other countries look to be u. K. Without talking about ecommerce and that provides a Good Opportunity for u. K. Based commerce. Youre talking about starting companies and it is still hard to start a company. Are we pushing against an open door here . Is there still a lot of resistance to what youre talking about or is it simply going to become normal because of the technology and the Digital Economy to be able to do that . I think that is the change in mindset. People have to view it as pushing against an open door. Theyve got to say, he or she has done it, why cant i . Whothen have people around are there ready to help and guide and advise and support these businesses as they grow. We gather momentum in this country. It is beginning. Things are getting better. ,he recovery will help as well obviously. People will have more confidence. Finance will be easier to access. It is more important is the economic cycle. Thank you so much for a great conversation, terry leahy and michael welch, founder of blackurkel. Com. Details of apple coming up next. Welcome back. Lets look at the currency markets. Take a look at the euro dollar. Remember the ecb meets on thursday post of the pressure to act is there. The market is not reflecting that this morning. Looking at what were watching for the rest of the day, we are joined by elliott. Youre looking at the landslide election victory by ergodan. A very big win for him and his party in local elections. A lot of unanswered questions. He has turkey centralbank governor headed to london to meet with investment bankers. We should hear from ratings the month of april, giving the reaction to this win for erdogans party. Some saying this is merely underlying the polarization of targets Turkish Society and there could be further trouble ahead. Lets talk about ukraine. Crimea. The russians have just appointed a new boss for the regions. Im also looking at ukrainian gas prices. Tomorrow, they begin talks with gazprom. As price could go as high 500. They will need the western aid in quickly to pay for that gas. Caroline . Back in the same courtroom in california, apple trying to find the newest samsungs have infringed their patents and trying to get a sales ban on some of their phones. The jury will be picked today. I thought we were done with this. I was hoping we were done with this, but no. We are never done with pat morris. Patent wars. Thank you, caroline hyde. That is it for the pulse. Keep it right here. Surveillance is next. They will take you through the next few hours. You can follow us on twitter. Thomases are made as john andy needs levrov as ideas ukraine are discussed. Midnight is here. Turning into a pumpkin on health care. The debate intensifies, november beckons. , im gettinguarter out of cash. That morning, this is bloomberg surveillance. It is monday, the final day of the First Quarter 2014. I am tom keene. Scarlet fu and adam johnson are joining me. Lets get to the morning read. 2. 5 ,ch inflation slows slightly weaker than forecast. Unexpectedlyion drops. The steepest in eight months. Economic news in u. S. , we will purchasingsago index. An activity index at 10 30. Ribune company in case you