Transcripts For BLOOMBERG The Pulse 20140416

We are live from bloomberg headquarters in london. Withso coming up, we speak burlesque performer deed of aunties about building up her brand. Maserati, the moneymaker. We see why this upscale brand is the golden goose. First, we begin with the crisis in ukraine. Tensions have escalated after ukraine began an offensive. David tweed is following the situation. The Russian Foreign minister Sergey Lavrov has said that he still plans to join the ukraine talks in geneva. How with the eu positioning itself ahead of these talks . The European Union has made it clear that they are putting together a list of further economic sanctions that they can put into place if the situation deteriorates. By that i mean, russia moving its own troops, 40,000 of them bank, border of ukraine, moving them actually into ukraine. To overtly support the separatists who have taken the municipal buildings. Also, very interesting comments from William Hague last night. Just ang that this isnt decision that russia might be making now. This is going to affect russias relationship with the west for decades. We are at a crucial moment in the crisis. Russia needs to choose whether it is open to diplomacy and deescalation. If it decides otherwise, we must be ready for a different state of relations with russia in the next 10 years than we have enjoyed in the last 20 years. The europeans also saying that they are prepared for the eu leaders to meet in brussels, possibly to put any sanctions into play if they decide to go down that route. Is always a sliding scale from diplomatic to sanctions to boots on the ground. We still dont know which one we are going to end up with. What is nato doing in terms of preparations . Nato certainly hasnt said anything about deploying troops. Is preparing to do today and this will be presented by the u. S. Air force general philip breedlove, the top military commander for nato. He is going to present plans for strengthening natos presence in europe and the baltic states. This is for two reasons. One is to give nato countries more of a sense of security, given what is happening in ukraine. Secondly, it is a pretty direct message to moscow as well. David, thank you very much indeed. Of theweed keeping track situation in eastern ukraine. Today, Credit Suisse reported results that missed estimates. Profit fell 34 , mostly from declines in the Investment Banking unit. Jonathan ferro joins us with the details. You spoke to the chief executives. I did. The ongoing question for Credit Suisse, you break down the numbers, the story is in the numbers. Wealth management continues to perform. And Investment Banking, profits continue to decline. Bear in mind, that is not just a Credit Suisse problem. That is an industry problem. It is leading the same question to be asked over and over again. Should this bank focus on Wealth Management, change strategy and rain in the Investment Bank . Brady dougan added that away this morning. He told me the Investment Bank was profitable. He gave me no indication that Credit Suisse would be stepping back from that business. We with tax evasion probes . Is there an end in sight . I think that is the perennial question. We thought they were close with the department of justice. They have set aside a billion dollars to deal with this. The new york probe gets deeper. The department of Financial Services, reports distributed that there was a subpoena issued to Credit Suisse. They were gathering documents from employees at Credit Suisse. Brady dougan did not confirm or denied that. He said it was working to resolve the issue. The big issue for shareholders is, is there an end in sight . How deep is the whole . Will they have to set aside more money . I put the question to brady, this is what he said. We will have to see how these things develop. We are adequately provisioned on these issues. We have a record of having done a pretty good job in working through these issues. Well have to see how these things develop over time. Key take away, they cannot rule out further provisions. For a lot of shareholders that will mean a lot of uncertainty going forward. Fax lets talk about how big this could end up being. He seems pretty tightlipped on what we are going to see down the road. This is a civil, not a criminal probe. Nevertheless the numbers can be fairly substantial. This is an organization that has flecked its muscles in the past. What do we know . How significant could it be . I would say, do not be fooled by this. This is serious. The new York Department of Financial Services, you hit the nail on the head. Remember that jim and lost it . Benjamin lost the . That is how serious this could get down the road. If you are an investor, that is some serious escalation risk. It doesnt look like there is a resolution inside. You could get more provisions down the road. Over creditertainty suisse, not just on the strategic side of things but on the legal and regulatory side as well. John, thank you so much. Jonathan ferro with the latest on Credit Suisse. It has been a tough if not terrible start to 2014 for tesco. It lost market share as well as its cfo. Biggestritains retailer posted a second year of falling profits and worsening sales. Lets get the details on the numbers. Caroline hyde joins us. Shares are up but you have to look for a Silver Lining pretty hard. There was no big shock but lets not put roasted the glasses on. At the moment, profits down for a second year. We have seen sales down three percent in the last quarter. That was worse than estimated. More than one billion pounds worth of writedowns coming in china and europe as profitability sunk. Shocks, but the surprise isnt going to be there is no surprise. It is a tough environment not just for tesco but all the key players. Price wars. You have morrisons channeling a billion pounds worth and cutting their overall prices. That is something tesco is having to tackle. They are losing market share to the likes of aldi and their prices arent managing to entice people to come in. I spoke to an investor who said yes, we are disappointed. It, tesco isabout still the thirdlargest supermarket retailer in the world. It is. It is huge. The amount of profit it does bring in, still in excess of 3 billion pounds. The strategy is taking time and it is more of the same. We are hearing from fellow car that he is going to be cutting prices. They are already cutting prices on standard goods. It is not reaping dividends quite yet. They are focusing on line still in a big way. This is a company that has dominated online buying in the u. K. More convenience stores, 150 of them. They are also revamping tesco extra. They are getting artisan bakeries, coffee shops. The problem is, they dont have a lot of time. The music is beginning to change. The chairman is said to be watching the situation carefully. You have already had others departing because they are concerned about his strategy. You have to wonder how much time he is going to be given to get this right. Philip clarke has been chief executive for three years. Since been at the company 1974. He said today, i am going to see this through. He has got no intention of leaving. Every Single Member of the original board he inherited has left. Cfo,ost recent one, the just this month. Clearly he doesnt agree with the tactics being deployed. Many say, this shouldnt be a surprise. This man is a fantastic store manager at the very basic point. Surprising that he will get rid of the old guard, bring in the new. He wants control. He wants to have absolute rains on where this company is going. He says he is in it for the long haul. We understand that the big revamps are reaping in more sales. You are seeing sales uptick once he manages to upgrade stores. Interesting International Growth as well. Discipline is there. He is focusing on asia. Focusing on the United States with Closing Retail loading retail. A year after they pulled out fresh and easy. Investors potentially looking at alternatives. People in the mix, people used to be at tesco. For potentially who could be the new guard. There is no obvious number two. That is perhaps why Philip Clarke has been given more time. Caroline, thank you. We had a dinner not too long ago with tesco. When you look at the supply chain, even to get a 30 day old sterling steak it can take up to 18 months. ,y the time you find a supplier i forget how long it takes to make sure that supply chain works. It is amazing. How much time is he going to have . What else is on our radar this morning . Will move its it European Headquarters from the netherlands to the u. K. That is according to the times newspaper. The coffee chain has faced criticism over its low tax payments and says it will pay more taxes in the future. Taxidrivers in brussels will be fined 10,000 euros if they are caught carrying private passengers after the nations saying the company doesnt have the necessary license to operate in the eu capital. Sixthbaba has posted its straight quarterly profit gain. The news saw yahoo shares soaring. It owns a stake in the chinese ecommerce company. Yahoo posted its first sales game last night since 2012. China economythe grows the least since 2012. Will that test the governments commitment to reining in credit . We are live in hong kong next. Welcome back. Chinas economy slowed in the First Quarter. Gdp rose from a year ago. The weakest pace of growth in six courses. Andy davis joins us from hong kong. This raises the pressure on the government. People are talking about a fresh round of stimulus. Some gains insaw stocks today, that was probably as much speculation as the Chinese Government would step up to spending. The numbers themselves were kind of a mixed bag. The headline number was in line with a lot of forecast but it is the slowest in a couple of years. What did todays numbers tell us about the slowdown in the chinese economy . One of the most worrisome things is the very dramatic drop in new Construction Spending which fell by about a quarter. The real estate sector in china is almost 15 of gdp. To see it drop that sharply, obviously the government has been trying to curtail property prices which have been shooting up in a lot of cities. There is a lot of overbuilding in the outlying areas. To see it drop like that is something they are very worried about. When you talk to people, when you read the newspapers, watch the news, sense that we are getting near the bottom of this story. Going to get better, or is there a sense that things are going to continue to get worse from here . That is the question. Clearly this is a statement as the economy. They have made a pretty Aggressive Growth target in line with the growth of the last several years. There is a lot of expectation that they will do whatever they can to beat that target. We are going to have to keep a close watch on these numbers going forward. The expectation is they are going to try to put a bottom on this thing. Andrew, thank you so much. Bloomberg News Reporter andrew davis from hong kong. What is the chance of an even deeper slowdown in china . Probably the trillion dollar question. How our markets pricing the risk . Is directors us, he of asian commodities trading at new edge. Andrew says that is the milliondollar question. Will the chinese authorities let the economy slow even further from here . If not, what kind of stimulus do we think they are going to put in place . I think it doesnt matter. Because the Chinese Government, their focus is to boost the economy. Their focus is not to boost gdp growth. At the same time, the premier has said he wants 7. 5 growth. This is a target. There is a difference between saying, mike your mandate is the economy and, this is 7. 5 , that is the growth i want. That puts them in a tricky position. I believe they have a good chance to achieve it. I have confidence in their ability. It doesnt really matter, does it . As long as we are not seeing a drastic problem with employment or a dramatic problem in some of the regions, so the country remains stable. It is a rough target. That is the reason why they are talking about a mini stimulus. Dont want to see problems here and there. They want to keep stable growth of the economy. To build a Solid Foundation for the next 10 years. Do you think the government has the people in place to manage this transition . This is of course a huge economy trying to transition to more market economy. We are seeing possible default. We will see the widening of the band. Do you think this will be managed smoothly . I believe so. In the past or to years, you might have seen so many reports about fears, concerns that china would bust if growth was so high so fast. Then chinas economy didnt bust. It has become the second largest economy in the world. That is the situation for the last 30 years. I have no reason to doubt that. Are we reaching the limits of how managing the economy thus far . Thus far, financial crisis, what did they do . They started spending big on infrastructure. The construction sector took off. That provided the backdrop to the growth over the last few years. Are we reaching the limits of that . You are going to get to an era of more infrastructure being less productive. Do we move on from that . I will tell you a story. My friend who is from a coastal town close to shanghai, the has plannedment four lines, now they are building the first. There is a huge demand from Chinese People and businesses to connect. That is what drives the economy. Infrastructure is still the big story . Infrastructure is the big story but we also hear about these ghost towns, towns that have been built to house 20 million people, that have now been left completely empty. That was a construction boom that we saw over the last 10 years. Is this a danger for the economy . That is why they are trying to build a Solid Foundation. What you said is true. In some places, you will find a ghost town. In most other cities and towns, there are still a lot of people who need better housing. Richard, thank you so much. Come, the car that is a cash cow. See why fiat is counting on maserati to balance its books. We test out the new technology helping land rover build an invisible car. Good morning. Welcome back. You are watching the pulse. We are live on bloomberg television. We have everything covered. Lets see how the markets are trading. Manus cranny has your asset check. A nice little bounce in these equity markets and a little bit of resilience despite the issues in ukraine. Aat you have got here is wonderful line from Market Makers yesterday evening. Bouncing off a threeweek low in European Equity markets. Today janet yellen will speak in the United States. That is going to be scrutinized within an inch of its life for rhetoric. Up 500 indicated at 1846. 7, 0. 4 . In midterm elections, coming up two midterm elections in the event it dates of america. In the United States of america. In the second quarter, these equity markets tends to lag. They tend to drop. Yellens speech will be closely watched. Here in the united kingdom, we are just a couple of minutes away. Guy, you were talking about this. We are going to get unemployment data. Interesting, 1. 6771 is where we trade on dollar sterling. How are wages rising . Believemate out there i is 1. 8 for a rise in wages. That would be the critical issue when it comes to the cost of living here in the united kingdom. Have a look at aussie dollar dollar. China delivering the slowest growth in almost six orders. It has just drifted a little bit lower. London came in through the asian session, it went higher after the china data. Down here in london. Back to you. Thank you so much. Up next, brand building burlesque style. We talk with Dita Von Teese about her new offstage pursued. Remember, you can follow us on twitter. Welcome back to the pulse live from bloombergs European Headquarters in london. I am francine lacqua. We have data coming through from the u. K. Average Earnings Growth in the u. K. Has jumped to plus 1. 7 versus 1. 4 . That is a critical number. That takes it above the u. K. Inflation rate which now runs at 1. 6 . The Unemployment Rate has fallen below 7 . That is old news, isnt it . Lets get that up for you. Lets look at pound dollar if we have it. There you go. This has driven the cable rate even higher. 1. 6811 is where we are now, up by 0. 5 . The earnings numbers, fairly important. You that tells you is that now have a political process underway. The conservative party will use quite aggressively. That is going to be a big headline in the u. K. It is time for bloombergs top headlines. Highfrequency traders are set to face some of the toughest rules in the world. Regulators have just back to new limits. At least two people have died after a ferry carrying passengers sank off the coast of south korea. Remained people unaccounted for according to the Nations Ministry of security and public administration. Isth koreas government still investigating what caused the ship to sink. Local media reports indicate that it sailed into rocks in foggy conditions. At the auto for him in new recalls. Cussing gms she admitted that the company was too slow to act. I believe it took too long. Wet is one of the reasons have the investigation. When we realized it, we brought it forward. Lets stay with the theme of visibility and the car sector. Land rover has unveiled a concept car that could pave the way for future of the brand. The ceremony on a u. S. Aircraft carrier in new york, the british carmaker announced new technologies. With the modern world of driving, the land rover brand has had to adapt. Best known for making powerful gas guzzlers, in recent years it has tried its hand at chasing a younger demographic. One feature has remained consistent, being able to conquer the land. Its latest advance sees some smart 21stcentury tech built into a classic car. The suvs anchor has rigged cameras on the grill to create a virtual image of the terrain call the transparent on it. What lies the need the car appears projected on the hood offering the driver even more visibility, including what position the front wheels are in. While land rover says the technology is pioneering, it is currently just a concept. The company has no plans to release it yet. I am wondering how it helps. By the time it is under the car, isnt it already a problem . The object you are trying to avoid. Chrysler, the transatlantic car merger is set to close by the end of 2014. Sergio marchionnes ambition pretty clear. Build a global automaker that is profitable. Sounds like a pretty good idea. Tougher than you think. Manus cranny joins us now to talk strategy. A number of challenges, the biggest . Overcapacity and what to do with it in italy. This is the basis of the story. You caught up with the ceo of alfa romeo maserati, excuse me. Our colleague has written the story overnight. Marchionne has brought fiat back from the brink. T he needs to do now is they have the capacity to build 6 million cars. Their targets are big. Marchionne theyat is the reason why need to build a global brand and make it profitable. That is not the easiest task. He has to marry these brands together. Jeep, maserati, for ari ferrari. I think he is going upscale. He is going to convinced investors. Done with ahave 70,000 maserati. I talked to the boss of maserati about this. He said, dont forget about alfa. Nobody is talking about alfa right now. Nobody is really getting excited about it. Apparently inside the company he was saying, dont forget lfa. T a there is a lot going on behind the scenes. The new York Auto Show starts today. Today and tomorrow is when they will show the new revived alfa. This is where they begin to sniff at the heels of the United States market. Just want to put maserati in context. Readies 000 model maseratis in 2012. They are about to sell 30,000 this year. The reason i talk about the numbers is because it is going to produce about a quarter billion euros of profit. The massmarket side of the fiat business is going to lose about a quarter billion. One batch is going to trump and make up for the underperformer. They have an suv coming. There is a two seater coming as well. They are talking about producing maybe 50,000 cars a year. It is going to be a full family and that will probably make it even more competitive area have a look at the advert. It is amazing. Go on theipped to attack against any of the giants in our industry. I love the rhetoric. It is a pretty powerful image. A full suite of products. It looks pretty, but the two seater is the one i want to see. On that note, lets get back to the italian. Ranting, back to you. Thanks. The italian is talking burberry. Sales continued to gain. S has beenahrendt doing a pretty good job in the last couple years of going into technology and attracting a younger crowd. She does seem to be. Sales in their fiscal secondhalf up 12 , beating analyst estimates. A slowdown compared to the first half which was 13 . Somear results given headwinds they are seeing from foreign currency. , sales the other department stores, that was beating analyst estimates. Some areas that she has really pioneered are showing the growth. That is why apple is taking her. That is really where she has shown her presence. Digital outperformed. They have bitten the bullet so much faster than any other luxury company. Really pioneering some online areas. Drawing people into the store. They are drawing them in with all my presence. You can click, buy online and go to the store to collect. Beauty is an area of outperformance as well. The lipstick, they have done all these things with tying it in online. You can send a burberry kiss. That has built up recognition of their lipsticks. Beauty, another area of outperformance. Mens accessories. I dont know if guy and manus have been purchasing. It is amazing, the digital offering. Last time you could click on the nails of a model during the cap walk and buy that exact color. What about the outlook . Slightly less optimistic. It is about foreign currency headwinds. The british pound is on the rise because of our unemployment figures. When you are selling in emerging china, latin america, when you bring that back home, the sales over there, because of their weakening currencies, it is not having as big an impact on the bottom line. This will have a material adverse impact on their reported profit, not just now but in going forward. Generally, they are looking optimistic. Angela ahrendts handing over the reins to christopher bailey. It seems to be in pretty strong performance. Caroline, thank you so much. Caroline hyde with the latest on burberry. From burberry to burlesque. Over to you, guy. Dita von teese, heard of her . She wants to see you in her underwear. After years of making waves as a performer, the burlesque beauty is branching out with a new line of lingerie. And i amita von teese known for being a burlesque performer. I am now also a lingerie designer. For me, my relationship with lingerie has always been about seduction. Obsessiontion and with lingerie started at a very young age. I watched a lot of old movies with my mother and i was thatnated by the lingerie i got sneak peeks of. My first job was working in a lingerie store. I feel like women are more adventurous now. They are willing to try new things. Especially with my collection, originally i did a few things and then we started throwing in the risque pieces. Women really responded to it. It wasnt always easy for me. I walked into a strip club in 1991 and it was all blondes, rock n roll music and neon bikinis. I could have walked in and said, i dont belong here. But i walked in and thought, there is no one like me here. I am going to win. When i first started making the shows and posing for risque pinups, it was kind of taboo and risque. Theesque traditionally in 1930s and 1940s was entertainment geared toward men. Thathat you have is women are becoming inspired by the art of creation and the confidence that they find in seeing a burlesque show or performing a burlesque show. Ofare not afraid anymore really owning our sensuality. I am 41 now and i am very happy to shift from striptease burlesque shows to building my brand and staying focused on something that i stand for. Is amazing because some people see this as gratuitous nudity but she is actually a real businesswoman. She has amazing earnings and revolutionized the way that women look at burlesque. You think about elle mcpherson, she has made a lot of money in that space as well. It is something you can do very well with. Stalking of getting your pulse racing, lets talk about Something Else that might. Much new york java junkies can pay for unlimited coffee. Almost 40overs access independent coffee spots around the city. The Company Behind the app already runs a Similar Service in tel aviv and jerusalem. Takesay that euro users full advantage, drinking about 20 more coffee than they did before. Guy and i were looking at the numbers. If you get a mainstream coffee from starbucks or one of the competitors, is it cheap . Probably. But espresso for three months, probably not as cheap as that. We had a busy morning. We are going to take a break. Welcome back to the pulse live from bloombergs london headquarters. Tesco shares rallying today. Britains retailer still has a tough year ahead. The company is seeking to unravel unprofitable ventures including its discontinued operations in china. Where else can tesco go to gain some momentum . s asked brian roberts. Talk to us about tesco. The challenges they have had have been many. A lot of the supermarket retailers are in the same position. What are they getting right and what are they getting wrong . A lot of tescos problems are from pure competition. Look at the u. K. Islands, there has been a massive fall in tescos size. Some of the products the problems they have are purely imposed upon them, such as the restrictions on Opening Hours in south korea. They can do nothing about that. The core of the business is the u. K. They did some great stuff in some of the more peripheral areas like technology, digital, convenience. The fundamental problem remains. They are losing market share from that core supermarket business. Lots of issues there they need to correct. Some of these will be longterm remedies. You thinkh longer do about numbers are going to continue to be posted . The discounters are being fairly nimble, are they going to keep chipping away . How much longer are we going to see numbers falling . We have already seen some measures being put in place. We are finally seeing some signs of a turnaround. What about the u. K. . I dont think there is any real Silver Bullet against this. You cant be cheaper than the discounters on a profit basis. They have great clarity and efficiency. They cant be beaten . Pretty much not. It is not just about low prices. What the supermarkets need to they are veryt easy to shop. If you go into tesco at the moment, you have got long term price reductions. You have fuel related savings, club card. And credibly complicated. You dont need the lowest prices. Unique clarity. What a repositioning . Can they do more on digital . They remain one of the great pioneers in terms of grocery commerce. They continue to remain at the forefront. In terms of being an Industry Leader in ecommerce. Relativelyll a very small part of the business. This time next year, will the numbers be improving . I think they will be less bad. I think we are in a structure will change now. This isnt just about tescos mistakes. There is lots of structural shifts going on in the marketplace. Tesco needs to improve merchandising and marketing. All of these slowburn activities. This is a big business. It takes a long time to change shoppers perceptions. In storeright changes and start communicating those changes effectively. International pick up where the u. K. Is lagging . That is what tesco has relied on for the last decade. You have some highgrowth markets, some high profitability markets in asia and central and Eastern Europe. Sadly, central and Eastern Europe is a bloodbath at the moment. Ireland is a bloodbath for tesco at the moment. Asia has problems as well. That has made recovery in the u. K. All the more vital. Atis not in a happy place the moment but we are seeing some interesting noises today from tesco around pricing and store refits. Brian, thank you so much for your time. Up next, clashing over caviar. We check out the british firm muscling in on this closely guarded industry. Good morning, welcome back. You are watching the pulse. What is the first place you think of when you think about caviar . Probably russia. Probably not the u. K. Anyway, exmoor caviar wants to change that. It is the only british manufacturer of the delicacy and it is winning over some of londons top chefs. But it is making a lot of enemies in the process. Angus bennett went to find out more. Coowner ofg is the the u. K. s only caviar maker. He likes to get up close and personal with the product. England, hehwest helps grow fish which produced the delicacy known as black gold. This is a mature sturgeon and it is kens meal ticket. Been selling caviar for over a decade but it was a mixture of luck and good Fortune Noble and hisorge father. To start a farm like this would cost a lot of money. The unlikely pairing of a london caviar man and a devon fish farmer worked. Exmoor caviar was born but this is no flash in the pan success story. It takes eight to 10 years to grow these sturgeons. This is the small and immaculately clean room that is used to harvest the caviar from sturgeon. The fish eggs are cut out, washed, salted and that is about it. Food whichcess for a will put a serious hole in your wallet. The european caviar market is closely guarded. Run by a select few manufacturers. And his Team Announced they were going to make the jealousy in the u. K. , it ruffled feathers. They once called it a flybynight. We have been called a lot worse. Ken says exmoor was accused of reaching production standards but officials have found no fault. His caviar is favored by some of the u. K. s top ships. It is produced with cornish sea salt, farm here in devon. It is a unique product. Chefs like unique products. Angus bennett, bloomberg. It looks delicious. Actually, by local. We cant comment. We need to have a taster and then announce ourselves. Francine is something of a connoisseur. For those listening on bloomberg radio, the first word is up next. For our viewers, a second arrive the pulse is coming up. We are going to carry on talking about tech stocks. We have a number of number being posted. Google reports numbers tonight. We are so excited. Virtual reality. We talked to the creative director. That is what we are going to try on. It looks pretty cool. You first. [laughter] see you in a moment. Geneva is a go. Rushs foreign minister says talks are still on tomorrow despite escalating violence in eastern ukraine. Stimulus speculation, stocks gain on bets that chinas lowdown will force beijing to loosen policy. Go inside tescos store of the future as shares rally on results, which were not as bad as feared. Good morning to our viewers in europe, good evening to those in asia, and a very warm welcome to those just waking up in the u. S. I am guy johnson. I am francine lacqua, this is the pulse, live from london. Up . Hat have we got coming a love of lingerie. We speak with burlesque performer Dita Von Teese about building her brand. Maserati moneymaker, why the brand is fiats golden goose. The crisis inth ukraine. Russias foreign minister plans to join talks in geneva tomorrow as violence escalates in ukraine. Authorities have started an offensive against separatists in the eastern part of the country. David tweed has been following the situation. It is clearly very fluid at the moment. Couldlks are still on, that turn out to not be the case . The russians have indicated they see the ukrainians stepping up the defensive against prorussian separatists, they might not turn up. Says hepeaking in hanoi plans to be in geneva tomorrow, thats the important thing. The situation is fluid in ukraine. Reports of armored personal armored personnel carriers defecting to the rebel side and ,re now flying russian flags more about whether those reports are confirmed later. Speaking in kiev, the ukrainian Prime Minister yatsenyuk site it has become clear that russia has decided to build a new berlin wall. He says russia has a new, ready for export in addition to oil and gas. He said that is terrorism. Pretty inflammatory words. The important thing is that the russians turn up at the meeting tomorrow. President s acting turchynov says thousands of people have been deceived by russian propaganda. Is a serious issue for the west and for ukraine. The sense of persecution some ukrainians are feeling. As a result, the United Nations Human Rights Office put out a 28 page report looking into these claims. They have concluded that actually the biggest human rights concern in ukraine is not threats to ethnic russians, but it is the exaggeration and distortion of facts and widespread misuse of those facts in the media. They are also saying that in nomea, for example, they had evidence of harassment or attack on ethnic russians. They did find evidence that ethnic russians there were in physical safety. This is a risk the ukrainians have. There is a sense among russian speaking ukrainians that they are being persecuted, even if that is not true. I bring your attention to a poll frankfurt newspaper in germany. Being won the war is over here in terms of public perception. 65 of germans do not have a positive view of vladimir putin, versus 8 who do. , in 2001 with back 10 who did not have a positive view of putin and 43 who did. That is key in terms of Angela Merkel being able to move forward with sanctions if these talks in geneva do not go well. As the west would certainly hope that they would. Thank you, david tweed with the latest on ukraine. Lets move over to china. The economy slowed sharply in the First Quarter, gdp rose 7. 4 from a year ago, the weakest pace of growth in six quarters. Joins us fromes hong kong. Stock markets are gaining on similar speculation. Has promised to keep growth at around 7. 5 . Any sign they will miss that target is going to prompt they will open the taps of it. This is the state managed economy that has the ability to do it pretty easily. That is why we are seeing some of the gains today. What do the numbers tell us about what is happening in the chinese economy . Is the headline number a fair reflection of reality on the ground . Good question. There has been speculation that these numbers are cooked, to a certain degree. They are overly optimistic, particular given the slowdown we are seeing in the property markets. Nook instruction fell 25 , the value of property sales was down. That has been a driver of property since growth has taken off. There is speculation about that. If you look at the quarter on headlineumbers, the number is annualized. But the pace seems to have slowed more sharply. It remains to be seen how grave the situation is and what authorities will do about it. Is this likely to be the bottom or are there fears things are going to get worse . The opinion is still out on that. I think there are some people that think this is as bad as it is going to get or they will let a gap. Ive the same time, the slowdown has been orchestrated by the government. They are trying to deleverage and do something about pollution. They are launching the antiextravagance campaign that is hurting spending. Some of this was to be expected. It is a question of how far they are willing to let it go . Joining us from hong kong on the latest data coming out of the chinese economy. Today, Credit Suisse reported results that missed estimates. Fromofit fell 34 , mostly declines in Investment Banking. Plenty of other headlines. Jonathan ferro joins us from zurich. The one question everybody is asking should this company rain back the Investment Bank . On a net income basis they missed estimates. It is fixed income that has led the decline. Why dont you rein it in . Is an industrywide problem. We have seen it come through and earnings season in the u. S. As well. For Credit Suisse, is a eager question. They have Wealth Management that continues to do very well. When i put the question for two brady dougan, should you rein in Investment Banking, he did not give any indication they are looking at that. There is no signed Credit Suisse will rein in the Investment Bank. That question is not going anywhere soon. The tax are we with evasion probes . Is there an end in sight . It. T does not look like they have settled with the sec. Looked like they were making progress with the department of justice. They put a site around 1 billion and we thought we were close. In the new York Department of Financial Services stepped up their probe. Reports that they wanted documents for payrolls, emails, travel documents. This is not going away anytime soon. If you are a shareholder, you have one question have they set aside enough money . Is there more to come . Can you rule out further provisions . I put that question two brady dougan. Will see how these things develop. I dont think we can rule that out. I think we are radical i think we are adequately provisioned and have done a pretty good job. We will have to see how these things develop over time. Positioned, have made progress these are things we heard a couple months ago. He cannot rule it out, that is a key take away this morning. Thank you so much, Jonathan Ferro with the latest from zurich on Credit Suisse. What else is on our radar . Brussels will be fined 10,000 euros if they are found to be taking private passengers. This after a National Court banned taxi starters from using the service. It says the fleet does not have licenses to operate in the city. This is according to financial times. Hired a googleas employee to be the Vice President of social products. Shares yesterday the most since twitters first day of trading. Alibaba posts a jump in sales for the last three months of 2013. This set yahoo shares soaring, of alibaba. Yahoo posted its first sales gain since 2012 last night as well. Tech earnings season is in full swing. Yahoo and intel advanced after reporting results. Can we expect the same for google after a report later today . We will have the details, next. Good morning, welcome back. You are watching the pulse, live from bloombergs European Headquarters in london. Lets talk about whats happening in the Foreign Exchange markets. The pound up near four year highs versus the u. S. Dollar, the cable rate at 1. 6809. Data is showing very clearly that we have an interesting conundrum for the bank of england. Unemployment is below the 7 threshold set by mark carney, the Forward Guidance strategy. We have also seen average wages starting to creep up. They are now at similar levels to inflation. Starting to see the possibility of real wage growth in the u. K. We have a long way to go to recoup the losses. The pound reacting fairly positively. Are we going to see early rate hikes . That may be an indication we are. Yahoo got a boost when alibaba posted revenues. Earningspecting google later today. Here to discuss tech trends is investment director responsible in the techvested sector. We are less interested in the numbers but we want to hear about the trends. If you look at the correction we have seen over the last two weeks, has it been justified or is it Market Movement . I do not think it has been justified by fundamentals. We have seen no change in earnings expectations, and a downward revision in technology. We have seen a rotation from risk on to risk all. Some of these leadingedge names in the cloud and social networking mobility have risen extremely fast over the last six months. We have seen a reverse of that. Is that going to have more to go . Or do you think we are starting to get to levels where you would be biased . It is tricky to predict. There have been three occasions in the last 10 years where what we might call leadingedge has underperformed the broadening 15 . R by 12 to one was in 2008, one was in 2011. The third is the last six weeks. If we look back at history, this would represent a maximum pain point. Therefore i think we are closer to the bottom of that rotation and may have a little bit more to go. We are looking for opportunities to buy. What are you looking for . Social media, technology, Wearable Technology . Anything you are pinpointing that might look expensive that will be the next big thing . X co in general, we look for ways to gain exposure to social networking, internet of things, the automation of knowledge work. If we can do this through traditional names, we do, because we get better valuation. Hard disk drive Companies Like western digital. Some of the leadingedge names are really interesting and have really big setbacks. We like fireeye. Are you comfortable with the multiples being paid when it comes to technology m a right now . Becauseficult question we are being asked to make an assessment, this might be worth many years in the future. The cycle is so compressed now compared to what a used to be historically. A company like facebook, and 10 years, has driven a quite big revenue stream and a big evaluation. Years attract a valuation of 19 billion. It is hard to be certain. We do have to accept that companies can create enormous value very quickly in this iteration of the technology cycle. We are very excited because we are about to start some Virtual Reality testing. We will be trying on oculus. As Virtual Reality going to be the next big thing customer it is used in gaming. How can you translate that into retail . It will be the goal to see that move anytime soon. I know you talked earlier about beingsco test case of able to put on a Virtual Reality set of glasses and see the aisles. You still cannot touch them and do a great deal more than you can do by doing Online Shopping at the moment. I think it is going to take a long time before it gains any form of mass acceptance and the price point will have to be dramatically lower. I think we are many years away from that. Who are a little older lived through the 2000 dot forbubble crash disaster the tech sector. Which some would say created so much more value because it forced companies to be more pragmatic. In terms of where we are right and in thecon valley tech centers around europe, do you get a sense that momentum is building . We have come a long way but there is still more to come. Do you get a sense that some of the technology we have been talking about, oculus, we are getting ahead of ourselves in what it can deliver . When you step back and look at the landscape, what are you seeing . The key is you need to be selective. When you get any type of hype or major price appreciation, it draws up the good and the bad initially. That is what we have seen in the last six months. We got to a point over the last four months where pretty much any ipo that had the word Cloud Computing or social networking went to 50 or 100 rhenium on day one. It is about being selective. That is the key. Look at each technology at each company and its own merits. Do the intrinsic valuation work. In a is really hard business where the life cycle, the halflife of one technology to the next one is going shorter and shorter. Run your normal valuation metrics over these businesses, is it getting harder and harder to get the model to spit out or easily understand an answer . The answer at the beginning of this year is that we were finding it tougher. The setbacks have allowed us to see some of our companies at 50 to 100 up time upside. We do not look at p valuations, traditional violations do not work well. Orwhen you look at weibo the chinese tech giants, they seem to be more reasonable, should that be the benchmark . Chineseve increased our exposure for exactly that reason. Chinese has china has the fastestgrowing smartphone growth, 25 a year. The western world is relatively stagnant. More interestingly, we are missg an opportunity to of on traditional ways dealing with the market. In china we might move straight to Online Retail and miss out on bricks and mortar. The Chinese Market is very exciting. Investmenttin, director at gam. Virtual reality to the rescue. We go inside the tesco store of the future. Wants tota von teese see you in her underwear. Details later this hour. We know the world is watching and we know we will be judged by our actions. Everybody is working 24 7 to make sure we are doing the right thing. That was gms Ceo Mary Barra speaking at the 2014 Automotive Forum in new york. Cars, chryslers merger set to close by the end of 2014. Sergio marchionnes ambition is to build a global carmaker that is profitable. Manus cranny talks about what is going to get him there. The brand. Make more things like maserati, which costs 70,000. That an alfalians an is worth it. The italians are sold if you have the money. On may 6, he needs to convince the Institutional Investors that if i can replicate what i have done with maserati, i can do it with alfa. Thee has big numbers with massmarket brands as well. If you look at chrysler, the new jeep is coming out. They will be produced on both sides of the atlantic. I talked to him in geneva and he said this is the first example of many that are going to be there of how we build capacity. We were going to make some iconic u. S. Brands in italy. Maybe that will solve some capacity problems. You brought up alfa, i talked to the ceo of maserati. Bit at whatlittle they are doing with alfa romeo. This is a story they are excited about. This is what he had to say. Do not forget about alfa romeo. There is a lot of work going on. A worky, we still have in progress. No talking. That. Ove do not forget about all florida mayo, although i cannot talk about it. Talk italian guy, dont about it. Andaking the maserati brand producing the suv. You saw the concept sports vehicle. Maserati will make as much money as the rest of the company will lose. Manus cranny on the car story, fiatmaserati and now, all florida mayo. Alfa romeo. Tescos high tech campaign. A burlesque star becomes a bil businesswoman. How Dita Von Teese is building a brand empire. Welcome back to the pulse, live from london. I am francine lacqua. I am guy johnson. These are the Bloomberg Top headlines. Pressures foreign minister Sergei Lavrov says he plans to join talks tomorrow in geneva. That is as violence escalates in ukraine. Authorities unleashed an offensive in the eastern region. As many as 11 militants were killed when ukrainian troops stormed an airfield. Two people have died after a ferry carrying more than 470 passengers sank off the coast of south korea. 293 people are unaccounted for. Stillvernment is investigating what caused the ship to sink. Local media are reporting it sailed into rocks in foggy conditions. Britains Unemployment Rate has fallen more than forecast. It is just below the 7 threshold that mark carney sat in the first stage of his Forward Guidance policy. The average Weekly Earnings are now rising just above inflation. That is very important politically and will play out in the british press. How is the market digesting this . Lets look at european markets with manus cranny. Taking it in stride. If i am not mistaken, that is the First Central Bank with the first trigger point on Forward Guidance that has been broken. The u. S. Is waiting to break their limit level. Mark carney has breached the first one stock that is all about slack and spare capacity, that is the essence of Forward Guidance. How do you measure that . Technology you had a conversation with mark from gam. Oversold, overdone, no justification for selloffs in the technology industry. One thing that came through from a q i i Market Makers last night, there is a difference between an expensive market and able and a bubble. Perhaps we are just dealing with expensive markets. U. S. Equity futures expected to open higher today. Janet yellen will perhaps be a bit more focused on the nuances in her language. Speak at the Economic Club of new york. The market will focus on that g starts. At housin how many people are taking mortgages. The beige book tonight. That will be the driver of u. S. Equity futures. Rling has sterling 1. 6808. Has traveled through the morning. Lets have a look at the aussie dollar. What happens next in china . Do they need a big stimulus or muted stimulus. Lower on the week china numbers. Cranny on the markets. We five minutes from now, it is keene. Llance with tom youre watching tech today. We are about to try on oculus. It is all about valuations and earnings. Technology. Bank of america earnings come out at the 7 00 new york time power. Jonathan ferro with his conversation with Credit Suisses brady dougan. We will look at ukraine and the events as they unfold in our early u. S. Morning. Then it is about technology. We are thrilled to bring our audience William Janeway, one of the worlds great thinkers on technology and technological progress. With a bonus, William Janeway and brad delong of berkeley. Together on technology and americas future. Modernom all the mumbojumbo. A great hour on engineering and technological processes. Really looking forward to that. I am, too. It might change the way we do retail. The read across a lot of the businesses is absolutely phenomenal. It is. If you look at the way it is overused today and all the modern talk about technology. We will try to get back to basics with William Janeway. He has been doing this for ages. It is a timely conversation. Tom keene with surveillance in 25 minutes. 34 redit suisse reported a decline in First Quarter profits. We also have news the bank is under investigation for tax evasion. New yorks banking regulator is said to have sent subpoenas last week. Lets find out more about the story. Jonathan ferro asked brady dougan about the probe. Lets have a listen. That we arenow going to get into a letter detail, but we are working with them and providing information. This is obviously around the crossborder issue. This is something we have been working on with the department of justice for over three years. Clearly, were going to cooperate with them and work through the issues. I think overall we actually feel it we have made some Good Progress on getting a lot of these legacy issues behind us. We settled the sec issued on crossborder. We got the fhfa issue settled. We are going to continue to work to try to get these issues resolved. Have issued a subpoena . I am not going to get into detail of what the nature of the inquiries have been. We are working together with them and providing information. The manight remember fronting the investigation threatened a separate bank with revoking their new york license. Do you think things could get this far . Predict. Impossible to our view is we will work very closely and cooperatively. I would hope that it could be operation on very these issues. We will be able to work through them. Dougan with a lot on his plate right now. 45 dollars, that is how much new york java junkies can pay per month for unlimited coffee. A new app gives caffeine addicts access to almost 40 independent coffee spots around the city. The israeli Company Behind the app runs a Similar Service in tel aviv and jerusalem. Take no surprise users full advantage, drinking 20 more coffee than they did before. You can spot them, they are Walking Around like this. Slightly jittery. Jittery but on the ball. Coffee is not that bad for you. Towe had to break, will and arrive in australia. They were greeted by tony abbott. Thousands gathered at Sydney Opera House to greet the couple. Prince william delivered a speech to around 400 guests will stop we will take a break, see you in a moment. Welcome back to the pulse. Live from london on bloomberg tv. It has been a tough start for 2014 for tesco. It has lost market share. A second year of falling profit and worsening sales. Caroline hyde is here. Shares are rising because numbers are not as bad as investors fear. Lets not sugarcoat this, it is not a great set of results. Profit down for a second straight year. Profit dropped six percent. Fourthquarter sales dropped more than had been expected. Like to like basis. Some hefty hits in terms of writedown. Europe, china, more than one billion pounds. Maybe not much of a surprise. We know the issues affecting tesco and the u. K. Grocery market in general. And you havearted a losing market share. Tesco is down to 27. 9 of the market. It is still a lot and still number one but it is losing ground to our day. To aldi. How is the ceo trying to turn things around. Three years at the helm. Give me time to turn this enormous ship around. We have got key things like more once cuts, they are focusing what they have done well in the past. Convenience, 100 50 more Convenient Stores per year. Online they have been dominant. This is an area they are still trying to be innovative. They have got the new tablet you can purchase. You spend more when you go by the shop as well as shop online. They are updatings stores. The big tesco extras. They are bringing in bakeries. There is a restaurant chain moving and. Destination shopping. People are spending more in more. Shops, 5 to 7 but it takes time. Interesting international tactic scaling back from europe where profit was really hard. Going more into asia and back into the u. S. With their clothing brand, f f. Says he is not going anywhere yet. Much, Caroline Hyde with the latest. Staying on tesco. It is betting on Virtual Reality to change the way we shop. We are so excited. Tesco launched a Virtual Reality campaign. At the center of it all is figure digital, the first agency in the u. K. To use Virtual Reality in marketing. And we have got a guy from the business here. Joe is the creative director of figure digital and joins us now. This is incredible. We had just been trying it on. Basically this is an oculus headset. Allows you to basically walk around a tesco store. Is thiseriousness, something we should look forward to. Is this something tesco is taking seriously . Lets go it is something you have to take seriously. It is hitting the Consumer Market at the end of this year and next year. At the moment it is available for developers. As soon as you have experimented with oculus a few times, there is no going back to the previous forms of media. Ratioback to the sort of of a tv screen or tablet once you have gone into a virtual landscape. It looks great on guy johnson. It is a lot lighter than i thought. It is great quality, it does not make me feel that sick. In terms of nausea or stuff like that. How can you use this . Is it for the back office or for people who work at the warehouses so they can scan and identify products . Its applications are just people are just starting to tap into them. They can be entertained or utilitarian. The entertainment sector obviously has the history of games. We are creating 360 degree movies that can record where you can enter the environment. They are fantastic, the things we are doing. What needs to happen to make you put this on and the experience is very good. When do we get to hd . When does the technology youally start to provide with a similar experience to the one you have Walking Around the store . Lets go very soon. They are shipping new units now. Cool. Are going to look of course. What i will love is to pick up the products. I am in the tesco store. I see my islands, but then i went to pick up a product. I have a carton of milk. I went to pick it up and see whether i can buy it. Is that next . This is the version we brought to the studio but they are working on technology to track your arms and Body Movement so you can pick up items and look around. Industries, that is fantastic. We have been looking at screens and buying products off of that. You have when you where the oculus, this is the inside of the tesco store. That is high resolution. You are saying this will be the new product we will be seeing. Something we can maybe become a little bit more tangible and pick products up. That works in a supermarket. The u. K. s leader when it comes to Online Retail. Are we going to be seeing more companies doing this . Is this something clothing manufacturers would be interested in . Is this something we will see across the high street . People have to get the idea out of their heads that it is a trend. It is the future. The way you can interact in a retail space, it is going to revolutionize things. To be able to pick up a product and look around it, gives you functions we do not have at the moment. This talk about stuff will be used not only for retail. Retail is the most obvious. Toalso talk about going visit your gp. You could interact with a virtual gp and feel you are in the room. Much more intimate to talk about your problems you are experiencing. Where is the limit of this question mark there is no limit at the moment. It is only the technology. This is the first wave. Already the resolution has doubled. You can only expect to see that increase until it is a completely realistic environment. You have got your head around why facebook bought this question mark oscar yes you have got your head around why facebook bought this . Yes. At the moment, everyone is buying social media online. Over the next five years, everyone is going to grapple for the virtual space. Facebook can make that transition seamlessly. Facebook has reached nearly maximum saturation online on a 2d format. Now they can expect more time from their customers. Almost everyone is on facebook. Reality you will spend more time in the Virtual World. I loved it. Im a little bit concerned about my interaction. Room and meet a people. Car companies would be concerned about this. You are not going to drive to meet your friends, you can meet them via this. Around 300 . Around 300. This will enable people who cannot socially interact, this will enable them a second life. You can become your avatar and free up your identity to become who you really want to be. That is where everyone is equal and your imagination is the limit of what you can achieve. Co i dont really know how to follow up on that. [laughter] avatars are not something we expected. The virtual francine lacqua. We had google glass on yesterday, 1500, that is expensive. This is 300. To bems of what are going the limiting factors is software causing the problem . Is it the ability to write code or create a Virtual World . Film, etc. 3d cameras youre talking about. Or is it the hardware . Thehere is no problem at moment. Oculus has been quick into market. It has been able to get out to everyone. Google glass is very a close and others weigh costs so much. No one has access to the technology. Google glass is very exclusive and that is why it costs so much. No one has access to the technology. In the future, you can see them merge into the same form. One looks better. A prototype, you can expect some headsets. We are working with interesting things in the fashion industry. I am back in the tesco store. It is where i like to hang out. You look great. Joe, thank you for a conversation. Creative director at figure digital. Brand building, burlesque style. We talked to Dita Von Teese about her new pursuit. Good morning, you are watching the pulse. A punchy pound. That is the cable rate. Near four year highs. 1. 6797. We have learned that u. K. Unemployment is now below 7 . That was the threshold set by mark carney. We are starting to see wages rising faster than inflation. The pound popping higher. Lets change gears. Wants to see you in her underwear. After years of making waves as a performer, this burlesque beauty is branching out to a new line of lingerie. We caught up with her. I am Dita Von Teese. Being a burlesque performer. I am now a lingerie designer. For me, my relationship with lingerie has been about production of self. My fascination and a session with lingerie started at a young age. I watched a lot of old movies with my mother. I was always fascinated by the lingerie that i got sneak peeks of. My first job was working in a lingerie store. I feel like women are more adventurous now. They are willing to try new things. Especially with my collection, i did a few things safe. Then we started throwing in really risque pieces and women really responded. That makes me really pleased. It was not always easy for me in the course of my career. I walked into a strip club in 1991 and it was all blondes and rock n roll music and neon bikinis. I could have said i do not belong here. I thought, there is no one like me here. Im going to win. The i first started making shows and posing for risque kind of taboo and risque. Burlesque, traditionally in the 1930s and 1940s was entertainment geared towards men. The neoburlesque movement has women becoming inspired by the art of creation of the confidence they find. We are not afraid anymore of owning our sensuality. I am 41 years old and i am very happy to shift from striptease burlesque shows to building my brand and staying focused on something that i stand for. Building the brand. Dita von teese. Born in 1972. Now for a look at what we are watching, we are joined by david tweed and michael mckee. David, lets start with ukraine. Prorussian separatists not giving in to any attempts by the some ofns to receive these local government buildings. The ukrainian Prime Minister says russia wants to build a new berlin wall. What we are watching now are these meetings that will take latest in geneva tomorrow. The russians have said theyre going to turn up. Thank you very much indeed. Mike . Fed watch. Explain yellen has to what Forward Guidance means. The chart suggested earlier rate increases, do they really mean it . Investors will be watching at noon eastern and 7 00 your time. Thank you so much for that. That is it for the pulse, is next. Ance live from new york with tom keene. See you tomorrow, everyone. At this hour, kiev conference confronts prorussian ukrainians and nato confronts ghosts from the past. What you need, another provider of online video. Good morning, everyone. This is bloomberg surveillance. We are live from World Headquarters in new york. Wednesday, april 16. Im john keane. Joining me he did not move to the Cayman Islands on tax day adam johnson, and also olivia sterns. Scarlet fu is off this week. We need a morning brief. A little bit of good and a little bit of bad. Overnight in the u. K. We found that unemployment came down to 6. 9 , actually below the bank of englands seven percent threshold. Certainly good news, right . In china, a very different situation. The lowesto 7. 4 since 2009. The bad obviously