Transcripts For BLOOMBERG The Pulse 20140516

We try some vintage frames that are a piece of fashion history. S. We gong in on canne to the movie market where producers and directors fight for funding. Lets go to the biggest exercise in democracy ever. The long dominant Congress Party has conceded defeat. It is headed for its worst election loss. That said over to mumbai where bloomberg tv india is standing by. What is the latest on the ground . Is never over till it is really over. Emphatically, it is coming in for the bjp led National Democratic alliance. Bjp is at 326 seats. The united Progressive Alliance, on the other hand, led by the congress is at 75, as we speak. The candidate is leading by a margin of nearly 114,000 votes. [indiscernible] di tweeted that india has one. That sums up the sentiment we have been feeling. The markets rallied massively since monday when he saw some informal exit polls coming out. The outcome was opening very strong. Fernanda, what is the big hope when it comes to business . Is this an election victory for the new Business Community under the bjp Led Coalition . Is interesting. Theres also the reason why you have seen this huge uptick in the markets. Modi is someone who speaks the language of business. India arem members of tracking the slowdown that we have seen. Willing policy paralysis get kick started if theres a strong government that comes to the center. To replicatele what he has done in his position , all off minister them giving a big thumbs up to these leads coming out as we speak. Will continue our conversation on india later with the chair of the Asian Business Association and the chairman of cobra beer as well. Dont miss that. Now, lets get over to one of our top corporate stories. Credit suisse is getting ready to pay out 2. 5 billion. Jonathan ferro has the latest for us. It all mean . Put the size of this into scope. Two. 5 billion is a lot. Is a great deal of money, especially think of what they put aside. Bear in mind, they put away 425 Million Dollars a couple of months ago, it seems it will be much bigger than that. It makes significant progress this year. If they can get this deal done, it is the pleading guilty part big clue in is the how bad it could be for the bank. The stock is down only one percent. Investors are quietly happy that we can be close to getting this over with. How does the fine compared to ubss finds . Three times bigger. This is where the parallel starts be drawn between the way ubs doubt with it. Ubs got it done quickly. This has dragged on for Credit Suisse. Weapon under pressure by a lot of people in the u. S. To get a big scalp. Really could be seen as a victim in all of this. Has also been under a lot of pressure to say what is going on at this bank. He testified just a couple of months ago. He said look, it was a fuse was bankers who skirted the banks control. He emphasizes his lesson one percent of global bank rough ability. It mightve been a small slice of profit, but that is a huge find. Questions will be asked about bradys future. They have to give out names as well. You have not seen the same exposure as ubs. Of people are asking what happened to oversight in the last couple of years with this bank. Thank you very much. Lets talk telecom. Frances economy minister david, make some sense of what is going on here. Story going to tell you a. It into the store you will have a better idea of the complex complexities in the race the relationship between companies and the government of france. The industry minister, way to were about him as if he wearing gold buckled shoes just like the same as finance minister of louis the 14th. The story ofory, this Telecommunications Operator in france. There are four of them. The biggest one is orange. R and thenllowed by sf g and then there is iliad. Theyre fighting so much of the prices are going down. Bouygues sent a letter to the Prime Minister. Gues is worried that bouy going to start cutting jobs to cut costs. What is happening now is, it appears that these two companie, orange, the biggest and bou ygues are in talks. If they do get together, they will have half the market. That could cause some problems with the European Commission competition unit. Mark. You have a story, tell us about this other bit going on. What is all that about . The biggest shareholder of it is a virtual wireless operator. That means instead of owning the network, it leases the network which is slightly different. Valuing virgin mobile, around , compared withos uygues deal is pretty small. Joining the 10 billion club. There are said to be seeking funding that could triple its valuation. We are joined now by our technology reporter, lulu chen. This will add fuel to the view that there is a bit of a tech bubble here. Absolutely. 10 billion would be placing them among a small group of companies with 11 digit valuations. Is based on our understanding that uber is going to raise 1 billion from their investors in this round of funding. That would make them larger than best i, staples. We have seen other Tech Companies reach this level of valuation before. Airbnb and dropbox. Is there a tech bubble . That is one of the concerns out there. But if you look at the number of companies that are coming to market, it is nowhere near where the. Com bubble was in the late 1990s. In terms of vc funding out there, it is their highest level since 2001. In china there is a pipeline of companies waiting to ipo in the u. S. Many companies of all said that they want to ipo in the next few years. Has beenn london, uber so aggressive in terms of expansion. Their plans . They are looking at asia, arent they . Definitely, global ambitions. In asia there are ready operating in 20 cities. Theyre looking to expand in hong kong and more secondtier cities in china. If they go to the market, they will be competing against cent andike 10c others. They are working with the local taxi operations. A slightlying different approach, working with the higherend market. Theyre hoping their businesses will overlap. We will wait to see. Thank you very much indeed. Heres what else is on our radar today. Doubts about Economic Growth in the region contributed to a drop in sales in germany. Confidence among u. S. Small businesses kept a sixyear high hit a sixyear high. Janet yellen credits businesses with less than 50 employees for the majority of job growth since 2010. America has come a long way since the dark days of the financial crisis, and Small Businesses deserve a considerable share of credit for the investment and hiring that have rocked that progress. That have brought that progress. Ukraines president says the government is working to expand constitutional powers to allow for local selfgovernment. U. S. Officials say they will punish Russian Industries if this months president ial election is undermined. Mandate. Up, modis indias opposition heads for the biggest landslide in 30 years. This is after the break. Canadian stocks have risen to a record. The new guest says government will play a key role in opening up india to foreign business investments. Vijay, thank you very much for joining us. Does this heralds a new era in indian politics . Absolutely. The bjp came with a clear majority and is about to come. This will give the country decisionmaking power to to make decisions without thinking about the small parties. They can put the big agenda, which is needed for the country for the last 10 years. Now it is time to change. It is time for growth, time for people to realize their dream. Certainly, the currency has been benefiting as well. What does the new government needs to put in place . Set the they have to infrastructure problem right. Theyre not sorting out the import bill. A lot of importing of fuel and oil. Increasing the manufacturing base. Controlling inflation. These things had to be put in place. These are the big ticket items. Happening. The government has to take the steps to make sure all of the projects are online. Having the issues. There is a sentiment of growth and positivity in the country. What would you see is underinvested in right now . Till now, the multiple retail is still there is a lot of negative sentiment. It has to be set right. That is number one. Number two is power. Of money percent invested in india comes into power. The country needs power. Without power, no investment in growth, no business can grow. Then logistics. One third of what india produces goes wasted. Agriculture doesnt always reach the market. We have to control inflation as well. We have to put logistics in place and put the warehousing and place. We have to put the roads in place. Areave to make sure we doing this for inclusive growth. The first thing i would say is it has to be inclusive growth. Are below theple poverty line. That is not good. Decrease the gap between poor and rich. In one sense you see the extreme wealth, and the other you see the extreme poverty. Yet the put a system in place for health care and education and sanitation in making sure that everything that is happening in india is being handled rightly so theres not so much burden on the cities. Does he have to go on a Charm Offensive with other countries . As you say, theres been a lot of consensus regarding regulation with retail. Does he need to come over to europe and gone a bit of a tour to start luring the money back in and to make sure these promises he has laid out are going to be substantiated . I think first we have to set our house in order. People in india know there is a change. Everyone is watching from all over. People watch what is happening in india. If you put everything in order, investment will come. There are more than 25 Million People of Indian Origin living outside of india. People will start investing in india. Then the Foreign Companies will invest. We have to put our house in order and investment will come. Thank you for joining us. The chairman of the Asian Business Association at the London Chamber of commerce. Well have more insight into doing business in india from the chairman of cobra beer. To not miss that interview. Downill to come, shooting saab. Details ahead. These two daredevil tightrope walkers found an extreme way to get a birds eye view of the spanish landscape. They went from one cliff face to the other. To champion bike riders from elgin put on a worldclass festival for locals. The flip and jumped around tour bus. They showed off their skills in the scorching heat. Wow. Equities markets are dead flat. The mission a something that has been exciting. The rally into treasuries. The 30 year bond has delivered 13 so far this year. Giving returnss were back above that level right now. What is behind the big move in treasuries . What is behind the rally . I heard lot of reasons for this. Called it. Man who Stephen Mager of hsbc talk to us a few months ago. He called 2. 5 on the 10 year by june. By yearend, he said this could go down to 2. 1 . If you listen to him, this rally is not over. This is what the rupee has been doing. The dollar has been getting weaker. This a buy on the rumor, sell on the news. Jonathan, thank you very much. As we had to break, it is time 500todays pulse number 63 million. That is how many people cast a vote in indias elections. It was a record turnout for the nation, and the Worlds Largest exercise in democracy. Di heads for ao landslide victory. It makes you wonder, doesnt it . s Coalition Led party seems to have gained the majority. More than 300 billion have gone into india once we have known that he would the the opposition candidate. Back in a minute. Welcome back to the pulse. Im mark barton. And i am caroline hyde. Here are bloombergs top headlines. Credit suisse is close to reaching an agreement to plead guilty and pay 2. 5 billion to the United States authorities. The deal would resolve investigations on whether the bank helped americans avoid tax. Is a 10th straight quarterly increase for china. It is adding concern that profitability will slip. Asian stocks fell on the report. Electoral Commission Says the opposition bjp has won enough seats in parliament to form a government on its own without the need to enter a coalition. Tweetedcandidate modi after the announcement that. Dia has won fernanda, it looks like it is a landslide win for modi. It is looking like an emphatic lead for the bjp National Democratic alliance. A huge margin by which it is leading is indeed the headline at this hour. It is well above 326. 272 for simple majority. The former ruling party is holding about 72 seats. Social media has played a huge part during these elections. Used it to reach out to an additional 40 Million People. The pm has called him to congratulate him. He will address the nation tomorrow. Modi will be keenly watch for a he is morehings, than someone who has been responsible for driving the where he gujarat, has been for some 15 years now. [indiscernible] is still at reflection of the sentiment that this new government will bring odi. We will have to wait and see if he is able to bring in investment on a National Level. I do want to mention that the has benefited. Fernanda, thank you. In our next hour we will get more insight into doing business in india. Do not miss the chairman of cobra beer. This weekend, voters in switzerland may shoot down their countrys 3. 5 oh yen dollar contract to buy fighter jets from sweden. Our correspondent hans nichols visited the factory. In a dogfight,gripen pilots have the confidence that the planes wont come in second place. I will leave that to the air force as to the uses of the aircraft. But it is capable to win. With the contract taking political flak in switzerland, is on the horizon. Soon, someone else will find a way to counter that. Then you have to be better than that. That is how it is going to be developed. Good or bad, costly, yes, that is the way the world looks like. Threatsant count those if you cant counter those threats, you will be behind. Once the fuselage is complete, the fighter takes 68 days to assemble. Theres only one machine in the entire planet, because this is labor intensive work. You see these guys, theyre putting in some 300 meters of tubing, some 30 milan some 30 kilometers of wiring, and then the next step, gets a nose and some wings. Saab currently produces eight fighters a year. Over the next 20 years, the goal is 10 share of the global fighter market. Is out of as a Fighter Pilots control. Whos going to win belongs to two versus 2, 1 versus one, four versus four. Five versus two. You can set up a scenario anywhere you want. We can provide an aircraft with excellent performance and show that. It is up to them to think, how can we use this . Cracks after my training in simulator time, i could take this out and test its capabilities in the full envelope. Hans nichols joins us now. How are things looking for saab, then . Polling set this will go down, and that they will lose this contract. Heres why saab is confident longterm. Is the cost per flight hour of n is a deciding factor. It is around 4600 an hour. The next competitor is at 16,000 per hour. Yes, they look at the sticker price, but they also look at the cost per hour and overall maintenance price. Those were saab is confident that they have an advantage. You say they are batting 50 . They want a 10 share of the global market. It is a dangerous world, right . This is their argument. Theyre making an argument that they are always that there are always threats are on the horizon. Hans, this was also going to the polls to vote on a minimum wage. It looks like this one will fail . Is remarkable, and switzerland to get 100,000 signatures. You can put something on the ballot. Then it gets tested. We have seen some votes go the other way in the last couple of months or years before an immigration with business groups were fiercely against. They lost their. It looks like business groups are going to win on the minimum wage. That will mean defeat. This is going to be a difficult vote for saab. We will be watching the stock for close on monday. Whether or not this contract will be canceled. In thing about fighter production, mark, ive learned this while walking the floor, you need to have a certain amount of fighters always in production so that you can keep building them. If you get the lowest certain level, you cant start up these plants by the flick of a switch. You need to have new orders coming on. Life alteringa event for saab, but this is a critical vote for them. Our international correspondent, hans nichols. Behind the glitz and glamour of the red carpet, the Cannes Film Festival is the biggest marketplace for movies. We went behind the scenes at the film market. Angus bennett reports. Kickback is the reallife story of a newspaper editor murdered in moscow. It is been a fouryear journey, and used in lucky to get this far. Is fully financed now, thankfully. , the moviesudgets are made for million. It is always a struggle because no one is willing to write the check. Money, that is what all these people are fighting over. Film market. Annes working out who has the goods and who is talking it up is not easy. In most films here never become more than a poster. Agnes bennett, bloomberg. Bennett. Will be joined by the chief executive of film london and the ceo of every man needed group. Has a little thing for john q zack. Jos really love him as an a look at theake company cashing in on the transformative power of vintage eyewear. It is time for the latest installment in our special series, the entrepreneurs making it. One startup is trying to take the big brands on with a direct to consumer model. To meet the founder of archibald optics. Every brand out there speaks about the quality and craftsmanship. Craftsmanship is a trendy word these days. That we have to show it third we went off to japan and filmed the actual process of manufacturing. This is the end product. Archibald optics, british retrostyled reading glasses made by craftsmen in japan. The company says is delivering quality at a lower price tag by cutting out the middleman. To mefounder spoke outside his home turned office. Something that is considered in the similar category of highquality eyewear, would take someone back about 600 pounds on the high street. We do it for 175 pounds allinclusive. You dont have a background in eyewear, so where do you draw for inspiration . I just chose a. That i thought was cool. Up with posters of old asked martins on my wall. I thought if i like is, there will be other people who like it. Is as it . Yes. This is the real living room start up. How to find balancing living and working in the same space . Is there a divide for you or is it one big adventure . I think in the position were there is no divide. On a, you have everyone desk that generally everyone is all over the place. I could do better than that. When it comes to glasses, more customers are ditching modern styles and looking for something new you something unique. Thank you very much for joining us today. These are the glasses. They are. , very much my generation. Whered you source them . We actually had a Family Business in london. My father was a wholesaler. We amassed our own collection and started finding new suppliers. Tosaw such a great response the design and the aesthetic. How many of these are you selling per month . Can ask you now . Can i ask you now. My word has the word luddy in it. Am i allowed to say it . Youre supposed to blow the bloody doors off. Their 23 karat goldplated. You dont find stuff like this anymore. That is why literally catches your eye. Those are about 400 pounds. About 400 95, so around 350 pounds. What is the style . It is a car brand. If youre cruising around in how many of these are you selling about a month . With such a diverse collection, so between our website in other channels, were selling about a hundred a month, which is great. Youre competing against the fashion industry as a whole. How difficult is it to set against so much competition in the industry . When youre a startup, to compete you have to be really creative and really resourceful and tell a story. All of these products have a story. It is really shifting away from mass production. Use of these are really a piece of fashion history. How do people respond to buying these online. Do you have a return policy . How do you lure people into buying online . That partner with other retailers i partnered with other retailers. People are more than happy to buy online. It has been surprising, but a good surprise. Do you only have one off editions like these . It is difficult to source varied we have been in the industry for such a long time, we have those relationships now. We always find these vaults and treasures. I cant give away my trade secrets. Pretty lady gaga. How do you market your website . How is it spread . How are people learning about your website . Ids to where these really boring black glasses. As an experiment i just took one of these out of my collection, and people literally stopped me in the street and start a conversation. It says so much about you when you wear something unique and we have something coming up next week. People to started hearing about it and started contacting us. Would be so proud of me. You have a certain age in a ec while at a really great. Group and professors. Do think the current climate is fostering more people like you to set up their own businesses . We have had less hiring going on because of austerity. Have you been lured into it in that respect . Certainly saw a huge shift in people going down those regular corporate paths. Theres so much Great Technology out there right now to make your business really efficient from day one. It is much more costeffective than it ever used to be. Fashion is a great industry to be in. Thank you very much. It is the first and last time. We will be back in two minutes. The president of the Environmental Defense fund sat down with charlie rose. They talked about president obamas Environmental Policies in the future of green energy. The president has been a leader on climate change. He is getting more and more focused on it. The first term he was able to double the miles per gallon standard for cars. That is one of the big sources of greenhouse gases. Now he is absolutely committed to issuing epa regulations on power plants which is 40 of americas carbon pollution. Is a race between finding being able sources, to extract shale gas in a safe way, and a finding that before Global Warming exercises a serious impact beyond where it is now. It is a race against time to deploy a maximum energy efficiency. Is anything holding back the climate of those two . Lets take florida for example. We have a company in this country, more than one cant more than one company that are putting solar panels on peoples homes. The company pays for it. You did a contract to buy electricity for less than the utility would sell it to you. Not Business Model is allowed in florida. We need to clear away the thicket that is impeding the market. Ofis that due to the power the Energy Companies lobbying . Yes. Epa president fred upp. Heres what we are talking about. All about indian. The chairmang to of cobra beer. Stay tuned for that. Modi poised to win. Indias opposition heads to the biggest win in 30 years. We are in mumbai. Credit suisse pleading guilty to and a u. S. Tax investigation. Talks with aup valuation of more than 10 billion. 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 mark barton. Hyde, this isne the pulse, live from london. Cashing in at cannes. Behind the scenes of the film festival. Live with the u. K. s shadow business sector, discussing pfizers bid for astrazeneca. Thearly results showed that Coalition Led by Narendra Modi has won by a landslide. The Congress Party has conceded defeat. Lets head to mumbai, where Sunanda Jayaseelan is standing by. Ground the latest on the . India weines in have the exit polls that have been trickling in since 8 00 this morning. They have beenat leaving by massive figures. Theave a simple majority in lower house. A lead. Ell above the halfway mark able to take the form of government. The Progressive Alliance led by the congress apartment but the Congress Party. Celebrations have started already. Are celebrating. The pm will address the nation. Modi tolling congratulate him. The new government will have challenges ahead. Who is an as someone very divisive leader. If he is able to replicate what is being called the gujarat model at the center. Has been responsible for driving the economy of gujarat, bringing investments domestically as well as internationally. In india we have been seeing the past couple of quarters with high inflation and slowing growth. This will be driving sentiment as well as kickstarting investment. As far as indian growth and foreign investors. , quite a todo list. It has been fascinating the way in brazingen technology. You said something about holograms . 3d holograms. Made use of technology. We have seen them using twitter extensively. Modi tweeting just a few moments ago saying india has won. He has used facebook and video. Have reached nearly 40 million additional people across india. He has singlehandedly been doing all of this. None of the other parties have managed to keep up with that advertisement on social media the bjp has done. Probably one of the reasons we have seen the huge margin between the two main parties. OfSunanda Jayaseelan bloomberg tv india, thank you so much. Covering the story all morning. In a few minutes we will get more insight into what modis victory means for doing business in india. The chairman of cobra beer joins us. Top company to our stores, Credit Suisse getting ready to pay out 2. 5 billion in the u. S. Investigation. The bank may plead guilty to claims it helped americans evade taxes. Jon ferro has the details. 2. 5 billion dollars, that is probably above most peoples anticipations. I sat down with brady dougan a couple months ago. He was confident they were making progress. They settled with the sec and they put more money aside. That might not be enough, they put aside 425 million on top of the 290 5 million from 2011. This is a lot bigger than anticipated. And a lot bigger than ubs fines. Inthat comparison has been the past couple years. Early, 2009,h this 700 80 million will stop this is three times that they. Ubs had to give more client information, they gave about 4700 accounts. Credit suisse have only given stoput of 20,000 Council People are criticizing the investigators for taking so long for notit suisse dealing with this as quickly as possible. Investigators have been criticized for not getting banks to admit to their guilt. That has been a criticism after the financial crisis. Admits guilt,se that is a leap forward. They are under a lot of pressure. Who pleads guilty . The Parent Company or the subsidiary . That raises questions for brady dougan. He has been there since 1990 and he has been on the executive board since 2003. Ceo since 2007. If you ask if he knew this was happening, he will say no. For thes this mean future . His response was pretty robust. We are trying to get it behind us. He has been really trying to deal with this. Maybe there is good news for Credit Suisse. Look at the stock and maybe that tells you something. Down a couple tenths of percentage points. This has been under pressure. Now maybe we can move on. The three of us had been to zurich we have all asked him. To resulte you going the u. S. Tax probe. We might be nearing that. The concern is 2. 5 billion dollars, but maybe they can move on. Thank you very much. Joining the 10 million club. In a story reported first by bloomberg, the car Service Seeking funding that could triple its valuation. Lulu chen joins us. What are the valuations . Its going to add fuel to the fire that there is a tech bubble. Among billion places uber a small handful of companies with 11 digit valuations. That is based on the fact that uber is raising less than 1 billion from their pe investors. Make them bigger than best buy and staples. We have seen other Tech Companies come to funding before and have that valuation. And dropbox to name a few. Is there a bubble . That is a concern. If you look at the numbers of companies coming to market it is nowhere near the tech bubble dotcom bubble in the late 1990s. Then again, funding is at a historic high since 2001. If you look at companies in china, a pipeline of countries backed by baidu, alibaba, and tencent waiting to ipo in the u. S. Companies tend to place more emphasis on the potential for monetization but it could take years before they could become profitable. This Company Expands wherever it enters. In london it has been phenomenal. What about money . Is about expanding in asia . In asia they here are already operating in 20 cities and looking to expand in hong kong and a lot of secondtier cities in china. We have heard they are looking to cooperate with fivestar hotel shols. If they go to china, they will have overlapping competition and alibaba backs companies. They are operating with local taxi companies. It could be overlapping in the future. Lulu chen in hong kong, thank you very much. All disclosure, i used uber the time. Their expansion has been phenomenal in london. They throw money at the situation. For every time i recommend uber to a friend, i get a free taxi ride. Talking to friends in new york, they said the minute they become number one you start to see the price ramp up. It shows how disruptive they are when you see how the incumbents are reacting. London cabdrivers, 10,000 of them are protesting. They say that the rule that drivers operate under are different from taxi drivers. They do not have to pay for licenses or permits. Parisian drivers blocked traffic from airports. Cars in brussels are subjected to a 10,000 euro fine. It is making huge roar it is causing a huge uproar within the industry. I know at Developers Look at it is so slick, it is beautifully made. Many use it as a rising star of how you make a very easy to use app and make it mobile. I am rated as a user. The minute i get in a taxi, i can say if that was a good ride and i can say whether i was a good or bad passenger. It stops uber people picking me up in the future. It allows uber to say we do not want you as a driver anymore. Hopefully making the standard of drivers better. Have you got any friends doing the driving rather than being the passenger . It is trying to entice people to make some money over the weekend. Them and have a discussion how are you liking it. They really love it. They say other taxidrivers they have to hide the fact that they have the app running. They think other taxidrivers will get angry. The story i on uber, of the day. Lets hear what else is on our radar. European auto, sales rose at the slowest pace in five months in april. Germany posted a drop in car sales. Among u. S. Small businesses hit a sixyear high according to the National Federation of independent business. Said chair janet yellen credits businesses with less than 50 employees for the majority of job growth since 2010. A long wayhas come since the dark ages of the financial crisis. And Small Businesses deserve a considerable share of credit to the investment and hiring that has brought that progress. Ukrainian forces have dislodged separatists from two rebel bases in the east. Ukraines president says the government is working to expand constitutional powers to allow for local selfgovernment. The u. S. And european Officials Say they will punish russia if it finds president ial elections is undermined. India decides. What does the action mean for big business in india . We spake to the founder and chairman of cobra beer, karan bilimoria. Telecom tie up. The industry gets smaller. The Company Styling in on deals. Right after the break. Check on the a currency markets. The currency everyone is looking at, the rupee against the dollar. Rising the most against the dollar since october last year and at its highest since july last year. Thendra modi poised for biggest election victory in indiana and 30 years. Giving him a mandate to overhaul the nation, the third biggest economy in asia. His message of development resonating across social divisions in a country with a third of the worlds poor. Stockpee and sensex market rising today. Victory meanmodis for business in the country . We are joined by lord karan bilimoria. You produce beer in india. Are you positive on this, will it make a change for your business . It will make a huge difference for india and the whole world. India was one of the fastestgrowing economies in the world until recently. The growth rate has slowed down and direction was out of the control. A new party came from nowhere and actually captured for a was awhile there groundswell of antiincumbency wanting a change and wanting a government that would get on with things. And Narendra Modi has shown in he has been elected there three times and has run the state successfully. He has experience. That is the thing leveled against barack obama because he had never run anything. Many president s have been state governors. How easy is it to replicate the success he achieved in gu jarat . Economy has outpaced the National Economy by 95 . Is it easy to replicate that on a National Level . It is a bigger challenge when you have 35 states as opposed to one state and 1. 2 5 billion people as opposed to tens of millions of people. In principle, he is encouraging investment and has invested in infrastructure. He is anticorruption. Those are things india needs. Results are showing that he might get an outright majority. For the first time in 30 years, one Party Getting a majority. The last time that happened was Reggie Gandhi in 1984 was ra in 1984, he slept with sympathy because his mother had been assassinated. Coalitions in india are very complex. You get the tailwagging the dog and you cannot get things done because Coalition Partners slow you down. Just imagine with our Coalition Give us a sense of where this man has come from. , does he give hope there will be less of a wealth divide . That has been level in india. Too much of a gap. If you go that 200 years, india and china where the two wealthiest countries in the world. Even in those days there was a huge disparities. India has been a country it is the most diverse, complex country in the world. You have several billionaires, many millionaires and then some of the poorest people in the world. Inclusive growth is the key. Anyone in india you have to encourage inward investment and have a trickling down to bring people out of poverty. Job creation is key and manufacturing is key. Narendra modi sees all that and gets all that. It is a challenge to make it happen on the ground in a country of the scale of india. With an outright majority, i think he will be able to get things done. What can the u. K. Due to release its what can the u. K. Do to boost it trading relationship with its fifth biggest trading partner . How can we improve our relationship with india on a trade basis . As the founding chairman of the u. K. India business council, i was not allowed to take delegations to gujarat. We did not do business with gujarat. We decided no, this person, he was the chief minister in 2002. He has not been convicted of anything. We decided to open relations with gujarat. One of the first countries to do that. Our high commissioner met Narendra Modi and we have been doing business with gujarat for the past two years. The Gujarati Community in the u. K. , we have the biggest Indian Diaspora in the u. K. It is the most successful diaspora and the u. K. , a contributes more than double its percentage to the economy as a percentage of the population. The indian population here and the gujarati here, having Narendra Modi will mean a lot. I hope it will mean trade relations will be greatly enhanced. Has already strengthened, the stock market is at record levels. Touched 25has thousands. Every Business Leader i have spoken to wants the bjp to get toand whats Narendra Modi get him because they want things done and they went correction removed. That is the hope. Hope this euphoria comes the reality. Thank you very much, lord bilimoria, chairman of cobra beer. Back in a few minutes. Lets talk telecoms. Exploring consolidation. Economy minister renewed calls for the companys mobile phone operators to merge. David tweed joins us. Can you make sense of this . Story. Ove this it gives us a glimpse into the byzantine relationship between , unions, and companies in france. Theme set the theme with wireless operation world in france. The biggest operator is orange, 27 owned by the government. The secondbiggest operator is sfr. Then you have bouygues telecom. Then you have a discount called ilia. You have a lot of competition. So much so that some of the unions are concerned that gues might like bouy thet cutting costs and unions wrote a letter to the governor saying they would like to see a merger of orange and bouygues telecom. The industry minister, who has been compared to genre keycorp baptisteto jean colbert. And orange are in talkes. , they wouldtogether have half the market in france and that could cause problems with European Competition authorities. See you later, david tweed. Back in a couple minutes. Back to the pulse, live from bloombergs European Headquarters in london. I am mark barton. I and caroline hyde. Ukrainian forces have dislodged separatists from two rebel bases in the east. The president says the government is working to expand constitutional powers to allow for local selfgovernment. To Credit Suisse close reaching a 2. 5 billion dollar deal. The bank might plead guilty and paid the fee to the u. S. Justice department. The prose investigates rather Credit Suisse help americans evade taxes. Indias Electoral Commission wons the opposition bjp has enough seats in parliament to form a government on its own without the need to form a coalition. Candidate Narendra Modi tweeted india has won. Lets look at your pm equity markets. Pathetic numbers out of countries. Dax off. Down, about then significant rally in treasuries. The yields on treasuries kept coming lower. Up a basis point today, 2. 5 , 10 year. This . S behind i spoke to a man from hsbc who told me earlier this year we are going to go to 2. 5 by june and 2. 1 by the end of the year. Last year, the yield on the 10 year was 1. 6 and within the year we went to 3 . This is a significant correction. He thinks this has got legs. The 30 year treasury delivering 13 . Everyone calling this great rotation, it is not happening yet. In the fx market, the indian rupee. Business friendly modi going to win that election. Rupee up by 0. 5 against the dollar. They say sale on the news, nobody is selling the rupee yet. In 25 minutes, it is surveillance with tom keene. He joins us from new york with a preview. Justve been obsessed with rates. You are going to be discussing them. We continue the discussion and are thrilled to bring you michael from an km partners. We talk about low yields and the. Hings we are getting right he has written a blistering note about the misconceptions on lower interest rates. We are thrilled to bring you michael darda. I have beenlibaba, requesting his attendance for a week, he is at ohio state thehen owns high ground on law and entities like ipos. About alibaba and itll be really interesting. We have been talking technology as well. Do you use uber . Addictive. You use it more and more. It is hugely popular in new york. It is building every day across the country. I am mildly obsessed with it. It looks as though they are fueling up more money to be able to invest further. It is an aggressive company. It is an interesting concept. It is based on a service. What i observed is a shortage of drivers. It is moving so fast and has become so popular that there is processes they have to work out in the next year or two. It is going to be really interesting to see how it plays out in other cities around the world. 10 billion dollar valuation. We check in with you and 25 minutes time. Thank you very much indeed. Battle for astrazeneca getting more heated. Swedens finance minister said his government should try to influence after the mikes decision. The u. K. Government has been getting involved about too those were grilled in parliament this week. You met with astrazeneca and pfizers chief executives . Yes. What did they say . It would not be good form to disclose details. What was that tone . Raising concerns about the deal. Confirming the worst seals of people in the british science communities. What did we learn . Pfizer has said they will cut the combined r d spend if the deal goes ahead. Ande will cut jobs dismember astrazeneca and split it into different parts. This is our second largest from a single company. My largest in the world. It would dismember that company. Not ruled out selling off parts of it in the future. If anything, what we have heard this week is reinforcing many of the concerns which led so many people to raise the alarm here. At the moment you are shadowing if the deal does not go through, you could be in charge . What would you say to this deal . Asked the secretary of state has the power under u. K. Law to intervene in exceptional cases to block takeovers of this sort where it impacts national security, competition, and financial security. We are proposing adding an extra category where a deal would impact the strategic science and r d base of our country. We believe this could be one of those deals. Astrazeneca alone is a company that counts for almost 3 of u. K. Manufacturing experts. Set up aaid we will group of scientists and Business People to advise us on whether this has a material adverse impact on the strategic sciencebased r d of the u. K. If they advised it is adverse, i if im in a position to do so , and the legal advice of the department where such you could i would intervene to block it on those grounds if that is with the advice was. So far, there are very few people in the british Science Community who are saying it will have anything other than an adverse impact. Message does it send out to the global Business Community . The message the u. K. Wants to project as we are open for business. Does this damage that . I do not believe so. Has one of the most permissive takeover regimes in the western world. We are not proposing a Carte Blanche to object to any merger. That thaterent from has been advanced in france. Affect the National Economic interests. My issue, lets be absolutely clear, is not that this is a foreign takeover. We have had successful foreign takeovers in the u. K. , there have been tremendous successes. Ibm and cisco. We are open for business. But i think to take what the chamber of commerce said yesterday, you can be an open economy without saying yes to every single merger. That is the worry here. We are open for business but as a government you take an interest in the structure of your economy. We have seen the detrimental effect and balances have had. We have got astrazeneca in a leading sector for the u. K. This is the way we compete in the world through sectors like that that are innovating and investing in r d. When you were speaking with ed, what would you have wanted to hear . Would it be that the minimum 20 of r d would remain here . Companies become more efficient and you do not need jobs. There is a difference in approach between the evidence given by the ceo of pfizer and the ceo of astrazeneca. He looks at how you can squeeze more productivity out to increase value. It seems to me that pfizers model is more predicated on. Utting that is what the former president at pfizer has said. The other big concern we have is that this is primarily driven by the way should to use the tax inversion structure available to pfizer in the u. S. More than 20 of the shares in the new group, are held abroad. I do not think, as a former said, iecutive has dont think that is a sound basis for a business relationship. The worry is that if the u. S. Clamps down on the tax inversion lastole was stopped in the 48 hours, not just people like senator carl levin and some of the usual people you would expect to raise issues. People like dick durbin and republican senators in the senate saying we have got to deal with tax inversion. Asserted there was no likelihood that the u. S. Would do anything about the abuse of tax inversion structures in the u. S. He admitted one of the main drivers of this deal is tax. I think there is a prospect of action in the u. S. Look at the reaction in the senate to three u. S. Governors raising concerns about this deal. I think we need to be a competitive tax environment in the u. K. If we have a bunch of transactions primarily driven by the tax inversion structure in the u. S. , as that is withdrawn in the future, the risk in the u. K. Is a flight of capital and investment back to the u. S. Leaving many of our firms high and dry. That would create major problems. Frenchtouched on the decree on takeovers announced this week. They have added more sectors to the protected list. Is this workable within eu legislation . If a labor government were to win the next election, were you would you produce something similar . We would have a different approach. I have Great Respect for Prime Minister valls. Public interest test, we will do so in very exceptional circumstances. I intend, in terms of our new Public Interest test with the sciencebased r d, to construe that narrowly. All situations but only when you have transactions with an adverse consequence in the u. K. Economy. Aam not really interested in situation where every single takeover or merger situation becomes a massive lobbying industry. How do you manage to do that . You have to ensure your inlic interest test applies exceptional cases. We have shown in government that you are able to widen the Public Interest test without the risk of that happening. We added Financial Stability to allow the lloyds bank deal, we added media plurality in Public Interest and it did not lead to a massive lobbying industry. If we are going to compete in the World Innovation is key. That is why our science and Research Base is so important. Is this a case that a lot of politicians grasp ahead of the elections . A i do not think it is question of political grandstanding. A lot of questions were raised by people in the business and science communities. Individuals like the chancellor of cambridge university. At the former head of Standard Chartered bank. The chief executive of Aberdeen Asset management. Many people in the city who have raised objections. This has really taken me aback about this deal. Usually the voices cautioning against interventionism and against the government being too active have been vociferous in arguing something needs to be done about this transaction. Could recognize that this have a real impact on the economy in the longterm. We saw in the lead into the 2008 crash where shortterm mentality gets you with the economy. There is an emerging consensus today that we need to take more of a longterm view. That is why people have been scrutinizing this deal so much in light of pfizers record of having taken over companies in u. S. Ast like white in the what happens to those firms. People lost their jobs, r d facilities were shut down, value is extracted. People do not want to see that happen to a great company. Astrazeneca has had problems in the past but the new astrazeneca under the new leadership, most people acknowledge it has turned a corner and is going in the right direction. Heavy targets they have for themselves. Anyone would say there is a takeover battle. Tochuka umunna, wonderful have you. U. K. Shadow business secretary. We are back in a couple minutes. Future ofook at the film. The Cannes Film Festival is the biggest marketplace for film. Thousands of hopeful producers hoping to get their projects on the silver screen. We are joined by adrian wilson, finland and ceo, and andrew myers, every man media group ceo. Andrew, you run the everyman airmedia group. 10 cinemas across the u. K. It is more about the experience then the film. You are trying to separate yourself from the world of multiplexes. We have seen during the 1980s and 1990s was a move in the industry towards multiplexes. It was a rebirth of cinema from a low point in 1985. But we have seen is the desire of people to engage in the high streets. To eat, drink, and be entertained on the high streets. People want to go out locally a great environment. It is about looking at cinema in a different way. From a hospitality perspective with film at the heart of it. As a part of a number of things you can have on a night out. Lets talk about the entertainment niche. Talent at the moment . We think that the Cannes Film Festival is showing some of the features, a couple british films out there. This year is pretty good for the brits in cannes. Talent. Fantastic the filmmaking talent, the emerging filmmaking talent is really getting to make its mark. This is good in cannes. We have young filmmakers making. Ilms there is a whole range of great new british films showcasing in cannes. It demonstrates what a strong industry we have. It is booming, the amount of films and Television Programs that are being made in london. Across the u. K. , it is reaching alltime highs. People are flocking to the u. K. Because of the town. We are watching we are awash with cash. Awash withnot say cash but the government has introduced tax credits as a massive incentive. For film, television, and animation and games. That has allowed us to develop talent and infrastructure. Our visual effects are the best in the world, gravity is a fantastic showcase. People really want to use that with those incentives. We could not be busier. With new ways to watch videos and to watch films such as on your mobile or tablet. With new ways to devour film, such as streaming sites, does that make your job harder . What sort of demographic are you going for . The younger audience is devouring the new technologies. What demographic are you focusing on . I would use the analogy that we all have kitchens at home but we still go out to eat. People are sociable and want to experience the environment with other people. They do not want to be confined to their own homes. For us, we target a slightly older demographic. It is not differentiated by age, it is by your desire to see a film and have a night out. Of disposable income. Have a great glass of wine and enjoy a great movie. Andrew, your film is out andrew, your film booker is in cannes. Has she called you . They all say wait until the end. [laughter] do we think this standard is there . Is this a golden age in terms of cinema . Are you proud . There are some great films coming up towards the end of the year. Not just independents, but from the mainstreams. We are very excited about the content. , the that are coming out new kent loach films, they appeal to an independent audience and a mix well with the mainstream as well. Stand as aes cannes place to publicize your film into global pantheon of film festivals . There areained other important film festivals like toronto and berlin and is number cannes one. Rematch the entire british Film Industry, we have a team out there. Date are promoting the u. K. As a place to make films and films we are investing in. Everyone has to be there. It is the fulcrum of the worlds Film Industry across the whole value chain. That position has not changed. How exciting is it that we have the new star wars films filming here, the new avengers film. For thea great coup Film Industry. It is great. The death knell of cinema exhibition is being predicted, going back to the crs. Cinema retains its appeal to public audiences. It is getting bigger and stronger. We have got mike lee and cap loach making lowbudget films. And yes we have jj abrams and they are being made with british talent. It is also things like the Royal Opera House and new ways of experiencing entertainment within the cinema. It is a huge improvement. A Hangover Club on your website. When you are hung over you go and film . Hangover club, girls night out. No shortage of things you can do. [laughter] special events. You are more than welcome to come. Much, filmu so london ceo and Everyman Media group chief executive. Back in just a minute. Lets have a look at the currency of the day, the rupee against the dollar. The biggest increase since may last year and the highest level since may. Narendra modi poised for the biggest enemy and election win the biggest indian election win in 30 years. His message of development resonating across social decisions. It is a country with a third of the worlds poor. 66 turnout. Shows what a feat of democracy this is. We hand you over to the United States. It has been a pulse being on the pulse has been a joy being on the pulse with you as wheat. This is bloomberg surveillance. The yield implosion continues. There is light at the end of the train wreck known as jcpenney. Good morning, everyone. This is bloomberg surveillance. It is friday, may 16. , scarlet fu and adam johnson. We have an incredibly varied and busy bloomberg surveillance. We are starting overseas first. Indian stocks hitting an alltime high as balancer touted ballots are counted in the largest democratic election. Slowing growth is a theme around the world. It has been a crazy week. Yes, it has been. Speaking of which, Building Permits coming in at 8 30. Confidence,consumer as well. Michelle obama will be speaking at topeka