Transcripts For BLOOMBERG The Pulse 20140613

From bloombergs European Headquarters in london. Also coming up on the program, oneonone with samuel l jackson. I sat down with the actor to discuss his role in the Star Wars Franchise. Later on, we are live with the ambassador to the u. K. We will ask him what legacy the world cup will leave for brazil. Iraq insurgents sweeping the northern part of the region. Opec called for u. S. Military intervention. Ryan chilcote joins us with the details. The benchmark for the United States, is set to make its biggest weekly gain since september. Now well over 100. Then you have brent, the benchmark for the rest of the world and europe. It is now over 110. Same reason, on the back of this chaos in northern iraq. Two dozen analysts we talked to yesterday, only three since only three of them think that prices will decline next week. The issue here is to what extent does the violence in the north of the country really affect to theability to get oil markets . That is a question we put to iraqs oil minister at opec in vienna and he told us he does not think a whole lot. All our production, all of our exports are from the south. The south is a very safe area. Have only small activities related to the distribution. Those small activities are theyrs to the pipeline goes from an oilfield in the north of the country to a mediterranean port in turkey. That pipeline was already offline because it had been bombed. The hope was that they could repair it and it would be back online. Now that there are is insurgents there are insurgents, it is less likely. The big issue is that three quarters of the oil in the country comes from the south and it gets exported out of basra. Oil, at least for the moment, is fine. But the street the chief strategist says he could see oil going to as high as 125 if the militants move on baghdad. They have threatened to do that. The market is very jittery about this. The market got jittery about libya, which produces about one Million Barrels a day. Iraq is a much bigger five. The big issue here is that we are not really just talking about iraq anymore. We are talking about events that could destabilize much of the middle east. It is right on the doorstep of turkey. Is muchoncern right now more than if the russell if the rebels advance towards baghdad. Is pressure building on president obama to intervene . The pressure is definitely building. All of the gains that the u. S. Sort of made in iraq are now under threat. He spoke about this yesterday and said that everything is still on the table. I do not rule out anything because we do have a stake in jihadistse that these are not getting a permanent foothold in either iraq or syria. Insurgents in the the hometown of the late saddam hussein. The secondlargest city in the country is still under insurgent control. Falluja is still under insurgent control. They control most of the sunnidominated part of iraq. The big issue would be if they are able to push into the shia majority area. They have already threatened to move into laces that have shia shrines places that have shia shrines. If they do that or if they move on baghdad, this crisis could get much worse. Minister saysl that he does expect the u. S. To start bombing the north. He does expect the u. S. To start bombing the militants in the north of the country. If you think about it, if there really is a threat to the government in baghdad and the u. S. Feels that, short of airstrikes, they are in a bad space, then it would almost be foolish for them not to do that. You could effectively have this iraq, the Islamic State of , patrolling a very large swath of iraq and syria. Basically able to do whatever they want, including preparing terrorists that could attack western interests outside of iraq and syria. That is the big concern. A very unstable situation. Thank you so much. We will see you later on in the pulse. Mortgage that could be recovery andritish rate hikes could be coming sooner than investors expect. That was the warning last night from mark carney. Lets bring in caroline hyde. Ooner than we think the question is, how soon and by how much . This is the billion pound question. It could come sooner than the market expects. The current consensus is that we would see rate hikes starting in april of next year. This is the most hawkish that we have ever heard mark carney, saying that we could be a step ahead of the Market Expectations in terms of rate hikes, really adding fuel to that fire. Have a listen. There is already great speculation about the first rate hike and this decision is becoming more balanced. Sooner thanpen Financial Markets currently expect. Say that very keen to this is the last line of defense in terms of trying to suppress over exuberance in the Housing Market. That is where the key concerns lie. Willyou mentioned how high they go, he is still reiterating what we had in his last statement. It will be gradual. You will not see some rate hikes to the tune of 1 . S will be a slow interest increase going forward. A big spike in the british pound. We saw the reaction from the market. Any are feeling Interest Rates could happen sooner. On the year, it is up more than two percent, the bestperforming currency. We know that mark carney feel that housing is the biggest threat to the uks economy. A rate rise will be the last line of defense. What other tools does the bank of england have . This has been the other key take away from the Mansion House speech. It is not just mark carney who talks to the banking industry. , the handles on the first of the u. K. He was trying to say, we are hearing you, imf, European Commission. There is concerned about the Housing Price increase in the u. K. Really, london is where the concern lies. House prices at eight times the average salary in london. People spending more than half of their salary, at the moment, in terms of mortgage repayment. You can see the chart in front of you in terms of house prices. George osborne spoke to those concerns and how they would be hurting in the future. Does the Housing Market pose an immediate threat to Financial Stability today . No, it does not. Could it in the future . Yes, it could. Especially if we do not learn the lessons of the past. Do we act now to ensure ourselves against future problem before they can materialize or does Economic Security come first . React now. When he says we, he means the treasury. But he also means the bank of england. He has been given legal powers to the bank of england to start raining in mortgage lending. Really interesting. Demand. Look after you suppress demand for housing by putting caps on the amount that we can borrow against a house. 60 aps we can only borrow or 70 of the value of the house that we buy. Also cap in terms of the amount that you can borrow versus your salary. At the moment, we already see and lloyds raining in reining in. Issues. E the key bank of england, you take charge of demand. Meanwhile, the government will take charge of supply. They are spending more than half a billion pounds to try to get on currently dirty land. They are going to clean that up quicker and get supply rolling. It is going to take time. House prices are not going to go down that quickly. Mortgage is starting to fall in terms of applications, but there is still concern, which is why the pound is spiking so much. Will interestrate hike before the end of 2014 . That is the question. Now lets talk sports. Billionaire john malone and Discovery Communications are buying a 49 stake in f1. Hans nichols has more. A media mogul. Is he just a car guy . Is this a trophy asset or does he want the grand prix on his network . The latter,t is unless we do not know something about his ability to shift into seven or eight year or ever many or however many gears these cars have. It is all about sports content. Here is the deal that is on the table. Liberty along with Discovery Communications would buy a 49 stake in on the one. They would buy that from cvc hman, which has a 13 stake. That valuation would put you right around 8 billion euros. Llion would be there charge. There is a difference between 500 million. That is why you get the 8 billion versus the 9 billion valuation. They need to rigid that to come together. One is stillrmula facing trial. Very difficult to bring a Company Public when your ceo is under investigation and facing the prosecutors questioned. Indeed. Breakdown the little bit more frost about why f1 is so attractive for malone. You look at their revenue last year, north of one billion euros. You look at the growth in the itdwarfsewership, anything you see stateside. The only thing that compares is mobile soccer. There is sponsorship and peer broadcast rights to unlock a lot of value, especially when you see what malone is doing on the cable side of things, which is going on a shopping spree. So you go on a shopping spree and now he needs the content to deliver. We will see if he can pull it off for the right price. Nichols, our international correspondent, joining us from berlin. Coming up, a strengthening u. K. Economy could lead to rate increases as early as this year. The surging Housing Market raise concerns of a potential bubble . Our next guest says there is no housing bubble. That is next on the pulse. Underlying Housing Market dynamics reflect a shortage of supply, which is the bank of england cannot tackle. Unable to build a single home, we welcome the chance to increase supply. Bank doesclear, the not target asset Price Inflation in general or house prices in particular. It is indebtedness that concerns us. That was mark carney talking about how to tackle the u. K. Housing supply shortage. Lets get more of a reaction from paul donovan, the global economist at ubs. Lets start with your reaction to what you heard from last night. Does anything in that speech make you change your expectations about when you will see rate hikes . We have always been somewhat ahead of the market, suggesting that the bank of england would have to tighten earlier. Earlyd of this year or next year, i think we will see a rate hike on the bank of england. Mark carney has repeatedly flagged that the Housing Market is the biggest threat to the u. K. Economy. You say we are not in a bubble. Why . We are not in a bubble naturally. It is a bubble fueled by money from hong kong. Whenever i go to asia, as soon taxicab, i trye to disguise because otherwise i will get an entire journey of where should i be buying in london. What the bank needs to be sensitive to is that we do not get excessive leverage in the the economy either from housing sector or the Banking Sector as a result of rising house prices outside of london. So the issue of leverage is one they are trying to tackle. That is where the new, unprecedented tools come into place. Do you think any of the new tools will work . The interesting thing is these are sort of old tools. It is only in the last 25 years that the Financial Markets have gotten used to the idea that Monetary Policy is about Interest Rates and that is it. If you go back to the 1970s, Monetary Policy was about Interest Rates, one regulation of the Banking Sector, reserve requirements, and limits on how much could borrow. What we are doing not just in the u. K. , but globally, is going back to a world where Monetary Policy is about more than Interest Rates alone. Interest rates and financial regulation. In a couple of years time, when we are talking about the feds policy or the bank of england policy, we are not going to be able to pull up the chart of the Interest Rate. We are going to do Interest Rates and a series of other charts. Do you think that the has beents scheme fueling the bubble . Absolutely. That it wasor said fine last night. Directly, the helpline scheme has not affected the London Property market. Indirectly, it has had an impact. Suddenly in asia is full of the governments helping the London Property market. Investors are saying, well, if you are supporting property up to 600,000 pounds, i am going to buy property up to the value of 600,000 pounds. That is what we have been seeing. Scheme haso buy helped people in the united kingdom. It has also bolstered the Confidence International investors have in buying u. K. Property. I was looking at the chart on air right now. A sharp vertical line. Interest rates have now been five years at a record low. You think they are staying there until the end of this year. I think the Third Quarter would be the earliest, maybe early next year. The issue with this great move areate move is how aware people outside of the Financial Markets going to be that the rates have gone up . We have seen the reaction in sterling. Colleaguesre what my in ubs think. They are financiallysophisticated individuals. What i care is the guys at my boxing gym in east london, what do they think . That influences their behavior. After five years of unchanged Interest Rates, there is a little bit of complacency about this. If the message gets across to people outside of the Financial Sector is there too much inflation . That has been something we have heard. I think so. Youe get really complacent, start borrowing on credit cards. It does not matter. The rates are not going to go up. I think that is what the bank of england is trying to head off. They are saying that if we accurately, we do not have to be so aggressive in the future. Now, remind people that Interest Rates can go up, and perhaps that will prevent a credit card boom or a credit binge, which we have not had in the u. K. If we can stop that from happening, we do not need to raise rates in the future. Loan to income ratio, you think it is going to work. There seems to be a lot of trouble in london, where the market is so hot. Cash buyers coming in. Centralll not work in london, where you have foreign cash buyers coming in. There need to be other factors that affect that. Seek tod either regulate Foreign Ownership or let the market take its own course. Burst. Ng off as bubble they always do. Outside of london, it is not cash buyers. Part, outside of london, it is people buying property in the ordinary sense. The interesting thing is, if you are going to introduce a limit, that will apply to help to buy mortgages just as much as other mortgages in the economy. On the demand side, they are also hoping to stoke supply. And lower lending rates. We have a bigger problem there in terms of immediacy. The building market is very tight at the moment. You do not have the labor. You do not have the contractors available and the shortage of labor supply. Outlookis your overall for the british economy right now . The fastestgrowing economy among g7 nations. I think it will continue to do relatively well. The u. K. Economy has benefited from the effects of the week sterling and flexibility of the labor market. And now it is strengthening. We had a sterling that corrected. We are now back at more normal levels. Thank you so much for your time. Stay with the pulse. Welcome back to the pulse. Lets get straight to your asset check. It is a down day when you are looking at equities. Geopolitical instability. What does that mean for oil . It means risk is off today. Of course, that is pushing the stoxx 600 lower for the week, currently off by. 25 today. Financial down by. 8 . Nearly every single Industry Group is trading lower on the day. Of course, we have been coming off sixyear highs, so clearly we are still relatively high in terms of our valuations. Lets have a look at how the pound has been affected. There are three key things at play. Most of all, it is coming from mark carney and george osborne, driving the pound higher. Look at that jump up. Mark carney said we could have an Interest Rate increase sooner than you think. Il also we are going to go back to the oil because we have brent trading at an eightmonth high. Up. 9 today. The instability in iraq, will it disrupt supply . That is the concern. We will be back in just a moment. Just a reminder. You can follow me on twitter. Be sure to stay tuned to the pulse. We will be back in two minutes with more. Welcome back to the pulse. Live from bloombergs European Headquarters in london. Underent obama is pressure to launch airstrikes to support iraq off on a iraqs army. Theres growing concern iraq will descend into civil war. Rate hikes could come sooner than you expect. Mark carney says rising u. K. Mortgage debt could threaten the countrys recovery. Surging property prices have been raising concerns about a potential bubble. Maintainingjapan is its unprecedented stimulus. The central bank will continue to expand monetary basis. Its governor is trying to boost emulation inflation that is still short of his target 2 percent. Elon musk has never been one to follow the crowd. He is taking a unique approach to teslas patton. He is giving them away for free. Hans nichols is here to explain. Is there some kind of Business Case for this . He wants to have an explosion of technology to have these electric cars the future. Patents willhe patte help accelerate the advent of sustainable transport. Olivia, i want to be in a position where i can talk about the intellectual land mines i lay behind me. Maybe i will lay a bunch for you and when you are done, you will not know when you will be tripping all over them. Patents are an important part of business. They are building gig of gigafactories. Leader and to be the they have made the calculation that sharing their intellectual property will not slow them down. I have full faith in you after you filed the story about how to dress to get into berlins hottest nightclub. Sticking with tesla, how me patents are we talking about . Normally they lock these up involves and would never give them away. Are these just a few patents or is he giving up the whole crown jewels . He is on the smaller ends. He has 160 patents. Gm,omparisons, ford and some of their patents are older. They are in the 6000 range. The leader is samsung. They have 47,000. Apple is about 4700. Microsoft, just soft of 2000. Esla does not have a lot theyre saying theyre going to give them away and we will see if it works for the business model. Thank you, hans nichols. Ets turn to films from star wars to pulp fiction Samuel Jackson is the highest grossing actor of all time. Signs ofwing no slowing down. He is filming tarzan in london. He is hosting a ball for his male cancer charity, one for the boys. I asked why he chose to get involved with the charity. I started thinking about it and talking to some of my that i knowrealized a lot of people who were cancer survivors. So, here i am. I am glad i am doing it and glad that i can do something other than laying lipservice to something or write a check to somebody and say here is the money, go and do what you do. I am actively involved. You said you are here for work. You are the highest grossing actor of all time. You could easily kick your feet up. What drives you . I have beenmeans is in some pretty popular movies. None of that money is actually mine. It is other peoples money. I have to go to work to generate an income. Huge films been in and you have three or four big reductions a year, where some of your colleagues do kick up their feet. I have a passion for what i do. When i discovered acting, or discover this is what i wanted to do, it made me want to get up every day and do it. When you think about it, writers get up and write every day. Haters get up and paint. Actors love to get up painters love to get up and paint. Actors love to get up and act, at least i would think. Hopefully, they are not just doing it because they need to get a check. Creativity,t job, when we do not have art, we do not have a culture. Will go that stuff he does is not art. Movies. Some of it is crap. There is a bit of truth in that, but i have been going to movies all of my life. I tend to do a lot of movies that i want to go and see. That is part of the beauty and joy of doing this job. Oret to choose roles characters that i want to pretend to be and i want to see in a particular kind of story. I have an opportunity to have fun and to do that. Who has been your favorite actor to work with . Get in trouble answering those kinds of questions. That is true. Enjoy working with the majority of the people i work with. Actors, i generally get along with. I have problems with director sometimes. I generally get along with all the actors i am around. Friends, some remain great acquaintances that you see places and you enjoy seeing. Some, i remain in contact with, we text, we talk, we get together. Some i play golf with. I have a lot of relationships with a lot of different actors. Another secret of his success, he gets all time written into every single one of his film contracts. His agent demands he plays golf at least two times per week. The world cup is not just about gold clicks and conversations. Welcome back to the pulse. Brazil escaped what could have been a huge upset. 31 in theroatia first match. Was by aagainst brazil defender. It was the first goal to be scored in brazils world cup history. Some heateden clashes between protesters and police. Brazil is hoping to avoid violence and widespread violence they faced last year during the confederation cup. Erik schatzker gives us a look at how brazil is trying to keep the games safe. These soldiers are preparing for an unusual battle. On the soccer field. Brazil is hosting the world cup for the first time in 64 years. They are not taking any chances. The Lieutenant Colonel will be keeping the peace here. Is one of 12 cities where the world cup matches will be played. Foreign language] his troops have been training to confront a number of scenarios. Angry protesters, hostage takers, even terrorist. [speaking foreign language] wants to avoid a repeat of last years federation cup. A series of rallies turned into deadly riots. Language]ng foreign rio is it used to hosting events fraught with risk. For manaus the security challenges new. [speaking foreign language] like any big city, them announce has a command center manaus has a command center. 45 million a special funding for everything from stateoftheart video to mobile surveillance units, plus 4000 more officers. To helpas an apt residents make contact with the closest cops. Great, theat is too army is ready to roll in. [speaking foreign language] a challenge has just begun. It will not end with the World Cup Final on july 13. The olympics in rio are just two years away. Lets stay on the road to rio, but switched to the new generation of world cup viewers. Ar next guest put together study to understand Online Consumer trends during the world cup and what it means for business. She joins us to discuss her findings. Sheila, thank you for joining us. When i think of watching the world cup, i think everyone had down to the pub and watches it as a group. You have done research to suggest this may not be the case. Will watch of brits the world cup online. That is 13 Million People who were not watching the game online years ago. Towill companies do capitalize on this trend . Are watching online, interacting with each other, shopping, betting. Retailers need to think about how they position their products and how they make them available to consumers. About publishers and social media companies. What should they do to i amze on the cup . Not sure preparing for the cup is one of the challenges. One challenge i am anticipating, they have no idea how many people will be using the internet to talk with each other, to watch the game, to cheer on their favorite team, to bet. That is the part that is hard for consumers and retailers to predict. What things are people buying during the world cup and how much of a spending . That surprised us. They said they would send between 100 and 300 pounds and they would be buying merchandise, earphones, food, bedding, all kinds of things kinds of things. If they see their favorite player wearing something, they will buy it. What is happening now is people et on multiple platforms at one time across multiple devices. People are able to do more and play their chances in more ways than they ever have been before. They have multiple forms for cheering for their own team. On youray be watching computer or placing a bet on your ipad. Multiple bets. Your phone,r ipad, multiple devices. See the game comes down to a shootout, you can bet once the game is over and goes into overtime. It is immediate it you are not waiting anymore. You see duringdo the games . It is not just the game. It is world events that bring people together. They feel like they are part of something massive. You might be watching it from the pub, but you feel like you are part of an International World Community Like you have never been before. You do not need to travel to rio to experience the full world cup. How about Online Gambling . We were betting on a shootout, what trends are you seeing in Online Gambling . Even in our own company, we have a pool going across all of our offices where people are betting. You do not have to restricted to a facetoface interaction or a legislative one. You can do it in a friendly way, whether it is facebook or twitter. It is more fun for people. Who are the companies who have built social media campaigns around the world cup, which you think will see a big boost because of what they are doing . Specificot identify ones. I am impressed with news organizations where theyre using multiple panels to engage with their viewers. It is less around providing and delivering content, it is fostering an interaction with viewers. That is the real shift. How do we create interactions between people during the event . , thank you forn being with us. We will be back with more on the world cup. It is grouping gripping people not only on ours, but also in the International Space station. Astronauts kicked around a ball in zero gravity. Pauloty forces in sao used tear gas to disperse protesters. Similar clashes occurred in rio de janeiro. Least fivested at protesters during demonstrations. Most brazilians disapproved of hosting the world cup. From otherney away services. Coming up next, why a biomass boom could lead to Greener Pastures for british farmers. That is coming up on the pulse, in two. Welcome back to the pulse. Live on Bloomberg Television streaminging and on your tablet, your phone, and bloomberg. Com. The British Renewable Energy rewards took place last night. Was the winner of the sustainable ability the sustainability award. Explain what a biomass project for. D what you wpon waste, biological abundance inurs in our economy. We turn it into energy. Our principal elements use straw to produce energy. You generally hear of wood chipping. How does a wood chipping compare in terms of cost, efficiency, versus what you are doing with straw . The wood chipping market is international. It has a higher carbon footprints. A lot of the objections to biomass arise because of wood. What we do is strong. It is a waste from food production. It is indigenous. We only use local material. How about cost . Because it is local, it is cheaper. Because it is drier, it is more efficient. Renewable energy much more efficiently as well. Comparable to wood chipping. You are being in tidal energy. Big areais the next for us. It is currently not competitive, but we believe it will be in about three years. You hear a lot of criticism projects that they are unrealistic and if Oil Prices Stay below 100, it does not make sense. What do you say to that . An infant it is industry. It will be expensive at the moment. The key is to find technology that has the ability to compete. We have removed concrete foundations, all of the expensive work. Our device is orderable. It can be lifted and dropped. That is one of the keys to getting it cheap. A very big scale. What is the status of your project, the delta stream device . It is a giant set in milford haven, off the coast of west wales. When will it be up and running . It is due to enter the water in about six to eight weeks time. Everything is on track at the moment. How big are we talking . Steel, blades which are about eight meters wide. Individual tubes, you can jump inside one of them. It is a massive device. More efficient at harnessing energy. Is it not a threat to wildlife . Things we one of the will be testing. So far, no device has been a threat to wildlife. We have strict environmental monitoring. We will keep an eye on it. Williams,d congratulations on the award. Bnp energy. Ing about and analyst will join us. He will talk about the potential 10 billion fine and what it could mean for the bank. We will continue talking about the world cup. We have an exclusive interview with brazils ambassador to the u. K. He will tell us why it is worth it to the country that they spent 11 billion and it looks like they are behind schedule. We will be bringing you more of my oneonone interview with Samuel Jackson. He will explain how he gets golf written into his contracts at least two times per week. You can follow me on twitter. Insurgents sweep through the rack and claimants largest city. Iraqeep through northern and claim the largest city. They could happen sooner than Financial Markets expect. Eyes on the prize. John malone seeks a major stake in f1. Good morning to our viewers in europe. Good evening to those in asia. A warm welcome to those waking up in the United States. I am olivia sterns. This is the pulse. Coming up, my oneonone with samuel l jackson. I sat down to discuss his role in the Star Wars Franchise and how he managed to get that purple saber. Later on, we will ask to be ambassador to the u. K. What the legacy the world cup will leave behind for brazil. Take theurgents largest northern city. Ryan chilcote joins us with the details. How concerned should we be about the violence we are saying . Hug withs up with the Samuel Jackson . What is up with that . After sitting down for 15 minutes with him of course. He is very open, warm. Back to oil. Volatility is back. We started the week with oil the most stable it has ever been. And a half,ast hour i have watched you go all over the place. Brent, as high as one or 14. 113. 15. Ser to an oil refinery was just they just withdrew from it. It is supposed to come back online. You have the militants besieging a military base. All this stuff is pushing the price of oil all over the place. The big picture, the benchmark for the United States, it is on its way to its biggest gain of the year. Since it is up around 5 monday. That is when this offensive began. Two dozen analysts. All but three of them think the price of oil will remain where it is or go up. The question is, all of this violence in the north of the country, to what extent is it really affecting iraqs ability to get oil to the market . There is no effect on our production. Area is a very safe area. We have small activity related to the distribution. The small activities that he refers to is the pipeline that to afrom near mediterranean port in turkey. That pipeline was not really moving oil already because it had already them blown up. The hope was that the mechanics could get in and fix it. There is a question on when they will be able to do that. Most of the oil is in the south of the country. Three quarters of that goes through a port in the south of the country. The oil price is volatile, but it is not exactly clear how serious the physical threat to oil is right now. Having said that, we are talking to the chief strategist of cmc markets. He said he can see it go to 125 anarrel, which would be astronomical price. It would have every world leader sweating about their fragile recovery. That is if the insurgents move on baghdad. That is the kind of price we could see. Meanwhile, they are calling for u. S. Military intervention. He thinks the u. S. Will actually bomb the rebels. Pressure is mounting on president obama. Is it likely the u. S. Will get involved . All options are on the table. I do not rule out anything. We have a stake in making sure jihadist are not getting a permanent foothold in iraq or syria. The insurgents are fighting in the hometown of the late saddam hussein. They are in mosul. They control it. They still control of falluja. They basically control most of northern iraq. The big thing will be, do they controlled shiia areas . If they do Something Like that, or if they move on baghdad, which is where the government sits, then the crisis gets much bigger. Ryan chilcote, thank you for the update. Threatendebt could britains recovery. Rate hikes could come sooner than you expect. That was the warning mark carney gave last night. Lets bring in caroline hyde. It could come sooner than april. April is the consensus of the market. Expecting Interest Rates to start come next year come spring. Mark carney warning in his most hawkish speech yet about the potential Interest Rate hikes i have ever heard him say since his tenure at the bank of england. He is hinting he could take the market by surprise. Speculation about the timing of the first rate hike. Moredecision is becoming balanced. It could happen sooner than Financial Markets expect. Fuel to theing fire. The hype about hikes. He is pushing that forward. The recovery is taking the bank of england by surprise. It is taking everyone by surprise. Maybe we need to analyze whether Interest Rates need to go on the rise. In terms of the size of increase, it will be gradual. He keeps repeating that. Any worries that any Interest Rate hike could shake this fragile recovery could stretch the indebted household. Would be a gradual increase in Interest Rates. The pound is really reacting to this potential increase in Interest Rates. That is putting your money in the u. K. More attractive. The rate hike will be a last line of defense. Us with the new tools are and how effective they might be in cooling off the Housing Market. This is why everyone is getting itchy about Interest Rate hikes. Inflation is very low. The key reason people want to see Interest Rate hikes is the talk of a growing bubble in Housing Prices. The European Commission has warned us that house prices are getting to bubble territory. Term, it is seen as a potential risk. Threat to pose a Financial Stability today . No, it does not. Could it in the future . Yes, it should. Especially if we do not learn the lessons of the past. Secure ourselves against future problems because Economic Security comes first. We will act now. When he says week, he means the government and the bank of england. He announced yesterday they will be given legal pools to legal tools to the bank of england. They will have direct tools to limit the proportion that you can borrow on your salary. At the moment, we have seen rbs and lloyds jumped the gun. Potentially, we could see the bank of england limit the loan to value ratios. Maybe you can only borrow 60 percent or 70 of what the entire house is worth. That would cool house prices. Costsdon, a general house eight times the average salary. Rein back put a halt, the appetite. Mortgage approvals have taken a little bit of a dip. What mark carney is hoping she will not have to use Interest Rates, that he can use financial policy authority that they can potentially rein back the Housing Market. Particularly in london. Try to addent will to supply. We have half a billion pounds promised to clean up sites. Hopefully, the government will win out in supply. An important point. Hopefully some of these tools will get construction going so we can get new houses. Thank you so much, caroline hyde. Lets switch gears and talk about sports. John malone and Discovery Communications are working to bridge a 1 billion valuation gap with the owners of formula one. It is a seek to buy a stake in the car racing series. Is this because john malone, a media malone a media mogul wants a trophy or does he want the grand prix on his network . We could do a whole separate show on american billionaires who have wasted portions on buying sports teams. Vanity atbe some play, but viewers like watching fast cars go around a formula one track and that is what people are going to want to watch. Here is what his group is doing, along with discovery. They are in talks about taking over the 35 stake from cbc and nieman brothers has another 13 stake they get you to a 49 stake. That values the company at 8 billion. They are still 1 billion apart. The current owners think it is about 9 billion. When you get to the price range, we are talking about another half 1 billion. Another half a billion dollars. We can maybe really do an entire show on stock cars and formula one. Are notle in the world qualified to talk about those things and it is you and me. Why is formula one still attractive to malone . We can talk about the business reasons. We can break down what formula one has done stock wise. The revenue is about 1 billion from tv deals and sponsorships. A billionabout dollars. That is a lot of money. You own a part of that. You can have leveraging. If youre going to have a bunch of cable companies, unique content. Content is king. This is one attempt to get at that. Thank you so much, hans nichols. Securing the world cup. We will get an inside look on what it takes to serve and protect the most popular sporting event on the planet. What will be the legacy of the world cup for brazil . We will speak to the brazilian ambassador to the u. K. In ireland. It is a bloomberg exclusive. You do not want to miss it. It is coming up next on the pulse. Welcome back to the pulse. Lets take a check on the currency markets. Starting with the pound. It is rising. Hitting a 19 month high against the euro. This is after mark carney, the governor of the bank of england said rate hikes could come sooner than markets expect. The sterling is rising to a onemonth high against the u. S. Dollar. Trading just below 1. 70. The yen is weakening. This comes after we heard from , saying theyapan will maintain the course of stimulus in japan that we are seeing. A little bit of a weakening yen versus the dollar. President obama is under pressure to launch airstrikes to support iraqs army. Forces are advancing rapidly across the country. The unrest could have on the Energy Market . Lets ask our Energy Strategist at bnp. Iraqs oilble is production to the violence that is going on . There has been no loss of production at the moment. The north,duction in under the hands of the kurds, they have been unable to export pipelinebecause the has been closed for a number of months. All of the production that is going on is coming from the south. That is outside the area the insurgency. If the insurgency escalates and affected,roduction is that is the concern. It is not being affected at all at the moment. Is there an overreaction in the oil prices . Moved up bys have six dollars in the past week to 114 or so after a period of low volatility. Clearly, is the southern output was affected, we have exports of 2. 5 Million Barrels a day, that could be affected. Uncertainty is probably justified, but we need to see how the events on the ground and out. It looks like the militants are heading towards baghdad. If they reach baghdad, what happens then . The idea that Central Government can fall apart increases the risk that the southern fields could be affected. I think that is critical. Is Million Barrels a day going to have a large impact on oil prices. There are various things that could be done to address that. Saudi arabia could increase its production, using Spare Capacity that almost matches their production. The United States and other countries to release stocks. There are potentials that additional could come onto the market. The longerterm implications are important. About 60 of planned increase capacity over the next five years is planned to come out of iraq. It is not just current production of concern. That willidea that be required to meet demand, that growth, if it does not emerge from iraq, where else will emerge from . It is tricky timing. Opec met in vienna this week and they decided to keep reduction unchanged. Was that a mistake . Production unchanged. Was that a mistake . Mind, there has been no loss of production at the moment. Opec is likely to react to events so that if there is a loss of production, there may be fromcrease of production countries such as saudi arabia, that can match what is being exploited from the south. They are just waiting and seeing. Events are happening very rapidly. It is possible that we will have a rack he production continuing, despite growing insurgency in and around baghdad. Reserve, as it were, the ability and willingness to increase production if needed. Sparet were to happen, Production Capacity would disappear and the world would be able to just unable to adjust to further shocked and that would lead to higher prices. Given that there is no oil price disruption at the moment, i think prices moving up five dollars or six dollars on the business of uncertainty, it is probably justified, given the current circumstances. Could how high could oil go . There is always a potential for a spike to 150, but the word spike gives you an indication that any improvement to that level would be very shortlived because you would have emergency stocks by the countries of the west, you have saudi arabia increasing production. You have an alignment of interest between iran, saudi arabia, and the United States, to make sure iran does not fall. You might get an accelerated move in sanction negotiations tound iran, to allow iran increase production by a certain amount. There are a number of things that might happen. Evidence are happening quickly on the ground. We may find production in the south is not affected any in the end. Do you think saudi arabia will put their foot on the pedal and pump out more oil . Do you think they will step in to fill the production gap . It does not need an official opec announcement. Saudi arabia, for the last two or three years has been acting unilaterally, deciding when it wants to increase or decrease production to make up for losses of say, libyan oil. I think they would do so quite quickly. They may announce it, they may not announce it. I think they probably would announce it in order to take some of the heat out of the market. Thank you, gareth lewisdavies. Coming up, playing defense. Brazils leaders reject criticism of their world cup preparations. The ceo of festivus says the company must reduce costs to remain. Years,next three to five thats is targeting markets make up about half of the worlds turbine demand. Barbados plans to build a solar park with as much as eight megawatts of capacity. It would be the largest on the caribbean islands. Contractorsing for to design and build a plant on industrial land it owns elsewhere in the caribbean. More thanlar shipment doubled the solar spread from rooftops to land once used for golf courses. The solar demand is being go buoyed by. With brazils u. K. Ambassador. You can follow me on twitter. Welcome back to the pulse. We are live from European Headquarters in london. Here are your top headlines. President obama is under pressure to launch airstrikes to support iraqs army. Militants are expanding rapidly across the country. There is concern iraq will descend into civil war. Englands governor says rate hikes could come sooner than you expect. Mark carney says that rising u. K. Mortgage debt could threaten the u. K. Recovery. The warning comes as new powers for the bank of england. The bank of japan is maintaining its unprecedented stimulus. Central bank will expand the Monetary Base at a pace of 688 billion per year. Boostovernor is trying to inflation that is short of the target of 2 . In just 30 minutes from now, it is bloomberg surveillance, with tom keene. As you know, oil is surging. Jonathan ferro is with us. The unitedenter, in states, iraq, with brent crude going up. Pipelineslk about the of the middle east. For decades, covering hydrocarbons within the United States, but we will touch on a rack with mr. Gheit. Migration fromts startup to tech company. We will talk to mario gabelli. Will talk to him about any number of topics, particularly, where to find value within this bull market. In the United States and in washington, we are transfixed by the movement in a rock. In iraq. And is dominating the news here. You mentioned twitter. Guests are saying twitter will be the winner of the world cup, who wins the day. Have you been watching . I have been watching carefully. The feed,s changed when in the United States, you went from espn coverage of what and i do notme, want to get into football because i do not know what i am talking about. This is different than four years ago. Question, you can hear the game. How cool is that . Changing thewitter world cup, i do not think it is to be underrated. Did call it football ball and we appreciate that over here. Thank you so much. Be sure to tune into bloomberg surveillance. We are staying with the world cup. Heated clashes between protesters and police. Brazil is hoping to avoid the violence. Ank schatzker gives us inside look at how brazil is trying to keep the games safe. These soldiers are preparing for an unusual battle on the soccer field. They are hosting the world cup for the first time in 64 years and the country is not taking any chances. [speaking foreign language] the Lieutenant Colonel will be keeping the peace in manaus. It is one of 12 cities where world cup matches will be played over the next few months. [speaking foreign language] his troops have been training for more than a year to confront any number of scenarios. Foreigners bent on destroying property, protesters, anarchists , hostage takers, even terrorist. [speaking foreign language] brazil wants to avoid a repeat of last years confederation cup, when a series of rallies turned into deadly riots. [speaking foreign language] rio is used to hosting big events fraught with risk, like the popes visit in 2013. For manaus, the security challenges new. [speaking foreign language] like any big city, manaus has a command center to monitor streets and high risk areas. It is getting an upgrade for the world cup. For5 million for funding stateoftheart video and mobile surveillance units, plus, 4000 more officers. They even have an app to help residents make contact with the closest cops. If the thread is too great, the army is ready to move in. [speaking foreign language] the challenge has just begun and it will not end with the World Cup Final on july 13. The olympics in rio are just two years away. For more on the challenges facing brazil over security, lets bring in the brazilian ambassador to the u. K. Joins us now. Be congratulations on the win yesterday. Start,got off to a rocky but you did prevail. 11 billion spent. By far, more than any tournament like this than in the past. 70 is inlion, infrastructure. In line with what happened in south africa and prior to that in other countries. The average cost of the stadium in brazil is lower than in 2002 world cup and 2010 world cup. The other money is in infrastructure, that is the money spent by the government. By stadium is invested others, not the federal government. I think it is money well spent. It was required by the country, which needs a lot of infrastructure. We have done a lot of stories on preparation for the cup. Are unfinished, roads that are unfinished. Is brazil . D completely prepared. We will not have the infrastructure that countries of the most parts of the developed world have. That will not happen. For the football world cup, we are prepared. You cannot say that preparations were on time and on course. And they are on time if everything goes well. Recall thating to preparations were offline at some stage or another. I understand why you need the investment in highways and the air force. Some are saying why you need a huge football stadium in the middle of the image on in the middle of the amazon jungle. There is a 2 million inhabitants city. Where we built a beautiful opera house 150 years ago and now we are building a beautiful stadium. I think 2 Million People will benefit from a 45,000 seat stadium. It is not an extravagance to a 45,000 seat stadium in a city of 2 Million People. Criticism is that people would have preferred to see this money spent on public services. You keep seeing posters that say quality schools. Why is this money better off spent on the world cup than health and education . It is a mistake to believe that any sort of diversion from health, education, transportation, or whatever, was spent in the stadium. Governmention spending was strictly for infrastructure. Was no diversion of resources at all. During this time, we spent 800 billion in health and education alone. Of Economic Impact will it have if brazil wins, if brazil loses . Hosting the world cup is a big thing. The world cup is the Largest Sporting event in the world. No comparison. We expect, for this world cup, 13 billion communicative Community Audience on tv. That is huge. Brazil is already a big attraction for foreign investors. We are doing well in this respect for the last many years. The world cup and the olympics, it offers it opens new opportunities for that. On andad an economist his forecast is for 1. 5 growth this year. What are the prospects of the economy right now . They are growing around 2 . Below what we want and what we need and what we are expecting. In brazil, there is a good thing. For spending. Year that you should control inflationary expectations, which is being done. Will have several new investments in infrastructure. We are opening many, many possibilities in roads, railways , ports, and 4g. Communications are coming to london for to sell the 4g option to investors. Investors are quite bullish on brazil. The street protest are heartening because they think it will lead to economic reform. I spoke to mark mobius about this. He is buying into the brazil story right now. Have heard this for decades, that brazil is on the cusp of booming. It has land, natural resources, oil, why hasnt it happened yet and why will it be different now . Blooming is a process. It is not a single event. We are in this process. We have been doing very well. For social inclusion. This is the fundamental element in brazil. It is fundamental to do it. We are doing well in this respect. Over the past 12 years, we had 65 million new bank accounts. This is a huge number. It shows the opportunities we have. Brazil is a big market for many things. Everybody is investing in these areas because it is a good thing to do so. Question, i know you think brazil is going to win. Who do you think you will be up against in the finals . The way the world cup is divided into groups, it is very probable that it would be argentina. What is the score . Friends they are going to throw a big party after the game, to show that they are not sore losers. Thank you for your time. Robert jaguaribe, the ambassador to u. K. And ireland. Welcome back. Mark carney says the central bank could raise Interest Rates sooner than you expect. Atjoined chancellor osborne a speech in london. Despite the strengthening u. K. Economy, challenges do remain. From our european economist at deutsche bank. Does anything you heard last night change your outlook for the u. K. . It certainly moved Market Expectations quickly. In this pricing something in november, december, which makes sense. Reporte an inflation that would be a good occasion for the bank of england to start moving. It came out as a bit of a surprise. A bold statement by carney. The communication of bank of england and being hard to decipher lately. The way i would read that is, the analogy i would use, it is mangy maybe close to what bernanke did in may of last year. To try to warn that the end of the party is nearing and at the same time, giving himself enough wiggle room to assess the impact of the market and see if it is safe to move. It is better to signal sufficiently ahead of time to home tooone getting drunk. Signal of how ahead of the pack the u. K. Is right now. The first Major Central Bank to raise rates. Carney seems focused on the Housing Market. He has said this is the greatest threat to the u. K. Economy. Do you agree with that . The idea that the u. K. Is ahead of the pack you cannot say france is ahead of the pack. Of gdp and where it was at the peak, france was ahead of the pack. The u. K. Took more time to dig that it gigantic had been accumulating. Theres Something Interesting about the u. K. Being ready to move fairly quickly, even cker than the feds, to it to an extent. Yes, what do you mean by that . If you have taken more time to bring back your gdp level to it may meanfore, two things. The level before the crisis was unstable, probably true to some extent. It probably also means there is slack in the system. A bold move from the central bank to signal so quickly ahead of the fed, headed the ecb. Is clearlyy market the issue. For the bank of england, the problem is whether they would decide to deal with this issue using credential measures, which is going to be increasingly in their remit. My guess is that there might be may causereasons that the bank of england to move to a measure of macro credential. You allow the marker at the market to capital. It is hard for the central bank where exactly capital has to be located. Mark carney said a rate hike would be the last line of defense. That is the purpose of these new tools. Tools, you look at those what is interesting about the path that is ahead of the central bank right now, macro well, i amtools are in favor of that. If you try to plug what is a reaction that money is too cheap, youre going to deal with one issue in one sector annual basically shift or force a shift to another sector and you will dragging through more regulation into a never increasing number of. That happens when they choose to go for macro credential measures than rate moves. It is probably easier he is appointed. He is appointed. The of the central bank is not the same as parliament has. , thank you for joining us this morning. Lets talk about film. Samuel jackson is the highest grossing actor of all time. Inis filming tarzan london. I asked him if it was true he gets golf time written into his contract. Not when i want, just twice a week. Does that really get written in . It is part of my perk up action perk package. It doesnt cost them anything. They generally have to pay migraines fees or whatever, but i theoretically get to play twice they generally have to fees, but is theoretically get to play twice a week. You asked for a purple light saber in star wars . Yes, i did. And we were doing episode 2 i read the script, i realized there was a huge fight scene in an arena. There were a lot of jedi and a lot of different things, fighting, droids, all of these things. In am i going to find myself the middle of all that . I thought, maybe if i had a uniquely colored light saber, i could do that. I asked if i could have a purple light saber. George said no, there are only blue and red. I said, dont you think i am powerfulu, the second second most powerful jedi next to yoda. When we came back, we were doing research reshoots and he said i have Something Interesting to show you. There i was with the purple light saber. He wasnt sure if he was going to keep it. It had caused trouble with people on the internet, and sure enough, he let me keep it. Jacksonwas seen him speaking to us in london. Stay with the pulse. Lets take a quick check on the currency markets. The pound is strengthening bursting its versus the dollar. Strengthening to a 19 month high after mark carney said he may raise Interest Rates sooner than you expect. For a quick look at what we are watching today, lets print and ryan chilcote. I am watching the oil markets. Ti, it has been on the path for its biggest weekly gain this year. It has been giving up ground over the last couple of hours. 106. Right around some people think this rally we have seen was a little overdone. It is clear the violence in iraq has put a fire under the oil market. It is about defending baghdad. The irani ands are ready to work with u. S. Military. It could get interesting. That could get interesting. Tom keene coming up next. This is bloomberg surveillance. Oil surges as iraq crumbles. Eight years of u. S. Effort is done in days. Mark carney moves market austerity. And twitter goes in search of its inner adult. Good morning everyone. Were live from our World Headquarters in new york. It is friday, june 13. I am tom keene. Joining me, scarlet fu and Jonathan Ferro has come abroad. He gets us started with a morning brief. It is an honor to begin with your morning brief. The sterling reached its highest mark in weeks against the euro. They may raise rates earlier than expected. The Prime Minister says he aims to stop corporate taxes in 2015. No earnings today. President obama will be visiting tribal natives from native American Indian tribes in the dakotas today