I am olivia sterns. Also coming up, it is complicated with carney. One year into the relationship, we see why he is behaving, like some say, like an unreliable boyfriend. And we look at how luxury can thrive in the digital age. First, we begin with our top story. Bnp paribas has been slapped with a record 9 billion fine for violating u. S. Sanctions. Frances largest bank will pay nearly 9 billion and says he deeply regrets the past misconduct that led to the settlement. Manus cranny has the details. Tell us more. Well, they said sorry. I think that is the first instance read they have also tried to reassure the market about what 9 billion means to us, to the shareholder, and to the staff. Gethe shareholder, you will a dividend, 1. 5 euros. Not as much as you thought the market was looking for two eur os. We are in no rush to raise capital. We can shoulder this burden. A variety of issues, but a sensible he looking at ostensibly, how much money did you make over the sanctions . How much did perry bob make paribas make breaking the rules . They are not in a rush to raise capital. That is critically important for the market. And staff, your bonus this year will be dictated by your , not by thein 2014 egregious lack of cooperation from the people who ran your bank in conjunction with these sanctions. Yes, you are going to be locked out of dollar trading for a year. That is important, but we do not know the longterm. We do not know the longterm implication. Reputation, business, and trust. Run us through some of the potential other impacts. , whatn you look at this is going to be interesting is how the french react to react. Fine, aon worth of a guilty plea, historic, by the way, with the french allowing paribas to write off 9 billion against tax. Just throwing it out there. They were tax on the profits. You have got to work with your head on this issue. They earn the money and made the profit and got taxed. Slapped by the u. S. Various members of the french have been lobbying on behalf of paribas. Could it be the final swipe that the french turn around and say, you can write part of that off against your taxes . Obviously, president hollande has said that he thinks the fine is disproportionate. Some in new york say if you look at the amount of money, 30 billion when it comes to these kind of sanction laws. Typically, they could enforce something up to twice that sum. That goes to the core of the issue. Look, you were told that there were issues around some of the transactions that you are doing. You were told that other investigations other institutions are under investigation. A lot of these transactions stopped in 2008, but they went on. If somebody tells you to stop doing what you are doing, to stop resenting in a manner in which we present, you would listen to your boss and the fact that you just keep doing it means that you are not listening. Areink this is very much the u. S. Treating European Companies badly . It has nothing to do with that. These are rules and they are being broken. This is about banking being taken to task by regulators and my gosh, are they showing their teeth. Thank you very much. Lets say with france. Nicolas sarkozy has reportedly been taken into custody this morning. It comes less than 24 hours. Fter his lawyer was held he was called to the Paris Prosecutors Office and sarkozys spokesperson was unavailable for more. Can you explain to us just what happened here . He had gone in for questioning this morning and he has been held to he has been held. It is not quite as dramatic as in england. It does mean the police can hold him while they question him there. There and the prosecutors have 24 hours, renewable just once, to decide whether or not to charge him. The probe has to do with influence peddling among judges, apparently the prosecutor suspects there were judges that were keeping sarkozys lawyer informed of the state of investigations. It is an unprecedented step for a former president obviously, we have heard rumors that sarkozy was preparing himself to run again in 2017. What do you think this might mean for his potential comeback . He has got to get all of these cases they have got to sort of guy and fizzle out they have got to sort of die and fizzle out. Away,s not that far particularly with how slow the French Justice system can work. There are three probes and this probe that he is being interrogated about today him about because his phone was being cap tapped. It all comes down to campaign financing, basically. That is a total of four probes against him. He has got to get those things out of the way at least a year or so before the election and that is not a given in france. Things can drag and drag and drag here. Thank you very much. Lets turn now to italy. It is italys turn, you could say, to take the helm of the new presidency, putting matteo renzi in a prime spot to enact the policies that he wants. Morning. Thank you for joining us. Zi hear a lot about ren wanting with a room from german austerity. What is it that he wants to achieve . Good morning and thank you for having me. Renzi is a young man. He is new for italy. The country has always had rather old leaders. Renzi wants change. He believes that austerity does not work. He is a centerright politician and believes in keynesian economics. He believes that to get growth, you need to be a little bit more flexible. His idea is to push for more growth. Unemployment is high on the agenda. They have to tackle the high unemployment. Infrastructure, he wants more technology. He is just trying to push for change as much as he can. And he is pushing back against germany. Legend has it that when merkel tried to argue against his policies, he told her, well, germany in 2003 broke the rules. We are allowed to break them too. A very different attitude from what you have seen in the past in italian leaders. They have always been a bit subservient to the euro and to the germans. Renzi is not like that. He likes to point out that italy is a contributor to the eu, meaning it puts in more money than it gets back. It is not known how many people it is never said. It is the first time an italian Prime Minister is saying what he believes. He is going to be a fighter and germany is going to have to put up with that. Thank you so much. We will continue this conversation on matteo renzi and what reforms he hopes to achieve in a few minutes. We will hear from someone who says it is time for the young Prime Minister to shake up italys parliament. Elser will be joining us right here on the pulse. Than 8recalled more million cars in north america over defects including eight missions and electrical malfunctions. The company has already called back more than 20 million cars this year. Gm expects to take a charge of as much as 1. 2 billion from recallrelated repairs. Twitter is said to have agreed tap commerce. They target people on their tablets or mobile phones were people four things they have already shown interest in buying. It is one of twitters biggest acquisitions ever. And air asia is teaming up with rakuten. The move comes as air asia makes a second attempt in japan. To come toian wants japan. It is just too expensive. Said they cannot wait for lowcost travel because it is too expensive to travel right now. I am optimistic. We believe we can get the cost down, which is key to getting the fares down. Still to come, hackers are hitting up there is. Tara line height is joining us with a quick preview. Is joining usde with a quick preview. It is hackers on the runway, where luxury and art meets technology. I am going to get creative. Is just trying to educate how the luxury world can embrace technology. Bloombergif i can fit in as i go to break. I will be back more with some key interviews to discuss how luxury units are going to have to learn from the digital age. Welcome back to the pulse. We are live on bloomberg tv and radio and streaming on bloomberg. Com, your tablet, your phone, and now any windows phone. Eu takes italy takes over the eus rotating presidency today. That gives matteo renzi the ability to guide more towards fiscal flex ability. We are joined by marco elser. Good morning. Thank you for joining us. Renzis topthink priorities for reform are going to be here . I think his top priority is first going to explain the situation in italy. A lot people still do not understand that italy has tried with previous governments to do some reforms and they have not been able to do them. Renzi is really intent on doing them. Like you properly pointed out, development is top of the agenda. He does adea speech tomorrow, which will probably be the first written speech he has ever done because he normally speaks without a set of points. To try to get Infrastructure Development in italy and also in europe, which will hopefully stimulate the economy. Because that is the underlying problem of italy, a very stagnant economy. The numbers came out yesterday, as you know. Andre risking disinflation that would be extremely dangerous for the entire european economy. It is all very well to say that he wants to boost infrastructure, shake up the rigid labor market, tackle the black market economy in italy. These are things that many people have tried and failed to do. The political situation is the reason that renzi is in charge in the first place. What are the prospects for renzi enacting these reforms . I am extraordinarily optimistic. Matteo renzi is a young rook in geriatricof an old, autocracy. I have said this in the past. His number one job is to clean everything up. Day where allirst payments for goods and services in italy over 30 euros must be available to be done with a credit card. This will facilitate a lot of transactions and ring out what before was black economy, which is a very significant part. These are all tax evasion. If they are properly paid, italy will have a significant surplus of cash. I would like to remind something to the viewers. Of 4. 1as a savings trillion euros. This money circulates and is not paying taxes. Today, taxes in italy are going to go towards the italian congress. Renzi is dead set on making traditional reforms, insurance isorms, labor reforms, which what i have been stating for the last three years. Rudy is Prime Ministers were not able to do that. Autocracy bec those are strong words. What do you think renzis prospect sorry for dealing with the European Commission overall . Do you think he will be able to get some wiggle room from Angela Merkel and the bundesbank over these strict fiscal targets . Well, italy has enforced, like other countries in europe, to live in a proverbial straitjacket for the last couple of years. Pilgrimes not have much reforms. Significant the European Union was a magna. The matter how intelligent and capable matteo renzi is, he is not going to be able to dictate in six months significant changes. Analogy is it is a tanker. It does not turn on a dime. It takes years and years. No matter how intelligent he is, he is going to have to realize he is going to do some political posturing, which is normal because he is a politician. But he and all of the politicians will have to come to isms with the fact that this the only way out. I would like to add something else. Matteo renzi is speaking not only on behalf of the 40 who voted for him, but on behalf of million italians. This is either left or right. He is going to have to toe a very diplomatic line because he cannot simply try to espouse his partys political action. This is something of natural Natural National interest. Thank you very much. We appreciate it. Now lets get some Quick Company news. Shares have fallen the most in almost five years today after the company said fullyear profit will decline as European Investment in the oil and gas sector slows. Working onilder is transforming itself into an Industrial Services divided. It mayshi heavy says produce new takeover targets to expand overseas. That is after its joint bid with siemens to purchase alstom failed. Mitsubishi said it is now looking at the u. S. And europe for other growth opportunities. Says 59 suppliers are failing to provide adequate Safety Equipment for workers. Largestas the worlds smartphone maker struggles to improve labor standards at its china plan. The company says the majority of suppliers do not comply with the legallypermitted overtime hours. As we had to break, enough time for todays the pulse number. It is 8000 this morning. That is how many people were spoken to about londoners loving a good liein. Almost half cut later than the world. Quarter said they press the Snooze Button on their alarm more than once when they wake up. Back with more on the pulse. Stay tuned. Welcome back to the pulse. Time for todays hotshots. Ersstart with the xfight world tour in madrid. Flip in theer bike middle of the competition. There it is. Marseille. To rollerbladers after the city of antiquity with a modern flair. On tight. Old i am not sure how he got himself into this situation, but watch this cell phone video of a man thingy to the trunk of a sedan driving down interstate 77 in charlotte, north carolina. Unreal. We will take a quick look at how the markets are trading this morning. Manus cranny has your asset check the i cannot exactly follow that. What i can tell you is the equity markets globally will 12 , so says the ubs chief investment officer. Price earnings were trading above 15. That is way above the longterm average. 30 above the longterm average. Manufacturing is doing it in china. They are doing a little bit less of it than we thought here in europe. The final reading came out lower than the market estimated. Unemployment rising for a second month in germany, rising. Yes, you heard me correctly. They were looking for a fall in germany. It rose by 9000. That was a little bit of a shock. The Confidence Index dropped for a second straight month last week. Up. Equity pictures, we are the s p 500. Virtually unchanged. Today, full manufacturing data in the u. S. , which is the dominant theme. Today, it is going to be out construction going to be about Construction Spending and the purchasing managers in the u. S. Kingdom,nto the united i told you manufacturing in china came in a little bit better and the report from japan said people are spending money on capital goods. Leaving rates unchanged. China growing, producing. The question as an investor, has the price of iron ore bottomed out . Bank of america say you may well be there. Back to you. Thank you so much. Also coming up on the pulse, 400 million downloads and counting. Tale talk to us about creating virtual adventures for kids. His Success Story is coming up next on the pulse. Just a reminder. You can follow me on twitter. Welcome back to the pulse. I am olivia stearns. Top headlines. Nicolas sarkozy has been taken into custody over allegations of corruption. It comes to less than 24 hours after the former french president s lawyer was held. Spokeswomankozys has gone unanswered. Chinese manufacturing expanded at the fastest pace and this year and the signs that did the stimulus efforts are helping to stabilize the economy. The official pmi came at 51. Any number above 50 signals expansion. Reported a profit of seven point 5 million pounds. The signal is down. The companys third Customer Fulfillment Center will burn cash. For more on what is happening at bring in charles allen. Thank you for coming. Funny one. They have not made an annual profit since 2000. Is the number a sign they are money . Ng to make they are making a very small amount of money. They did that on improving efficiency and cutting markets and costs. That has been the reverse in the second half. You can probably earn a small profit. The bigger hope is the morrisons, joint venture, will earn them a return going into the second half. That is where people are looking at they will pay to license their Fulfillment Centers around the world. There is no sign of any deals other than more since. What did you think the big challenges for ocado are . Its a getting more customers . Or or they have or are they having problems with the cost . They are. Anything in retail it looks is expensive. Sometimes more expensive. The other point is the delivery cost among the actual cost of were in the business and are delivering to the door is very high. They are not completely scalable. Made onevery has to be by one and there is a trend around the world where we see people do collecting groceries. That cuts out a lot of cost and could be more efficient. I wonder what their take is on amazon drone and that the probably benefit. What are they looking at in terms of the growth . U. K. , it is the continuing to expand and fighting for customers. It is hoping it will be up to start doing Technology Licensing around the world. However, amazon has done a their own grocery business, amazon fresh. Another big player has an interesting proprietary business. It is not obvious where the deals are going to come from. Back to amazon. We do not know if they are making money from amazon fresh. There are signs they are losing. Since 2000, they have never had an annual profit. This momentot had of reckoning yet. Will there be a moment for ocado that we have to turn not a big profit . The stock is down significantly this year from its peak. It is down again today. , we go seenot a deal the valuation and price go down to earlier levels when it was what a quarter or less of it is now. A year to date, off of by 20 . Charles allen, thank you for joining. To theurn our attention big business. Apps for children are quite a lucrative. One of the leading companies is taptale whos apps have been downloaded more than 370 million times. Elliott gotkine has more. Good morning. Good morning. More than 400 million times. I am pleased to say i have the now. Nd cofounder with me great to have you with us. 400 million downloads and a profitable company. How have you done this and which app is driving . Secret to drive this amount of downloads and it is really good content that kids love and their parents would approve of zach are playing a with. And something of value. Pacing also the fact we are global so we created the games all over the world. Europe, israel, the u. S. , asia. The attraction. Different kids and they can relate to the characters. The main drivers early on, great apps with over 2 million downloads, the most popular for kids. Goldtly, small kind of field. A baby series. Over 50 million downloads. There are 12 chapters. Hollywood mega hit. Uayour biggest market is the u. S. Followed by the u. K. Andyou said saudi arabia the rest of the middle east. How does that happen . I do not really know how it happened but i know at some point we sold the downloads in saudi arabia, kuwait, and a lot of countries in the region. Really peaking. Many of the releases within a in the countries. Good cross a good engagement. The kids are really engaged. Kids like great contents. The company is profitable already. What happened next . Are you looking at the possibility of an initial Public Offering . Not yet. It is honestly a company we are looking of where we are going ahead. We have a big business in the gaming industry and there are a lot of opportunities. We are not focus on how we can growth. How to acquire the company in hong kong. Acquisitions . In the past four weeks, six Interesting Companies on our radar. We are doing a thorough process and it is important to find the right match. Right now, we are focused on that, growing organically. And producing great content. And finding other Great Companies that can help us. Chris the ceo and cofounder of taptale. Great to have you. Is a soccerpps veterans the injuries of soccer players. Maybe one for luis. Great idea. Also amazing to me how Young Children are when they can already learner how to use an iphone. I have a friend who has a two year old who can use her skype. Elliott dokken joining us with the head of taptale lets turn to pharma. Abbvie will be in london to a takeover. For for more, lets bring in matt campbell. Good morning. Threehas rebuffed abbvie times. What is he hoping to achieve this week . This is a lot of convincing and listening. Everybody expects abbvie to make another bid, increased bid. Looking to hear from shire shareholders and what they are looking at and where they think the fair value of shire is. That is quite a heated debate. Shire is fast growing and their stocks are way up so investors will look for a pretty big number before they start pushing shire management. You said everybody is expecting that we expect them to raise the bid. The share price of shire has not moved whenever the second of final offer from abbvie. Is trading where the third offer from abbvie was. It reflects a little bit of investor skepticism. Astrazeneca. Ith important differences from the situation. Much fanfare, determined american a choir and did not happen. The market has a little bit of caution. Any sense of why it does not seem to be as political as the astrazeneca pfizer deal . The astrazeneca footprint in the u. K. Is enormous. Highly skilled and highly paid research employees, a household name. One of the critical companies in a sector of u. K. Government that is strategic to the british government, life sciences. Shire is much smaller. It has five or 600 u. K. Employees. This is not a turning into a political debate the way astrazeneca did. Isthe ceo of abbvie insisting theres a clean strategic rationale to this. Not another tax evasion . Is that the case . It means a number of different things. There are so many exemptions and deductions. What every big American Company are global American Company struggles with is how to deal with offshore cash. That is a really big thing for abbvie and others. The other part is there is a compelling rationale for abbvie which is a one drug company, humira, which is an arthritis drug. Very tempting target. Chris and they will lose the and they will lose the patent. Matt campbell, thank you. We have a breaking news. Manus cranny joins us. Chris and the fec which we saw the News Conference with mark carney and his cohorts, these are the minutes from the fc. Their actions in terms of putting a lid on longterm ratio in mortgages which complement policy, the most important part is the complexion of the vote in terms of the new route. It was split. So wanted higher. So wanted a lower. Some wanted higher. Some wanted lower. That translates to the split. Fpc. Ide is split on the that is the critical thing. Manufacturing is the strongest theacets going rate in United Kingdom in 70 years. It is the predominant heart of the economy. The 15th of march in a row. Look at dollar. I will stop talking. Thank you so much. Next, a digital big bang. Fashion and disruptors are colliding in london. Caroline joins us. Caroline . S on theat hacker runway. You have news. Trying to breathe new life into luxury meets digital. What is the future of luxury in the digital age . How to embrace the future and a social media . We will speak to an investor next . Have experience. Will be speaking to index ventures, next. Welcome back to the pulse. I am olivia stearns. Algeria. Eat they will play in the quarterfinals. All 3 goals were scored in overtime. They will play france. Past. Ermany won in the was expelled for fighting has apologized for the incident in a statement posted on twitter. Suarez said he regretted it and will not for commit and will never commit an offense like that. Will be ofn striker noble to play in the teams last 16 pat will be available to play and the teams last 16 match. He was injured in the opener. A victory would mean a birth for the First Time Since 2002. We are looking forward to that match. His raptors and the designers and decisionmakers have gather in paris to debate one key question, how can luxury thrive in the digital age . Caroline hyde is live. She is standing by with a special guest. Good morning. Chris a good morning, olivia. I am joined by the cofounder of index ventures him a company that invests in new stocks. About the old conglomerates, lvh, why are they nervous about online . What can they achieve by Going Digital . It is a very interesting moment in fashion industry. It is allowed on brent to get you to allow brands to it has to properly show themselves. Perhaps at conflict with their offline stores. With theing the brand right of sophistication. In the past two years old will stay in the Digital World it has embraced the fashion industry. Years, wepast two have seen the Digital World embrace the fashion industry. A lot more interesting. And to get it around their brand and give a good customer experience. That is why we are excited to be here. [indiscernible] it is now in [indiscernible] what you are analyzing at the moment in the luxury space . We have had quite a lot of experience in luxury and fashion. Devoted to luxury for many years. More recently, a very interesting way of the rating and providing offering online to consumers. R 100pany that created ove million in sales. How you can build a good fashion Business Online from a bear resources, just only 20,000. A good example of an entrepreneur. Julie was talking to me about her experience. To creat her Customer Base theyre really bills the to builds the brand. Europeanarticularly a phenomenon. [indiscernible] large players globally and the u. S. Will follow. Europe is quite active. We are very excited to be part of it. Chris are you seeing it in other european areas . Family. Ped find the breeding initiatives within paris. Will it be more luxury . We believe entrepreneurs and europe are well placed. The geography where they are growing the business is. Not a particular hub. Good players in scandinavia and players, creating a valuation. Seen europe grow over the past 15 years in activity to a great ground for startups. Companies like [indiscernible] worth more than 1 billion. 7 of those became a more valuable. 4 of those were european. 1 was a French Company that went public on the nasdaq. The entrepreneurial ceiling is very active and accelerating and a good thing for europe as a well. A portfolio. We have companies that have traded 25,000 jobs and created 8 billion in sales in the last five or six years. Part in europe as well. Entrepreneurs, europeans have understood that they can take over the global opportunity. Indeed. You very much ppet that being giusee zocco talking about a thriving environment for startups. 25 thousand more jobs, back to you. We will have a more from the conference coming on the second half of the the pulse, but we will take a quick break. Welcome back to the pulse. The turkey ruling parties said without ite will be the candidate. The energy segment. Negotiating form. Heads to iscarbon best performing quarter in six years. Joining me is that matthew. What is going on here . The price seemed so hopelessly low, why is it coming up . The politicians are talking about how they might fix it in the future and implementing the first steps to improving it in march. They started with some of the supply and that seems to be starting to have an impact on the demand supply balance in the markets. We are seeing price rise 5 in the quarter that just ended. Some the analysts are expecting a similar ballpark on a gain in the couple of quarters. Theepends on whether or not eu countries can get their stuff together and agree on how the market should be permanently. Why was the price is so low for so long . An inherent flaw in the cap and trade scheme . How it was implemented. The skiing was pretty sound, i think. They set the target based on 2008 fastestgrowing economy. Judge of the schema was pretty sound, i think. The supplier they put out overwhelmed demand. Thank you so much. Stay with the pulse and we will be back in 2. B. N. P. Paribas fight for the future. The bank promises shareholders they can survive the sanctions for violations. Sarkozy detained. Reportedly taken into custody di amidst corruption allegations. Renzi takes the reigns of the e. U. Presidency. We check out the challenges to is ambitious agenda. Good morning our sflures europe. Good evening to those in asia and a warm welcome to those waking up in the united states. Im olivia sterns. This is the pulse. Also coming up on the show, it is complicated with carney. One year into the relationship we see why some say he is behaving like an unreliable boyfriend. We look at how luxury can thrive in the digital age. First we begin with our top story. B. N. P. Paribas has been slapped with a record fine for violating u. S. Chanks sanctions. Manus cranny has been following story and joins us now with details performs what else did b. N. P. Paribas have to say this morning . They are going to take a hit in the second quarter. If youre a shareholder, you will get a dividend. Less than what market analysts promised you. Not what you would expect. Not what you would expect. A couple of other things. The dividend is in check. Ok . That is fine. They are not in any rush to raise capital. This is an important message. Were able to shoulder the burden of a 9 billion fine. Employees, if youre an employee at b. N. P. Paribas, your bonus, work hard, they will pay you on your 2014 performance. They are not going to slap you on the 9 billion charge. How did we get from 1. 1 billion in provisions to 9 billion . That blows my mind. January, 1. 1 billion. June, 9. 9 billion. It comes down to this. How much money did they make . How much profit did they make breaching the sanction rules with iran . The spruppings they must have tremendous profit. Prummings presumption is they maust have tremendous profit. Be careful. Yes, sir, ill be careful. Went right ahead. Stopped most of the actions at the end of 2008. Kept ongoing. Kept on going. To that end, thats where we are. Dividend, bonuses, raising capital. 10. 5, down to 10. Could have been worse. They are in no hurry to move the rating upwards. No upward pressure on the ratings. They have changed to negative on their debt outlook. Obviously the shares have take an beating. Today they are up. The dividend is in about the. If youre an employee, you perhaps will see a big bite into your bonus. You a myriad of french figure heads lobbying on behalf of the french. Stoffer finance minister says this is in line with the french authorities. Agreements on sanctions are protecting the futures. He warned the u. S. s ability to punish banks outside the country should encourage europe to further use the euro as a currency for international trade. In ormed in di, normandy, he asked president in to be sure they are proportion. President obama said i dont get involved. They are when you look at the scrail of the profits and the egregious nature of the breaches. Nicolas sarkozy has reportedly been taken into custody di this morning. Lets head out to paris. Greg, can you start by explaining to us exactly what happened here . Well, Nicolas Sarkozy went in this morning to be questioned by Anti Corruption judges who are probing whether or not some other judges were keeping sarkozys lawyer informed. The beginning of the interrogation, clearly he was put under a higher form of interrogation. It doesnt mean he is in a prison cell or anything. It means he has to stay there and answer the questions. E cant just get up and leave. Greg, of course, right now, it looks like hollandes Approval Ratings are record lows. What do you think this might all mean for a potential comeback . Yes. Sarkozy after saying he wanted to drop out of politics, this year has been extremely active going political meetings across the country. Either the judge says we dont have enough to pursue the investigation and drops them or they fizzle out. Investigation consist go on for ages. They often just fizzle without you being totally cleared. Sarkozy has three years but that is less time than it seems given how the u. S. Justice system works. This current one that he is being questioned about today came because he has been wiretapped for one of the other investigations. Got the w judges suspicion. He has to hope within the next year or so these other three go that way because he cant really be running for president with these hanging over hip no. Certainly not. We know in france they have a tendency to drag on and on. Thank you so much for joining us. Lets turn to italy. It is their turn to take the helm of the e. U. Presidency. Putting renzi in a spot to nabt the policies he wants. Enact the policies he wants. Rensny takes the helm of what some say is the big bureaucratic body like moving a super tanker. What do you think renzi really hopes to achieve here . Youre right. Europe is very complicated. Renzi himself called europe an old boring aunt nagging its countries about rules and regulation. He said no, this is not the europe i want. He is trying to change europe. I know that is very difficult. E has this strong push, this youth, to drive things forward. His approach is new. High on his agenda is greater flexibility. He wants growth. Looking for more employment. The unemployment numbers still are not very good throughout europe. These are his main targets now for the e. U. Presidency. Thank you so much. Now lets shift to the auto industry. G. M. Has add more than 8 million vehicles to its list of cars recalled over faulty ignition switches. The c. E. O. Steps up efforts to shed their reputation for dragging their feet on defective parts. Craig, good morning. Where does g. M. s recall tally stand here after yesterdays Massive Campaign . You mentioned just short of 8. 5 million vehicles recalled yesterday, which is a pretty astounding number to put that into context. You really have to look at the number of vehicles recalled for the full year. Just short of 26 until the first half and so g. M. Just blew past fords record set in 2001 for most vehicles recalled in a full year and it only took them six months. N the the bulk of those vehicles were for an issue reminiscent of the problem they had back in february that got this recall mess started with ignition switches and the problem being that drivers may experience an issue where they bump the ignition and cause the car to go off and obviously that caused a problem with air bags not going off in crashes and led to at least 13 deaths. It drew a lot of attention. An exclusive element of the story for bloomberg news, we learned that the engineer who was really sort of singled out for being the problem with that initial recall of more than 2. 5 million vehicles, did work on some of the vehicles that were recalled yesterday, which was a y by the name of ray digeorgio. Were at 30 million recalls. That is an incredible number. S it finally it . You mentioned mary barra at the top. She had a qual analysts and she expected the bulk of g. M. s safety records would be wrapped up in first half of the year. The huge recall yesterday happened at the very end of the first half of the year. So the expectation here is that the recall activity should slow from here on forward. Obviously the amount of vehicles recalled in the first half accounts for a substantial number of the vehicles on the road. You only have so many to recall at this point. You also just have an expectation that this scrutiny is going to continue to be there. There is certainly some uncertainty as to just how much g. M. Can stop the bleeding Going Forward here. Thank you, craig. Coming up next on the pulse, italy takes the reins of the e. U. Presidency. We check out renzis agenda and the roadblocks in his way. Welcome back to the pulse. Lets take a quick check on the currency markets. Were looking at the turkish lira. S ruling party, the a. K. P. Ering edering dan erdogan will be its president ial account. Should we be more concerned with how renzi will be perceived in berlin and brussels . So lets start with this issue of his age. Renzi is perceived as a newcomer. He is only 29. When you talk about doing business, people like juncker get the top spot because they are seasoned bureaucrats. Do you think his age will be a strength or minus for him he is very young. Just 39. Having said that herks just won an election. A european election. F you are the leaders of major European Countries europe is looking with some respect at what he has achieved so far. He seems to have this mandate whereas many other leaders did so poorly. What do you hi his Top Priorities will be . Likely to put europe on a sound footing in terms of reforms and less emphasis on austerity. The euro crisis is over, but there is a lot of work still to be done. To make sure that it can never recur. That would likely be his european priority probably followed by the issue of how to keep britain in. Very different appetite for changes, these reforms to the eurozone. You have the head of the bundesbank saying there should be no more leeway, no more wiggle room on the fiscal targets. Do you think merkel will allow any changes to the fiscal compact . No. The question is how will the rules be applied . When it comes to that, it is very clear what russia and berlin are looking at. They want renzi to deliver at home. If he now indeed introduceses the labor market researches that he has promised, this is an issue to be due in september in itsly. If he does manage to streamline the political system, that means basically abolishing the upper house of parliament and making it easier to reform italy. If renzi delivers the key reformses then berlin and brussels will not mind a fiscal overshoot. So what do you think renzis prospects are realistically for implementing these reforms in italy . It is very well to think they should be more flexible and tackle the mountain of debt and get a hand on the mafia which is a major issue for their economy. You mentioned the political function in italy. How is he going to be able to actually implement these reforms and work through those entrenched interests in italy . It will always be difficult and the reforms will not be perfect. Having said that, renzi probably has a much better chance than anybody before him. At is unlike monti, he has a popular mandate. He tells everybody else if you dont want to go along, lets possibly have a new election. Grillo made noises that they would actually want to talk to renzi about reforms. Renzi has a good chance. He will likely deliver quite few reforms, yes. What about one of renzis ideas for the e. U. Presidency, the investment program. Do you think that might prove popular . It sounds like a good idea. The question is where will the money come from . My guess is yes, there will be an investment program. Money has already been pledged. I dont think a lot of extra money will be coming out of any pot there is. There is not extra money to go around. On that, renzi will success. As of last week, juncker will be leading up the group. Do you think juncker might now be willing to be more flexible with renzi since renzi obviously through his support behind him for his candidacy . I actually think that juncker will not matter all that much when it comes to the big issues and fiscal flexibility and the balance of reforms and austerity, these things will be decided in the big capital, including berlin, not the head of the e. U. Bureaucracy in brussels. What about were lucky, a bit more next year. The start of the year was bad. It continue tracted. Exactly. Italy at the moment actually does look like it is getting up. Consumer confidence is there. More importantly, the austerity is over. They have a useful leader likely to deliver something. Italy will be back to work. Thank you so much. We appreciate it. Coming up, the boys in blue go green. We check out the new Energy Efficient motor bikes helping police in the u. S. Fight crime. Welcome back to the pulse live on Bloomberg Television and streaming on the ipad and bloomberg. Com. It is time for todays new energy. Were going to talk motorcycles. Police in california hope youll never here these electric ones coming. They are environmentally friendly and can go where big squad cars cannot. My name is paul marshall. Im a Police Officer here in san ose state. When we ride the zeroos, it is just an ordinary assignment. It is just a vehicle that we took out on patrol that day. They are a great tool to have here at the university. You can go in through these areas that any patrol car cant. There is one obstacle can the cars. With the bikes we can go anywhere. Whether it be a medical emergency or a Police Emergency of some sort, we can get there much quicker. Oftentimes were the first ones n the scene. With zeros being so quiet, were able to ride up on something or somebody and they had no idea we were coming. We can go down a sidewalk opposed to putting on all of our emergency lights and going the wrong way down a street that causes a hazard. Were just more at one with everything that goes on here than being closed off in our patrol cars. Well, that is pretty incredible. You always thought that policeman wanted to make as much noise as possible and flashlights but these guys on the bikes are instead going stealth. You can imagine some unsuspected students to be quite prized to see cops pulling up on motor bikes behind them. Coming up on the pulse, it is complicated with carney one year into the relationship. He is behaving like an unreliable boyfriend. Ell be joined by sir john jeeves. Very warm welcome back to the pulse live from bloombergs European Headquarters in london, im olivia sterns. Here are the Bloomberg Top headlines. Nicolas sarkozy has been taken into custody di in an alleged nfluence case. Chinas manufacturing expanded in june at the fastest pace this year. Governments stimulus methods are stabilizing the economy. Israeli Security Forces have carried out air strikes on the gaza strip after the bodies of three missing teenagers were found in the west bank. Israel believes the teenagers were kidnapped by members of hamas. Manus cranny . Eckly markets are rising in a spirited start in the third quarter. Where china goes, the rest of the world follows. Exports, exports in this country, David Cameron must be smiling today and likewise george osbourne, the highest since 1992. That strength in the economic recovery and the manufacturing numbers takes dollar sterling aut way up here to 1. 7140. Sterling rising. Sterling is strong. When it comes to evaluations, the question you to ask yourself is this. This map, Equities Trading around 15 times earnings. That is way above. Its fiveyear ve average. The Manufacturing Index in europe misses estimates. Two very different trades. Olivia, back to you. It has been one year since mark carney took charge of the bank of england. When he arrived, expectations were high, unlike those to have Football Team at the world cup. Has he had more luck . Mark carney would be englands star striker. The bank of englands new captain faces a tough task but his fans were cheering him on. Almost straightaway he launched his first attack. The introduction of Forward Guidance, a policy tool that links Interest Rates to unemployment. Not all of his teams approved. Unemployment went down faster than a desperate player in the box. Six months after announcing his guidance, mark carney moves the goal posts. A few months later, he moves them again. Fast forward to today, the u. K. Economy is top of the league with the highest growth in the gmp7. He may need to go on the counterattack once again. Central banking. It is fawny old game. Funny old game. So has mark carney delivered . Joining us now to discuss is the former Deputy Governor at the bank of england. Good morning. Thank you. Welcome to pulse pus. The pulse. What kind of marks would you give carney . I think he has done unbelievablely well in terms of the economy. It has developed better than he hoped. Ve i think he gets pretty good marks for reforming the bank of england. He has come in quickly trying to reshape the bank, brought in a new team, put his imprint on it. I think he and the markets are still getting used to their dialogue a bit. When everything is going well and people are talking about him as though his credibility is shot, i think that is a great exaggeration. People have been saying he is an unreliable boyfriend. He is sending mixed signals. One week he is hawkish. The next he is dovish. You think that criticism is unfounded . I think he has tuned in the economy has surprised him and so gave dance he initially turned out to be true but it didnt last as long as he expected. Since then, we move back to a world in which the first Interest Rate move will depend on events, a balanced judgment. So there is not a lot of Forward Guidance on that. He would say there are still two other element s of Forward Guidance. Mainly that were going to increase Interest Rates slowly when we start and they are not going to go on very high. He has had to move the goal posts on Forward Guidance. Would you say that Forward Guidance has been a success or has the success of the economy been down to other background factors . Well, the economic success has been long in the making. Actually he didnt have to use any words on Forward Guidance. He didnt raise Interest Rates until unemployment had fallen. I think it has turned out, especially on the first move, when are we going to make the first move, that Forward Guidance is very difficult at this point because it all depends on what happens on the ground. When do you think then that they will make the first move . Im expecting them to make a move in the autumn. I think we still have an emergency level of Interest Rates. A strong economy. Hat strength of recovery seems entrenched. We have falling unemployment. Says. You start the pro what is your take on macro credential tools . The loan to income caps . The new stress tests for borrow s to see whether they will be able to afford the loans . Do you think they will cool down the Housing Market . When they announced them, the bank said this is just precautionry. It is not going to have an immediate effect. That is true. I think it will have a slight effect on on confidence, on the feeling about how far a house price is going to rise. It may have helped dampen the developing spiral where people say i have to buy today because i wont be able to afford it tomorrow. Mark carney said that the Housing Market is the number one threat to the u. K. Economy. Do you agree . I im not sure i do really. I think in london, we have a special problem and have had for few years of cash buyers. I think there is a risk of a bubble there. The rest of the country, i dont think some recovery of house prices was bound to happen as the recovery developed economically and as peoples confidence grew. Im not too worried about the Housing Market at this point. Talk to me a little bit more about what you think mark carney has achieved. We were saying there was so much fanfare about his arrival and he has made some big structural changes. I believe he has increased the number of staff at the bank by 50 in the last year. He has brought in mckenzie and deloitte. How big do you think the bank of england will be from when you were there to where it will be when carney leaves . Well, i think that carney joined a bank which had been very stable for 10 years or more, pretty much every one there had worked under the same management for a long time and he has brought in a breath of fresh air. He has changed the top tier. He has a completely different style to mervyn king. Here is a guy who is very comfortable speaking off the cuff spontaneously in interviews and so on. Much more at ease as a public figure. I think he is reshaping the bank. What hasnt change seconddegree aierarchical ns organization. He hasnt faced much resistance. He arrives with an expect of Forward Guidance will be issued. It is issued the following month. On the whole, i think people want him to succeed and take his lead. In the autumn, i think well begin to see perhaps some members of the Monetary Policy committee starting to say we should be beginning to raise Interest Rates. That would be the first sort of breaks in the ranks. That is how the system is supposed to work. He is very much a than command of his institution and everything is going well. And the bad publicity is extraordinary. You wonder what would happen if something actually went wrong . Very true. Britain is said to be the strongest growing g7 economy. You would think carney would be getting slightly better press. The board member composition is goings to change a little bit this year. Christian ford is coming in. Ms someone from the i. M. F. Joining. How important do you think this International Experience is, as carney is from canada, in a post crisis world . I think it is extremely helpful and the banks always try do it. Carney is chairman of the International Body which sets financial regulations. He has himself a very international perspective. I think for london in particular, as a financial center, that is absolutely essential. What you see and are still seeing is a huge buildup of firepower. Not only is carney chair of the Financial Stability board, one deputy comes from being number two in the i. M. F. The other deputy si used to be our man in brussels and on the g7, we have a tremendously strong Diplomatic Team if you like if the bank of england and i think that is helpful. Just one final question on the economy. Mark carney is dealing with a lot of healthy tail winds with the economy but one thorn in his side has been the fact that wage growth doesnt seem to be picking up. It is still 1. 5 . Why do you think wage growth hasnt picked up more given the fact that the labor force is bigger than ever . Jobs are back to where they were before the crisis. I think the figures are slightly misleading in that respect in that there is a change in the composition of the workforce as more people take on jobs. So i think within that total, which is growing very slowly, the people who have been in jobs all the time have on the whole seen their wages grow faster than the headlines would suggest. But on the whole, i think this is a positive. Because the alternative is perhaps that we would have higher unemployment and faster wage growth. That is what happened in previous recoveries. That is not necessarily a good thing. You want in the whole in the start of a recovery to absorb the excess labor as quickly as possible. Im comfortable about that. The real question and this is i think what the bank of england is trying to assess at the moment is as you get to normal levels of unemployment, maybe 6 or so, will we see wages and inflation pick up quite quickly or is there still plenty of slack in the system . The moment think they there is plenty of slack. Do you agree . Do you think there is plentyor slack . I think there is still some slack but not a huge amount and my view is you need to start normal iding rates well before you get to the point of operating at full capacity. So that is the case for starting to move. And from there on . Thank you so much. Deputy ks to the former governor. Oming up on the pulse, Caroline Hyde is in paris at the conference and joins with us a quick preview. Caroline . Yes, olivia. The coffee is flowing. We have members from christian dress en lady gagas designer is here talking about how the digital age is disrupting luxury. Back after the break. Welcome back to the pulse. Designers and Decision Makers have gathered in paris to debate one key question. How can luxury thrive in the digital age . Caroline hyde is there. Ake it away. Hi, there, olivia. Im joined by greg march. He is cofounder of a Business Model disrupting fine Hotels Offering the experience of a home. Many people want to experience if the the struggle sl finding a way to do it. The ing a very services that you get in the hotel. In new york a couple of years ago and now here h paris and a couple of other cities recently. How much do you think that have you benefited by the fact that other luxury bands have receipt sent to embrace it . There is a new era of businesses. There is now an emerging of Companies Like ours to bring those two things together. The best fit for a hotel was the best fit for a home stay and the that digital experience and a very traditional experience. The best of both worlds. You were previously an investor. Ou set up your own startup. What made you really grab that particular opportunity, that market with both hands . I feel like im ive been outed on television. There is a bunch of factors here. There is a revolution in progress. Youre seeing it in home stays. Cleaning services. E online and offline are colliding. I own a place in central london. I travel lot. It seemed like a waste. My home is sitting empty several months a year. I dont have the time or energy to run a hospitality company. If someone can do the work for me. Here is an opportunity. No one else is in that market thats where we jumped in first. What do you think about the current investment situation . Do you have wanting to grow your business . I think it is getting much better. There is more comaraderie. Support around those people. Here too in paris where more and more there is an awareness in europe. The crucial importance of innovation driving economic progress and creating jobs. I think the world has changed dramatically in the last five to 10 years. Money is flowing. I have been talking to people at this conference. Im really shocked at the lack of Digital Adoption by so many older bigger brands. What would you say to owner of a luxury brand . What about they benefit by analyzing the that you get online and this is the point. People live in combin with the online and offline world. They are always using their phones and ipads and connective device in the world we live in now. If youre not in that space then youre not talking to your customer and someone else is starting fofment either you adapt or you will be forced to adapt. Obviously someone who is building a very disruptive company, were well on our way. I dont want to be too helpful. Youre looking to be acquired by one of these companies . No. Were building the business. Ultimately our hope is to build a major hospitality brand in the new era. Wonderful speaking to you. The founder of one fine stay. Used to be an investor. Well see how much indeed it disrupts the hotel business. Great stuff. Caroline hyde at the hackers on the runway conference in paris. Coming ugh g up on the pulse, it is the first day for fords new california. C. E. O. Well bring you all the details after the break. Welcome back to the pulse. Lets take a quick check on the currency markets. We are looking at the turkish lira. This is the fiveday chart youre looking at. As y has declared erdogan the president candidate. Now for more on the news coming t of turkey, lets head over to elliott gotkine. He is speaking now. What are we hearing . Well, i find this a bit of a Pitch Finally revealing turkeys worst kept secret in that he plans to run for the presidency. That he would be president for all turks, not just one particular group if he is elected. Saying that he would make turkey succeed and thrive in the future. The Prime Minister has had a few issues ranging from corruption allegations and violent protests in turkey. Elliott, youre also watching israel, some very upsetting headlines over the weekend. The bodies of those missing teenage rs have been found. What has been the response . Yeah, the three israeli teenagers hitchhiking home, their bodies were discovered just outside of hebron in the west bank. The reaction from israel has been to carry out air strikes in gaza against militants from the hamas Islamic Group which it blames for the kidnapping and responsible for missiles being launched out of gaza. Thanks so much, elliott. Finally, alan mulally passes the torch at ford today. He has a sales call this morning. And the first earnings coming up on july 25. Come keion is coming up next. Tom keene is coming up next. If it is tuesday, it must be where will you be at 4 00 p. M. Eastern time . Interest rates will rise. What does it mean for jamie dimon and for you . Dad, can i please borrow the car keys . Alan mulally gives way to fields in dearborn, michigan. As is bloomberg surveillance, live from our World Headquarters in new york. It is tuesday, july 1. I am tom keene. Joining me, scarlet fu. Adam johnson has a busy morning for us. July 1. Hard to believe. Unemployment in europe is 11. 6 . Think of that. That is a lot of people. We are at 6. 3 . They are at 11. 6 percent. Overall manufacturing has slowed. The purchasing of Managers Index having some problems. In europe, germany and u. K. Were bright spots. In the u. S. , several key indicators on manufacturing. 9 45, and ati at 10 00, Construction Spending and throughout the day vehicle sales throughout the month of june. Two