Transcripts For BLOOMBERG The Pulse 20140708

A bloomberg exclusive. We will be here with a ceo. Closing in on the luxury car leader. Andill see why Audi Mercedes are catching up with the bmw. First, our first a big story. Shares in air france are under pressure. The toughest forecasting over the past especially on the north american routes and asian routes. America. Ittle bit of lets find out what is going on. More of what is going on. This seems familiar. It is. About a month ago. They were saying the bases smaller capacity. A little bit different. The same issue. They are seeing a lot of pressure from the middle eastern carriers and expanding very rapidly and talk about the transatlantic. It is interesting to see if it will have a read over to British Airways and liberia. The one difference is ig operates out of london mainly. Capacity for mainland europe to u. S. Is up about 10 compared to 2008 pete and not as high out of london. You will have to see whether it is ig. Heathrow is limited. You have the 4 runways. Heathrow has 2. A destination in the way that maybe frankfurt is not. Harris definitely is. It is an end point. The gulf carrier are flooded with capacity and called out cargo is a problem. Their cargo unit is struggling a little bit. They cited earlier and they will this month. Te later they are basically thinking about selling it. They have been selling off some of the airplanes and that is where they are at with that. We will see precisely at the end of the month. You are seeing a lot of capacity and the passenger jet. Or thenot need the cargo freighters. Chris the details in a little later. Thank you. Salesshould mention that and meeting will be tomorrow. Hans nichols will be reporting live from the event. He is focus on commerzbank, germanys secondlargest lender and may be next in line to resolve u. S. Sanctions. Hans has a more. Hans . Olivia, good morning. Heres the interstate think about that number. Billion . T half 1 the good news for commerzbank is that could get out of the way by the end of the summer and have the litigation on the sanctions aside behind them. It has to do with the delaware blacklist countries. Dealing with a blacklist countries. Comparison to what was seen from other french banks. The bnp, close to 9 billion. The stock taking a hit down almost 4 . Now 3 . Why me back a little bit. The big question is, will the bank needed to raise Additional Capital to cover this . 1. 2 billion and this will eat away half of it. Will it be the last they have to settle . Is this a summer of the settlements . At the stop. Ised we are in the early stages of what is happening. Million dollars. That compares to something significantly larger than bnp paribas. Any way of explaining the difference in terms of what happened here, what won bank did and one did not do . I finally get to see this on air. Felonious conduct was. It looks like with commerzbank they are not going to be pressing for a felony conviction. With bnp, the u. S. Attorneys office of criminal activity took place. Both the violated the rules of but a difference in degree of whether you cross the for lonely as a line. It seems like they are going softer on commerzbank and will not be push for a criminal prosecution. One big caveat, do you remember how much the numbers down surround with bnp . Even sure number at 8. 9 billion dollars. I would caution that the 500 million, it could be an initial number and could go back and arth as negotiations for sediment increase and come closer to a conclusion. Rex thank you. Thank you. For lonely us. Us. Colonialists felonio ous. Feloni numbersngs underwhelming. They dropped. The cfo told us on the results were not going to be good and they delivered on that. Chris and they certainly did and underwhelmed a pessimistic view. Of 24 when you are looking at operation profit for samsung in the Second Quarter. That is the loaves and two years we are seeing for samsung. 7 billion is how much they produced. What applef of produced. Samsung is the biggest maker of smart phones out there. , a lot more than theyre cheaper rivals. At what is driving visit drop in profits. It is competition. Not only smart phones and tablets but also the higher end. That apple and perhaps bigger screens from apple. That will be unveiled later this year. Something there will be a five into theat could eat share of samsung. And they are fighting smaller competitors. Lenovo and Chinese Companies are offering phones with hd display s, fast processors, and a much cheaper price. Theirighting of course own currency. The strength of the korean won. Overseas sales when you bring them back home. There is optimism for samsung in the third quarter. Why is it that . We have many of the analysts downgrading coming into the Second Quarter and theyve managed to lose in terms of underwhelming and that respect. Third quarter looks brighter. They promise a cautiously optimistic view asset will be a more positive outlook. They are ranked in Marketing Spending as well. Of aare expecting a bit pickup. Something to be china where we expect a furor around the 4g, an explosion in demand. Coming from china for four g phones and we know samsung has 20 share in china so that could bode well. It is not all about smartphones. And chips. Splays that seems to be helping down. With the see many have grown televisions for the world cup. There. E will leave it caroline hyde. European finance ministers are in brussels amid a war of worlds. Matteo renzi is pushing for a flexible approach to the budgetary rules and germany is pushing back. Case. T rizzis what is he asking for and why does he want it . Because he cannot pass the reforms or he wants to invest . Has not given us any specifics on flexibility, it is a mood he is turn to generate. The top line really is a renzi have a message, i had your back when you wanted juncker, now half have mine. That matteoview renzi would abate and that David Cameron. He knew he would win the fight and juncker. Want more flexibility. That is what he is pushing for. Not just him but his finance minister as well and the dutch finance minister saying, this is understandable. Surprise, surprise. Ireland say in the same and french. The french needs to drive reform. Europef the guys in especially the ecb is a we are little bit more flexible on the budget side, are you going to deliver those reforms . Maybe not. Exactly. A point well made a by juncker and clearly. What i am looking at is if it is the story here. There is some talk of a coordinated infrastructure project. A plan that could be put together. He wants to flexibility on the budget. Someearly requires flexibility coming out of brussels. Gives a ground. Will it get ground initially . I will back of this project around europe and to get in evolution and change of policy that looks softer. Indicationearly an of where renzi will take things for the is italys term. , over the last five years, you had the European Central bank trying to have a fine line between what have another monetary stimulus and there will be an incentive for you to reform. That message is everybody of the ecb. Then, he was a little bit provocative matteo renzi on the backhand. Bang. He said him stay out of italian politics. No, no. The same thing to drive be. Draghi. Stay out of italian politics. A point for the ecb, the message, we will do enough andy you guys do a little more. It is incredibly sensitive. Maybe the message back out is stay out of our business, you hit your mandate the 2 inflation target. He has seen what rizzi hasnt done. Comeave to say, renzi has out on top. He has seen was a renzi has done. Germans askede for more because they exceeded their debt. And it worked for them . Clearly. Feeling the heat. Marks and spencers ceo under fire. Well talk about that. Welcome to the pulse. Marketers spend Marks Spencers Clothing Sales have slid and said customers are getting used to the redesigned website. Good morning. Thank you for coming in. Sales are down. The bad news for marco bolan because that has been his key area. He spent nearly 4 billion invested in this area, stores, the website and it does not like it is working. What is going wrong . If you look at Marks Spencers business, it is 2. It is food which is doing great. Mprovements the online this is clearly hasnt had a mixed response. Customers have not taken highly to it. Is downral merchandise for multiple reasons. Lets put in place the website. Laura came from tesla and did well and we knew there were problems with the website. Should we assume there will always be glitches . Major Technology Transfers usually involve a glitches and the web offering will be better. Anything that is new takes time. You have operation glitches. It is a change for shoppers. Changes in the way you navigate the site. We were expecting it. However, there are more fundamental problems of m ss website which is around availability and out of stock is an issue. Chris and thats been the problem for m s a while. It will not stop overnight. It will not. Happening fors some shoppers have not really i cannot think of another retailer that has overhauled their website and made it so much more difficult for customers to navigate together they saw an 8 drop in sales. That is a good point. The future of general merchandise as we see it is on the line. From a strategy perspective, m s is doing the right thing but its is the execution part. Is it the buyers . They are not getting a no stock in. Where does the fault lie in the process . If the website is going to get a better and you see something you want to buy a it is out of stock, you are going to go somewhere else. You are not going to come back. Where does the problem lie . If it is the buyer, it should be a relatively easy fix. The problem is in the supply chain for so also has to do with the company it self. The supply chain. Also has to do with the company itself. To be up to respond quickly. It requires a lot of work. How markst understand spencer can be competitive online. The food is a this amazon and all,. Oconnell. Generalmake sense for a merchandiser to be in food and general merchandise . Of thed it is the tale two companies. In america, we do not really have this. Strong in food and cashmere jumpers. That is the Million Dollar question. 2 businesses. I do not know. The food business is doing well. It is lower margin than apparel business. It is what Marks Spencer is focusing on. Ok. One final point. A point is melinda back the best person or mark . Markearly we need to give sometime. And the new Management Team and plays place. They have done the right things in terms of the capabilities of giving laura and the responsibilities of stores and online. They are making the right moves. Execution remains to be seen. Rex thank you very much. Time for the pulse number. 60 Million Pounds is how much united wanted nike to pay for sponsor deals, this is according to people familiar with the matter. Nike does not think it is a good talks. O they ended we are back in a couple of minutes. Good morning and welcome back. Time for hot shots. The high diverse. Divers. The series. To check this out to stop nearly 100 feet. I would imagine the water is quite cold. Look at the speed. Practice makes perfect for the pro. During aed the stunt training session. On a go pro. Helmet. A red bull with an opening ceremony. Ritual blessing. Begins the competition. It will take place over the coming awake. It is in mali. Did you go surfing . I got up. For how long . 10 seconds. I had an instructor holding the board. The european markets. Manus cranny has more. Under a little bit of pressure. We go into a quiet week. Matteo renzi looking toward the irish and supporting rearranging the fiscal policy and the debt estimates should be on this map. U. K. , thein mind, any chamber of commerce down by 0. 3 . It warns to raise rates could be impactnd could have an in confidence levels we are seeing in the United Kingdom. Go first, be brave. The United States of america. Today the and under, u. S. Is going to auction 27 billion worth of notes. Thats a little bit of pressure. That will be interesting to cover. Cutting the amount of bonds they issue. Every time they have an auction. U. S. Equities trading a shade lighter. 69. 1. Gold is off threemonth highs. Down a shade. Thank you. Reporting season is about to start. Yelp and you can rate financial experts. Well talk to the ceo. Thats coming up next on the pulse. You can follow us both at twitter. Us and to tell us what you think. Who are you rooting for in the semifinals . \ good morning and welcome back. You are watching the pulse. I am guy johnson. I am olivia sterns. Finance ministers are meeting in brussels and they use of the euro. Yesterdays talks, they signaled their willingness for countries to meet their targets as long as they make measures to make their economy more competitive. He has told bloomberg that his country has no plans to sell bonds and probably not until 2016. They had ago were some financial crisis in years. Bulgarians lined up at the largest banks. You chris ukraines charge prohave russian rubbles of the pound is down quite strongly. I will come back to that and what it means later. To investment advice. I am sure you have one of this. I am talking about a monkey. You probably rely on stock pickers. For when youogs decide on stocks. Is it any good . What israelis start up saturday have the answer for finding out. Elliott gotkine has more. A thanks, guys. I am joined by the cofounder and ceo. He founded the company after losing money following the advice of an investment house. He joins me now. Granted to have you. Tell me how it works. Developed an entity called the accountability which measures the performance of anybody giving advice using andnologies such as earning processing. Basically, we are bringing accountability all down with our users to evaluate their picks online like Marketing Gurus and onlyst and bloggers platforms. People often say that pass performance is no indication of future returns, there is often a disclaimer. If we look at the past performance of the analyst, banks or bloggers, how do we know in the future . Most of them are good in the past. But we have found some inconsistencies in their calls meeting those who are good or more likely to be good in the future as well. On average, who is better highly paid investment houses or those sitting at home in their rooms or just blogging away . If you merge the lists of analysts and bloggers, the first and was ranked highest will be the 50 fifth place, the first 55 are prominent financial bloggers. Some investors we are speaking to are saying, investment analysts can move the market when they say buy or sell and they are more trustworthy because we know who they are. They are not necessarily ramping a penny stock. Does it undermine the fact you are incorporating people who could be anybody recommending themselves . And that is correct. And analyst from Goldman Sachs is likely to be influential and move the stock a bit but if you measure on a longterm time you will see that in the long term, the blogger, the one you never heard about could be sitting at theres a better chance he will outperform the market. What docurious to know the banks and investors and professionals make of this service . You are taking a lot of the advise of analysts that banks are making a putting that on your site as saying maybe you are not as good as somebody sitting in their rooms. And that is true. We are holding them accountable. We are getting good feedback. Some of them are using us as an impartial third party. We are getting emails from analyst asking us to update their profile pictures. That is what they care about. Youre raised 90,000 so far. What is the money for and what do you have to go . We are finalizing at the moment. It will be millions of dollars and thats all i can say. We wish you the best. Uri gruembaum, ceo and cofounder of tipranks. I am throwing my dart back at you. Does it make you the monkey, elliott . I do not want to go there but there does how we got to it. Elliott gotkine, multitalented. Thank you very much. Audi and mercedes are narrowing the sales gap with bmw. Lets get over it to hans nichols who is a live from berlin. Clearly mercedes, nipping on the heels of a bmw to be in first place and luxury car race. How safe is bmws lead . Ahead ofy are 16,000 spot and is in the top they finished last year in the top spot but there are troubling signs for bmw and audi balmoral bmw. Later this year, Mercedes C Class will be introduced in china and that is where a love the growth is. If you are look at the numbers, it is impressive. And that is where a lot of the growth is. Audis growthat and it is propelled by a strong showing in china and the u. S. And oddly, spain where they have had a cash for clunkers program. You do not also said that an luxury together so we will dig into those numbers a little more. Overall, you see strong growth in china. Stronger growth for all of them in a lot of ways. Because bmw may be losing marketshare to mercedes down the line, some analysts are predicting the second half of the year award not to be as strong and we are seeing that stock down a little bit. The guy, olivia . Numbers. Royce, great a real standout story. I understand we should be talking about mexico as well. Crystal well, bmw has joined mercedes and audi and having a plant. When you look at north American Growth which is been steady but not crazy like china, they want a second plan. They have one in spartanburg, south carolina. The billiondollar plant you could our production around up 100 50,000 vehicles. We are looking at maybe 2 million vehicles for all of these companies combined by the end of the decade. A remarkable story of growth and driving an explosion in china. They need to license a more drivers. You have to hundred 50 million licensed drivers and they want to go to a billion 250 million licensed drivers and they want to go to one billion drivers. I am not sure i could pass a chinese driving test. I am a terrific parallel parker as many women. And i can drive in the left side. Watching, fran. Something to do . I am a perfect driver. Twowheels. We get to ride in the chase car. Lostss of the major the last major event. It is the second of the final stage of the tour de swiss. He directs the team. Left or uphill. And they are pinning their stage hopes on one rider. He is one of the best here. Win today. E can downhill, cyclist go faster than 100 kilometers per hour. He has broken ribs and collarbones. Reallye back, it is hard. We have one guy [indiscernible] midway through the race, a pull away. Ght riders he decides not to chase and they will protect their climber and bide their time. In any situation. Chris the other seven will protect him and they sacrifice for the leader. Ometers, he makes the call to a attack. The mountain is in sight. The winner of this stage will be decided on the hill climb up to the ski resort. A dash to the finish. Radio to the leader. That is not enough. I was second. Finished second. We were close to winning today. He finishes three seconds behind the winner, close a but the disappointing. Timing is everything. You are a psycho list. Cyclist. Are a swisso not go down the outs. You can take on ryan chilcote. Lets stay on sports a gets you and get you caught up with the world cup. Over ticketswas has been arrested. Director of hospitality was detained at the Copacabana Hotel where officials are staying during the world cup. Fisa hasnt denied fifa has denied that referees have not been going giving out as many red and yellow cards. Fouls, more than any in their tournament. Jersey is selling for less. Fake fans are opting to buy versions. The original price was 102. A big business, big responsibility. How the private sector can come back can combat global economy. That is next. 45 minutes past the hour. Welcome back. You are watching the pulse. Global inequality and we are talking about the 21st century. Focus on where the big business can reduce the gap between rich and poor. Joined by Larry Hathaway. A conversation about this. Live in a world clearly of inequality. The data surrounding the inequality is a mixed and biased and fuzzy in certain areas. Give us first of all, why did you write this . Premise, is ae Getting Better if we strip out china . Ourt is of interest to audience. Our audience of investors and people who do business with us partly because of the attention that has come of the issue. Partly because theres a general awareness of inequality is one of the defining issues of our time. The eradication of poverty. Looking at it this as an economist but also the interest of investors and others in mind we felt it was an important issue to address. What are some the key findings . Chris and there are 2. Countries, inequality has arisen. That is well documented by a number of different authors. A phenomenon not only since the financial crisis above further past three decades. The second is less welldocumented or perhaps the current discussion and debate is inequality between countries has declined. Aboutis a clear story china and its ability to reduce poverty especially extreme poverty and some echoes elsewhere. Clearly, it is worth noting. As we were talking about, i asked you to what extent do these numbers hold up if you strip out china. A much less so because china is unique in its Development Story and to lift hundreds of millions of people out of extreme poverty. That is defined of less than one dollar a day. If you look at a global level am a percentage of people in extreme poverty in 1990, over 40 . Today, over 20 . A near having of the rate. Been obviously some progress but to a lesser extent elsewhere. Larry, you guys are one of the biggest wealth Asset Managers in the world. When you look at the people you run a money for, does the inequality story make them nervous . And how nervous . Focus is on the things like distribution on higher taxation and transfers and to some extent, that is an understandable debate taking place in the context of outcomes in a number of countries. Having said that, there are opportunities. We cited this in the paper talk about partnership between business and government and ngos. The partnerships that are working well in the production of Public Health which is terribly important in especially forms ofng the most poverty. There also seems to be opportunity among those who engage in philanthropic activities. Happen, ioes not would be curious to know if theres a predisposition to get more money in cash but cousin there is an expectation if they do not do that, the philanthropic work, they will be forced to do it . That is a political decision. It seems that it is incumbent upon them to resist and those amines could perhaps do so in ways that those who do not have that sort of wealth or able to do. In that sense, what we are trying to do is throw up a challenge in their that is incumbent upon governments, business, people with means, and ordinary citizens to address these issues and faceup and engage around them. That is the purpose. You have a lot of wealthy clients who are interested. We were at a conference last month called Inclusive Capitalism in the u. S. , bill clinton and Christine Lagarde was there. What advice do you give to your clients who are looking to do it Impact Investing . How do you think they should get into it and what kind of returns should they expect . First of all, a lot of folks are involved. Big foundations in particular which are a byproduct of individual wealth Success Stories from the rockefeller foundation, the gates foundation. They have made great contributions in areas of the green revolution, agricultural productivity hugely important in this space and Public Health campaign. In terms of new initiatives, certainly, and impact on a payback of the investors in the basis of measurable and deliverables and social outcomes and Poverty Reduction or health care is one way to think about this. Thinking about the tax code in the way it is being used to engage more people in this philanthropic giving. And to be sure, economists are a bit worried about too much manipulation of the tax code for those purposes. The deliverables are there that can be supported. See you. Great to Larry Hathaway joining us. Well be back in a couple of minutes. Welcome back to the pulse. Time for new energy. 150 leaders have come together for solar. Will David Cameron back it . Good morning, jamie. Thank you for coming in. Can you tell us about the solar fund . What is the Business Model . Projects in the u. K. Operating and locked in by the time we acquire. Instead of wonder million anject, coming through acquisition in play. Nine projects paying a dividend of 6 which is generating an ir of a percent. The government announced a plans of the way solar will be subsidized. You have to navigate the rapidly changing landscape of solar subsidies, how do you cope with that . We have been investing in the sector for 70 years and we have seen the landscapes change. Is march 2015heme the which is accelerated by two years as another change we were expecting as coming sooner. As the prices of solar is growing at a fastest rate, we should be able to get going asediately into the scheme it takes over from the current scheme. Will it change in the availability of your project . Theres a big secondary market and solar. The change does not impact projects lower than five megawatts. Sizeolar funded in that and if this scheme is a scheme where solar can be favorable with a removable technology. Jamie richards of Foresight Group we appreciate your time. Stay with the pulse. For our viewers, the second hour of the the pulse is annexed and will have an interview with see nd talking about samsung and their disappointing results. A red flag from air france. Cracking down on commerce bank. They could have violated u. S. Sanctions. The smartphone maker misses estimates and its chinese rivals. Good morning to all of you in europe. A very warm welcome to just waking up in the United States. I am guy johnson. This is the pulse live from european bloombergs European Headquarters in london. Ceo of matomythe media group. We see why audi and mercedes are cap and up with bmw. Lets go from cars the planes. Have cut air france the earnings forecast. A reporter joins us now with more. We have heard this before. Now we are getting it from air france. Citing trans and the middle east. A little bit different in that air france is citing asia. A lot of this is about the middle eastern carriers. Aney are expanding at incredible rate. There is some pressure. Some of the analysts ive spoken to are saying this is about a mainland to United States market versus the u. K. To the u. S. Withgian air came out transatlantic flights. Are you going to get into this . He said not unless he can get the big planes. Carriersbout the gulf buying a ring up. He might be getting his wish. That would be interesting. That they something had a weakness that they mentioned earlier in the year. They have had issues with their cargo unit. Theyre going to talk about this later this month. There is a lot more cargo being carried in passenger planes. , basically from British Airways point of view, this is good news. Can get the overcapacity that you would get elsewhere. I suppose that is true. They will have the results in august. I will ask that question in august. Is going to see interesting to see what they have to say. Thank you very much indeed. International correspondent hans nichols will be reporting live from that event tomorrow. Now we are looking at commerzbank, germanys secondlargest lender. Hans, only half 1 billion. What did they do . That is still a lot of money. Even if you are a shareholder, shares are down about 4 . The bottom was 4. 1 . There are some interesting things about this potential settlement. 500 million is the floor. This could go higher. Number, with the bigger 8. 9 billion, there was a lot of bouncing around on that. There was run report that it would be 16 million. This is a limoneira number. We are seeing a lot of gaming out from the u. S. Attorneys office. They are trying to get the right number. Theyre trying to get the formula right. Or felonyl convictions. That could be a big difference here. They have got the money set aside. They have 1. 2 billion in provisions. Is this a dry run for a potential action against Deutsche Bank . That is the big question in frankfurt today. How could you not say for loney us . We are in a situation where you talk about Deutsche Bank. People are looking at what could happen next. When we look at commerzbank, this is a small fine. Are we beginning to understand that maybe the crime does fit the punishment . We dont know what it will finally be. 500 million, is this the way the regulators are not going for leather and targeting everybody . The interesting thing about u. S. Egulatory parts of the sizes you have competing interests. You have three or four regulators looking into this. It you have the fed, then your state regulator, you have the prosecutors and the department of justice and the Southern District of new york. This operates semiat thomas lee. Alternately they take their orders from washington. The u. S. Know where regulators are. We dont know if they are acting as brakes on these large fines. Once the settlements are final we may get the back story on how much of a concern there is about Systemic Risk if you continue to go after these banks for what appears to be criminal activity violating u. S. Sanctions laws. Business with iran, sudan, myanmar, other countries that have been blacklisted. We will have to figure out the logic. We assumed you were going to thank you so much. About samsung. K results arequarter underwhelming in the market. Businesshe european correspondent. We knew it was going to be a big number. These results were not going to be good. They did not disappoint trade despite everybody down grading the earnings for samsung , it was worse than they expected. 24 drop it off rating operating rough it. They are fighting competition. Competition on the highend. You have apple leading into the highend of samsung. Not is why the f five did fly off the shelves. Well see competition in the lower end. They have get the hd displays. Clearly samsung is feeling the pressure when it comes to competition. Aresmart phone makers seeing a slight following in the ever growth rejection you see for the latest phones and latest tablets. Growth is slowing slightly. They are fighting their own currency. South korea has been strong against the u. S. Dollar in the last 12 months. Look at the sales they are doing overseas. When you bring that back home, you have less bang for your buck. They are fighting on several fronts. Youve got to wonder if samsung is more concerned about the iphone six or if they are worried about these cheap rivals. It does look like they are signaling this is a trough. Wire the optimistic . They must stuffs a better third quarter. Theyre cautiously optimistic. China is about to get very hungry for four g phones. Samsung is the Biggest Smartphone maker in the world. They could benefit in china in particular. Big game tonight. Up there is going to be a lot of people that want cameras to take pictures. Summary has a lot of them. Millionne has some 6 dollars worth. This is an extraordinary story. A factory based in brazil. 10 trucks rolled in. They stole 40,000 units of product. Mobile,alking tablets, that is a phenomenal amount to be making off with. Samsung says 50 employees were held hostage but no casualties. Someone out there has got a phenomenal amount of samsung product to be selling off at the moment. Luckily they were protected by insurance. That is an extraordinary story. You would think you could track these things. There would be something in there that says this phone has a unique code on it. When it logs onto a network we will know. This is why they are calling for a kill switch in the United States. You could turn off devices remotely so that if they are stolen. European finance minister is today . A war of words between italy and germany. Renzi is pushing for more flexible approaches. Jonathan ferro joins us now. Is this another you scratch my back i scratch yours renzi . There is probably more than that. There is a thing called leverage. Number two you broke the rules with france. Allow us to do the same thing. It might been us benefit as well. European parliamentary elections, i have a mandate. Have you got a mandate . I dont think so. Many people across europe dont have one. He trounced everybody in the italian parliamentary elections. We are going to do it my way. It looks like you might get his way. Do you think he is going to get his way . The germans are getting hot under the collar. Things are changing. They are sitting there saying we will give you a little bit. At the same time you will push through reforms. Right now they have got a lot more in terms of the ecb. Reallysame time can they tell governments what to do. Renzi says no. They say to stay out of italian politics. Yes he was a bit provocative. He was just repeating what they have all said over the last couple of years. He is hitting hard. It is to drive through reforms in italy and a message at home to europe. That is why he gets the popular vote in italy. He has got a message and he has to deliver. He is facing some massive challenges. Is moving slowly. Germans are not going to sign up for this in a big way. Signals, think about all of the support they are getting. They are facing some flexibility. Job growth in europe would be welcome. Theres one person that is pulling the strings over the last five years trade it is not the italians, it is the germans. We spend on a time talking about the italians. What he has done is given a massive favor. What he would love is flexibility. It,tands up and asks for are they going to deliver it . The spanish of done their work. Maybe the get the french off the hook. You give them some flexibility are they going to take his feet away from the fire . That is the big risk. Even the ones who say you can have some flexibility which need to frontload on reforms. There is a trust issue in europe. Maybe they trust the ecb a little but more. Precisely. It therein lies the problem. Thats her off. They are trading beneath u. S. Treasuries. We will bring the focus back to samsung. We will look at how they can bring that growth. Were back in a moment. Welcome back. We had disappointing manufacturing information from the u. K. The only thing i will say is when you look at the pound is i am not sure this tally works of the data we have been getting. We are back where we are. Lets get picked to one of the top company stories. Samsung has missed estimates with apple andon chinese rivals. Good morning. Welcome to the pulse. What should they be more worried about . There is money for them to worry about. The iphone six has a bigger screen. That has been a key thing at the highend end of that apple has been missing. All of the grace in this market is the lowend. That is where private companies in china and india are doing very well. If they are privately owned a. Nobody knows what profit merit margins they are earning. Headed samsung with such a dominant position so . Nderestimate the potential for these operate with android. How did they miss the chinese . It is keep difficult to keep innovating at that pace. Pointg has been enjoying percent operating margins for years. Is difficult to invent. It is difficult to invent a new iphone every three years. Around asdont come often as investors would like. I dont think you point any fingers at samsung and say they missed it. It was always going to happen. It just takes a while. We see evidence of it today. Are they going to be forced andake a cue from apple return cash more aggressively to shareholders . I think they might like to see that with samsung. The payout is too low. It is only around 1 . There is a huge amount of cash on the balance sheet. A lot of people but to see them be more proactive. So far we have not seen any signs of they want to more material with it. We will have to wait and see. I think that is having shareholders would like. Nokia. We are just watching this same movie again . I was thinking about this morning. What we sawdecade was several players in the handset market fighting that out. We had motorola and nokia. We had apple and samsung as well. For the last five years its just been about two players. Nobody has been able to come close to them. You are starting to hear some similarities. People look at samsung and they say the scale of the company and its cost efficiency and its Marketing Budget cant be touched. That is what people said about nokia peer it we dont that story played out. I think that the next decade could be a rerun of the last. But now we have private players. They are harder to monitor. These are the micro maxes. We really need to see their hand to see what they have. There are aw that, lot of unknowns. This is why we want up with cheap valuations on samsung. What can they do to compete with apple . It is difficult for them. They have not been a software company. They have borrowed android and put their own interface on the top. It is a minor addition. It is something other people could do. They have tried before to develop their own oss. They havent gotten any traction. Lohink it is going to be a ng slog. Their strength has been manufacturing well and putting their fingers in a lot of different pies. They have made consistent money for over a decade. I think they just do more of the same. I think that entails lower profit margins. The chances of them reinventing themselves and becoming an Apple Software ecosystem is not going to happen. Thank you. We are back in two couple of minutes. Good morning. Welcome back. It is time for the new energy. George bank Deutsche Bank is 1 billion for japanese solar. Ibm has started a project to assist china in air quality. It will boost the amount of Renewable Energy that will be available for grid transmission or storage. It will counter the declining sales in the worlds secondbiggest economy. Lets talk about the pulse numbers. 6,000. That is how much facebook is per their teenage interns month. Landing top talent is so difficult that they are trying anything for an edge. They are hiring interns out of high school. How can an 18 year old be worth 6,000 a month . You knew liz well . You know who plays well . I was a bloomberg and turn. Nothing close to 6,000. The second time is the charm. We will talk about that when we come back. Welcome back. Youre watching the pulse. Were live in london. I am guy johnson. These are the new top headlines. European leaders are meeting in brussels. They are boosting the use of the euro in preparation for ecb supervision. They are willing to give governments extra time to make that targets. Measures to make their economies more competitive. The European Union endured the most worst financial crisis. Ukraines government has accused prorussian rubbles of destroying seven bridges. Ukraines army has recaptured territory in the east. Sanctions could be applied as soon as today to more russian individuals if they are backing the insurgency. How are the market forming this morning . Here is manus cranny. We will get to the math and a moment. Out. s a big reports this makes for some fascinating insight. Inzi is setting the agenda europe. Deliver where others did not . 27 billion dollars worth of u. S. Treasury paper comes into the market today. Why do we care . Tomorrow we get the movement in where rates are going. If you think the fed is going to . O higher faster then when it comes to the whole rate issue in the United Kingdom, Ernest Chambers of commerce warned about confidence. Denting that confidence is raising rates. Equity markets were down for three straight days. Temporary than just a repot in these markets. Iag comes down with the air france information. Think about north atlantic. Think of what that means for traffic in terms of overcapacity. They are fighting with virgin and middle eastern carriers. Now there is overcapacity. They are talking about a rising cost moment. They could be on the cusp of a big cash return. It is 25 minutes and here is tom keene. We have got a lot going on. Rachelle meyer will join us. We will talk about the jobs report from last thursday. We will talk about her expertise on the American Housing market. We will talk about the United Kingdom housing bubble that some. Dean maki will join us from barclays. He will talk about his relative optimism. It is interesting to see the backandforth between lower gdp and the bang up job report. Big deal is uber they are really heating up. They announced a price cut to compete directly with yellow cabs of new york city. That is front and center this morning in new york. That is very interesting. It is cheaper in london. Uber in new york they have surged pricing. Have football fever. Who are you rooting for today . I have brazil in my bracket. I am doing almost as well as stephanie ruhle. Stephanie is rocking the house. Up she has way too much expertise for me to compete with. I have argentina to win it all. Be sure to watch surveillance in 25 minutes. It is time for an exclusive. Matomy media group is trying again. We have more. I have got the ceo right with us. It is great to be talking with you. You are trading up. You made it. Good morning. How does it feel to get this away . It is a big honor for us to be trading on the Stock Exchange. It was unfortunate that we missed the first time. We were determined to do that. I think it is the right place floating. Go we have a good company for this market. Penniess are up a few off the conditional training from this morning. You are on the high grace market. Terms what does that mean . For us there is not a lot of meaning to that. Just to get into the Stock Exchange you need to have 25 of your shareholders in the european zone. We aim for a market that enabled us to do that. That is what we did. Could you have gone into the high grace market the last time around . More moneyaiming for to raise. This time we raised 70 million. The we took a loan. We want to make this in the firstround. We raised 70 million. We have more profits. To theere we can go premium markets. I know youre not taking any money off the table. What is the money going to be used for . We are going to use it to make more acquisitions that enable us to get more capabilities and build the business. Money and itking will all go into the company. We feel we will build value for the coming years. It is a great thing. It is viable to raise the money to go further. That it is just the beginning. We can build a Great Company in the future. The evaluation right now is around 350 million. You said that your goal was to build a big business. A billion dollar business. To as awe expect billionaire . I cant forecast. I think we are on the right track. The company was profitable. Were are going to keep doing that. One thing that was helping us gave focusst time we on revenue. This time we were able to show the First Quarter results that beat the forecast. Isolate nice thing. If it is a great achievement for us. It gives us the confidence for investors in our company. If you extrapolate that for the rest of the year you are on pace. I cant give that to you. If youre checking just the numbers it is growth. You saidime we spoke, that investors lost their appetite for internet stock. That is why you pulled. Have they get their appetite back . Valuations are higher than before. The u. S. Started to go down. They were scared about where it would go. The market stabilized and is growing again. The market cap is getting back to where it was before. This is giving appetite to investors. This is the future. Place. In the right an emerging industry of the future. There is no internet bubble right now . That after these corrections we will see the numbers are going down. This is a real valuation. Not a lot of people have seen the news over the last few days. You are a former military man. As a businessman in israel how do you deal with what is going on in the south of israel . We experienced a few rounds like that. I think until now we experience it and it does not affect the business or our supplies. Think this round will pass and we will keep doing business as usual. The ipo this morning on a Stock Exchange. Great to have you with us. Unconditional training begins on friday. Fix. Xing the were going to talk about how they might potentially reform. That is coming up next on the pulse. All of those orders would put into the auction. It is much wider. They are taking orders on the phone from a number of parties. Councilhis world gold director speaking to us earlier today about the process for setting the price of gold. That has been in place for almost a century. After a series of scandals the london gold fix it is destined to be dragged into the 21st century. Jessica howard reports. We all know the shiny precious metal. How precious as it . Had we put a price on it . Twicenchmark has been set a day every business day by a panel of banks in london. They say what price they are prepared to buy and sell out until there is a consensus rated it is called the gold fix. It was set in a similar way. Concern is that the price can be manipulated. Barclays has been fined for wanting letting one of its traders manipulate the price. Fewer banks want to be a part of the process. Now decide the benchmark price for gold. Only two banks now set the price after Deutsche Bank allowed. The industry has been discussing changes on how to set the price. It will be based on data from electronic trading. Worth 80arket trillion every year, there is a lot riding on this fix to a fix. Where thealk about price goes from here. John mayer joins us now. The prices rebounded a little bit in the last few weeks. We are trying to get 1320 this morning. Is the balance of probability that we wind up in a mediocre range that does not inflate a great deal for quite some time . We have positive and negative factors in this market. Inbalance the big rise stocks is going to leave rice desire. Significantly higher . 50 or 100 by the end of the year. Enoughotten that hedging that depresses rices. That offsets that. There is a good market to sell into. You have got short covering. There are a lot of shorts. Those shorts are being closed. The market is ending to go a bit more bullish. There are Inflation Fears in the United States. Investors are worried that the fed is behind the curve. It keeps saying that they are focused on employment. That is their key idea for now. Theyre not so worried about inflation and the impact that will have. If the fed does start to catch up and raise interest rates, the dollar will strengthen and that is never great for gold. Where is the demand coming from . What are Central Banks doing . It is difficult to know what Central Banks are doing. There is more buying in asia. There has been some selling in the latin american continent. It is difficult to know. We are likely to see more indian and chinese dying. Buying. There is quite a lot of new investment money coming in. Gold producers are struggling to meet production targets. When the market was biking up back in 2011, they were buying back their hedges. That locked the men and they were not able to take off. Now they are locking in. There has been a depressive effect. Gold, i donte to want to be buying the minors. I think it is worth looking at some of the minors. Yes they are locking in. Theyre not so bullish on the market as they were for years ago. They are good at pinning down the costs. They really blew out the industry dramatically. They got a scare. Reduced to fight hard to costs. They are looking at cost deflation. That wont occur for every minor across the board. Is a lot of Spare Capacity that can be taken out. Struggling in south africa. There are more strikes. It looks like another union is kicking up a fuss and muss to have their own deal. There are strikes in south africa every year. How do they compare to years past . Now that wages have gone up, houston are the margins . It is pretty tough down there. The new the currents to bail them out once again. Youll notice the gold industry did not go on strike. The margins are thin. It is blackandwhite for them. It is binary. I dont think we will see a lot of strike action on the gold mines. We might see some protesting. It was more politically motivated. They were carving out their niche. The majority of votes. The minors that when a striker never going to get back the earnings of they have lost. It is a sorry situation all around. Is it going to get better and better . An executive was telling me about automation. This is an industry that has not had the automation that so many other industries have had. What is the potential for technology . It works with certain mines. Into a southmation African Mining industry has a problematic. It usually ends up in some form of financial zester. I am a bit of a traditionalist when it comes to mining. If you dont mind gold precisely than your cost a lot. The way they do it is brilliant. They have a fantastic industry for making network. If you break that model and try to bring in new machinery i think it would be very difficult. Some of the mines have very large scale. They bring in big machinery. I have been to a mind. It was three kilometers underground. That is pushing for automation. Theyre able to planet from the start. It from the start. It was nice to see you as ever. Class of the titans. Brazil takes on germany in the world cup. We will look at the match when we come back. This is one of the movers of the morning at. Manufacturing data is out on the british economy. Look at the pmi. It does not gel with that. Of now for look and what we are watching for the rest of the day. We are joined by hans nichols. You are watching commerzbank shares down by three or 4 . With new fines for violating u. S. Sanctions. I will be looking at a couple of things. When reporters wake up in washington it is going to be sweltering. It will call the Justice Department to cf half 1 billion is the floor or the ceiling. They will ask if Deutsche Bank is next. To come out of this. Germany versus brazil. Had a local news just great graphic. Defenders mentality here. Ive got to fly to frankfurt tonight to get on the plane. It is nearly impossible to get an airplane or cab when germany plays. I might have to walk to frankfurt. My money is on germany. He will turn up for work tomorrow. Pulse. It for the keep it right here on bloomberg television. Surveillance is next. Prepare for aels last stand as russia prepares for negotiations with kiev. The American Housing market is a mystery for 2015, and over the there is a price war in getting you to the airport. Good morning, everyone. This is bloomberg surveillance. We are live from our World Headquarters in new york. It is tuesday, july 8. Im tom keene with scarlet fu and adam johnson. Manufacturing. K. Unexpectedly drops, the most in 16 months. Hennepin, a fourth straight monthly current account surplus, making up then making up for a weaker yen. Underscores a significant change in japan. There is a massive tidal shift in japan. It is working. Data, we have a lot of stuff not a lot, if you think. 7 30, the mse smallbusiness optimism figures come out. 10 00, we will focus on jobs opegs