Transcripts For BLOOMBERG The Pulse 20140716

Sound, at the speed of we will take you inside the worlds fastest and most expensive private jet. Outrageousions options, check out some of the strangest items ever sold on ebay. We begin with the big ecostory of the day. Chinas Economic Growth increased for the first time in three quarters after the government accelerated spending. Jonathan ferro has more with the market reaction. Are you still alive . Talk to me about china. This is reassuring for us in many ways. The top line is reassuring. Growth that 7. 5 . That is solid growth. The synnex among us the pointu take it as seven five percent growth, the question has been asked whether this economy is restructuring. Look at some of the credit growth going through and the stimulus measures and you ask yourself whether they can get the task done. Theyre looking at this and for that government to maintain legitimacy, you have to maintain jobs. They do not want the Unemployment Rate to rise. They have to generate growth, no matter what looks like. Lets talk about the federal reserve. There are two very Different Things to consider. Where do you think the way to focuses . Is it on janet yellen . A little bit of volatility in the air, we may see rates rise sooner than we think. Debate the excitement of bloomberg. It is little bit more measured, a little bit more nuanced. We might raise rates faster than you think. On the flip side, on the other side, if it does not, we might keep them lower for longer than you think. Forget about the testimony, forget about the q a session and look at the quote. Some of the valuations of some of the sectors are stretched, and it is quite big for a central bank to make that call. You think that is what the q a session wo isat is why day t important. I want to know about stocks. Janet yellen did say she is not overly concerned about the valuations. Very true. An interesting dichotomy at play. Lets turn our attention to the middle east. Editor Elliott Gotkine is in tel aviv. The ceasefire was frederick and not rhetoric and not reality . It andisraelis accepted posit their attacks paused their attacks for five or six hours until the rocket barrage became too much. There are temps in the region to broker a ceasefire. The Palestinian Leader is due to be in egypt. Hamas. Not control strip. Controls the gaza it will be their decision to observe the ceasefire or not. We have seen reports from that 100,000 gazans have been told to leaves to leave their home via israelis before further strikes. A large number of women and children and the like. In israel, it was the First Casualty as well. A volunteer to take food packages was critically injured in a mortar explosion. And later died from his wounds. Depressingly familiar and no sign of a ceasefire. You for that roundup. Lets turn to tech, apple and ibm, they are putting old rivalries to rest. Yahoo was keeping more of ali baba that originally anticipated. Ryan chilcote and Caroline Hyde are here with the details. This is a nice big move. Apple, ibm, finally we get the crossover between business and personal life. Interesting that these are two companies that have been feuding for three decades. 1984, the mac comes on the scene. Had, cades that ahead, we know it is all about apple. It is slightly better for ibm. In a nutshell, they will make business apps for iphones and ipads. The likes of Caroline Hyde can now use their iphone or ipad for more than just browsing. She can say, i won approval for this for her posh dinner. If we had more businesslike things going on, i see something selling well over there and i want to put in a big order for that. That is something people are not doing in the mobile space right now. Siemens, their employees have iphones. Why wouldnt ibm want to get in that space . Want you to put these earnings in context. This ibm deal with apple, that is less devices. So much growth going on in mobile at the moment. It is interesting that we have intel beating estimates. Asml, in the food chain, is the maker of chip machines. Their customers are the likes of samsung, intel. They make machines may have been investing a huge amount in this new euv technology. The machines that make more powerful chips. Areeems as though the sales not going as quickly growing as quickly as expected. Everyone was thinking this was the future. We know that smartphone and tablet sales are still growing, but not at the pace we used to have. Maybe these powerful chips are not in demand as quickly. Three of those machines were ordered. They will be sold in 2015. 2014. Ere expected in 2014 sales not looking as good. It will grow six percent. Morgan stanley saying this is another sales warning. News. Od a slightly different story on the tech story ibm shareholders thought it was delightful. Apple was up about two percent. The loser was blackberry. Investors continued to be concerned. 3. 5 that was down 3. 5 . Ibm returned about 70 to include dividends. That sounds pretty good. But then you think the s p take note, this deal gets announce yesterday. That is when ibm will have their earnings out. I think what ibm would like to say, look, this is a direction we can move in. Maybe they do not have exciting revenue numbers, but this is something that can sweeten things. This is a company that is feeling the warm winds coming from apple. We will get a new iphone, we understand, in the fall. That means they will be driven by that. Theyre already seeing profit escalating. Chipmakers are doing well. The company that provides their equipment, and not doing so well. Techank you for that roundup. We will stay with a hold tech theme. Also coming up, a bloomberg exclusive with the ceo of christies talking record profits. Welcome back to the pulse. Bloombergs on london headquarters. We are on the present. The pentagon has confirmed the f 35 will not make its airshow fleet. It was grounded by fire. An appearance was planned. Lockheed martin hope to boost foreign orders. Shares of Qantas Airways fell. Majorityowned by the australian government. 49 cap oneep Foreign Ownership in place. Rio tinto said production rose 11 in the second quarter. The expanded operations in western australia. Output matched estimates. Oil prices have fallen only seven percent this year 27 this year. Those are your headlines. Theme running through markets and this morning, it is tech. The fed concerned about tech valuations. They should a report. Sent facebook and twitter lower. A partner atw is passion capital. Decidesshocking the fed to send us a memo to tell us that tech is overstretched . I think it is interesting. They had to try to assert what their involvement would be and how engaged they could be with the market. It was a bit of a stretch for them to say is valuations were overstretched. Do you disagree . I disagree. I think it was a sweeping generalization and it was ill guided. A lot of media coverage, some of the examples people would throw out to validate Janet Yellens comments. The biotech index has a multiple of 500. Things like facebook. Of 20 since the beginning of the year. Up 136 from a year and a half ago. In orders of magnitude lets leave that aside. Apple and ibm, ibm has the hardware and apple has the kit. What a beautiful marriage. Should apple have a prenup . I do not know strategically, it is a great story. Soundsu can deliver fantastic. The question is, the devil in the details, how will the execute on this . Let take five years, six years will it take five years, six years, seven years . Look at the players in the deal. Are the executors . They are good leaders. I think theyre very good at focus and very good at getting their teams to execute. This will be it is going to be a little bit more than frost. They did go to great pains to make sure the underscore the commitment and the partnership. Time will tell. It will take far too long. A great opportunity for startups. They feed into this. An opportunity. There is an opportunity to deliver security and solutions and applications for ios devices. They are working out while they are working out how they do that, it is a great opportunity for startups. Do you think the innovation will calm in a kind of will come in the kind of companies that you back at the moment . I think so. I hope so. Google bought a company that was in the space called divide, all brought all about enterprise management. Google paid a lot of money for them. Ok. She stays with us for little bit more. Yahoo , alibaba, what does it all mean . The ceo of christies joins us live for an exclusive interview in the next part of the pulse. Dont go away. Welcome back. Let me get you up to speed. Session highs across many of these indexes. The dax up by one percent. Strong gains on the. 7. 5 , better than many expected. Is that reassuring . Rio tinto out with some solid numbers. On the flip side, the fed rings the bell and the Monetary Policy report on the valuations of some sectors. They call the valuations stretched. What do you think about that . Will janet yellen be pushed on various sectors of the market . Upside 7143 surprise. In five minutes, the u. K. Unemployment. Looking for that to come down to 6. 5 . What does it mean for the bank of england . Still with me is eileen burbage. Lets talk about yahoo . , she has managed to hold onto alibaba. Fantastic for them, a stroke of genius. Stroke of genius. They have negotiated the fact that they would have to 40 of their holding of the offering down to 27 . That means they get to hold onto three quarters of their holding in alibaba. That is fantastic. They will not about a billion dollars in cash net about 8 billion in cash. That is fantastic for the company. Is it a good enough reason to hold on to yahoo . The only reason pumping up yahoo is you have this vicarious holding in alibaba. As long as that is there, it is substantial. It is real. Until the Public Offering in until some of that settles out in terms of how much or were over aside, it is Worth Holding onto. It is the old the the only thing people are holding onto. It will be surpassed by microsoft in terms of ad revenue. Premium advertisers are not going to yahoo . That is a big problem. Which is why this was a stroke of genius to hold onto the alibaba stock. The reason they missed earnings could be rectified over the next two. She is buying time. How much time would you give her . With respect to this one transaction, it is fantastic. Been able to carve out, that is what saved them. Talk to me about chips. They make the beast machines that make the chips. How significant is that . Not a hugeit is problem. They had a huge amount of growth. You will have to see that slow down a little bit. All of the chip manufacturers have the equipment they need. This new technology, those machines cost 60 Million Euros each. You do not have to sell hundreds of thousands. Great to get your input on those tech stories. Come back very soon. It is an exclusive, live with the ceo of christies. Auctions. Lking opt what is big about china . Welcome back. Live from bloombergs European Headquarters in london. U. K. Unemployment is crossing the bloomberg terminal. The jobless claims, dirty 6000. 36,000. 27,000 was the forecast. The threemonth rate of unemployment remains unchanged at 6. 5 Weekly Earnings comes in below what the market was estimating. Was. 8. Mate the jobless claims dropped more than the market anticipated. We will have more reaction on the u. K. Data with the bill oneill. Make sure you stay tuned for that. Lets give you some of the top headlines. Eu leaders, their meeting in brussels, barracks considering expanding sanctions against russia. The u. S. Is urging the European Union to take a tougher stand against moscow. Chinas Economic Growth accelerated for the first time in three quarters. The Chinese Government had boosted spending and freed up more money for loans. Billion in deals at the air show. The biggest deal was with air asia. To the co to see you know about why he decided the ceo to know why he decided to bet big. Not a lot of choice in this space. For four years, i kept pushing airbus to reenter this. To their credit, they went back and took a look at it. You told me you are harassing them. How long . Four years. They told me know when many different languages. In manytold me no different languages. It will save us 14 of cost. It will enable us to grow much quicker. The makers of the worlds fastest, most expensive private jets are expanding their range. Bloomberg spoke to bolstering about their latest gulfstream about their latest plane. We are sitting inside the gulfstream, the largest business jet aircraft available. It is the longest range business aircraft, the largest cabin, and the fastest certified civilian aircraft in the world. Cuttingedge Technology Aircraft with an advanced cockpit. The most advanced business jet on the market today. This is a standard layout. This arrangement seats 13 for both eating, sleeping, and working. The airplane is capable for flying a must 16 hours. Itn fly to go missions allows you to get to your destinations quicker than any aircraft in the world. Price. Illion is the we have a backlog for the airplane that extends out through 2017. It is worth waiting for. It is time for a bloomberg exclusive. Christies had a record hot year in art sales, up 2. 7 billion pounds. The auction house got a boost from online activity. It is up by 70 . We are joined by the co, Stephen Murphy. A great set of numbers. Three quarters of a billion dollars. Can this kind is him and him and this kind of momentum just continue . The business has gone broadly into the larger art markets. We are at a moment in time where the culture has shifted to a huge interest in art. Over 103 more works million in the first half than the same period last year. The middle of the market has grown as well. In 2013, we had a 70 increase in works on paper sales. The world has moved toward acquiring and experiencing art. The standard line would be that china is up 50 of the big six the bigticket sales. How has that shifted . Talk to me about the complexion of the buyers. The mix of sales worldwide for christies, christies is a global entity and we are operating on auction and private sales online. E operate in three markets america is 38 of our business. Europe is 38 of our business and 24 is asia. What is really happening is buyers are buying worldwide. The chinese higher spent 46 more. Clients spend 46 more. What is happening for us as we are looking at our clients as opposed to regions. Talk to me about engagement. Talk to me about how you win these mandates. What is involved . How long is the process . The first thing to say about the weather system of the art market is it is not overheated, but it is vibrant because the sales are being achieved at such high levels. There are so many new buyers. 30 of our buyers last year were new to christies. They were brandnew people coming in to buy art. When prices go up, more great works come into the market. That is the virtuous circle. We are discovering so many new people every month that we have not ever done business with. A great deal has been made of zero percent Interest Rates. I look at the diamond list. I look at zero Interest Rates, pushing new interest and your market . People with means are having more time and money to spend on things they care about. I care about art and objects and jewelry, etc. A tiny percent of our clients are pursuing these passions as asset moves. The Hedge Fund Manager who wants to buy the picture. Is a passionate enterprise. Lets talk about some of the other asset classes. I love watches. Some of them i cannot afford. The online watch business youve got is interesting. I find it fascinating. We have the watches business, diamonds. Where are we apart from the big blockbuster our tickets . Art tickets . Christies is a place that people should be able to come and get advice and counsel about their passions and a transaction, if they wish. We have watches, wine, jewelry, art. That is who we are and what we offer. For the watch aficionado, the reason we built the site was to have auctions online and to reach that market. The real reason we are doing it is we know that if we connect with our clients and they buy a watch or to wear three, take a connected to a christies specialist who will bring them into the world of christies. Last month, a gentleman who we never served before bought three watches and then migrated to an offline auction and bought an american painting. That is our strategy. It is the ultimate high night worth High Net Worth sale is building that relationship. A great quarter for russian arent. Russian art. Are you concerned about geopolitics . Do you look at what is happening in russia . We are talking about the art if we are getting the conversation right because the art comes first. We have to invite them to enjoy it. Dips in certain markets within a year or quarter are dangerous to draw trends from. I was recently in mumbai for our first option in india auction in india. This local reporter asked me, why are you here with the market kind of soft question mark we are here for the next 100 years. It may be a little bit dim right now is beside the point. That was the other thing. You will stay with me for a while. Your opening more space, more physical touch and feel space. Broadento engage and to the appreciation of what you guys do . We have grown to 14 exhibition spaces around the world and therell be more in 2015. Our belief is that the world has gone online for information and bricks and mortar for experience. We have to provide both. Christies ceo Stephen Murphy staying with us. His fashion collaboration goes on sale this week. The bags are a bargain. The worlds most expensive living artists. His original sculpture sold for recordbreaking 58. 4 million. Lets continue our exclusive conversation with Stephen Murphy. The auction house had a record halfyear results. Sales up 13 . Nline sales up 27 over 170 countries. Talk to me about the marriage between online. You have one of your competitors who decided to get in bed with ebay. Talk to me about what your versuss is doing online the new spaces. The simplest way to describe the strategy is to say that we looked at what were customers were doing and we try to replicate that for them. Customers are online, iphones, ipads and they are also visiting galleries and shops. We built 14 new exhibition spaces to bring people in. You have to stand in front of the painting to enjoy it. At the same time, talking about it and knowing about it, that can happen anywhere in the world. The idea is to have all the Information Online available all the time and have the experience to travel around the world realtime. That is part of the secret. Gotcan be sitting in july on a beach sri lanka on the beach and instantly access the research that you need. Ityou can know all about anywhere in the world any time. The top and of the business will always be key. That is the beef of your business. Where do you go next . What do you make of that kind of collaboration . I am curious. This,e me for my point on it is a rare fight work. Rarefied work. Its kind of moments, is that good for art . Anybody can walk in to any christies house anywhere in the world any time. We are open to the public. I keep going back to online because this has been the biggest change. We have 2 million visitors a month into our online site. Coming in through search and also through our email exchange. Exclusivity has a good feel about it, but we are not as exclusive as the brand may indicate. It is a fascinating arrangement. Talk to me about brands. My experience has been a couple of different forms. I look at mercedes, bmw, very exclusive, but they stretch the range of what they offer. What we have realized his people already realized people we are not convincing people to buy art. The brand is key. Our strategy for online is making an integral part of who we are. When we are in china, we walked into christies shanghai, it is christies network you are stepping into. Heres the thing, whether youre in china or new york or online, if this object is said to be 18thcentury porcelain, it it is. It has been verified by an expert and we will stick by that. Give me since of the pace of change. It sounds as if it has been in a matter of years, the world has your vocally changed. Your revocable he changed. Are living in a time everything is changing at an incredible rate. There is an art fair every two months is brandnew. The trick is to keep your priorities right. Based build the strategy on your own notion of your own company. Look at what your customer needs. Where should your average wealthy person [inaudible] what is your call for value . To start, you should buy something you feel a personal connection and passionate. You should buy something and keep it for a while. Fantastic. Great answer im off to look at the watch shop online. Thank you so much. Next, cracking up clean energy. We checked out the recordbreaking deal driving renewable investments. The air show has been showcasing Aviation Innovation all week. Colorful demonstration taking part in exhibitions. Pro surfers in mexico took on some of the biggest waves of the season, catching some extreme rides. Daredevils are flocking there to test their skills against some of mexicos heaviest breakers. Wow. You. Is clean energy for lets get into new energy, Clean Energy Investment is on the rise. Will the upward trend continue . Joining us is the head of research. We are constantly seeing a shift for alternatives. Can his momentum sustained . Can this momentum sustained . It is looking promising the fiscal situation in europe has been challenging. The cost of Renewable Energy is coming down. The first three quarters of this year have been strong. This sincen tracking 2004. Projectni offshore wind , 3. 8 billion. Where is that coming from . A large and growing offshore wind industry. It is a Large Consortium of banks. Beyond that, and number of other smaller projects. A big project in israel. We are also seeing the continued uptick of solar peavy to go on peoples roofs. To anyone billion dollars last quarter, a third of the total investment. Are people just accepting it a little bit more . In some parts of the world, people looking at that and seeing an upward trajectory. Lets leave it there. Us. T to have you with for those of you listening on bloomberg radio, you are we never forget you are there. First word is up next. For the viewers, the second hour of the pulse. We will have a conversation with bill oneill about how china will transition to a more consumer driven economy. How do you make losing a brand success . Optimism in the air. Ibm and apple team up to tackle the corporate market. Giant ipo. Ecommerce house achieves record results. A very good morning to our viewers in europe. It warm welcome if you are just waking up and spending your day in the united states. This is the pulse. , itng up on the program travels at the speed of sound. Fastest,ou inside the most expensive private jet. Outrageous auctions. Some of the strangest items ever sold on ebay. With the story in the u. K. Unemployment data. The jobless rate slid to the lowest in 5. 5 years. We had chinas growth report. That beat estimates. Jonathan ferro is with me. We broke the story. Lets have a look at dollar sterling. It dropped like a stone. You see unemployment coming lower. Average Weekly Earnings is weak. If the higher inflation rate is involved, it emboldens the dubs to hold off dubs to hold jobs doves to hold off. Earning less in my pocket and paying more. It is a bit of a conundrum going on. Downnemployment rate comes as more people go into employment. That wages would go up. How is this going to play out in the coming months . You might see wage growth tick higher. The bank of england may see that. I think there are more people among employment, they may not have the answer for you. We are going to catch up with bill oneill in a while. Talk to me about china. It is good news. Gdp growth. 7. 5 . Why are we not getting a little more bang for our buck . It, you say that it is better than estimates. Robust growth. The question mark is always there. Much electricity is actually being used . Put that against gdp. Start thinking whether this economy is very strong. Forget all of the negativity and cynicism and look at the economy itself. They were talking about restructuring the economy. That restructuring process. There is a lot of concern over china and how they are going to do that. A country in history that has had a boom that big without a downturn afterward. Ok. We will see whether we hold onto these gains. Jonathan ferro on the markets. Lets turn our attention to the middle east. Our middle east editor elliott aviv. Gotkine is in tel more rockets, more airstrikes. It has been a tough morning. Yes. It is a depressingly familiar situation here. The egyptian proposed ceased lasted about 56 hours for israel yesterday. The rockets never stopped flying. The death toll keeps rising in gaza. We are over the 200 mark, a significant number of those are women and children. This is lasted longer than the last conflict between israel and hamas in 2012. The israeli Prime Minister is still considering his options with respect to a ground invasion. Leader whonian normally has a unity government with hamas is meant to be in egypt today to perhaps put some impetus behind suggestions for a ceasefire. Israel will carry on until the rockets stop and hamas shows no sign of stopping. Are pretty much where we were yesterday morning. Lets leave it there. Stay safe. Lets turn our attention to tech. A new ibm partnership on the cards. More ofs keeping alibaba than originally anticipated. Ryan has the details. Talk to me. Apple and ibm coming together. Wondering about the ability to make this whole bill physically work. Details are a lot of that have to be fleshed out. It all sounds great. Generationally it is pretty exciting. You had an ibm world, apple. Omes on the scene ibm was the company to take down. Now the tables of been reversed, havent they . , if you be a case of can beat them, join them. Or friend amis frenemies. Apple has been very successful with the iphone and the ipad, reaching consumers. A little bit less successful in reaching business folk to do their business things. Right now, Business People use their phones to browse the web, check the email, maybe their calendars. There is not a whole lot of Business Software that has been made for apple products. It has pretty much been microsoft or blackberry. Microsoft allowing their office to not be available on the ipad. It is all about apple trying to get more of that business space. A company like siemens. 30,000 employees have iphones. Why would you not want to wrap it all into one app . Yeah. Why would you not want to read people with your software . Knowhing is is we dont how theyre going to share any money if they make any money and what apps theyre going to make. Lets talk about the driving side. The company that makes the ,achines for the chipmakers what is the overall story telling you about the chip market . It is showing you that chipmakers are doing well, but they are not demanding the new, most uptodate equipment as quickly as had been anticipated. Intel and the other huge chipmaker doing really well. Could demand is good. More tablets,ing more smartphones, more chips. Provides the machines, the equipment. Invested in machines that make smaller, more powerful chips. Shipought we were going to three of the systems by the end of 2014. They are delayed until 2015. Not be up 17 , as the market anticipated. The longterm strategy is very strong, but in the meantime, they are not setting up well. Two very different stories. On your side, ibm, apple. If you are on blackberry, you are disappointed. If you owned apple, you found it delightful. Ibm shares went up as well. Byy were pretty pleased this, even though it is just a partnership. We dont know the details. This was announced yesterday. Evening, they have sales declined over the last two years. This is a way to stay ahead of the earnings that we will get tomorrow night. Big picture, i was looking at the graphs, if you take a look at ibm over the last five years, stock is up. S p is up 120 with dividends. Apple is up over 300 over the last five years. Everybody said london property. I dont think so. We are going to leave it there. Caroline hyde, ryan chilcote. Thank you very much. Slows evenrowth though the jobless rate is down. What is going on up there . Welcome back to the pulse. Lets check in on the currency markets. On thettle bit of move british pound. There is dollarsterling. Unemployment rate dropped. That is back to a 2008 low. Wages in your pocket in this country did not meet estimates. That is the reason why the market is just stepping back after the inflation data yesterday. Greater minds than i will debate. Lets get a little but more on the data. Are joined by the head of the u. K. Investment office. The conundrum. Unemployment is falling, more people are working, and wages missed targets. What is happening . The wages are the worn element. It is the lack. Lag. Survey isainst the also proving to be lengthening. Are including base effects from last year. Speakderlying numbers to to arise monthtomonth. We are seeing historically volatile. We could see it move up quite sharply in the second half of the year. Look. This trend is there. You are convinced we are in this upward trajectory. Front, i do think it is the one element, we always have to caution against expect hers. That mightlement stay. I dont think it will. If november is in line with enough trade trajectory. Is the sterling rise. I dont think it is inflation. , to have a the issue preemptive strike, to move early with a modest move. Dissension on be the report, the minutes of the august mpc and then more and september. Appointees would have quite an impact on the market. I dont think it is the case that all of the internal members will move together. That could actually be healthy. In terms of sterling and the bonds. You have some strong views. Translate all of that into the view for the u. K. The u. K. Is special. We still dont see a u. S. Interest rate hike until the middle of next year. Europe in the distant future with the possibility of easing this year coming through. The u. K. Is quite distinctive. See that reflected particularly against the europeans, particularly against the euro and the swiss franc. Certainly in the euro. Certainly. Our view is that the euro will weaken. Eurodollar story. Sterling will participate. The conversations i have been is a bit of aling battle at the end at these levels. Would you agree . We look at our valuation, we are not hewlett hugely off for value by any means. Prices by the way, there seems to be a sense that it is not being passed on totally to the consumer. Is runningspending at 11 . It is the strongest, longest consecutive rating since the 1990s. There is no evidence that business is being impacted by sterling. That is media hype. It is not a break. This is a domestic recovery. It is dominated by domestic recovery in the services sector. Are you normal on Interest Rates . , what would be reasonable to assume, we will probably be looking at 2 or 2. 5 , the normal rates. Quite right. You will stay with me. We have a lot more ground to cover. Still to come, the markets. We will take a look at the geothermal generators deal. That is next. It is time for todays new energy headlines. Loans for renewable developments in japan. Financing for clean energy. Contract. S won a used fornes will be power Plant Projects in indonesia. The project will begin operation in november 2016. Has bought most of vanilla more wind farm. An Illinois Wind farm. Has another 20 year wind power contract. That is based in texas. Back to billgy oneill. Bill, china. The numbers on the upside. , should you bep good to see bees numbers or should we sustain them . Not as we wanted. It is an issue a policy. It is clear the government has played a big role. The rollout of the policies attached to that. The pickup and Government Spending around infrastructure. The Property Market is a big story. 3570 of the largest cities have the first ever monthtomonth decline. , as we of the weakness begin to spread, the story here is still that we are seeing structural issues around the property issue in china. That is really reflected in the drawback an activity inactive today. In activity. Reframing t is refraining from a major easing and policy. That weakness in policy and continued to drag on the economy. Not too concerned about shadow banking . There will be bumps in the road. These will be controlled. Basically, you are seeing evidence of spreading out. Accidenthe issue of an is at risk. China is slowing on an underlying basis. Evident in is not these numbers. That will continue into 2015. It will not be the end of the world. I think there might be a few people a little but shocked. The impact ofof the shifting of the growth dynamic away from these investments. Janet yellen. The fed report. Yellen says what did you make of last nights bill . Carry on as we are. A gradual removal of stimulus. She is still talking about slack in the labor market. We are going to have to leave it there. I know the tech is one of your calls. I hope that has more. I hope that does not impact performance. Always great to have you with us on the pulse. Wild to come, ebays auctions. Im not talking about my recent propositions. It is bizarre, it is true. We will to you what they are. Welcome back to the pulse. From london. I manus cranny. Here are the top headlines. To. Unemployment has dropped its lowest level in 5. 5 years. The nations jobless rate dropped to 6. 5 . But wage growth slowed to its lowest since 2009. Eu leaders are meeting in brussels. E have breaking News Headlines we will bring you more on that. Janet yellen told lawmakers that must press onnk with record monetary stimulus to fight continued monetary weakness in the job market. Until the economy continues to improve, the recovery is not yet complete. Even with the recent declines, the Unemployment Rate remains above the federal open Market Committee participants estimate of its longer run normal level. That was day one of ms. Yellen. What will day two hold . You are having a bit of a strong session in the lead up until they two. Two. Te europe. Ata gains across when you speak to this, you are speaking about gdp. On the other side of this debate, it is about janet yellen. It is about the Monetary Policy report that came out yesterday. Valuations were stretched. Is anybody going to answer the question about that today . That is a big thing for central bank to come out with. Were looking at pounddollar. Unemployment did her out earlier on today. 6. 5 . That is the 2000 hello. 2008 low. You have some doves looking out at employment. Lets the with data is showing. Lets cross over to new york. Tom keene is there. Surveillance at the top of the hour. Banks are still very much the top. They really are. We have seen really good earnings out of wells fargo, jp morgan, goldman sachs. The state ofabout bank of america. Each one of these banks are different. It will be interesting to see how bank of america does in consumer banking. About the surprises we have seen in Revenue Growth and Earnings Growth across all of the major banks. The state of wall street. Any discussion of job rationalizations to come. We will look at the janet yellen testimony. Representatives versus the u. S. Senate. A little more magisterial yesterday. She will face tough questions this morning as the questions become Many Political speeches. Us Capital Markets will join for unique perspective as well. Were you surprised that the fed is chasing the markets about valuations of tech, biotech . And another time and place i would have been stunned. They used to be the idea that the central bank did not speak about that. Anything goes here in this lending of Financial Stability in the standard economics. You see that at the International Monetary fund. Fed chairman, janet yellen, going after it. Ok. Lets see what impact it has. Theveillance at the top of hour. Turning our attention to the brink of the news breaking news. The eu will expand sanctions against russia. How serious is this . Not extraordinarily. I will go out on a limb and say that. That you leaders meet this evening. Leaders meet this evening. We have seen a draft they are set to approved. It could change, but they are set to approve it. When the heads of state gather, they try to have things wrapped up before they actually show up. They will try to cut funding to russia through the eib. It belongs to the European Union. The European Investment bank. Lets stop lending money to russian projects or what you read they will also cut funding to russia through the ebrd, another bank set up to help oh soviet economies. Post soviet economies. The European Union are going to use their influence within the ebrd to cut funding that way. The second thing you will see in the sanctions is that they are going to expand the sanctions against individual companies that they see as responsive for responsible for destabilizing the situation in ukraine. Union has already sanctioned 72 individuals. And Ukrainian National individuals that are deemed to be siding with the insurgents are subject to travel brands and have had their assets frozen. The European Union has also twotioned to Companies Companies for their part in destabilizing the situation in ukraine. We will see that number of two companies expand. They have to decide unanimously. Ok. Lets leave it there. As we get more details, we will cover it. Threat of new sanctions on russia. Lets turn to commodities. Biggestg all of the miners. The wrapup of production meeting demand. The worlds number two minor. Miner. Iron ore is the holy grail within this company. Where are we with the numbers . Analysts focus on the number. It met our internal Bloomberg News survey. 67. 5 million tons for the quarter. It was up 11 . List of prizes in the copper section of the business. That is the second most important point of the business. They have upgraded for your guidance. Year guidance. Iron ore has had a pretty tortured year. We are off the lows. Goldman sachs said that the chinese are reducing production, but not as much as everybody thought. Where are we with ore in pricing . Miners ramping up production to levels never seen before. The real key point for people rio is that prices are still hundred dollars per ton, these are still huge margins. The government came out with a bearish note. They are not the only ones. They are not the only ones. Are they . . Specifically, people are a bit more positive for the outlook, iron ore. Recovery inramatic prices for the second half. Have you got to the bottom of the conundrum. Why are they ramping up production . Or are they just cannibalizing their own market . Theyre putting pressure on the competitors. They are squeezing out chinese domestic production. Over the longterm, they think. Buyback still on the agenda . Yes. A bit of speculation that the drop in prices is going to temper the asking price for a buyback. A 3 looking at perhaps billion 5 billion buyback. We are going to leave it there. The conundrum. Fantastic economics. Brazil trounced by germany. Andy murray did not make it in wimbledon. Find out how losing might be a winner for sponsors. We do all of the conundrums on the pulse. Welcome back. Lets talk sport. There have been some sporting upset. Priscilla did not make it to the world cup final. Did not make it to the world cup final. In the murray had to pull out of the quarterfinals of wimbledon. Crashing out of the competition early is not such a bad thing, such a catastrophe. Jeremy hart is the founder of inc. Content. Why . The u. K. Did not cop much mustered up the world cup. If i am a brand, will i not be crying . , brands that are not directly sponsoring stars are benefiting more than those that do sponsor stars through thick and thin. Thing, thereid his was a chocolate bar brand, snickers, ran in that very quickly suggesting that italian was particularly tasty . There is no way his personal sponsors some of them pulled out. Bere are a lot of mileage to made by those who are in it through thick and thin. Being in it through thick and thin can lead to huge rewards. That is undeniable. Talk to me about jaguar. A unique proposition. Even though he is out of the Tour De France , thishout being modest was my idea, ticketed jack wire. Theyre all about creating stories. It is a strong news story. Were journalists by training. Nobody had ever ridden through officially tunnel anyway. Maybe somebody had have a quick go on their own bike. Nobody had ever been through it efficiently. Wire are jack jaguar is not a brand officially involved in the Tour De France. It was guerrilla marketing. It was the sweet spot. At thewere looking tunnel that froome had ridden through. It was news perfection. It was effectively hijacking the news. It has been run by about 6000 media worldwide. Jaguar got a lot of coverage out of that. Crashes later froome out of the Tour De France. Jaguar notd jguar be uncomfortable after having all of the collateral out there after froome crashed . He wasas doing his job, pushing, he got knocked off on the stage after the tunnel. He damaged his wrist. When he got onto the cobbles in northern france, he fell again and broke. There is always a risk when you associate yourself with a sport in an event. Rory mcelroy is not on the top of his game at the moment. Is Golden Triangle is a little bit disrupted. The personal life, not the best press in the world. His clubs. You dont feel too bad for him. You dont. I dont. He is not at the top of his game. You have to assume that all of these guys, that the money is not everything. Nike is sponsoring him as a golfer. If you are sponsoring the open as an event, you will get coverage regardless of who wins or who loses. That is not the sweet spot. The sweet spot is supporting the athlete who goes on and wins. It is like betting. If you put all your money on a particular number or color, you could miss out. It is not fair to say i was , but there was a lot of joe hart advertising head and shoulders in the world cup. It was a very incongruous pairing to me. I do understand why they kept the spots running even though england was out there in that a lot of money into that advertising campaign. Your device to brands how to capitalize in the eye of the storm . Not too good on the traditional route or solely done the traditional route. What i would love to have seen is joe hart and it could have been wearing head and shoulders or the branding that the england england the minute what would have been smart and what i would have recommended was to have used the collateral, all of the team members from england, talking about different players, the stadium, situations that could be dropped in for news media to pick up. If you have joe hart talking about the german goalie or the argentinian goalie, so that for to final, if it comes down penalties, this guys better than that guy. The inside knowledge she has got he has got, what joe hart thinks is valuable. If you have your branding on him it is a little bit more relevant. Were going to leave it there. Ok. A bloomberg exclusive. Chris murphy and i spoke about the record halfyear results. We are at a moment in time when the culture has shifted to a huge interest in art. 53 more works over 10 million in the first half. The middle of the market has grown as well. Increasewe had a 70 in works on paper sales. The world has moved toward wiring and experiencing and engaging with our. Art. China picks up nearly 50 of the bigticket sales. How has that shifted . Talk to me about the audience. Ou say there are new entrances talk to me about the complexion of the buyers. The mix of sales worldwide s. Estes, christie we are a global entity. Business. S 38 of our europe was 38 of our business. 24 was asia. Buyers are buying worldwide. 46 more,yers spent even there was a 26 downturn in hong kong sales. Spend 46 clients more in other sales around the world. What is really happening for us as we are looking at our clients as the map, rather than regions. Ceohat was christies Stephen Murphy speaking with me in an exclusive interview. A fascinating look at the changing world of art. Stay with us. Lets get you a quick currency check. Itosterling dropping their dropping. Had unemployment at the lowest levels in 5. 5 years. The momentum there is very much on wage growth. Lets talk about tech. Ebay posted earnings. One of the things the company may not mentions are some of the bizarre items on its website. Here is a look at some of the wild bids. Fully armored tank for 85,000. Talk to me. What are we watching. Is, if William Shatner is a kidney stone factory, could he produce more of them . We could have a lot of jokes about ebay and what they are doing. The important thing is to look at it as a barometer in terms of growth in europe. One particular thing i will be looking at, how much cash have from abroad tod the states . They will take a big income tax hit on that corporate tax. Ok. Were going to leave it there. Hans nichols in berlin. The team in london. The bloomberg surveillance guys in new york are up next. They will talk banks and day two of Janet Yellens testimony. Thanks for being with us. We will do it again tomorrow. Janet yellen create stock prices. Israelis killed near the entrance to gaza. No ceasefire insight. A landmark partnership. The entire Tech Industry will adapt. Good morning. This is bloomberg surveillance. Im tom keene. Rlet fu and adam johnson. Overnight, we had signs of growth around the world. 7. 4 . Timate had been it is a good sign. U. K. Unemployment falls to the lowest level in 5. 5 years. It was sort of, do you think it was frothy . Not frothy . No. What was Janet Yellens, yesterday . We are trading at about 16. 8