Transcripts For BLOOMBERG The Pulse 20140828

Welcome. You are watching the pulse. We are live from bloombergs European Headquarters in london. Lets get straight into our top stories. Telefonica raising the stakes. The company has lifted its bid for vivendis gvt units. That counters an offer from Telecom Italia. This is getting very incestuous. It is a battle for one of brazils fastestgrowing broad brand providers. Caroline hyde is here to answer our questions. Why is it so important . It is all about brazil. It is the Fastest Growing in brazil. It is a young, growing community in brazil who all want access to the internet. You want data, videos, facebook. This is a tantalizing asset owned by vivendi. They want to clock into that expansion. Both telefonica and Telecom Italia already have friends. They want to become more present. And want to merge with gvt gain more dominance while at home their domestic revenues have been easing off. Putting it politely. Of course, we are not using these two. We are going for whatsapp to send our messages. We are going to skype for our phone calls. Revenues are what they used to be. Who has got the better deal here . Valuation states it is obvious. Telefonica is offering more money. 7. 4 5 billion euros. Almost 5 billion euros of cash. Then you have got 12 of telefonicas brazil, when it merges with gvt, they are offering vivendi a stake in the merged asset. Then, interestingly, they get the option to have italians boater too. Italian exposure too. The brazilian regulator doesnt want us to have them anyway. It pits Telecom Italia in terms of valuation. They are only offering 7 billion euros, less cash. 16 of that is going to be exposure to Telecom Italia. Say, we willitalia distribute your content for you . Canal plus,ey have they have music as well. Also, they would get again a stake in the pizza pie that is brazil. There is such a tussle going on. Many are feeling that they could end up with the brazilian unit of Telecom Italia being tied up as well. Oi, i love that name. Is the asset actually for sale . Vivendi has so far said previously when telefonica came with its bid, we are not putting anything up for sale. Now, they have got a Board Meeting. The reason we have this flurry of offers coming to the table is vivendi, the board meets. They are going to be digesting these offers, trying to see which one they prefer. Then of course we get the vivendi earnings. All this comes as a media conglomerate is exiting telecoms. Atther they are making out or indeedot for sale wanting more of Telecom Italia, it is quite an amazing rearrangement. Lets focus on france and frances future. French politicians and ceos gathered near versailles today. This of course follows a week of political turmoil. We have seen the Cabinet Reshuffle after the resignation of president hollandes government. Caroline connan is onsite is on site with the latest on how business is responding to political change. Caroline, we heard from mr. Valls. We can say that the Business Community here is responding quite well to the Cabinet Reshuffle. They say the nomination of the new economic minister is a sign that president hollande and me minister valls tax cuts for a company that is part of the socalled responsibility pack. Yesterday was the Opening Ceremony of the university. I talked to one ceo. Frances largest insurer. Here is how he reacted to the speech. It is the first time we see a Prime Minister from the socialist party coming to meet this guy and tell you, i love you. I love corporations, the private sector, i am supporting you. We have been waiting there for a long time. S type of radical change the old labor, new labor, tony blair says we will succeed only if the success of corporations. Comparing Prime Minister valls to tony blair. Valls wasech of mr. Quite interesting. It was a speech that we all expected for france. It is a speech, historical speech, where he was pragmatic and he was very willing to challenge things in france. A speech which could be able to change the way we do business in france. The medeas the head of f that i spoke to earlier today. Prime minister valls saying entrepreneurs, france needs you. I love business. He said the tax is too much and he wants to accelerate france for businesses to keep hiring and investment are. That was the message here from Prime Minister valls to the medef. Head did to say that the tax cuts were not enough and he wanted 100 billion euros that was necessary to boost french worth. Back to you. Thank you very much indeed. Interesting that the labour party has now gone the other way and is being seen as antibusiness. Caroline connan on, thank you very much indeed. Lets get to another top story. The fbi is investigating a coordinated computer hacking attack which targeted jpmorgan and at least four other banks. It is believed to the hackers were russian. None of this is confirmed yet. Anna edwards is here. That is this kind of idea maybe they are responding to sanctions. That is what is being investigated by the fbi and others. People familiar with the investigation are telling bloomberg Russian Hackers attacked Jpmorgan Chase and at least four other banks during the month of august, resulting in the loss of gigabytes of customer data. One of the five banks has linked these attacks to the russian state backed hackers. The fbi is investigating whether this is a retaliatory action against u. S. Sanctions. The nsa is also said to be helping out here. What has been stolen . Account information that could be used to take money out of banks. No evidence that that has happened yet. Nsitive information was taken. There could be some european banks in there. As you would imagine, there is layers of Security Systems in place. Most often when you see this kind of information being stolen, it is via retailers or customers themselves. Typically, the layers of protection are less. It is quite tricky to work out exactly where this is coming from. Beenof these attacks have through latin america and other regions. The servers typically used by Russian Hackers, which is what has led the fbi and others to make these inquiries, how they are doing this is they are using software called zero day. It allows hackers to essentially Remote Control into your computer. They have to get through layers of banking security. We have heard from jpmorgan over this and they are not concerned as to whether they have been hacked. They say a business their size sitcoms do cyberattacks on a daily basis. It is something that the industry is aware of and they are spending a lot of money. There was recently a fairly highprofile warning that the next financial crisis could emerge as a result of some sort of internetbased financial institution. Every time we have a , you have tosis ask questions about where the next one might come from. We have seen a jump over the last several months according to experts in the number of attacks we have seen coming from russia and other Eastern European countries on u. S. Financial institutions. Interesting to explore whether this is linked to sanctions, whether it is retaliatory and to what extent or not the russian government might be involved here. This is something the fbi is looking at. To finde we will wait out. As jpmorgan has been saying, it is common that attacks take place. It is not common that they are successful. As i was saying, they have stolen gigabytes of customer data. They havent necessarily done anything with that. Our reporting suggests they havent stolen any money yet. That would possibly lead into further lines of inquiry. Interesting that jpmorgan was sold out. They were singled out for criticism when they blocked a payment to the russian embassy. Jpmorgan already being embroiled in the political evidence we find guiding 2014. Everything is linked. The known unknowns, the unknown unknowns. What do we need to worry about next . Thank you very much indeed. We are going to take a break. Coming up, german unemployment unexpectedly rises. We are going to head to berlin. And the french economic recovery or lack of it. Welcome back. You are looking at live pictures coming to us. The french president is addressing a group of ambassadors this morning, making some interesting comments. The euro zone economy the French Economy. Mr. Hollande is saying that europe is threatened by a long stagnation as a result of which, we need to devalue the euro. The euro is too strong and inflation is too low, he says. Monetary policy and budgetary policy to fight this. Kind of echoing what mario draghi said recently at jackson hole. Maybe you could argue that his outgoing economy minister has also been echoing as well. He says he wants a summit of eurozone countries to deal with this problem. Over in germany, unemployment has unexpectedly risen after eurozones largest economy contracted for the First Time Since 2013. Inflation data also trickling out as well. Lets go to berlin. Good morning to you. I want to start with the French Economy. Hollande says he wants a summit of eurozone countries. He says that europe is threatened by a long stagnation. Do you think that his desire for a summit and a need to fight this in a monetary and budgetary sense is going to be given any traction in berlin . How do you think these countries are going to be seeing eye eye to eye or not . It in a summit, why not . That might be possible. I think everybody who is expecting massive changes when it comes to rebalancing in the eurozone or a stronger role for monetary policy, i would be very skeptical about that. The consensus here in berlin that this crisis requires adjustments in terms of structural reform in the economies of Southern Europe and especially france. Do you think therefore he is going to gain any traction . Do you think he and renzi will gain any traction with berlin over the coming months . Today,ctually in paris the german finance minister. He has come out and said that maybe draghi was overinterpreted. There seems to be resistance to all of this. How would you rate renzi and hollandes chances of making significant change . Clearly there is resistance in germany. If we are talking about significant change, change on ones,rgin, more flexible more flexible interpretations of what has been said, that might be something that could be the result of this debate. Certainly this reigniting growth debate is not going away in the short term. In terms of actual substantial isnges, i dont think this very likely given the political consensus that prevails in berlin. Of economic deterioration do you think we have to see to change hearts and minds in berlin . In the German Economy, i would be skeptical whether this would have an effect on eurozone policy. Germany obviously has institutions in place to deal with this on a subpolitical level. If you think of the highlevel bargains between workers and employers, these kind of institutions help german employers and employees i just the challenges in the German Economy. I think what we would have to see would be either the return of significant market pressure, so that we are talking about the membership of one specific country in the eurozone as we saw in the summer of 2012. The other transmission mechanism could potentially be political. If we were to see in Southern Europe the rise of populist forces that would put the european project at risk. Short of these, i dont see a major change. Do you think there is a consensus in germany that the slowdown in the German Economy right now is a temporary affect . Pervades belief that most of business and the Economic Community . Yes, i think so. There is strong consensus on that front. I the same time, there is growing awareness of the importance of Political Risk. The finance minister raised that issue, warning of Political Risk , saying of course we are not isolated from that in germany and the eurozone. Many brush that aside. Looking at what is going on in ukraine, minds are slowly changing regarding the importance of Political Risk. Overall, given the high level of economic performance, the high that we are coming from renders this for now as a slight downtick and a temporary one. Do you think that is the correct assumption . Theing this morning about fact that maybe germany is making a mistake here, that germany is inextricably linked with eurozone partners which are experiencing a lets be nice about this a dismal economic picture at the moment. To bey appears increasingly seeing itself as isolated from that. Is that an error on germanys part . Yes. If you look at it from an economic perspective, of course. Germany withhat 40 of its exports going to the eurozone, 60 of the eu, 10 to france, germany is dependent. At the same time, i would say that of course the Political Awareness of these linkages in europe is pretty strong. Of the see at the end day is how difficult it is to translate what you consider right economically into something that wins you political majorities. That has been the problem with fighting the eurozone and the structural underpinning of the eurozone crisis from the beginning. Final question. Very briefly, can draghi go it alone without germany on qe . Probably not. If you expect Something Like omt, anything that would require political backing. Thank you very much indeed. We are going to take a break. Still to come, chinas richest man. Alibaba prepares to ipo. The sky is the limit. We are going to break down the numbers later in the pulse. The hour. Tes past welcome back. You are watching the pulse. To the markets now. Let me hand you over to jonathan ferro. Thanks, guy. Today is dominated by individual companies, individual stocks. To the sovereign debt market. I am going to give you a mouthful. A gauge ofcall it global sovereign bonds. Near record highs. Money keeps going into this kind of security. 10 year bonds, down by a basis point. You hear me say it every day, record low. It is not just germany. A real yield, where do you go . People are going to spain. You see the spanish yield come down from 4 by the start of this year. It is also a record low. Down again by another two basis points. The data in europe today is not pretty. German unemployment just taking higher. Rate over into the spain, 25 . Where do you go from here . You have bank lending contracting. They will tell you it is less bad than previous months but what will the ecb do . President hollande complaining that this is too strong. What is frances price target for the euro . Too strong at 1. 32 . Where do they want it . Down, i think. Keep it coming down as Economic Data keeps coming lower. Maybe that is what you need to have happen. That wouldnt hurt at all. My point is, i only hear it from french politicians. Not hearing it from the spanish or the italians. And if you were the germans, you would be happy where it is now. We will take a break. See you in a moment. Welcome back. You are watching the pulse. We are live from bloombergs European Headquarters in london. These are the Bloomberg Top headlines. Italys four biggest banks are seeking to borrow as much as 27 billion euros. The auction is designed to boost lending. Italys yard just bank is isortedly largest bank reportedly asking for around 7 billion euros. The United States says russia may be directing a. Ounteroffensive a spokesman for the russian president Vladimir Putin denied this, stating the information doesnt correspond with reality. Fighting in the region is worsening, spreading to previously peaceful areas. The fbi is investigating a hack attack from jpmorgan and at least for bank other financial twos four other financial institutions. Tosian hackers are believed have coordinated the attacks which resulted in the loss of customer data. Could be a retaliation for sanctions against russia. Lets get back to our top corporate story. Brazilse for one of fastest broadband providers keeps heating up. Plenty more twists and turns. Telefonica has raised its offer for vivendis gvt unit. That counters a bid from Telecom Italia. Joining us now on the phone is conor oshea, the head of the media Sector Research division. Good morning to you. A surprise is the action by Telecom Italia . That fits inhing the logic of what Telecom Italia should you doing in your mind . Good morning. It is something of a surprise given that they alluded there would be an offer for the business in brazil. We are not sure whether they are Going Forward or backwards in brazil. Maybe in order to flush out a. Id, they are looking at gvt complement their own presence. It doesnt look like a very compelling offer. Certainly on paper, it is only slightly above what the first offer for telefonica was. It doesnt look like a very serious bid. We wonder what the real game plan of Telecom Italia is in brazil. It may well be an exit and this is designed to flush out a bid. Hadnt looked at it from that point of view, fascinating. Where does that leave telefonica . Telefonica looks like the favorite in this scenario. , maybe not quite as high as some of the expectations building yesterday. It looks more serious. The increments in the offer versus the first offer. On paper, they have a clear advantage. Perhaps there may be some more regulatory difficulty with telefonica is offer. That is always a concern for vivendi who is looking for the cleanest way to monetize its cash. , we still dont anticipate major problems and the deal should go through. Say it does go through and it all works as intended. Have you figured out, has anybody figure out what vivendi is going to use the money for . That is the 15 billion question. Obviously when they made the commitment to return 5 billion euro to investors over 2014 and one a 15 including annual dividends, that was before the possible sale of gvt. That was on the expectation that sfr would have done as expected. Differents a dimension to the issue. I think investors will be probably disappointed if some of this cash doesnt come back to shareholders. 3. 5 billion remains to be paid. M a, they arent going to invest in content assets and Digital Assets but it is all quite vague at the moment. Very little forthcoming from the new ceo. The market is really waiting for an update on that. We probably should talk about bouygues out this morning as well saying it hasnt received any bid for bouygues telecom. How does m a in the telecom story work here in france . We have a at looking across the pond. All kinds of options on the table. How does bouygues fit into all that . I think people generally expect bouygues to exit the Telecom Space. It seems that that is not an immediate prospect. As you mentioned, iliad with an effort, some diversionary tactic to increase the chances of it, so that they can negotiate a better price. Time will tell. I think having gotten more or less a greenlight from the for the operators to go to three and mobile, there is still the expectation that that will happen. The way they are going, it looks more like a 2015 story at this stage. Thanks for the analysis. Conor oshea joining us. Now, lets move on. After a week that saw the resignation of frances government, the companys businesses are gathering in paris. Caroline connan on caught up with a ceo and got his take on the french Cabinet Reshuffle. Hollande can say if it was necessary or not. To workit is important as a team. I think the situation has been clarified. I think it is good for the confidence which is very important for the time being. It is good also for the rapidity of action, which i think are necessary. Now we have to see what will happen when the Prime Minister will present to the parliament and how he is going to be received by the parliament. This is something which should happen in the next week. I think it is good for my country to have a clear government able to give full confidence to all the entrepreneurs and people who are there today. Are what is really necessary now is to get confidence in the future and to be able to really invest. I think it is important, if we want really to go back to growth, it is important in my view to reduce public spending. I think it is key. If we want to really be able to invest, which means to ,eestablish normal profit level and therefore to invest, if we want to do that, we need to have less pressure on the companys, less pressure on the public in terms of taxes, and we need to have more flexibility in terms of doing business, which means the flexibility in terms of capacity to move, to reduce if necessary staff, etc. We need to have more freedom. That the new sure government understands this point of view and the companies. What we want as companies is to invest, to increase our business, and therefore to increase staff. Speaking tof suez us earlier on the french government reshuffle. Caroline connan also caught up with the chief executive for score. He gave us his take on the health of the countrys economy. Say therench would sickness is wellknown. Incredible amount of social spending. Incredible number of regulations. We cannot go further. We are not talking about numbers. He said that we have to move the from to inverse trend that we have been surfing on for years and years. Now we have to discuss topic by topic, issue by issue, reform by reform. But to see finally a Prime Minister announcing he is going to introduce Structural Reforms in a way relevant to support French Business is something that should be underlined. There is a question mark, a big question mark. Support of the president , support of the parliament, will there be a enough support from Public Opinion to remove . Austerity. Had when you have 57 of gdp in social spending, where is austerity . We have had no budget cuts. Otherwise we would not be in the position where we are. Spending had been creating an incredible deficit. A crazy country sometimes, france. We have had no austerity. Undergo Structural Reforms. All countries that reduced unemployment at a point in time did undergo those Structural Reforms. Social security reform and so on. That is what needs to be done. Doesnt even have austerity, the view from scor on the French Economy. It, we experienced needed. That is the view. Lets take you to china. Personions wealthiest has a network of more than a net worth of more than 21 billion. As the Chinese Company prepares for the biggest ipo in u. S. History, he gets even richer. Joining us, tom metcalfe. Run me the numbers. Basically, he has gone up in our valuation to 21 billion. That is because of alibabas ipo coming out. A lot more information out there about the company and what it is composed of. As well as alibaba in which he has about an 8 stake, worth approximately 11 billion, he also has a stake in the online pay,ent Service Called ali a bit like paypal. That is worth 25 billion. [indiscernible] not in terms of the ali baba ipo. Included in your valuation of him . Right. That is another sort of 11 billion added. The assumption would be that ali baba shares would go up on this ipo. Ipo daybased on kind of one price ground zero and goes up from there. Exactly. We will have to see when the shares actually lift. Most analysts think ali baba will rise from the figure they mentioned to perhaps 200 billion. When did he start ali baba . How much has he made over the course of the history . This has been a short period of time. Incredible, 1999. The size and scope of ali baba today is incredible. They are just over sort of 15 years. How does he compare with some of his peers . Richestina, the three people are all tech billionaires. Jack ma is number one. In china, it is all competitive at the top among the tech fortunes. At 21 billion, he is ahead of people like steve ballmer. Some fairly aggressive numbers. How does this kind of wealth work in china . Weird question, but in the United States, this is a sort of economic hierarchy. How do these guys fit into china . Parthey perceived as being of the system or are they now above . Do they give back money, is there a philanthropic element . This is a huge amount of cash. I like to think they are all pretty widely celebrated in that country. It all ties into the growth of china as the worlds secondbiggest economy. Is a sector they are very proud of. We will leave it there. Thank you very much indeed, tom metcalfe. Still to come, the weird and wacky locations of the iconic golden arches. We will take a look at some unexpectedly luxurious mcdonalds landmarks. Welcome back. You are watching the pulse. Crisis in ukraine sending waves through global markets. The eu which relies on russian gas piped through ukraine is rug going is struggling to broker a deal. Winter is coming. Lets talk more about what we are going to deal with here, the opportunities. German president of did i pronounce that correctly . That is a good start to this interview. You are in plenty of central and Eastern European countries. You have got quite a lot of experience in dealing with this. Risk is europe running right now when it comes to its Energy Supplies . I used to work in ukraine for a long time. Right now, russia is the biggest supplier of gas to the European Market generally. There is no shortterm fix here. There is longerterm fixes, things like more domestic production, maybe more shale gas production. New infrastructure to bring gas from other places, but there is no quick fix. The quickest fix i guess right effectively reducing consumption, but that is not happening with europes strategy to grow. There isnt a quick fix. What are the risks we are running this winter . Even in soviet times, they supplied us with a gas we wanted. Things seem a little tense right now. If you look at it from an economic and business perspective, there should be no ifson why it will work politics are driving this thing. Domestic production and we are relying on russian gas. Other countries like germany and italy rely very heavily on russian gas. There is no quick fix. Something needs to be sorted out in my view. You watchect the Political Landscape developed, you know what the geology looks like. This winter, is it going to turn into a problem . Or do you think this is so economically important that there is actually no risk . Mutually assured destruction. One side decides to start turning the caps off and the game changes dramatically. My personal view is that it is too important for both sides. The relationship has existed for decades. That is a political decision. If you make that political toision, i am probably going be very happy because that is the only way to sort the problem out in the short term. More l g. They take a long time to come out of the cradle. You are in georgia. When you look at the opportunities in the region, where does ukraine fit into that spectrum . Relatively low down. In the past was a big gas producer. Most of those fields are now depleted. There is still a significant amount of gas but it is difficult gas to produce rather than the easy stuff. There is a potential for shale gas but that is some way away. I would put it relatively low down the list. We have now got issues regarding crimea. Would you say that the biggest focus now for energy in central and Eastern Europe is pointed more towards the east or towards the west . Politicallly the story that has changed over the last few months means that the greater focus, the greater investment will likely go to eastern economies rather than western economies . Is already happening. Where i work in central asia, there is a huge amount of gas. Whatbly at least half of you have got currently in russia. , right now, has an export route to china. That is where the gas will go. Potentially an export route to the indian subcontinent. There is sufficient gas there to supply a significant amount of gas to europe. You have to bridge the entire russian gap. Tajikinto gq stan istan, which has never been fully explored, has huge potential. The infrastructure didnt exist to get that gas to europe. It existed to get the gas to china, but not to europe. Entre has to be more investm in infrastructure. David, thank you very much indeed. Ok, we are going to take a break. Still to come, one of the worlds most recognized brands. Some unusual locations. We will show you the more surprising stops. That is coming up later on this program. Welcome back. You are watching the pulse. We are live on bloomberg television. For those listening on bloomberg radio, we are going to leave you now. For our viewers, it is a second hour of the pulse. Malaysian air earnings. The carrier reports planned layoffs and a new ceo. How do you put that business back on track . Plus we are covering the brazil bidding war. European telecoms going toe to toe to try to pick up gvt from vivendi. Is Telecom Italias bid just a ploy designed to flush out resilient business . We will talk about politicians and their views on business. A bidding war in brazil. Hack attack. Maybe. The new french government says it now loves business. We will find out if it is a twoway affair. Good morning to our viewers in europe. Good evening to those in asia. It warm while come to those in the United States. Im guy johnson. A warm welcome to those in the United States. Im guy johnson. This is the pulse. Arech politicians and ceos gathered for the annual ofference following a week political turmoil that has seen a Cabinet Reshuffle and the resignation of president hollandes government. Business. Ment loves does business love the government . Love thesses do government at the moment. The reshuffle was well received by Business Executives. They say the nomination of the new economy minister signals llanderesident ho wants to keep probusiness policies. 41 billion euros of tax cuts for companies. I spoke to a ceo of one of the biggest utilities in europe, specialized in waste management, and he said that this 40 billion euros might not be enough, but the reshuffle was a good thing. While i think it is important to have one single cabinet working as a team, so i think that situation has been clarified, i think it is good. Think it is good for the president. I think that is good for the rapidity of action. I think that is necessary. We have to see what is going to happen when the Prime Minister and the president are in front of the parliament. Here that telling us the reshuffle brings clarity with the new government and that he doesnt see any more political turmoil and france in the next few months. Look at what was in the speech yesterday and why everyone is so enthusiastic about it. What did he have to say . Love was a declaration of for Business Leaders gathered here. Franceme minister said needs entrepreneurs and i love business. He was described as the new tony blair or schroeder. Theants to accelerate reforms in order to bring back investment in france and to ,everse unemployment in france which has been over 10 at the moment. The speech has been called historical. Here are comments about the new government and their plans. I think that the 40 billion euros is a good step. It is brave and courageous. It is not enough. We think that the gap with germany is large. , think if we have this target five years, but having this target is important to be consistent and persistent. I think that he has the courage and tenacity to do that. Telling us that this 40 billion euros of tax cuts might not be enough. He wants to see 100 billion euros of tax cuts. The new love affair between the Prime Minister and the Business Executives is what will be remembered. Fascinating stuff. We will see what actually comes of it. Thank you very much indeed. Telefonica is raising the 9. 9s for vivendi to billion, countering an offer from Telecom Italia. Bloomberg is in paris with more. Analysts talking to this morning is that telefonica has the upper hand. Is that the sense in madrid . The sense is that it has the upper hand when you look at it from a purely financial point of view. They have made an offer that includes much more cash than what Telecom Italia wants to offer. They have also offered a bigger bid. They are willing to pay 7. 4 billion compared to 7 billion by italian. The issue is that there are other factors that may end up weighing in Telecom Italias factor. We are not sure which will weigh more. Financial issues or Telecom Italias willingness to offer a window to vivendi. To one analystg earlier who was suggesting that this is a way of Telecom Italia flushing out more bids for its business in london america. This is actually just a ploy and it should not be taken too seriously. Is that the view from the jed . Are people taking the offer seriously . Is that the view from madrid . Are people taking the offer seriously . There are a lot of question marks. Competitors trying to snatch the mobile unit. They have to be aggressive to try to grow. They have to be defensive to try to hold onto the unit they have. A lot of the people following this deal or the attempt to get a deal believe that Telecom Italia is trying to position itself and that is why it has made this offer. What the response will be to , like yoution marks said, is still to be seen. What is next . Vivendis Board Meeting. They offer scam out offers came out with very little time between them. Vivendi said they will consider both. They will have a press Conference Today after the Board Meeting no matter what they decide. It is a question of sitting and waiting. Offer expires tomorrow. It will not leave vivendi with much time to way which one they like more. Ok. Thank you very much indeed. Fascinating. Story in thestuous Telecom Space right now. The fbi is investigating a hack fourk on jpmorgan and other banks. Russian hackers are thought to have coordinated the attacks. We will have more on that shortly. The Chinese Government crackdown on lavish spending. Storyl have more on that and little bit later on. It later on. B is chinas richest person. Alibaba. Ver 7 of it could be americas biggest ipo. Numbers look fairly good. Satisfaction guaranteed. We will speak to a french food brand about how to cook up success in what is a difficult space right now. French look at the economy and french politicians. We will do all that when we return to the pulse. Welcome back. A quick look at eurodollar. Where are we trading . Interesting stuff happening. Francois hollande is talking about the euro. With lowaction to deal inflation. Hello do we go . Do wel wait how low go . We will wait and we will watch. Some more positive news should the long through in term. We are coming to the end of the month. Things are getting weird in the Foreign Exchange market for the end of the month. You could see a Short Covering rally and that may be what we are seeing here. Now and that2s be a technical story, rather than anything that relates to the eurozone economy. Lets talk about the eurozone economy and how hard it is to do business or easy it is to do business. How sweet it is in business . A french food brand has been iding a sugar high. It is expected to expand into multiple countries. It is a Global Company with french roots. Lets find out what is happening. Lets go to paris and join our colleague. A crucial week for france. Alove talks about business lot of talks about business. Companies is a food brand in france. Im happy to be joined by the ceo of the brand. You heard the speech yesterday from the Prime Minister. He was kind of declaring his love to businesses. Are you confident this is going to give your business and other businesses and france the room they need . Yeah, i dont know. I think it is a good direction, but the political speeches need action and results. In france, what is like a big problem, Everybody Knows what to do, but there is no political courage to implement the action. We have a wonderful country. The economy is doing very bad right now. It is very easy. More than 10 unemployment. Just do what Everybody Knows what we have to do to save our country. Have the political courage to save our wonderful country. You have enjoyed a 30 40 growth since you were created back in 2005. How do you do it . Because we are passionate about our job and we have innovation in our main objectives. Thanmy product brings more other products to consumers. We are still a small company. We have wonderful product. Our aim is to bring the taste of food in the heart of cities and that is what customers like our products. Lets talk about your products. Milk drinks, ice creams, cookies. One of them is this one. Vanilla milk drink. You were targeting trendy products, healthy products. Is this what Consumers Want . I think people want authentic and tasty products. Our products are really tasty. We want them to taste good in your mouth. Sometimes you can enjoy the real taste by getting our products. You also using some kind to become aertising trendy product . I dont know. We just share our passion. We have a Wonderful Team of people working for our company in paris. Every day we love what we do. Consumers understand it and the media and joy our energy. Life is wonderful in france. Everything is possible. We have this open door of our office. We have people coming in to share, to cs, to taste products. It is a sharing adventure. You present in france, belgium, switzerland, dubai, hong kong. Where are you going next . Inwe are implementing brooklyn or harlem in new york. I hope were going to have a small team at the beginning. The team in the u. S. Will begin there and the first of december in the first of december. I hope also to move to the u. S. With my family. I think it is a wonderful market. People like the taste. It is a huge market. They like innovation, entrepreneurs, france. I think it is going to be a good story for us. Where do you see yourself in five times . Alln new york city and with my products in all the major big cities of the u. S. What about globally . Globally, we have a plan to will asia and michel probably set up a banana farm in hong kong or tokyo. You have attended Business School here where we are at. But its still difficult is it still difficult in france . Nothing is hard. It is common sense. The business has a good team around. Energy, common sense, a good team. Nothing is hard, you know . In france, everything is possible, but you need a lot of energy and common sense. We have seen that french gdp has been zero growth for the past two quarters. What do you think is needed to boost the French Economy . I think revolution and for politics to implement what Everybody Knows to do. Hollande to say im not going to represent myself in 2017 so that i can do what i need to do right now so that everything will be better. Have you talked to other Business Executives that are here . What do they say about the direction of the French Economy and about your sector . It ise success possible to have success in france. It is possible. We knew the politics to do the simple things that have the political courage to do them. It is very simple. The speech is good. But we need results and action now. Not just words, but action. 40 billion euros of tax cuts. Is it having an impact . Is it not enough . It is not enough. You need time to see the results of the action. There is time, but it is in a good direction. Thank you so much. Thank you. That was the ceo of michel and augustin. The new food brand to watch. Back to you. He says a lot of great things. He is talking about the fact that we need change in france, yet he is moving to the United States because that is where they love entrepreneurs. I guess that is part of the problem as well, that there are better environments elsewhere and he is off. I dont think we get enough french entrepreneurs and hoodies in hoodies on this program. We need more. Thank you. Avivll take you to tel where this ceo is talking about his company, the ipo, and how he plans to stay ahead of the curve as well. Welcome back. You are watching the pulse. Lets take you back. We just heard the ceo of the french food brand michel and a ugustine. Here is the take from another ceo and france. In france. They said it. Spending an incredible amount on social spending, the number of regulations, we cannot go further. Away to inverse the trend we have been surfing on for years and years. We are not going to discuss topic by topic, issue by issue, reform by reform. To see finally a Prime Minister announcing that he is going to introduce Structural Reforms in are relevant to support French Business is something that should be underlined and stressed. It is a question mark about how it will get done. Will it have the support of the president . The support of the parliament . Andsupport of the press Public Opinion . To really move the way it wants to move. This is absolutely ridiculous. We have not had austerity. We have no austerity. 57 of gdp is in public and social spending, where is austerity . All of the spending has been treating an incredible deficit with public debt withich is close to 200 . It is a crazy country sometimes, france. We that they want to need to undergo Structural Reforms. Countries need to undergo that way to reduce unemployment arid pension reform, Social Security reform, and so on. Unemployment. Pension reform, Social Security reform, and so on. A pretty clear agenda. Take youcome, we will to tel aviv to talk to a ceo. Good morning, everybody. Welcome back. You are watching the pulse. Im guy johnson. The web Advertising Company went public back in july. Profits rose sharply. Joining us from tel aviv is the ceo. Good morning to you. Gone since the ipo . Are you happy with the way the stock has performed . Was it the right decision . Tell us where you started, really. As i said before, we went to london and we are happy with the results and we think it. S too early yesterday, we showed the first results. Showing very good revenue and profit growth. We grew our top line by 20 . Our profitability grew by 61 . Expecting morere from the markets. Can i get used to those type from you guys . Is that when it what investors should be expecting from here on in . Are not givinge forecasts ahead, but we are sticking to our plan which we set at the beginning of the year. The growth graham came from the Growth Drivers we indicated. We said it would come from social and mobile. Grown our display and video activity by 18 . We grew social activity and we grew mobile activity. It is a good indication that we are growing in the places we said we would grow. Really promising. That is what the business looks like right now. How much bigger is this business going to be . You have done a little bit of m a. Is there any more to be done . This industry looks like it is going to see a lot more consolidation. Where are you going to fit in . The ipo is in order to raise capital and liquidity, not to consolidate. Market that is ripe for consolidation. We conducted for acquisitions in the last year. R acquisitions in the last year. It is really an achievement for us. In what were doing in our performance activity. Moneyason we raise to the is for acquisitions and that is what we are planning to do. Are you talking to anybody right now . [laughter] nownt share with you right about our plans. Acquisitionsthe public. It was ripe for consolidation. How quickly is this going to happen . Ok. Ande are working very hard it is a very organized pipeline of companies. I trust we will be able to do it in the near future. Ok. We will leave that one alone for the time being. Expanding the footprint in europe. A lot of big social Media Companies are getting more aggressive in trying to do more. With them and in what their plans are and how aggressive they are planning to be in a lot of new markets . Believe we are a Global Company, we are based in israel, but we have presence in europe, u. S. , and latin america and of course in israel. We are planning to expand our presence to the u. K. And france in the near future and also to go more to russian market and to thereian market because is a lot of opportunity for Companies Like ours in these markets. Activity is based on performance. There is still a lot of room to grow. We can take part of the growth. Ok. We will leave it on that note. Ofer, thank you for your time. Media joiningomy us from tel aviv. Lets go through the top headlines. Seeks 27argest bank billion euros from the ecb seeks 7 billion euros from the ecb. The United States says russia is directing the rebel attacks in ukraine. German unemployment rose in august. That came as no surprise to economists. That came as a surprise to economists. They dont like surprises. Data is not exactly positive. Another top story for you. The fbi is investigating a coordinated computer hacking attack that targeted jpmorgan and other banks. Data was stolen. Edwards is anna tracking the story. What do we know . Does a gigabyte of data include . I did not bring any gigabytes with me to show you. Im disappointed. What we are told is that Russian Hackers have hacked Jpmorgan Chase and at least four fours, for other banks other banks. They have taken gigabytes of customer data. There is a suggestion that the russian government could be involved. The fbi is investigating. This could be a retaliatory attack because of the sanctions imposed by the west on russia. As well. S helping, what has been stolen . For jpmorganmation and other bank customers. This could result in funds being withdrawn. There is no evidence that that has happened yet. There is also Sensitive Information of other natures as well taken from employee computers. We dont know the names of the four other banks yet. It is not normal for this type of attack to take place on a bank. Banks do have layers of security in place. Attackers normal for to target consumers themselves or retailers come aware typically they have more success at getting this information. Retailers, where banks to bickley have more typically have more success at getting this information. Said thatast year they spent 200 million per year on preventing Cyber Security attacks. They 600 employees have 600 employees involved in protecting the bank on this front. Links to russia. How are we making that link . One of the five banks involved is making this link and the fbi is investigating. It is very tricky to track that link. The attacks come via servers that are known to be used by via Russian Hackers. There is Remote Access to computer networks. The investigation now is to what extent russia and other parts of Eastern Europe are involved here. Tapping into a trend where we have seen increasing levels of attacks coming from russia and Eastern Europe. There have been a series of warnings about how i financial crisis could be started by just this kind of event. Are we legislating enough for the future crisis and not for the past . Thank you very much indeed. To the markets now. Jonathan ferro, over to you. Thank you very much. Let me give you a snapshot of equities as we trade through the morning. Down by 0. 25 here. Down a touch today. Significantly if you look at the dax. The story is in the bond market. German bonds, 0. 19 . This is a record low. 5 trillion, 6 trillion of assets. Not one of them purchasing bonds with a negative yield. If we look at the institutions, the banks, the Pension Funds that have to buy those particular securities, everyone else, where do get that yield . Everyone going to spain and italy. Record low yields. To. 24 . Just off record lows 2. 24 percent. Just off record lows. If you look at the data in the eurozone, that is not a bet on recovery, on optimism. Inflation data is not inspiring anybody out there. President hollande talking about the need for the euro. This is for you, president hollande. Your problem is not about being competitive internationally, it is his it is about being competitive within the eurozone. Reforms. Where are they . Reforms,ural supplyside reforms, that is what they are talking about. Are complaining about austerity, we have not had austerity yet in this country. The state spends far too much money. Thank you very much. Up next, chinas richest person as alibaba plans to go public. We will break down the numbers of jack mas fortune when we return. 15 minutes until the top of the hour. Welcome back. Is chinas wealthiest person. He has a net worth of more than 21 billion. He could be about to get even richer with alibabas ipo. Metcalfe. Now is tom lets look at the numbers. His net worth has jumped enormously since alibaba announced its ipo. Previous estimates had it about 12 billion. Today, we think he is worth more than 21 billion. It is a real indication of just how big ali baba is becoming. The numbers look good. The roadshow starts next week. It has grown massively over the last few weeks. Lets assume the share price rises the little but more. Will the numbers get bigger . Absolutely. It is looking good for jack ma. The jump in his fortunes are not even part of the ipo. Part of the online Payment System which he owns 50 of it. Not many people were aware of that. The history of all of this. He sent the business up in the late 1990s. Absolutely. It is an interesting story. He started out an english teacher, the son of musicians. He was on the west coast and got inspired by the action going off on over there and raised 60,000. Fter that, he started alibaba an incredible story. How does he fit in in the hierarchy of the billionaires that you guys track . In china, he is the richest. He is pretty rich in the tech industry. Mark zuckerberg is worth about 30 billion. He is the internet poster child right now. Thanks very much indeed. Tom metcalfe joining us on the alibaba story. The numbers over the last one before hours have been very good. The ipo and the roadshow next week. We will take a short break. We will see you after that. Good morning. Welcome back. There are 35,000 Mcdonalds Restaurants worldwide. Lets take a look at the most unusual locations around the world. Tasty. Lets talk about what is happening in the currency markets. I should probably be showing you euros wes. Euroswiss. Would like tonde see this jump and little lower. Eurodollar. You may see a short recovering rally as we head to the end of the month. That is normal for a week positioning. Positioning. We are at the lowest level since early 2012. What else are watching today . Lets find out. We are joined by our correspondent and versailles. Telecoms. Jonathan ferro is in the studio. Caroline, take it away. I am watching the other ceos coming year. We will be talking about the Cabinet Reshuffle and the speech from the Prime Minister. So far, the reactions were pretty get from the Business Executives here. Comparing the Prime Minister to tony blair. Many said that the reshuffle brings clarity to the economy of france. This afternoon, we will be hearing more from ceos. They will all be speaking this afternoon, as the big gathering of these executives near versailles. We are also looking forward to my exclusive interview with the german finance minister. Medef,lso coming here to us,he medef president told the difference between frances and germanys competitiveness is 115 billion euros. We will find out what he has to say about this Cabinet Reshuffle and the direction of frances economy. That is the big story for tomorrow. Looking forward to it. Caroline hyde is here. Day. Are talking all weaker earnings were dragged down. We are also talking about merger central. It is about the fight for brazil s telefonica and Telecom Italia vivendi, telefonica and Telecom Italia showing their hands. Telecom italia putting in a 7 billion euro offer. The board of vivendi, the owner of gvt, which everyone a squabble and over, will decide. Telefonica has only given them one day. The 29th of august is when their offer expires. All eyes are on the offer and all eyes around vivendi earnings. Is going to get more and more interesting, i suspect. Carolyn, thank you. John, the last few minutes. The record euro low. The United States treasury. Gdp is on the agenda as well. U. S. Gdp. It is. It is looking to take down tick down. My focus is in france, it really is. It is huge. The comments from mario draghi. What is he going to do about mario draghi . He has come out already to talk about the fiscal side of things. It is going to be very, very interesting. Withme sort of way to deal things in the euro area. The french parliament. Everybody is teething up. Yes. Mood music. Not exactly ready for change yet. The German Economy is slowing down as well. The low yields already reflection of increased optimism and reforms in these countries is what we are being told. Yeah, yeah. It is going to come in at 0. 3 . Lower targets. We are aiming policy a germany. It is huge. If i said next week was huge for the ecb, everybody would have laughed me out of the room last week. Without the ecb was on hold for the next two months, but everybody has started to change their course. Much, guys, thank you very indeed. That wraps up the pulse. We told you what to watch for the rest of the day. Let me tell you what you should be rocking watching for the rest of the day. Bloomberg surveillance is up next, tom keene and his team will be taking you through the next few hours. We look forward to seeing you again tomorrow. That is it for today. This is bloomberg surveillance. It is not war, perhaps a counter offensive. Russian tanks and infantry cross into ukraine. Equities surged higher, emerging markets ignore europes travails. It is not thanksgiving. We celebrate national bowtied day. Good morning, everyone. This is bloomberg surveillance. We are live from new york city. Joining me, scarlet fu and brendan greeley. He is back a after day after day. Are you holding up . No sleep . Im doing all right. [laughter] it is 3 15 when i wake up. German unemployment unexpectedly rose in august. Euro area Economic Confidence declined more than economists predicted. Bad news is good news out of europe right now because it increases the likelihood that mario draghi will do something extraordinary. They are at the tipping point. We will