Transcripts For BLOOMBERG The Pulse 20140910

We are live from bloombergs European Headquarters in london. Thatgin with the battle started this all. Three most senior politicians heading north of the border to try and convince voters to reject independence. Prime minister David Cameron, nick clegg and Opposition Leader ed miliband have canceled appearances in parliament to campaign for unity. Thats talk about the subject. Anna edwards has been covering the story. All hands on deck is how we refer to it. Absolutely, trying to show a sign of unity among the westminster adversaries as they head north of the border to try and persuade the scots not to break up the union, not to break up our family, the wording that David Cameron is putting to this. No sunrise that he is talking about family. He is talking about precious and special things. An emotional rather than a factual plea. Campaigning days of ahead of next thursdays vote. We have seen evidence in the polls that women are more undecided about this than men are. So much so that there is going to be a debate on moms net today, a parenting website. If they thought they were going to get an easy ride, perhaps not. We spoke to justine roberts. I have had a look at the questions that are on moms net. There are questions about, what does it mean if we are Better Together, are there questions of a more of that kind of nature . They are tough questions about the economy. There are things about mortgages, foreign exchange, the pound, eu membership, similar conversations to the ones already taking place. Even the politicians using different language. Interesting, isnt it . Greater proportion of most them who would like to be independent, yet an assumption built in that they will keep the pound. Absolutely. Pole ofhe moms net scottish users say that they believe scotland would keep the pound. If you think about that as informing their decision of independence, that is interesting. It will also give alex salmond a lot to explain. If he is not able to keep the pound, he would certainly have a lot to explain. You get the opposite view from business. Businesses are probably more aware of the risks associated with the pound and understand why it may not be a good idea for the rest of the u. K. Maybe they have different timeline horizons. Ian cheshire, we spoke to him earlier. Manus was talking to the ceo of kingfisher. He has been vocal about this. He says the Better Together campaign is not scaremongering. He has been criticized. He says it is not scaremongering. He says the risks are very real. I think it is a stronger, better deal if we are to go, a much better economic and social future for scotland. These are real risks. , there are extra costs with a new country. There is no way there is going to be a Currency Union. None of that looks very attractive. The Current Situation is extremely attractive. The risks are genuinely there. Markets woke up to this story a couple weeks ago with that first yougov poll. We spoke to socgen. They are saying in france, the u. S. , it is all they are talking about. Implications for many parts of the world. Whether it is catalonia in spain, venice in italy, flanders in belgium, people all over europe watching. Thank you very much indeed. Anna edwards will continue the conversation in the next hour with john swinney. The yes campaign would like us to call him scotlands finance minister. We may be getting ahead of ourselves. We will talk to him about whether or not he can secure the pound for scotland. John Claude Juncker is said to unveil the makeup of his team later today. The new European Commission will be announced at 12 00. Hans nichols joins us now to talk about who will be in the running. We already know a few of the names. What are we expecting . We are expecting an eastern looking team. Three of the seven Vice President s will come from former communist countries. The outlook may be weighted more ard Angela Merkels look of austerity. Clearly, merkel is out front. She is getting what she wants. When you look at the other members, these are core cabinet positions, we havent figured out all the precise portfolios. You have former Prime Ministers of estonia, latvia, slovenia. It doesnt look like what the u. S. Used to call old europe. At least in terms of the economy ministry, p. R. Muscovy see, he like he may be economic and monetary. He is going to have to do the very thing he couldnt accomplish when he was frances finance minister, structural reform. A lot of times we talk about these personalities in brussels. These have real policy implications. There is going to be a massive fight. France is going to be 4. 4 of their target. Italy has acknowledged they are not going to grow this year. Economic slowdown is going to be the story. The fall, an american term. Even the americans are getting interested in brussels politics, which looks like it is going to get more interesting. This is a fun story. There is a News Organization out of washington dc, they have done a very good job covering washington politics, covering wall street as well. They are joining with a Digital Media company that sold off regional newspapers last year. They still have a big tabloid here. They are going to be hiring 100 reporters in europe. They are going to try to bring up to speed breaking news stories the way that is done in washington. There will be more competition, maybe a little more horserace. We will see how they cover it. It is clearly a big investment. The news out of brussels will affect the markets and readers. I cant wait. I am genuinely fascinated. Thanks very much indeed. A big day in brussels. Lets talk about changes at the top. Fast and furious. Erraris chairman is resigning because of a clash, we understand, over strategy with the Parent Company, fiat. Fiats ceo Sergio Marchionne will take over the ferrari unit in the short term. The guy thatw is follows marchionne around. Known there were tensions. What finally happened to make this happen . Was in the airs for days. We reported a couple days ago that montezemolo was on his way out. We followed marchionne and montezemolo all around italy and some remarks were really harsh between the two. At the end, differences over strategy. Montezemolo wanted to keep ferraria an independent unit frm fiat. Sergio marchionne wants to integrate ferrari into chrysler. He needs the name. He needs the help to boost sales for the other units. That is essentially the story. Sergio is taking over. He now gets control. He gets his ideas imposed on ferrari. How long is he likely to do that . You we understand who will ultimately take over the unit . Lead ferr does this iri, where do we see ferrar fitting in . Will it work alongside alfa romeo . Essentially, from what we heard from sergio is taking over the job for the moment. Ferrari is clearly important for sergio because he needs the help of ferrari as part of his plan to boost sales of luxury cars. Ago, reported some months the new alfa romeo will have an engine derived from a ferrari engine. To give theopposed name of ferrari to other units of the group and he wanted to isolate ferrari from the rest of the group because ferrari was meant to be exclusive. Montezemolo wanted to keep ferra ri sales to a number. Analysts have speculated that they may go from 7000 to 10,000 because the demand is there. It is an easy way to boost revenue. Great reporting as ever. Thanks very much indeed. That is couldnt be more true. Lets talk about what else is on our radar. A sad story to kick off. The chairman of santander, spains largest bank, has died. Passing away last night in madrid. He suffered a heart attack. Spain really losing an icon today. You cant underestimate the impact this guy had in spain and across the european banking sector. Sayses finance minister the Nations Capital before. 4 this year. Sapin cut the 2015 growth forecast 1 , 1. 7 . A significant downgrading of the numbers today. David beckham is considering adding something to his global brand. A team over in miami. Miami is going to happen. You sound pretty confident. I know it is going to happen. When i first went into this, i was very proud. Obviously, i was even more proud to continue the belief that i inl that soccer will grow one of the toughest leagues in the world. Want to hear more on that interview . Tune in 7 00 tonight london time. Up, turbulence ahead as lufthansa pilots walk off the job in munich. We will talk about what to expect. More crucially, bottom line. Stay with us for that story here on the pulse. Welcome back. You are watching the pulse. Lufthansa pilots have begun a strike. The lockout will force germanys Biggest Airline to cancel 110 flights. Joining us now from frankfurt is shaquille adam, managing director of a Global Airline consultancy. Good morning to you. This has been going on for quite some time. It strikes me that it is the duration of the strike that is the problem at lufthansa. An eighthour strike is manageable. It is the fact that we are seeing strike after strike. What damages that doing . Thanks for having me. I think lufthansa has been in a world of pain for a few months now. You might argue a few years. Have very lucky they they are not in the baseball business because three strikes and you are out. Very key has made some strategic missteps and the strikes are reflecting a lot of pain between management and staff. Lufthansa of the day, havent followed the market. They arent serving more customers. They are scrambling. It is unclear what strategy they have. They had three very different strikes. One with germany where the passengers are already upset lufthansa used to be being switched over to an lcc product. There are other airlines competing on some of those markets. This is forcing customers to consider other options. The strike at frankfurt previous to today, lufthansa argued that this was not hurting. That is not true. Frankfurt is one of the largest transfer hubs in the world. For lufthansa, being mainly a transfer airline, any shortfall connectivity is affecting the long haul. In munich, we are hearing that the pilots are walking out on long haul flights. Munich was built to divert traffic away from frankfurt. Passengers dont care if they are connecting through frankfurt, munich, paris or amsterdam. When you start canceling flights connecting through munich, you are telling passengers to look at other airlines. New,hreat is coming from modern airlines such as istanbul and dubai. This is just telling those airlines, for customers to take a look at other options. This is going to damage the Brand Perception with some of the core customer base. I dont think there will be a dramatic shift from the core loyal base. Loyal customers are primarily on corporate contracts. They are incentivized to continue to fly with lufthansa. Ok, lets pick up on the last point. Flyer,were a corporate either the person getting on the plane or the person deciding which plane that person is going to get on, what would your advice be . The reality is that because lufthansa is a large connecting airline, a lot of those passengers are originating or , european u. S. Cities, middle eastern cities, asian cities. They have no reason to have to go through munich, frankfurt, or be loyal to lufthansa. What they tend to be loyal to is frequent flyer points. A Business Traveler who needs to trial, you say, take a look at another airline. The risk for lufthansa is, lufthansa is very far behind compared to the other airlines. When these Corporate Customers start to look at their airline, there is a big risk. If they start to try emirates or cathay pacific, you are going to see passengers saying, wait a minute, those are better products. Those airlines have better service. Connecting through dubai is efficient. Connecting through istanbul would be a great experience. Delta has flatbeds. I think you start to see Corporate Customers saying, look , maybe i want to take a look at another airline. If i like it, i might start to say, we should be sticking to those airline options. It strikes me that lufthansa is fighting a number of battles. There is also the tax story. Flying out of germany is pretty expensive. How big a problem is that for management as well . Lufthansa has been extremely lucky until now. The Corporate Customer base have been very loyal to the lufthansa brand. There is always some nationalistic pride. The challenge here is that these businesses havent necessarily been looking for the best price option. As corporates start to become more price sensitive, as we start to see germany getting into trouble, businesses are going to look at better price options. They are going to say, wait a minute, i will look at something else. ,he challenge for lufthansa is it is very expensive to transfer through germany. If you need to travel to or from germany, you will pay those taxes. If you are transferring through germany, why pay these taxes when you can travel through dubai or istanbul or other airports where the airfare is going to have a significant cut . Start to become more price sensitive, those numbers add up. Shakeel, always interesting to talk to you. Shakeel adam. Thank you very much. We are going to take a break. Still to come, the pound takes center stage. Scottish finance secretary john swinney weighs in on the great currency debate. Welcome back. You are watching the pulse. We are live on bloomberg tv. Lets get on the markets now. Jon ferro. Thanks very much, guy johnson. Dax down by 0. 6 . Ftse 100 down by 0. 3 . The ibex down in spain down by over 1 . Sad news that the chairman of santander has passed away. Some uncertainty over governance for the shortterm until someone else gets appointed. That will happen today. Makes up 18. 6 of the total index. Elsewhere, you are looking at fx. Sterling, that is where the noise is. 1. 6099. Just keeps coming. Down almost 0. 1 on the day. Everybody will be looking at Prime Minister David Cameron as he goes up to scotland to rally the troops. I dont want to look at u. K. Assets. , a referendumland over in spain on november 9. It is for independence in catalan. Could spain absorb their debt. For has been happening spanish yields . Up 10 basis points yesterday, another seven basis points today. Is this a little bit of scottish beaver or a healthy dose of or aty scottish fever healthy dose of reality . The two are not unrelated. We will talk about that later. Microsoft and minecraft. See you in a moment. Welcome back. You are watching the pulse. We are live from bloombergs European Headquarters in london. European Union Leaders are meeting in brussels. Whether to go ahead with further tougher sanctions on russia. The talks follow the eus decision this week to put sanctions on hold for a few days while waiting the viability of the russianukrainian ceasefire. Rebelukrainian ceasefire. The chairman of santander, spains largest bank, has died at 79 years old. Emilio botin passed away last night in madrid. Board will meet today to discuss his successor. President obama is preparing for congress to pay for a multibilliondollar plan against the Islamic State extremists. Obama is scheduled to deliver his detailed plan in a televised address tonight. We will bring you that live here on bloomberg. Wes get the details of what can expect. Elliott gotkine has more. Obamas proposal to congress not yet fully finalized. What kind of detail can we expect to see . Essentially, everyone expecting obama to outline his strategy to dealing with Islamic State. Up until now, he has been criticized by other politicians for his selfadmitted lack of strategy in dealing with these sunni extremists who have carved out territory in iraq and syria, terrorizing people along the way. Killing many people as well, including the beheading of two u. S. Journalists. Some kind of strategy, perhaps some kind of outline of what the u. S. Intends to do. It has already carried out Something Like 150 airstrikes on Islamic State to support the kurds in the northern part of the country. He himself admitted to not having a strategy. He held some talks yesterday with congressional leaders to try to gauge their perspective. He says he has already got the power to move ahead, but he doesnt want to go out on his own. He wants the full support of congress to show a united front. So, what do we understand about how this is going to work on the ground . John kerry secretary of state, touring the region. What support is he generating . What can we expect from him as well . John kerry has already touched down in baghdad this morning. He is due to meet the new Prime Minister as well as other lawmakers to show support that the u. S. Has for the new Iraqi Government and really get commitments from the new government in how it plans to deal with the threat from Islamic State. You may recall, under all maliki , the u. S. Was reluctant to lend a large amount of support to someone they saw as a divisive character and partly the cause of the atmosphere that led to Islamic State being able to garner support in iraq. Kerry is there to meet lawmakers, to meet the Prime Minister. We may get some word on a strategy in iraq from kerrry. We expect maybe some potential for further aid to moderate rebels in syria, preventing foreign fighters from entering iraq and syria, and perhaps airstrikes inside of syria itself, something that hasnt happened thus far. That would put the u. S. Affect of leon on the same side as bashar assad, who just about a year ago, the u. S. Were keen to topple. In this part of the world, sometimes even if your enemys enemy isnt becoming your friend, he ends up being your ally. Elliott, thank you very much indeed. Elliott gotkine joining us from tel aviv. Now, britains three most senior politicians are heading to scotland in a plea to reject independence. David cameron, nick clegg and ed band all canceled parliamentary appearances to campaign for unity. We have been speaking to ceos about the implications of this vote. Ian cheshire told us there are real risks to business and scotland leaves the union. I think this is a stronger, better deal if we are together. It is a much better economic and social future for scotland. I understand the point on negatives but these are real risks. There are extra costs with the new country. There is no way there is going to be a Currency Union. None of that to me looks very attractive. Ishink the Current Situation extremely attractive. The risks are genuinely there. This is not a scaremongering exercise. It is business reality. Are you making plans . Have you and the board discussed plans about what you would do in terms of the size of this . 5500 employees up there. There is a whole host of issues. What is on the agenda when this comes up . The problem is, the level of uncertainty. What is extraordinary is there that the pound can continue. I dont see that happening. There are lots of people in europe who will reject the scotland becoming part of europe. The problem is, it is not clear how this is going to pan out. What most businesses have to do is carry on. We are not going to pick up shop and move south of the border. What we will have to do is review the Investment Plans. We dont understand what environment we are coming into. Reprice and relabel all of that. We trade across lots of country borders. This is not a small undertaking. There is a lot of uncertainty and a lot of companies will be looking at this, thinking, lets see what happens. Course my kingfisher ceo ian cheshire speaking to manus cranny earlier. We will continue the conversation within the next hour. John swinney is joining us. We will talk a lot about the pound. In the meantime, we talk tech. Microsoft is near a deal to acquire the Parent Company of the game, minecraft. Matt campbell joins us now. This is a successful company. Not microsoft. It makes money, but it is not in terms of the product they produce. Why does microsoft want what looks like a lego game . This is a strange choice for microsoft. As you say, minecraft is very popular. It has very devoted fans. I think it would be pretty recognizable to someone who grew up playing video games in the 80s or 90s. Nevertheless, people love it. It is very popular on the xbox. And microsoft has tons of cash offshore. Minecraft is made by a company that is based in sweden. This is potentially a very productive use of that offshore know,hich for reasons we cant be profitably brought back. To invertis not going itself to sweden for this but it is an interesting addition. Where are we with the transaction . This is fairly advanced according to people familiar with the matter. It could be as soon as next week or even this week. What is interesting here is this is a move to bulk up the xbox platform. A lot of analysts have said that microsoft should split off xbox and focus on things like office, excel, which are popular and make lots of money. The cloud as well. Stillox, actually, is enormously profitable, enormously successful. There is some suggestion that it be separated into its own company. Satya nadella sees it as priority. Still trying to figure out Satya Nadella. This tells us what about his strategy . Does it tell us anything . I am curious how to read the tea leaves. I am not sure it tells us xbox willx that remain in microsoft forever. One thing that has been pointed out is that minecraft is not available on windows mobile, which is what microsoft is trying to build into an alternative to android and apple. These very popular content platforms, microsoft can ensure that they are integrated with their mobile offering, which is something that Satya Nadella has said is a huge priority. Extrapolate that thinking, there needs to be more deals. There could be. Microsoft has a lot of money despite all of the fashionable microsoft hating that is going on. It does kick out cash. It is an extremely successful company. It does have the resources to do this. Y of those resources are offshore. Nice to see you, thanks very much indeed. Lets turn to a sad subject. The chairman of santander has died. Emilio botin passing away last night in madrid from a heart attack. Lets talk more about him and the implications of his passing. Roderigo joins us now from madrid. Put this man in context. He was an icon. He came from a different age in terms of the way that he saw banking and his legacy is enormous. His legacy is huge. He created a bank he took a family bank that he joined in the 1950s but his father had been running before him and his grandfather before that. His family has been in the bank since the 1800s. He created it into spains biggest bank. He expanded aggressively a broad. He did it in 28 years as chairman. He spent lots of money on takeovers. The most interesting thing for a lot of people is that when the ,panish crisis started santander was able to grow through it and use that as a springboard to grow further. We have got to know his daughter very well in london. Anna. Is it expected that she will fill his shoes . Well, she is definitely in the running. Most analysts think she is probably she probably holds the winning lottery ticket. Even yesterday, bloomberg ran Market Movers and she was named among them for her performance at the head of the Spanish Banks british unit. She was mentioned in that article as a likely successor to her father, whose passing came as a bit of a surprise. Recently inseen conferences and he looked very healthy. Usual self even though he was 80 years old. There have been talks of who would take over for him for quite some time now. It had been mentioned for several years. She seems to be in the pole position. We will leave it there. Thank you very much indeed, rodrigo orihuela. Coming up, apple enters the wearable war with a new smart watch and sets its sights on your wallet. We will discuss all the products launched yesterday. That is in a moment. Welcome back. You are watching the pulse. It has been a busy morning. One of the subjects we have been discussing is apple. It is the tech story. Apple revealing two new iphone models. Both have bigger screens. It is moving into a new category as well. Your wallet and the wearables. Sam grobart takes a look now at the watch. You have heard rumors about it. You may be read some articles about it. It is finally here. Apples got a watch. This is the apple watch. It is apples first new product in four years since the ipod was introduced. There will be more than one apple watch. There will be three different families starting at 349 in 2015. This watch is made with stainless steel. Other models will be made out of aluminum or gold. The bands, in this case a magnetic closure on a leather band, will include other materials like stainless steel, rubber and other synthetics. There is a new controller that apple is calling the digital crown. The watch will not be available until next year but it will allow you to cycle through different apps as well as different functions in each app. The app requires the iphone but it is backwards compatible all the way to the iphone 5. It includes fitness tractors, d aopes and a buste bunch of different apps. The Development Community will work on new apps that take advantage of the touch screen as well as all the microphones and speakers and vibrating devices. Lets talk more about this. It is an interesting product. Coo of the cofounder and a marketing firm. Good morning. We have been talking about the watch. Good first attempt . How does it look, how does it feel . Is this the product you were hoping for . I think it is. It is a beautifully styled watch. We have seen many different wearables and what apple has done is bring beauty to products. I hear that it is heavy but it feels good. So it takes the fashion box. Absolutely. If you are wearing this thing, that says a lot about you. Absolutely, and we have got choice. Apple is giving you three different types of watches. It is a great start. Do we understand the implications of what that product is . We call it a watch but it is not a watch. This is a whole new era of connected devices. We have seen this with other suppliers. This, we are drawing the line now on starting all over again. What is the potential . You think about how the ipod revolutionized all kinds of industries. What is the potential here . How far do the tentacles reach out . I think this era is where brands can Start Connecting to people on themselves, the watches, your mobile phone, you have to have your mobile phone with you as well. That is the start. I think it is evolutionary in some ways. It is still using many of the characteristics we see today. Is it not going to reach its full potential until it is separated from the phone . That strikes me as being a clunky relationship area for example, it has to take advantage of the gps chip in the mobile phone. If you go running, you should have your phone with you still. That is a heavy kit to carry around if i have one of the new, larger iphones. Running up the hill. Payments, lets talk about payments. We are pretty, used to the idea of security. The opportunity presumably is over in the united states. I am still slightly struggling with the idea of why a company like apple wants to get involved in payments. I see the opportunity. The usa market has a huge opportunity to disrupt payments. That was my number one thing i was hoping for last night and we got it. I think it is fantastic to see apple do that. They are using the standard nfc setup that we have seen with android phones already. They are right now claiming not to have any access to your basket or details. Actually, for apple, the opportunity is to bundle it within their device. From a data point of view, it is lower than what you would expect. Visa ora retailer, i am whatever else. I have seen what apple does to other businesses. How nervous would you tell me i should be . I would absolutely be concerned. Apple is very good at cornering the market of their core customer. If you look back at applications and ring tones and that space, they have always charged a larger percentage per payment. Once apple has control, what do i do about it . If i am the cto of that company, what do i do . I think you have to embrace it and look at new models. See how you move that customer. The apple customer is diehard. They believe in every single one of their products. Much higher basket value than on android. Obviously you have to embrace it. Finance, need today or a retailer today, you have to say, these models used to work and now i have to look at a new connected customer model. You have to embrace that. How big a box could we get for health visavis the watch . There are things that are missing. I am thinking, we dont fully yet understand how having a biometric device attached to us is going to impact all kinds of things. Health awareness and fitness awareness. Is it the best . Probably not. They have had watches that do far more than what we have seen there. Other Companies Like jawbone have sleep cycles which they are tracking. They have brought fun into fitness and health care. They are embracing it through personalization. To the everyday customer, consumer, it is a great first start in the market and it will grow everybodys market in that space. We will see it evolve. Thanks for stopping by,7. Uminski. Back in a couple of minutes. Welcome back. You are watching the pulse. Time for todays new energy. Jaguar has launched its most energyefficient model today. It has an aluminum frame. Report,g to a new global co2 levels are increasing at their fastest rate in years. Greenhouse gases have reached record levels in the atmosphere. The concentration of methane is 250 higher than it was before the industrial revolution. Out on a 6 missing billion wind power boom while sweden benefits. That is due to tax policies. Norway is aiming to triple wind capacity but has only arrested one turbine for every seven in sweden. For those listening on bloomberg radio, the first word is up next. For our viewers, a second hour of the pulse. The battle for scotland is what everybody is talking about. We are going to talk to the scottish finance secretary. He is john swinney. We are also talking about s european juncker commission. Back in a moment. All hands on deck. Ins tops brita politicians head to scotland to beg voters not to vote for independence. Scottish finance minister. Ferrari clashes with fiat. Chairman dies at the age of 79. Good morning to our viewers in europe, good evening to those in asia, and a very warm welcome to those just waking up in the u. S. I am guy johnson. This is the pulse. Live from bloombergs European Headquarters in london. A subject everybody is talking about. The battle for scotland. Britains three most senior politicians theyre convincing voters to reject independence. David cameron, nick clegg, and milibandram and ed have scheduled appearances. Anna edwards is tracking the story. The concern in westminster that yes is a possibility. Scots possibility of the ripping up the union. These gentlemen are heading to. Cotland isnot break up our family the plea from David Cameron. Female voters a little bit more undecided compared to the male voters. That explains what seems to be a ft in campaigning we are seeing. We spoke to the cofounder of momsnet. Interesting that were going to have alex salmon and alastair on momsnet. Y interesting to see what kind of questions they come under. They will have to answer question things about currency, eu membership, the new scotland act offered by gordon brown. Burgess, foreign exchange. The pound is at the center of this debate. The economics are still century. The female voters are probably more disposed to voting yes. At the same time, they have this expectation that the pound comes with them. The predisposition to vote yes is coming from a survey done mumsnet. Am at assuming that the pound would be cap i scotland. Cheshire, he was warning about the risk that surrounds what currency is used how itland, the costs of would impact business. We spoke to unicredit, one of the many houses trying to get their head around where the pound would head. It could mean big applications to the currency now in either direction. If we got a yes vote, yes to independence, 1. 50 on the pound against the dollar would be possible. If we get a no, a bounce in sterling. Not all the ground has been lost since july has to do with independence. He thought we could call that he thought we could claw back half. We could see moves in either direction. On scotland. Ds we will carry the conversation on, talking to the scottish finance minister, john swinney. The pound and currency controls. Lets take the politics to brussels. Is set toe juncker unveil the makeup of his team later today. Hans nichols joins us now to talk about some of the faces that will be running brussels. What do we know and what do we need to know . Faces and these new commissioners will have an eastern outlook. Three of the seven Vice President we do not quite know it looks like three of the seven will come from eastern europe. Was four of the six from western europe. The president of the eu commission, the eu council, this forums,runs the big Prime Minister former Prime Minister of poland. Close ally of Angela Merkel hard to imagine this looking Angela Merkel had had all of her choices, she what shehave gotten wanted. Former Prime Minister of estonia, latvia, pennsylvania. And slovenia. Oncial in the ongoing debate how much austerity we are going to have. The only thing the old europe and maybe the socialist and prospending side, pms give easy moscovisi, former Prime Minister of france. He will be in charge of Structural Reforms that he was not able to carry out when he was finance minister. The french are interested. Waiting to see how britain comes out of this. Politics in brussels gets more interesting and there are people who are interested in politics in brussels. There will be a new player in town, politico. The washington dcbased publication. It transformed the way politics was reported in the states. Two president ial cycles and now coming up on a third. They will go in with axel springer, the german media house that is flush with cash after selling off a bunch of regional newspapers. They will try to own the Digital Space and higher 100 reporters and editors. They will be based in brussels and we will see how they shake things up. A lot of market moving news and interesting stories are going to come out of brussels. Thank you very much indeed, looking for to seeing what that looks like. Hans nichols covering what is happening in brussels. We will cover what happens in brussels. A press conference from the commission about that. We will take you live and make sure you are aware of some of these key jobs. Lets change gears. Fast and well, furious. Downris chairman stepping because of a clash of strategy with the Parent Company, fiat. Fiats ceo, Sergio Marchionne will be taking over the unit. Lets talk to a guy who knows all about this. He knows everything that is happening at fee it at fiat. Why did these two guys finally fully fallout . Hi. On my way to the ferrari headquarters. We will finally explain, on the record, what happened and why the ceo resigned. The report was released finally in new york. Probably, Sergio Marchionne wanted a final solution for ferrari before the listing took place. Clearly the decision became quicker after a weekend flash. Said something that Sergio Marchionne did not like. Tosaid i have managed transform this company into a machine. Sergio marchionne replied that whathould threaten is being shaped without him. This is the final conflict between Sergio Marchionne and montezemolo. What the real issue is, totezemolo wanted ferrari remain independent. Sergio marchionne wanted ferrari to be more integrated into the group. That is a sources told us this week. Sergio marchionne slips into the driver seat at ferrari. How long is he going to be in that seat . Thats not clear at the moment. Saying that the job for the moment is permanent. It does not seem to be a temporary job. Obviously, hes the ceo of fiat and chrysler. Sergio has many things on his plate. He will keep the role. Thank you very much indeed. On his way to find out exactly what is going on here. We look forward to his Coverage Later on. Right. Spain has lost an icon overnight. , hashairman of santander died at the age of 79. After suffering a heart attack. More on this story shortly. We will take a break and be back in a couple minutes. Good morning. Welcome back. Youre watching the pulse. Lets talk about the currency markets. One currency everybody is talking about is the british pound. Thatght not be british for much longer. Watching the Scottish Referendum carefully. You can see the impact it has had on the cable rate, the pound versus the u. S. Dollar. 1. 671. Week. Is on the check out the volatility chart on the pound. Volatility chart as the world becomes unnerved by the prospect of the yes vote being successful. The fate of the pound at the heart of the Scottish Independence today. Joining us now from edinburgh is john swinney. The scottish finance secretary. Good morning. Are those who are concerned that if we were to see successful, being the new administration in edinburgh would be forced to impose currency controls. We are seeing evidence of currency flight away from scotland. You had any discussions whatsoever about the possibility of currency controls being imposed . Is important to remember in all of this debate is that the referendums on the 18th of oftember, within a period negotiation and dialogue between the scottish and you can governments to implement that vote. That will take an 18 month scotland becomes an independent country in march 2016. For people looking at this debate, it is important that people understand that although scotland might go to become independent on the 18th of september, that does not take effect. Theres a period of negotiation and transition. In that period, we would be seeking to a associate we would be seeking to negotiate with the u. K. Government. To continue to use the pound sterling and for that to be used within an integrated Financial Market with the bank of england as a lender of last resort. With the Financial Regulations undertaken by the bank of england to provide security and the observance of Financial Stability, which is the responsibility of the bank of england. To the question. Talkingiod you are about will be highly uncertain. The outcome of that negotiation is by no means predetermined. As mrs. Will have a long time businesses will have a long time to watch what the events are and how they unfold. That is why people are talking about currency flight and money being moved out of the border. Because of the certainty because of the uncertainty surrounding that. Given that uncertainty, is it not possible that you might have to impose some sort of currency controls to stop that money exiting the country as a result of that extended. Have you had that discussion . The reason for my first answer is just scotland remains part of the United Kingdom from the referendum on the 18th of september until march 2016. In that period, the bank of england remains responsible for Financial Stability. Which is what the governor of the bank of england did a few weeks ago when he provided the inflation report. It is the u. K. Government that remains responsible for Monetary Policy in that period. In scotland we would not have that power and responsibility until the country becomes independent in march 2016. You could ask the authorities in london and the bank of england to impose restrictions because of the possibility of that happening. Look at the front page of the financial times, evidence is happening already. You could make that request. Has beennk of england absolutely clear. The government said this the other day. The bank of england is responsible for financial the aftermath of a referendum on the 18th of september and will be for the period certainly for the foreseeable future. The agenda and approach i want to see is where the bank of england remains the lender of last resort, is responsible for financial and prudential across and independents got one and the rest of the u. K. There is not a frame for this discussion to be taking place. After a yes vote on the 18th of september, the current arrangements remain in place until at least march 2016. On the model that we advise, the bank of england would remain responsible for Financial Stability and for Financial Regulation for the longterm as part of a proposal. In the short term to make it happen in the longterm, you might have to impose restrictions. Im not going to ask you to speak to the bank but i am curious to know what your views would be. Youre not really telling me whether or not you think in the shortterm the volatility that surrounds this you see what is happening with the pound this week and the of money flowing south of the border. In no way can you imagine a scenario in which we would have to put shortterm measures in place to preserve longterm Financial Stability . Thing is, there will always be volatility in the markets. Whenever there is a political issue that is being addressed. We saw volatility in the market in 2010 at the u. K. General election. The pound fell significantly as a consequence of the uncertainty that arose out of the u. K. Elections in 2010. There will always be volatility on the markets. The point im trying to get across to you this morning is that there is no necessity for for theree conse to be concerned in the aftermath of the referendum because the current provisions reveal for the foreseeable future. And in the longterm, if the agenda that the government is putting forward prevails. We want to take for a responsible negotiation with the u. K. Government. We have set out are in the interest not only of an independent scotland but in the interest of the rest of the u. K. That would be the approach that we would take to guarantee that we have a smooth transition towards the establishment of an independent scotland and the ability to exercise and take weward the Financial Market have within the u. K. At the present time in which we would want to see continuing as a consequence of independent. When we agree with your team for this interview, they suggested we call you the scottish finance minister. Ahead ofbe getting ourselves, but it is not beyond the realms of possibility. Lets talk about responsibility. You have laid out at you clear scotland would be lisicki the pound. If that were not the case, there are plenty of people who think that should not be the case, including the governor of the , judging fromd yesterday. Would you take personal responsibility for the fact that that is not achievable . Would you put your job on the line and say if i cannot make that happen, i will take personal responsibility and i will not continue in that post . Do you think alex salmon should take the same view . We set out for this responsible and credible of an independent scotland and the rest of the middle kingdom. We have not had negotiations with the u. K. Government about. Hat proposition there is a. When we were involved in a clinical campaign. In the aftermath of a yes vote, the position of the u. K. Government would change. The proposal we advance is in the interest not just a vain independents got on, also in the interest of the rest of the u. K. In the interest not just of an independent scotland, also the interest of the rest of the u. K. We believe there is a very good prospect to secure that dream. If that turns out not to be possible, will you resign . Do, i will pursue the negotiations that have got to be taken forward. To ensure that a yes for an a is proven toision practical effect by the negotiations with the Scottish Government and the u. K. Government. That is what we will be focused on in the aftermath of a yes vote in the referendum and that is what we are working to secure. Will you resign if you cannot achieve that . What i am simply saying to you is that we will take forward an orderly process of negotiation with the u. K. Government. We believe that there is a very strong case and a Strong Foundation for the establishment of our country. Supported by Eminent International opinions from a range of economists in that opposition. That is what we are taking to the negotiations with the u. K. Government. Scottish finance secretary john swinney. Thank you for your time. Lets move on. Spain has lost an icon, the chairman of santander has died overnight. Emilio botin was a legend in the Banking Industry. Lets talk about his legacy and into madrid. Ns us now. Ihns put this guy in context. You said he was a legend in the Banking Industry. He was a legend in spain. He did a company that was family managed, a local bank from the Northern City of santander. One of theinto biggest banks in the world. He participated in the mva amro takeover. He even created a bank that was able to get through the financial crisis both in spain and the eurozone and the u. S. Subprime without having to lose power and having to lose its. Rowth perspective and position his daughter we know very well in the u. K. Issue the most likely candidate to succeed him . Definitely. He has been grooming her for a while. The family has run the bank for decades. He joined the board in the 1960s. He took over in 1980 six. Before that, his father had run the company. Before that, botins grandfather. Ana patricia taking over would continue the tradition. She has run the british unit and she has done it well with good results. A lot of analysts are happy with her job. Bloomberg yesterday included her in the article on the 50 most influential Market Movers in the world. Primefinitely stands in position to have a job after her father surprisingly died. Is this going to mean a significant change in direction for the Santander Group . It seems unlikely. The death was a bit of a surprise. He had not been ill, he had been seen recently at events and seemed healthy. At the helm of the company. He was almost 80 years old. The talk of his secession had been in discussion for a while. The line of the bank was clear. The fact that his daughter was running one of the most important units and has been in the company for years and is the likely successor tends to indicate that she will most likely keep the line of the company. Thank you very much indeed for this news. The analysis on this news. Sad day for the Banking Industry and for spain. Let me take you to todays post euros. 100,000 the price of the new mercedes gt. 5 the price of its precepts are half the price of its predecessor, the xlxs. Zip to the brand known for its comfortable sedans. Mercedes knowhow to the fast. Lets talk about what we have coming up. Microsoft making a play for my craft minecraft. 2 billion price tag. Why it is moving in that direction. Follow me on twitter. A fairly busy morning in terms of the news. Feel free to join the conversation. My twitter handle is guyjohnsontv. Talking about ferrari, that when, a new commission unveiled in brussels. We will take a short break. See you in a moment. Good morning. Welcome back, you are watching the pulse. Here in london. Im guy johnson and these are the top headlines. European Union Leaders in brussels today to consider tougher russian sanctions. The talks follow the eus decisions to put sanctions on hold for a few days while waiting the viability of the really ukrainian ceasefire. Britains three senior politicians heading to scotland. Clegg, andon, nick ed miliband have all canceled parliamentary appearances for the campaign for unity. The bank of England Governor Mark carney is warning the scots about keeping the pound. Take note of the positions of all the major westminster parties to roll out out the Currency Union between an independent scotland and the rest of the u. K. It is in that context that the Currency Union is incompatible with saturday. Interim paddle incompatible with sovereignty. President obama scheduled to deliver a plan and addressed the nation tonight. We will carry that live on bloomberg tv. It some more. Ut Elliott Gotkine is our middle east editor and joins us from tel aviv. In terms of the details, how final are they . Finalized,letely from our perspective. We do not know what obama is going to say. Administration official, he is likely trying to ask congress for billions of dollars to help with this fight against the Islamic State. That is what this evenings address is going to be about. Hes been criticized for not having a strategy. He even said so himself. Tonight is his opportunity to show that he has gotten some kind of strategy in place. Perhaps that will be somewhat informed by his secretary of state john kerrys presence on the ground in baghdad, unannounced for security reasons. Meeting with the new Prime Minister, abadi, also the president , foreign minister, and speaker of the parliament. The iraqipport for governments unity and for its fight against the sunni extremists. Also to get new commitments from the new Prime Minister as to how they plan to deal with the threat of Islamic State. Its talk about understand that we were going to be listening to him, we are not. In front of me. Lets talk a little bit about the plan the u. S. Is considering prosecuting in the region and the details of it. Elseus some sense of what we are going to be seen. It looks like the u. S. Is considering a number of potential options for the fight against islam exchange Islamic State. From preventing foreign fighters from entering iraq and syria, difficult given the porous borders. To lend more support to moderate rebels in syria. Against the regime of Bashar Alassad and also the Islamic State. Air strikes inside syria. That would be a controversial thing, given that the u. S. Called off airstrikes last year. This time, they would be fighting for the same team given oft alassad is no friend the extremists either. It has not been done before. That would take the fight against the Islamic State which has carved out a territory q and syria the size of great britain. Another criticism for obama, one of his big Campaign Promises was to get the u. S. Out of iraq, now he is going back in. Why didnt he see what mightve happened before taking the troops home . Elliott gotkine us from tel aviv. Right. 25 minutes until surveillance. Tom keene in new york to tell us what we can expect. What have you got . We go to washington and get an update as the president speaks to america this evening. And to so much of the world on his efforts against the Islamic State. We hope to get Phil Mattingly from washington in the 7 00 hour. We look at the markets, tony joins us. And a monster bull reaffirms his optimism on the American Economy and our markets as we look at many walls of worry. One of those is scotland and the fallout. Derek called penny will join us. Rom bank of tokyomitsubishi synthesizing the ever weaker yen and stronger dollar. Looking for to the show. Tom keene over in the states on surveillance. Interesting market commentary. Jonathan ferro has more. Check out equities first. Just off session lows. Ftse 100 up by. 1 . Dax down. 1 , the chairman of santander has passed away. Santander stock makes up 18. 6 of that index. France, theng to finance minister coming out and saying that the budget deficit issue will be 4. 4 . They will not hit that 3 target until 2017. How many more extensions to the french need . We are talking about sterling. More weakness off session lows, 1. 6882, down by. 1 . This is in the bond market. U. K. Assets. Scotland and whether it gets independence. Does this speak to is happening in spain and catalunya . Talan region will have its own referendum. Look at spanish yields. Up 10 basis points yesterday and another today. 2. 3 is the yield. Still perfectly love but the moves have been sizable, 20 basis points in two days. If scotland becomes independent and the u. K. Observes that debt, that is one thing. Can spain absorb the debt of a region the size of cattlalan . What is going on . A little bit of scottish theater. Scottish fever. Awfully tight. The polling data is going to be fascinating to watch. Momentum with the yes campaign judging by the polling numbers. What happens over the next 8 days is fascinating. Apples health kick. The Product Launch revealing a new focus on fitness and health and wellbeing. My guest developed and app that tells women everywhere about her monthly cycle, fertility. To see how she thinks this develops from here. We will talk about that in a moment. Welcome back you are watching the pulse. Lets talk technology. Microsoft said to be near a deal with the Parent Company of the Videogame Company minecraft. Why minecraft . A pretty interesting rumor transaction. I think its getting reasonably close to unannounced. Minecraft is proudly a lowtech game, it looks like playing lego on a screen. Of theognizable to some things we see on a platform like an xbox. It has devoted fans. Microsoft, despite the problems it has had Building Products consumers want, does have success in the xbox. It seems to want to strengthen that platform and make sure games like this and content like this is available on its mobile software. The xbox has an incredibly powerful graphics chip. Powerful not require a graphics chip. Makes you wonder about whether it is for the xbox or more about the other platforms and the success of getting the operating system and other areas. Something interesting about minecraft is that it is not available on Windows Phone. Which is the Software Microsoft wants to build into the rival to android and apple. That has never really worked for them. Making sure these popular applications are available for Windows Phone is totally critical if microsoft is going to ever have real success going the alternative to android and apple. What does this tell us about broader strategy at microsoft . Satya nadella is figuring out what he wants to do. It is clear in a number of areas that he is when to focus. Give us clues and help us fill out the picture. We do not hear much about the xbox business in discussions about the future of the company. Nadellaer dot satya has been all about the cloud and enterprise customers. Indispensableft to big businesses. The xbox part sort of runs itself. It has a good product, people like it and seems to surf the wave of consumer demand for gaming platforms. Doing something that is so targeted at consumers. There is no business of minecraft unless you are getting very creative. It is unusual and it tells us that perhaps Satya Nadella sees a future for that sort of thing within this renewed microsoft. Nice to see you. Matt campbell. Lets move on. Showed theest Lunch Company is going all in with a focus on fitness. A focus on health. Julia is a developer for the , which will be part of Apples Health kit. Edd you get what you want yesterday . What is the potential here question mark ica potential with apple releasing the new health kit of it. Integrating with one feature we are going to roll ops, issoon as ios 8 dr to enable users to check their body temperature. This is a measure people can take to find out when a delay should occurs. This will be integrated with health kit so the user can decide other apps to read this data. It opens the possibility for a thirdparty thermometer factory to input data and of the user itself. When i first heard about health kit and he watched, my first thought was not to go to fertility. It is a logical link. We are very much in the infancy excuse the pun of what this product is going to do. How far could it go . When you think about what is next and what comes after, how far does it go . What does this product do . I think one big potential therefore our users in appscular is to have other give us information that in turn gets our users to draw more insights. If you had a stressful week, you have a high heart rate that can be detected by the apple watch. If your sleep patterns have been off and you have not been getting enough sleep, you can see that reflected in a longer than usual cycle. That would be great insight for users. Is aesumably Data Security massive part of what you think about as well. , fornnerved are you instance by the recent apple problems they have had . This is stuff i said expect a lot of women would not want published. Does that worry you . We pay close attention to this. The health kit puts a great focus on security. It is always up to the user what they share and with what apps they share it. If people do not want the health kit integration, they would not enable it. It is opt in. We take measures to protect data. There is another feature rolling out with the i was a release, touch id. You can protect with your fingertips if you have an iphone 5 or one of the new ones. Even if someone gets your phone into their hands, they will not be able to access your data. What is it like to work with apple . This process,ed what is it like on a onetoone basis working with this company question mark we communicate with them a lot. They give great input on Product Development and the designs that we do. Especially now with iowa state especially not with ios 8, theres been talk about how we can integrate. Interest in apps making the features available for users. There has been a lot of conversation on going with them to make the best out of those features. Is apple the right way to go for your company . Is android going to offer more further down the road . Do you think your customers are more apple customers . How does it work . We are working on android right now, it will roll out soon. To have aswe want many users as possible use the app. Apple has always been our focus. Were going to keep developing and integrating new features. We are also going to ship an android app soon so that more users are able to access our out. Will the android app bs with the android will the android app be as successful . We hope to catch up at some point with the ios version. People talk about the fact that apple users spend more. Does that come into your thinking when you think about which operating system you are going to work with . Or is it the ease of writing for that particular operating system. Is it the ios or the amount of money that gets spent . We need to care about money. After users tend to spend more. Focus is tonow, our provide the best User Experience for the broadest audience possible. On the one hand, focusing on apple and integrating the most cutting edge features. Putting our resources on to android to deliver to other audiences. Ia, congratulations on the product. Looks like something looking at your latest funding a project that is going to go somewhere. Fascinating. Julia with biowink. Using the clue app. Ok. Well take a break. We will talk about the eu Mission President elect unveiling the makeup of his group. Well bring you those appointments at the top of the hour right here. You are watching the pulse. Streaming on your tablet. On bloomberg. Com. We have a changing of the guard in brussels. JeanClaude Juncker is set to unveil the makeup of his team. We will get that in a few minutes yesterday time. Rbs. To gallo joins us from raging about whether or not we need to see more fiscal room for maneuver is in order to generate demand in europe. Applico how critical is todays announcement . Todays announcement is thertant, as well as what eurogroup will announce end the potential for a francogerman Investment Plan. You have seen mario draghi shooting his monetary bazooka. Thirdd the second and the aero here to follow up on the ecbs generosity of stimulus. We need more physical stimulus and we need more reforms. JeanClaude Juncker talked about a 300 billion euro Investment Plan in july. This is not what we are seeing yet. Were seeing a lot of mixed opinions in germany about freeing up some of the surplus. Itself, the ecb stimulus becomes just liquidity. After the initial sugar rush, investors are a little concerned and markets are selling off. We need to see more cooperation between fiscal and Monetary Policy. Juncker is the guy Angela Merkel suggested. Germans are cautious. We heard what Wolfgang Schaeuble had to say. Do you think juncker and the team he will propose will deliver in any shape or form in terms of the scale that we need to make this happen . There are some discussions could what the eurogroup say and what the European Commission could be. The key points are number one, whether there will be a plan to guarantee assetbacked securities. Involveshe ecb plan purchases of sme assetbacked securities, as well as other things, including rmbs, residential mortgagebacked security. All inecurities are not the range of things that the ecb can buy. The ecb needs guarantees from the European Investment bank or from national governments. Unique cooperation from these entities with the ecb. Schaeuble yesterday said they are not going to offer during tease. That is a hard line. Ecb in germany, if the abs, thatnches of can help smes in other parts of europe. Guarantees to tranches of assetbacked securities. Spending more broadly. If you are going to do reforms, you will have short falling growth in the near term. You need some sort of stimulus, not just austerity, to withstand the impact of reforms. Hold that thought. I want to say goodbye to our viewers in the u. S. The pulse is wrapping up. We will continue the press conference live. Tom keene is chomping at the bit in the u. S. And a lot of things to talk about. We will see you tomorrow. For our european viewers, stay with us. This is bloomberg surveillance. The president speaks to the nation. The u. S. Will attack the Islamic State with airstrikes. The goal to ultimately destroy the terrorist group. Move, yields higher. Pound sterling continues its descent. A conversation on your more work, less life balance. Good morning, this is bloomberg surveillance. Live from new york. It is wednesday, september 10. I am tom keene, joining the is scarlet fu and adam johnson. Adam has our morning brief. Overnight the French Foreign minister lowers next years growth forecast to 1 . It had been 1. 7 . They keep lowering growth. Not all of europe in recession, part of europe. Just the second latest economy. Negative yields in germany. Japanese yen to its weakest levels in six years. Abenomics is working. He wants to make products cheaper so japan cant export can exportre