Transcripts For BLOOMBERG The Pulse 20140926

The ryder cup tees off in scotland. Were going to look at golfs prop you ready problems. Popularity problems. And the battle of the bubble. We had to france to find out why champagne is losing its fizz. Press echo is taking over. First, lets talk about the markets. Stabilizingcks after a decent selloff yesterday afternoon in europe. Lets talk about the action, put it in context. Jonathan ferro. It is a dangerous game to look at one section and start to blame a whole different thing. Everybody is trying to blame everything. Nasdaq, techhe stocks fell off, apple makes up 7 of that index. That stock really feels it. You can explain that one right there. I think we should look at the week. Not just the macro stuff. Look at some of these companies that are coming out with profit warnings. You have tnt talking about europe and the struggles there. You look at the data from germany. Business confidence trending lower. Just a story of internal management problems. ,t is a story about food prices which arent going anywhere. It is a story about a whole these companies havent really restructured. My take away is that there is enough negative macro news out some point, there may be a trigger and have it knows what that trigger will be. It might not be that significant but it acts as the catalyst. I think the bullbear debate has heated up. We had a couple ipos in europe. Some people think that the s p 500 bull market run of the last five years has been off the back of strong earnings. Earnings per share, what is that a result of . A lot of it is the share buybacks. We had 2 trillion worth. That is off the back of low wakes. What happens to rates when they do rise . What does it mean for those kind of themes . We believe it there. Thank you very much indeed. We are going to talk a lot about golf the day. In the meantime, we are going to talk about tax. The internet has been vulnerable to a security flaw for years. Governments and Companies Just waking up to the threat. The u. S. Department of Homeland Security is warning about the shellshocked bug. Our international correspondent, but he might as well be internet correspondent today, hans nichols joins us now. Apple may be vulnerable to this. The internet of things may be vulnerable to this. Is it possible to quantify the risk . No. All we know is that the risk is towards the top of the charts and that is from an official government agency. They say this is a 10 in terms of impact and vulnerability. You mentioned apple. Apple just came out and said that their os ask system osx system, most of them arent vulnerable. They are only the owner if you have changed advanced security settings. I get to pretend to be a computer scientist. Normally we pretend to be economists. Lets talk about the bash code. Systemssource code unix that has been around since the 1980s. This is where the vulnerability exists. Here is what the department of Homeland Security says. Official Statement Last night guy, that is governments take and it is a very clear message to i. T. , directors, everyone running the backend of a security system. They need to fix this bug. There is a patch available. Download the patch and also figure out which of your systems are indeed vulnerable. Many ofhere are so them. That is the problem as well. It has been around for a long time. You have to figure out where it is and where the patches need to be applied. How does this compare to the heartbleed bug that we were talking about recently . Trick users like you and me into changing our password and that password opened the front door to our security systems. What we have with shellshocked is a vulnerability on the backside. This isnt tricking consumers. The tools they are using to break in, they are quite primitive. In some ways, that is the problem. This is so old, you have to fix the back systems on architecture that is really from the 1980s. A remarkable story. What is most remarkable to me is how long it has taken for everyone to wise up to it. Like governments and companies are raising alarm bells. And the implications for the internet of things, we will watch that as well. Thank you very much indeed. Beenair france shares have under pressure all week. We know why. The pilot strike is in its 12th day. The company has offered big concessions. Kari lundgren joins me now. This was meant to be about transavia. The fact that we have not had a deal done seems to suggest that the pilots objective may be different. It seems they are still worried about the transavia side of things and how that is going to be. There is a cap on it. 14 planes, it cant grow beyond that. Point, the question is how that is going to grow. What the pilots are worried about is whether the contract , whether theing terms and conditions for those contracts are going to be different. They are worried that if you are an air france pilot, are you going to be under a different contract . This is something they are concerned about. Are we any closer to this strike ending . We had a statement from the board today. We had a statement from the sky team pilots alliance association. Both sides have their backers. The board was very much saying, if we are going to grow trans avioa france, it has to be a lowcost thing. They dismissed having one tract across the board. We havent heard much this morning yet. One would hope there is going to be something. The weather in scotland this morning looks glorious. If i want to get there, there are a few options available. You can go by private jet. You can pull with other hedge fund managers, company owners. You are talking about business on the golf course, you could do it in your private jet on the way there. 1800 pounds. For a single . That is a return fare. It would mean flying with people you dont know. Better than the 10,000 pounds you would spend doing it yourself. I am sure it is worth every penny as i watch the golf on the monitors in front of me. Thank you very much indeed. Cup. Get more on the ryder Caroline Hyde joins us for that story. It is clearly one of the highlights in the golfing calendar. In your calendar. It is even better to watch live. But nevertheless, this is a big day for golf. Golf is finding life quite tough it elsewhere. You said it is great to watch on tv. I am not such a fan. There seems to be a problem. Since tiger woods hasnt won a major since 2008, some people are calling it free fall. You see money flowing into golf. You see tv ratings falling. Golf clubs closing. How are they going to build up the momentum again . Rory mcilroy is helping. He has just won two majors. Widely followed on social media. It is helping with europe. In terms of social Media Presence versus the u. S. , we have europe with more than a million likes on facebook of the ryder cup European Team. That is three times the u. S. Twitter, two point 8 million follows for the European Team than the u. S. Team. Only way they win is instagram. Fowler has u. S. Emblazoned on his head. Usa carved into his haircut. He is helping with instagram but generally they have to up their Media Presence. They also need to get women on board. Whenlittle referendum vote they announce that women can now become members. Big move. There are still two courses on the british open that dont allow women but it is getting the youth involved. One area is asia. The middle class is swelling. We see more participation there. You bring up rory. He has a new driver in his golf bag. Bright green. But this is a new nike golf driver. As you say, big following. Golf is proving to be tough for Companies Like adidas. Nike is faring better. They say Action Sports and golf were the two areas they didnt see growth but they are optimistic. They are saying, they have gone in hard. They have sponsored the key players in terms of social engagement. Tiger woods, rory mcilroy. He has a new club that is going to get people talking. This is a company that puts their money where their mouth is. Salesow spend 12 of all on athletes endorsements. They have about 30 billion. 12 of that is a lot of money. They are on track to be spending big. Sales of 15 . Europe doing very nicely, up 25 . Greater china up 20 . Profits are doing well. This is where they are really standing apart from adidas. As seeing sales down and having to issue profit warnings. Nike going from strength to strength. Social media, they won. Also in golf, they sold a lot more boots and they have these new boots that they have ronaldo wearing. They are winning in terms of golf as well. Caroline, thank you very much indeed. She will never have a driver by the end of the day. Up, no retreat, no surrender. Air france saying they are still refusing to back down. My next guest says the strike could come back to on them. He will explain why when we come back. Good morning. You are watching the pulse. It is friday. Air france pilots still on strike. They return to the negotiating table. Concessions from the airline have nailed to stop the worst strike this century with the airline losing 20 Million Euros on an operating basis every day. How long can this carry on . And economist, over at sex o bank. He covers this area. Good morning to you. Walk us through what we may see next week. Does this represent and exist shall crisis for air france . How serious is this . It is a disaster for air france. As you said, the company is losing a lot of money every day. Euro loss forlion the next 10 days. The final situation is very weak. If the strike last for a very long time, probably next week we will have discussions between top management and labor unions. This is only a way to keep [indiscernible] what does that say about france . You sense that the french government would like to get involved but it is trying not to. It has a little bit. What does this communicate to the world about French Business . All, it is very toficult for a company reform and change the situation. This strike is a symbol of corporatism in france. It is a way to keep privilege for some people in the company. Might not know [indiscernible] it is a very bad message to foreign investors. As we saw last week, the government cant influence negotiations. It is trying to not give too much. I am pretty sure the government tried to push for the end of the strike because it is a bad situation in france. In what sense does this act as a significant change for the airline . You are looking at a business that needs to figure out how to compete with ryanair and easyjet. Done, what can management due to deal with that threat . What can it do to make this airline profitable . Unless it wins, its options are going to be very limited. Exactly. The situation is that air france is not profitable. If we didnt have the strike, it might return to profit this year. As we can see, it is not in that situation. The big problem for air france [indiscernible] it is not a failure but it is not enough to be competitive regarding ryanair. Strategy implement a to create a new project. This is very important. The big problem for air france is the financial situation. Losing money is not good for an airline. Even if the government is part of your shareholders, it is never a good situation. I am not very confident about air france surviving in the next year. It might be very difficult for the company. Last question. If you were a ceo, would you be going down to your travel team and saying, we cant deal with these guys anymore, we need to get our business back on track, lets talk to easyjet. Is that what you think is happening in businesses up and down france . Is that what they are doing right now . Yes. Negotiate,ying to they try to have the support of the government to be in better shape, but they are negotiation negotiating with other Companies Like easyjet. It is very important for air france to get into a talk with those companies to find an agreement. It might have a lot of job cuts in the coming years. It is crucial for the company to survive, to end the strike very project,implement this to have a local subsidiary, and to negotiate with local companies to find an agreement to be more competitive. Christopher, thank you very much indeed. We are going to take a break. Still to come, making waves in monaco. That is coming up later here on the pulse. Welcome back. You are watching the pulse live on bloomberg television. We are on the radio, streaming on your tablet, on your phone, on bloomberg. Com, on the markets where Jonathan Ferro is. I think the word you are looking for is stabilization. We had big losses yesterday. Losses have stabilized on the ftse. On the week, down over 3 . Dax stillankfurt, the trading lower, down by 0. 1 . Selloff likea big yesterday, the temp tatian is to start blaming everything. The macro side and the corporate side. On the macro side, the data has not been pretty. Business confidence in germany trending lower. Consumer confidence lower. The ecb can do their part. German business is just not buying it right now. Some big moves on the corporate side of things as well. You look at de la rue. When a company that prints money is struggling, you know there might be a problem in corporate land. De la rue down 27. 5 . They are citing market conditions. Not just in the Currency Division but in the Security Division as well. Epassports. This stock taking some heat today. Plenty of moves in the fx market as well. Eurodollar, quite a week. It drops through 127 yesterday for the First Time Since november 2012. It is a mix of the data again. The data and the expectations that the ecb is going to do more. Dollaryen going higher, up by 0. 3 . Inflation numbers out overnight. Not pretty when you trip out that sales tax hike. I think there is a lesson for the likes of europe when you look at japan. Inflation, a, economy still struggling. We will talk about that later. We are also going to talk about ebola. Welcome back. You are watching the pulse. I am guy johnson and these are the Bloomberg Top headlines. Ukraines president says the worst of the war with prorussian separatists is now over. Ukraine is now focusing on elections, securing gas and preparing its bid for eu membership. U. K. Prime minister David Cameron will Tell Parliament that the Islamic State extremists pose a direct threat to the united kingdom. He called for emergency votes on whether to join the u. S. Led airstrikes. According to officials, british strikes may start within days of and approval vote. Ankish fighters are battling advance by Islamic State in northern syria. Tens of thousands of kurds have fled while others are heading to join the fight. Airstrikesfollowing by the u. S. , saudi arabia and the United Arab Emirates in syria. Sierra leone is the latest country to expand its battle in as the death toll in west africa approaches 3000 people. Health experts are warning of an epidemic. A vaccine developed by glaxosmithkline could potentially prevent that. Joining us now on the phone, john pender. Thanks for taking the time to talk with us this morning. The quarantine story has been one that we have been focusing on. The authorities have been hoping that will work. What difference will a vaccine make in the fight against the virus . Good morning, guy. A vaccine for ebola like any other vaccine, we hope if it proves to be successful in the early stage trials, will provide protection for a period of time for those people on the front line working on ebola. Longerterm, perhaps to provide protection for the community against the disease. We are quite a long time away from proving that yet. In terms of the science, how tough has it been to get to the stage you are at now . How much have you had to put on it and, walk us through how the process started, the calls you received to get it going. Virus has been known since 1976. All the previous outbreaks until the recent one have been controlled by traditional means of isolation natural outbreaks that have just died away. This is the first time we have seen an outbreak which has got roots into the urban area. This is the first time where ebola has really hit the public profile as a disease which the Global Community needs to focus on care if that is why we have accelerating the trials of this particular incident. We have been working on this vaccine for a couple of years have wethe acquisition o made a couple years ago. It has been fast tracked now because of his current outbreak. Is this a zerosum game . Are you taking resources away from Something Else . It is a zerosum game in not have a huge amount of Spare Capacity in our r d pipeline or our manufacturing portfolio for vaccines. Vaccines are a growth area for us and for the world generally. That is why we have needed to find new ways of working to develop this vaccine so far, which is why we have created this consortium with the u. K. Department for international development, the medical Research Council and a number of academic institutions, to ensure that we bring more resources into the situation and prevent it being a zerosum game. Through work our way the process of monitoring, hoping to find a solution to this outbreak, initially, the protocols were containment. That was the strategy. Do you think lessons have been learned for future outbreaks, that there are lessons we can learn from this, that viruses are a problem that need to be dealt with with a vaccine . I think what we have learned from this outbreak is isolation and containment is still the best way to control this disease and other viral outbreaks. Procedurese, those were not followed quickly enough and the Health System in the country is so fragile and them inle, many of conflict situations, they werent able to cope with that basic method of tackling the disease. Now, what we have seen from the u. K. Government and u. S. Government to build isolation wards and hospitals, we are still in a situation where we are probably 2000 beds short to really follow that strategy of containment and isolation. In that environment, certainly there is an increasing need for vaccines. We have to remember that this is a unique riskbenefit situation in terms of the threat from ebola and it fully justifies this fasttrack approach on developing a vaccine. John, a pleasure to speak with you. Jon pender joining us from gs k. Lets get more company news for you now. Shares sliding today after it cut fullyear profit forecasts. The money printing up says orders have disappointed. De la rue is forecasting difficult conditions into 2016. This is more to do with passports and other government issued items. Theon house prices fell for first time in almost two years according to home track. Declining demand led to a weakening of the market across the u. K. Liverpool and roma football teams are among seven that could face sanctions for breaching financial regulations aimed at curbing losses. Must provide roma regulators with more information on why losses were in excess of 45 Million Euros. That is the limit over two seasons. Talking of big spenders, it is a bigger yacht. Now could be the time to buy one. This according to several manufacturers. Boardne connan went on the three biggest yachts at the monaco yacht show. The owner is asking for 1 million. What you find is fantastic deck space. Among other things, we have a 16 meter geyser. Gym, thethe spa, the cinema, plenty of space. Is verythe exterior contemporary. The inside is special and it is very surprising. Cakewalk is an extraordinary vessel. She is the largest yacht in the United States. She is the largest yacht here that is officially for sale. The asking price is 190 Million Euros. We just had a recent price drop. The experience on board is six star. It is one of the best you will find on any yacht in the world. , a has a wonderful top deck wonderful owners cabin with beautiful marble bathrooms, and a wonderful garage with all sorts of great toys for playing in the water. Behind us is a nice you knew yacht called the equanimity. It is the largest in the monaco you show this year. Has kind of explorer style. It gives protection from the weather and the elements. Nice gig. Those might be the small ones because the big ones cant get in the harbor. That is just something you have to deal with if you are in the market for one of these things. Can your boat get into monaco harbor . Coming up, we are going to talk about golfs popularity problem. Can the ryder cup help the game get out of the rut . We will look at how to get the next generation onto the green. Welcome back. I you are not watching this, guess it is a counterfactual thing to say. You might be watching golf. You may have two screens. That is what i am doing. The ryder cup is in scotland today. Despite team europes continued success, the game still isnt winning too many new fans. At least when it comes to those who want to play. Joining me now to talk about the popularity problem is richard payne, the head of Gulf Research at marketing surveys. It is great to watch the ryder cup. The analyst voice echoing your living room is nice to have. Getting out and spending three or four hours on big courses playing 18 holes, they dont have time for it these days. How do we fix that . Time is the critical factor in golf. The main reason people are citing as to why they are leaving the game or not taping up the game in the first lace. Shows we those hit the peak in 2006. That maintained a steady level up to 2011 where it was about 3. 9 million. We have dropped down to close to 3. 4 million now. Over the last three years, it has been steadily declining. The trend is down. Time is a factor. People used to say all the business was done on the golf course. People used to do the deals and make things happen. Does that not apply anymore . I think it does but it is certainly a factor, playing for hours with someone in their pocket, facetoface, walking down the fairway, there is going to be business done. However, with the economy as it is, when the crash happened in 2008, even up to now, people are having to work harder. People going away are dropping off. You want to still have that sentiment. You want to have business on the golf course but you need it in a shorter format. 18 holes disappearing, nine holes the new 18. Nine holes coming forward certainly. The issue almost is that nine holes isnt acceptable. There are very few golf courses that block off nine holes. Everybody gets really ansi. Exactly right. Lots of golfers still want the traditional golf game and they want to have a handicap. A the moment, there isnt process in which you can get a handicap while playing nine holes of golf. There are lots of initiatives. Not just england golf but federations across europe, to incorporate and increase the attractiveness of nine holes. Is it a bit like 2020 . That was the cricket solution. The fiveday game was way too much for many people. Certainly. 2020 golf, similar to match play, a faster format of the game. A lot of what we talk about when we are consulting is, you need to have faster, friendlier family golf. It is the speed, but it is also bringing in other elements of your social life. Game ofhink that the golf is for hours, it may be an hour. Much shorter slots of time in your day. Exactly right. We did a study last year. Golfers lost0,000 in 2013 so we wanted to know why. We asked them the questions and what came back was about 60 said it was time commitments. That was split between work commitments and family commitments. Beyond that, lots of people said they were taking up other activities to keep fit that they could do from their doorstep and complete within a half hour. In terms of what this means for businesses, nike has got a new driver this morning, i am sure that that is by design, not by accident. They need to get people to still go out and spend money. It is the nature of golf changing on that front. The internet has radically changed all kinds of things. You can go out and buy decent secondhand gear. How do you drive topline businesses when it comes to golf . Critically, golf retail purchases are constrained. About 80 of the core golfers. It is vital that we get golfers playing more often. We defined a core golfer as someone who plays at least monthly. Interms of participation this country, only about 1. 5 million actually fall into that category. Can make the format shorter or make it more attractive and get them playing more often, they are more likely to translate into purchasing. Companies need to embrace technology. Social media. Of golfers under 55 are using social media, have smartphones. There is a requirement for golf golfings cannot see the population as this older savvytion, this nontech generation and embracing that and using the opportunity to use these new apps that people are using on almost every hole. 18 holes looking at a phone, that is 18 touch points at which someone can send a message. It is engaging and talking to the golfer on a more regular basis. It is a feeling i can certainly relate to. Richard, thank you very much indeed. Lets stay on golf. Donald trump is betting big on golf in scotland. Can his golf courses compete with the best . We sent tom gibson. Scottish golf is meant to be tough. This course looks fairly wild. Strong winds, no. Visible weather, not today. Just minutes away from aberdeen, Donald Trumps twoyearold course is a traditional links on the surface. Sunshine, there are a few other nods toward america. For one, size matters. They usually use between 150 and 200 acres. We have over 600. Unsurprisingly, service is high on the agenda to do. Got nine holes on the south side and nine holes on the source side the north side. The guys can order some food and get back in. Mountainous sand dunes and vast fairways mean they dont have much chance of being bothered by other golfers either. We have over 100 guys playing the course today. They wont realize that there is another 100 guys. Making the course memorable was key for trump. He is competing with world leaders. It is more than just a vanity project. The golf industry in scotland generated nearly 2 billion in 2011. In the u. S. , the game is in recession. Holidaying in scotland to play is increasing. Aroundurism is worth 340 million today. By 2020, that is expected to rise to 500 million. While green fees are on the steep side, the course isnt exclusive. It relies on those visiting the region to get there by tour bus or helicopter. Over time, we are likely to evolve to be something of a hybrid with a membership option. At the moment, the pay and play aspect is working extremely well. We are working with travel agents across the world and seeing the benefit of that. If all that travel is too exhausting, visitors can stay in the trump suite. Just a few meters from the course, there is the option to buy a bit more. Tom gibson, bloomberg. The weather in scotland looks delightful today. The american tourists finding the going a little bit tough. Pay attention to the ryder cup. Still to come, turbulence on the tarmac. There is no end insight for the air france pilot strike. We will see how long the carrier can survive without a solution. Without getting its pilots back in the cockpit. Good morning, everybody. Welcome back. You are watching the pulse. We are streaming on your tablet, your phone and on bloomberg. Com. Lets get some new energy top headlines. Developing countries are leading the biggest construction boom in more than two decades. Almost two thirds of reactors being built worldwide are being built in china, india and the asiapacific region countries including bangladesh, vietnam, egypt and jordan also considering building their First Nuclear facilities. Indias Prime Minister may have kept skipped the u. S. Summit on Climate Change in new york but Renewable Energy is still high on the agenda. Narendra modi and president obama are expected to discuss joint measures to combat global warming. Tesla is expanding operations in hong kong. The company will double its workforce there. It once hong kong to be the place to showcase the success of an electric cars to the rest of asia. For as those listening on bloomberg radio, the first word is up next. For our viewers it is a second hour of the pulse. How long can air france survive . The strike is ongoing. We will talk to analysts about the prospects for this business. Plus, golfs popularity problem. Richard locke is going to join us. Business used to get done on the golf course. That is increasingly not happening. We will talk about that. Nine holes seems to be the solution. Golf has to change an awful lot if that is going to be the case. Just a reminder, you can follow us on twitter. Please join the conversation. We are going to take a short break. See you in a moment right here on the pulse. Stocks stabilize after a selloff. Investors exit panic mode. The turbulence at air france continues. The strike enters its 12th day. Security flawed. Governments and Companies Scramble to deal with the shellshocked loophole. Good morning to our viewers in europe. Good evening to those in asia. A warm welcome to those waking up in the United States. This is the pulse. We are here in london. What have we got coming up for you . The ryder cup tees off in scotland. We are going to look at golfs popularity program problem. European stocks stabilizing. There is little bit of green in europe. What is going on . Jonathan ferro. Ibex is it going . They are green. Losses yesterday. There is a risk to take one days losses and try to blame everything. The best thing we can do is look at the macro side of things. Not great on both sides. That is the story. Look at the french pmi. Contraction territory. That is not pretty. There are Business Confidence is an Consumer Confidence is trending lower. We need to think about bad news does not mean good news because the Central Banks will not do more. The bank of central japan providing a crate a case study on currency. Not much good stuff happens on the other end. Morning,we are this wall street flatlined a little for most of the afternoon, did not do much. We priced that in. Europe has stabilized a little bit, but what it has not done is popped. We are looking for a catalyst. What could that be this afternoon . What have we got that could move things around a bit . Maybe everybody is watching golf. Numbers from the u. S. It is a second quarter, just another reading. Analysts could come next week. Numbers, next month, october a huge month. Theres a statement. It i know everyone obsesses with the language, but a statement talks about rates not rising for a significant time. Tois going to be interesting see how the fed communicates what is next and what happens next for the market. Thank you. Its good to our top tech stories. The internet has been vulnerable to the internet flaw for 20 years. Homeland security is warning about the socalled shellshock loophole. Hans nichols joins us now. Who is more verbal . Who is not . Would we know . What do we know . X apple says their os operating system, most of them are not vulnerable. You are only vulnerable if you have reconfigured things. It gets at what is at stake here. These are the back and of systems. The back end of systems. The front end seems to be secure. You have a threat level of one u. S. Says this is a 10. It is quite serious. Heres a statement from the government. They are aware of a vulnerability affecting unit operating systems. Exportation may allow a remote attacker to execute arbitrary code on an affected system. This has to do with the bash code. Used the open source code on the next systems since the 1980s. And has been around for a long time, only now are the alarm bells sounding. Most consumers have firewalls. It will make it harder for Consumer Technology to be targeted, but services have to communicate they are exposed. This is a backoffice problem. That is a good way to put it. Trick users into giving up their password. This one is worthy back door of security is clearly wide open. Servers need to communicate. If someone knocks on the door, you need to peer through the whole. If that peering through the back door window it could, buys a lot of systems. Thank you. Interesting. Hans nichols, our international correspondent. Lets move on. Is onance pilot strike its 12th day. Our reporter joins us now. We had talks that took place yesterday. This would bet done. A big concessions made on a seemsf air france, but it like the pilots are Still Holding out. It seems like their concern is about the shape of france. They are line drop the idea of having an operation outside of france, they still want to do it within france. Pilots are worried about what that is going to look like. Would we know about what happens next . Talks are ongoing. Two weeks aof strikes. We have not heard how the talks when. The board to out with a statement saying they were backing. They were Standing Firm on that. Our more concessions going to have to be made . Are we going to see it has been an incredibly strong strike. Every day, 20 Million Euros of operating loss of consistently pilots not showing up for work. It does not seem like either side is backing down. We are watching the ryder cup. Those who have the privilege of watching it live, some are getting their and fashion. A company is offering a popup service on private jets. Instead of chartering your own, pay 1800 pounds and get up there and back in a day. Go in the morning early. Watch the golf and come back. Sounds like maybe you wont be doing business on the golf course, but you can chat with likeminded people on the plane. Thank you. Continue to talk about the ryder cup. It teed off this morning. It is a story that everyone is paying attention to. Money in the game of golf. This is a big day for you. Not only do we have the ryder cup, but we also have nike posting numbers. Nikes game. They have skin in the game. They back raleigh they back rory mcilroy. They gave him a new club it has been spotted. A close eye on the new driver, which he is using. It on the down as to what driver it is. We know he uses nike. Woods, since 2008 has not won a major. His dominance has waned and so has the popularity of golf. We have seen participation down. We are seeing courses having to shut. Nike signed a contract with mcilroy. There is money to be made. Sales are up 15 . This is a company that brings in about 30 billion a year. 12 they back athletes. They spend on advertising and endorsements. Clearly, it is worth their money. Golf is the only part where they are not increasing sales. Lost 18 of their sales having to restructure. We see the challenges, but they think they are any they think they are in the right. They think it is a fight worth fighting. About what else they are doing and the online story and the other bits of the business that are doing well. This is the nike shoe, boots, cleats if you are american. This was worn by the last man to score a goal in the world cup. He was a final winning goal. This is one the nike sent over to me. This is where they dominated. They dominate in footwear. Adidas is the number one in football. Wonder you want to go big on the world cup. 300 Million People playing the game. It was the mostwatched sport ever. They managed to dominate. Drive up sales in western europe. China even up 20 . Interestingly, they have gone viral in terms of football. Nike football has 38 million likes on facebook. That is far in excess of burberry. Nike has 3. 9 million followers on twitter. Is Winning Media fans. There managed to they are managing to drive up sales. A recorddrive them to high. Amazing when the company was only set up in 1965. Caroline, thank you. Caroline hyde on the latest for nike. Attention to those numbers. Coming up, no retreat, no surrender. Look at how air france can survive the pilot strike. We are back in a moment. Good morning, everyone. Welcome back. You are watching the pulse. Within the last few minutes, s p has raised the outlook for the country. Rom negative to stable you can see what that is doing to the dollar rupee. Trading at 61. 1688. Interesting timing. We see the president. I think he has an event at Madison Square garden which is sold out. The timing is fairly interesting, given what has happened stateside. Lets move on and talk about greetings. Air france is one of our big stories. Pilots yet to return to work. Concessions from the airline, but so far, that has failed to stop the worst strike this century. Our analyst joins us from paris. How long can air france keep doing this . As you mention, air france is losing 20 Million Euros per day. Istially, i think the strike growing. There is real risk on air france. Rowth if we look to the cash that is expected to be generated by air france, it is expected to be around 400 million to 500 Million Euros area and euros. No u. S. Carrier has ever really successfully executed establishing a lowcost carrier within its own framework. Iag has bought that in. Was seeing the example compared to the one in the United States. Is going to be the case. The main reason you have issues an airline within an airline, it has been something that failed in the u. S. I think it is the proof that it does not work, even in europe. You have the labor situation and the fact that labor will not accept pay cuts in order to fly with a lowcost carrier. On top of that, you have some entrepreneurial issues. The local business within is tough. We have the proof with air france that it is quite impossible to build an airline within an airline. So what happens next. Strategyooking at your being torn up by the union. What do you do next . There are rumors you have to make acquisitions. Is that how you get around that . How do you rebuild the strategy based on the reality of what we are seeing . Make that long story short, if you look to air france, the long haul as possible. You are facing tough competition inm emerging countries, but 2013, it was 800 Million Euros. We are facing that situation. You want to grow, but youre facing the competition of lowcost carriers with prices that are 40 below. If youre not able to build a lowcost in europe, to stay in the competition and to be profitable, you will have to do Something Else. What are the options . One of the options is to stop to outsource the activity to players like easyjet or ryanair. The other option is to buy a lowcost. Options say from action from labor . I do not think so. Those are the solutions we have at this stage. Does thatckly decision get made . How much is it . A year, 18 months . Ryanair putting a lot of capacity into europe. Paris is putting more capacity on. They are buying 320. They are buying a lot. Is clear in focus of development. Easyjet will in portugal and in dash. There facing the competition. Those competitors are going to continue to increase. They have to do something. To react quickly, the problem is ,ith union and the way it works the way air france operates, it will take time. A consolidation will a core. That is something that will happen. Consolidation will occur. It is something that will happen to fivethe next three years. I spoke to the boss of your legacy the other day. A thinks this is going to be bloodbath. That winter is going to be tough. The process be accelerated . I think you are at the industry level. You are not looking to what is happening in europe and on the they arecling, benefiting from that. They are also facing tough capacity. Would that accelerate a little bit . Yes. It is not going to happen quickly. Thank you. To take a break. We will be back in a couple of minutes. Welcome back. You are watching the pulse. Bloomberg news, our correspondent joins us now. He is on the phone from westminster. The last time we had this kind of a vote, the labour party did not back it. , reaction did not happen. How different is the story this time . Is. Labor leadership some are still saying no, this reminds us of a rat, the last time we invaded iraq. Doneovernment has everything it can to try to reassure that. Is onlynsisted it talking about airstrikes. Any expansion of this boots on the ground, or in a combat role, or any move into syria would require further vote. I think this will go through, there will be a rebellion. People voting against this. I think it will pass. It to what extent is the influence doesnt have at the house . It cuts two ways. On one level, ed miller band is months away from being a Prime Minister and needs to look like a Prime Minister. Part of the pressure on him today is to feel is to fill the role. On the other hand, they do not want to get dragged into a great war just before an election. There is an argument for and against. Theres also pressure not to get dragon. Dragged in. Get were going to take a break. Still a come, teeing off. Troubles at the ryder cup. Facing a popularity problem. See you in a moment. Good morning, everybody. These are the Bloomberg Top headlines. David cameron will Tell Parliament that Islamic State extremists throws a threat to the u. K. Lawmakers have been called in on whether to join the usled airstrikes. British strikes may start within days of an approval vote. Kurdish fighters are battling to halt an advance. Syria, tensnorthern of thousands of kurds have fled. Ukraines president has said the worst of the war is now over. Ukraine is focusing on elections and preparing a bid for membership. A big day for the markets yesterday. What is going on today . It has been a big day all week. No tond votes independence. Is negative. The dax is in positive territory. You have to look at the data and the maneuvers as well. The data side of things not pretty. French manufacturing services, the Business Confidence numbers Consumer Confidence continues to slip and slide. The Corporate News has been on the negative side across the eurozone. You look at the likes of della. Ue, it is about the security they are struggling to make money. Market conditions are unfavorable. What a week for tesco. Internal problems on the financial side of things. Week, this company down by over 16 . Over 3 billion pounds sliced off the market cap. French unions on strike. That company taking a beating. Dollar yen tells the story to the eurozone. Through 109. Inflation data overnight shows inflation that inflation at 3. 1 . Tax you strip out the sales , there is inflation of 1. 1 percent. You can weaken your currency. Price. Have sales tax that does not mean you have an economic recovery. A little bit of pop in european expertise. We are looking forward to what happened stateside. Tom keene is over in new york with a preview. What is on the agenda . I was crying over derek jeter. He played his last game last night and it was stunning. We will discuss his final game with the new york yankees. We will do that this morning. Before that, very serious conversation. In london, parliament in an emergency session. We will cover that. The nationss on foreign policy. Really looking forward to speaking about a new world order. We will talk to william about wall street. Him about some of the initiatives needed for wall street to be more responsible next time. We will speak of the new york yankees. We are watching golf over here. It, but the tourists are not doing well. Around. E it will turn the ryder cup sneaks up on america. On us. Sneak up show. King forward to the tom keene on surveillance shortly. The market for superyachts has hit the bottom. This is according to several manufacturers. The owner is asking for 1 million plus expenses. What you find is deck space amongst other things. It is called the tree of life. All kind of treatment possibilities. You have the cinema, a lot of inside. You have plenty of space to enjoy when the weather is not so nice. I think the exterior is contemporary. Inside, it is special. It is very surprising. This is an extraordinary vessel. She is the largest yacht here that is for sale. The asking price is 119 Million Euros and we had a recent price drop. Sixexperience on board is stars. It is one of the best you will find on any of the yachts in the world. Is the wonderful owners cabin. A wonderful garage with all sorts of great toys for playing in the water. Behind us is a new yacht. Largest the yacht can carry. It has an explorer style with a volume of a superstructure. It is giving protection from the weather and the elements. Life is tough. Lets change gears completely. I want to take you to westminster. David cameron is addressing an emergency session of parliament. Lets listen in. We have dealte with before, the brutality is staggering. Crucifixions, the gal ching out of eyes, the use of rape as a weapon, the slaughter of children. These belong to the dark ages. It is not just the brutality. It is backed by billions of dollars and has captured an arsenal of the most modern weapons. In the space of a few months, isil has taken control of territory which is greater than the size of britain and is making millions sending money sending oil to the Bashar Alassad regime. This is not a threat on the far side of the world. Left unchecked, we will face terrorists and bordering a nato member with a declared and proven determination to attack our country and our people. This is not the stuff of fantasy. It is happening in front of us and we need to face up to it. There a clear, comprehensive plan . Yes. It starts at home with tough, uncompromising action. Arehe house knows, we introducing new powers. These include strengthening abilities to seize passports and stop suspects traveling. Ensuring airlines comply with our nofly lists. In all this, we are being clear about the cause of the terrorist threat we face. That means defeating the poisonous ideology of islamist extremism by tackling all forms of extremism, not just the violent extremists. We are prescribing organizations that insight terrorism and stopping people who incite hatred in our schools, universities, and prisons. Some will say any action you take will radicalize young people. Ais is a cancer on the counsel of despair. The threat of radicalization is already here. Leung people have left our country to fight with the extremist. Younger people have left our country to fight with the extremists. Two questions is put to himself. How long will this war last and when will Mission Creek start . Going to be a mission that will take not just months, but years. I believe we have to be prepared for that commitment. Rightly, america, britain, putting combat troops on the ground, there will be troops on the ground, but they will be iraqi and kurdish troops. We should be supporting them in all of the ways that i will describe. In terms of Mission Creek, i why we aress discussing what is happening in iraq today and only that, that is the motion in terms of the order paper. Let me give way to the honorable lady and then my friend. A number of occasions, we face a longterm generational and the priority is to fight he poisonous ideology. Will you commit to work with the , to seeam, community these atrocities carried out in the name of their religion and utterly reject them and have a Practical Program to make this happen . I commit to doing that. Because of the problem is the poisonous narrative. Wherever there are broken states, conflicts, civil wars, whether it is both boko haram, yemen, or isil in iraq and syria. We need movements to reclaim the religion from extremist. That is happening in our country and around the world. It was notable that president obama, in his speech, singled out muslims in britain who were saying this is not being done in my name and we should praise those people, too. Places fore minister us in the iraqi army, the problem is, we are in the iraqi army, they ran away and i still and isil still has their arms. Can we roll back isil or is this just politics . I am notdirect, claiming that by airstrikes alone we can rollback this problem. Aat the problem requires is comprehensive strategy, including a well formed Iraqi Government and a well formed iraqi armed forces. They will be the ones that have to defeat this on the ground. Where i disagree with my friend, and because of how this came about, i would say that the two most principal causes of this problem, as i said, the background of islamist extremism, but two principal causes, in syria, Bashar Alassad has been butchering his own people and acting as a recruiting sergeant to the extremists. With the malik egovernment, the government did not represent all of the people of iraq. Powerfule most interventions, ban kimoon got it spot on when he said missiles can kill terrorists. Good governance will kill terrorism. We should have that thought front and back of mind. We will leave the house and Prime Minister there as he takes questions from parliamentarians. We are going to take a break. We will be back in a couple of minutes. Good morning. Welcome back. Lets talk about golf. The u. S. And europe have come out swinging. The ryder cup has teed off in scotland. Also is facing a popularity problem and is not winning over many new players. Lets bring in richard. Ofis a managing director business golf network. Nice to watch the golf and see the nice weather up in scotland. A lot of people are struggling with golf because if you want to play 18 holes of golf, it takes four hours. Who has four hours to do that . I have played golf or for two years or more. Major changes. When i started playing golf, a lot of people belonged to golf clubs and they used to play weekends. Nowadays and the demands of life, people do not have the time to play once or twice a week. Notink people now are passed joining golf clubs because they have to justify the cost. If they are not playing twice a week, it is very expensive. To be known it used for his people would get out there and do business. It was a board one. That is turning into something that is an issue for golf. People cannot justify a from a work point of view, you cannot expense the expense. The nature of the game has changed. Your business is trying to target this. Can golf or cover from that . Can we go back to when it was acceptable to spend midweek on a golf course . , years ago, my mother said, more business on the golf course than anywhere else. That still holds true. Since been self employed 2000 six. Business is done with people you know, like, and trust. You know or who you know, it is how well you know someone. If you spend quality time with the business golf network has tapped into that. Also the issue of time. We have used golf as the mechanism and catalyst to build those relationships. Time . U justify if you are on the golf course. Oing his best why should you enjoy yourself and do business at the same time . Nine seems to be the new game. First of all, 18 holes, quite right. Hours, it is a day. People cannot afford that. People have family commitments and right up front, we focused on having nine holes, have a business meeting, and then go play nine holes. Nice to see the change. The problem is, there is a duration mismatch. Thatgolf that is knows it needs to play shorter games. There are 7018hole golf courses there are so many 18 hole golf courses out there. Is an infrastructure that does not suit the game anymore. How quickly can golf adapt to that . I think it has to. If you look at golf nowadays, it employs thousands of people across the world. It will have to adapt. Ofying nine holes, a lot golf courses have 27 holes. There is a combination of 18 with three different nines. It will have to adapt. The front nine or the back around they sit clubhouse in a way that it does not here in the u k. Is that a better set up for golf Going Forward . If you can start and finish at the clubhouse, play nine, then you are back home. Certainly, we have a lot of traditional courses. I played one the other day. You start on the first and you finish on the ninth. You are as far away from the clubhouse as when you started. Design will have to come in and look at that issue. Face a threat that they can overcome from other sports . People are doing things they can do in half an hour and senate and fit into their schedule. Many of the people that are powerful and golf are of a more traditional nature. You wonder whether the will exists to make it happen. I think it does. Golf is becoming open to more people. Traditionally, it used to be an elite sport. More people are coming into golf. People who are haps traditionally would not have done the ryder cup. In a healthy position, but it needs to change. Nice to see you. Were are going to take a break. Were going to take you to parliament. Prime minister David Cameron is speaking, saying Islamic State extremists pose a direct threat. There is an emergency vote on whether the u. K. Should join the usled airstrikes. According to an official, strikes couldst dart could start within days. We are back with a story after this break. Welcome back. We want to talk about what is happening in the currency market. The dollar falling. It is falling against many currencies. The reason, s p raising its India Outlook from stable from negative to stable. That is where we sit. The present will be speaking at Madison Square garden. You cannot get a ticket for that event. Getting a rock reception over in the United States. What else do we have coming up clearly we will be watching on gdp. Watch out, technology reaction to what is happening with the latest loophole and x in linux. We are also watching what is happening in london. David house of commons, cameron has been addressing parliamentarians this morning. We have an emergency vote here the u. K. Looks to maybe join the Coalition Airstrikes against is. We will monitor that event as we head towards the vote and my colleagues over the United States will be picking that up. Is coming up next, live from new york. Tom keene and his team will cover that story as we build towards the vote. Thelar leadership will back conservative coalition. Is a great deal of resonance on the fringes of the labour party. Have a great weekend. I will see you monday. The Prime Minister recalls parliament. They debate this hour joining the coalition. Rice is over. Is it business as usual for wall street . And derek jeter exits Yankee Stadium in style. Scarlet fu could not have written a better script. Good morning, everyone. This is bloomberg surveillance. From derek jeters new york city. I am tom keene. Joining me, scarlet fu and added johnson and adam johnson. Overnight Consumer Prices rise slightly less than expected. This is the latest indication growth is below trend. Inflation. Ore this is a global theme into october. At 8 30 we will get our own read into the u. S. Economy. Rise we will revise it up to 4. 6 . In theory. It is currently rated at 4. 2 . University of Michigan Confidence comes out at 955