Transcripts For BLOOMBERG The Pulse 20141113

You are watching the pulse. We are here in london. Tensions between ukraine and russia are at boiling point. Nato top military commanders say russia is sending troops and equipment to ukraine. Sanctions are the focus of a meeting today in brussels. Ryan chilcote has been covering the story. What options do eu and u. S. Officials have . What toare deliberating do next and then we get a final decision from the Foreign Ministers on monday. Choices, one,e expand personal sanctions, the individuals subject to asset freezes. Two, expand the list of Russian Companies facing sanctions. Westernestrict what companies and investors can do on the russian market. It looked like it was going to be option one. Now it looks like options two and three may be in play. I spoke with Ukrainian Foreign minister and he seemed to downplay the idea that these sanctions would be really biting. Is just one point in the whole toolbox. What we need is a clear pressure to keep the escalation on track. Again, sanctions are important but just one integral part in toolbox. Deescalationent, is not on the cards. The foreign minister told me the rebels are regrouping and ukraine is prepared to fight. The ruble is fluctuating again today. How will the threat of sanctions impact the currency . The threat of sanctions creates on currency. That worries not just russian oligarchs, but also russians on the street, if you will. They will be concerned what might happen to the ruble and would want to put that into hard currency. It is not the only thing affecting the ruble. The other thing is brent, now below 80. Finally, what the central bank does. Weve heard them say they are going to intervene on the market less. Seeing the ruble weakened by about 1. 5 . It appears to have somewhat stabilized and that is probably the result of the central bank and its policy of restricting ruble liquidity to russian banks. They were concerned that russian banks were using rubles to buy dollars, speeding up the weakening of the ruble. Ryan, thanks very much indeed. Now a warning for europe u. S. Treasury secretary jack lew calls on europe to do more to avoid a lost decade of growth. More action is needed to reduce the risks the region could fall into a deeper slump. Anotherd cannot afford lost decade. Singled out germany and the netherlands. Hans nichols now joins us with the very latest. How have these comments been received in europe . Angela merkel is on her way to the g20 in australia. She landed first in new zealand. Yesterday, she had a domestic problem. Last night, you heard something similar from jack lew, saying that Monetary Policy is at the end of its rope. You need to do more with fiscal policy, have more spending to boost aggregate demand. We keep reporting it because policymakers keep saying it. Here is merkels challenge. She is gettinge international pressure, domestically, it is going in the opposite direction. Her council of economic advisers, it is criticizing her for doing too much to spend more on labor subsidies, more on social security, more on increasing the minimum wage and saying she should be spending less. Of what theposite International Leaders are urging her to do. You get a sense that merkel is in a difficult position. When we look forward towards tomorrow, expectations are for 0. 1 . Last quarter it was for negative. If germany slips into recession, Angela Merkel is going to be in a more difficult position. Can never take domestic politics out of the story. There is a dollar element to all of this. The dollar is strengthening. Jack lew cannot come out and say he wants to have the dollar weakened. Every time a treasury secretary talks about the dollar, they say, we believe in a strong dollar. But you look at the movement of down to 1. 24. S that is the point where the ceo of airbus told us he needed to be to sell more airplanes. We also get airbus earnings tomorrow. Hans, thanks very much indeed. This is what is on our radar this morning. The head of new yorks department of Financial Services refused to join a Group Settlement over rate, causing barclays to pull out. That is according to someone familiar with the matter. He decided the settlement wouldnt be severe enough and is continuing his own probe. He also appointed a monitor to review barclays. The Morgan Stanley ceo weighed in on the fines. He spoke to bloomberg in an exclusive interview. Obviously,s allegedly, real bad behavior going on in the industry. That is the kind of thing we have to root out. This Industry Needs to operate with the trust and confidence of the public. Any manipulation of the markets flies in the face of that and they should be fined. Behavior and the cultural failures leading up to the crisis, it is just not good enough. I think all bank ceos would say the same thing. Partneran sachs new spotlights the shrinking role of its trading unit. Employees in research and trading make up 36 , down from 44 . Other divisions had more partners named than they did back in 2012. We have breaking news out of fifa. Cleared toussia are host the world cup by a fifa panel. They say the world cup vote violations are limited in scope. There were some violations. They suggest so they basically found out that instead of gifts, they didnt comply with requests. They had some dealings with jobs but they say that is not enough to reopen the process, which basically means that russia and qatar will remain hosts of the next two world cups. A are saying the probe found minor violations. It is very critical of the u. S. , the u. K. And australia with the bids that they put forward. I think this is going to cause ripples. We will cover those responses. Coming up, italys intesa thats on Wealth Management. Stay with us for an exclusive interview with carla mussina. Later, the sixth annual noah conference. We have a great lineup of guests including an exclusive interview with mike lynch. Welcome back to the pulse lets turn to italy and its banks. Im joined now for an exclusive interview by the ceo of intel us and paolo, carlo messina. Thank you for joining us. It me a sense of where you are right now. Aqr, you passed with flying colors. The results were better than expected. How much more confident are you now than six months ago . We are confident on the possibility of making execution on the business plan. The only point would be the gdp growth in italy. It is looking slightly negative and we had a forecast of slightly positive. Wee are going on is ourin very positive on business plan. I want to come back to all the turmoil and turbulent of the eurozone, but give me a sense of your strategy. If you are doing so well, why not raise your target . This is a good point. We are in a condition to increase our targets. We are over delivering in revenues and commissions. We are in doubledigit commission growth. Volumes. Creasing the point is that these increases in revenue can compensate something we cannot suspect from negative gdp in the country. I can confirm that targets probably if the gdp will grow comparedin the future to the plan. I will announce in the next months. Are you disappointed that italy is growing . This is the disappointment of a lot of investors. Now, we should be on a growing path. The point of italy is that if you look at the fundamentals, it is very strong because the saving of families is increasing. If the potential is there, what something that is to avoid uncertainty for the future. Coming back to consumption and to grow. With the devaluation of the euro, we will grow more next year. We talk about the fact that one of the reasons why Southern Europe is not growing is because banks are not lending enough. It seems to me sometimes it is a problem the other way. Banking ceos say, i dont have that many people asking for funds. Are we expecting too much from the banks . We have 20 billion euros of mediumterm loans to Italian Companies and families. demand of credit. It is related to the demand of products. There is a combination problem. It is more a problem of demand. We have no constraints to give money. The problem is it is a strategic area in which it is possible to have recovery in the country. Talk to me about strategy. You laid out the vision and why you are not raising targets yet, because of the concern that gdp will remain weak. Where to you see growth . Italy has always been a country with zero growth rate gdp. Something unusual for italy to have zero growth. What will be very important for us is that if we have an increase of 1 in gdp, we can increase our targets. Looking at the area in which we can grow, the Private Banking, Asset Management and Insurance Business are the business in which we are delivering and executing. We are in a position to say that we can use our capability to grow further in italy or outside of italy. Be, what, three acquisitions . If this is something where you say, i want to be the number one italian bank in terms of private wealth, where do you see opportunity . Look at delivery first. We increased volume by 40 billion euros. Now we have Something Like 300 billion euros Private Banking and Wealth Management. Bet is something that could third or fourth in europe. We want to increase the volumes also through possible hiring of private bankers in other companies, or making acquisitions. Areasitions would be in where there is a lot of concentration of Private Banking or wealth. So you can talk about switzerland, you can talk about asia. This is the area which i am considering. Acquisition or hiring private bankers. Will you decide in the next couple of months . This will be something in the next couple of months. I am now integrating. I will have a Strong Company and if possibility, to make combination with other private banks in europe or outside of europe. You wantook at to focus in private wealth, Wealth Management because that is a growing business. When you look at the risks surrounding the european union, russia is at the forefront. Are you about that . At what point does that impact your bottom line . In the shortterm, i dont see significant impact. The real point is on the gdp growth of the eurozone. At the end, you have a really positive item, the devaluation of the euro, but a very negative because europe is a strong relations with russia, more than usa. With sanctions, the problem will be in russia but also in germany and italy. In the mediumterm, there could be some reduction in gdp growth through this geopolitical situation. This could be a problem for growth in the eurozone. Does this have an impact on the european rich . Not significant in the short term. In the mediumterm, we cannot survive without the combination of the european transactions. In the mediumterm, this is really a problem. Do you worry about deflation . Russia is really the most important. On deflation, im not worried. I think that through the action of the ecb, we are having significant devaluation of the real positivethe lead increase gdp in italy. Easing the quantitative that they are doing, they are moving the situation in the market. Assia is by definition problem because it is a political problem. On the markets, it seems that we are so used to it now, is there a danger that we are hooked . That this is the new drug and when we start to unwind, the markets or businesses wont know quite how to deal with it . It is 10 of valuation of the euro. If there would be another 10 evaluation, that could be Something Like a drug. Extra liquidity could create some problem in the financial environments through in my view, but now there is no drug into the economy. Draghi is the only one that is managing the situation in europe. Not the politicians. One that ishe only managing the crisis in europe. Just a last point on funding, are you concerned by the new rules . Know, we are very strong. Have the cost of funding and a funding situation that is number one in europe. So overall it is exciting times. You are cautious with the political situation but in all, it feels a good place to do business. Italy is really a good place in which you can do business if you are really devoted to a real economy bank and with strong support for europe. As i told you on different occasions, my people is delivering this plan in an incredible way. I am very happy with the situation. Your main worry apart from russia . Is it acquisitions, is it something you have your team behind you. What is the one thing you cant afford to miss . The first thing is execution on the plan. I have to execute my plan. Then i have capital. The second point is what to do with this excessive capital. There are areas of private , but whatwant to grow is also important is the situation in italy. Remain negative, there will be a problem for all the eurozone. That encapsulates what a lot of ceos are telling us. Carlo messina, the ceo of intesa speaking to us. Coming up, the sixth annual noah conference. Welcome back to the pulse to the markets now. What have you got . Jack lew. The u. S. Truck is very treasury secretary talks about a lost decade. We are six years in al ready. We might see a very different United States. You and i could do backandforth on this already. Londons ftse up 0. 3 . The dax up by almost 1 . I spoke to mark, the cfo, i asked him how eurodollars tech line was helping him. He said it is not translating into bottomline growth because they are hedged. All those people that talk about translational benets, look at how those companies are structured and whether they are hedged. Looking at your willdollar right now, 1. 2463 is the move. Up 0. 2 . That is some decline we have seen since may. Few minutes, we will be talking about russia and qatar keeping the fifa world cup. That is coming up here on the pulse. Welcome back to the pulse live from london. These are the Bloomberg Top headlines. Ukraine is warning its conflict with russia is close to returning to open war. Militaryatos Top Commander says russia is sending troops and equipment at ukraine. The Un Security Council is scheduled to hold an emergency session in new york today. More indications of economic in slowdown in china. For octoberigures came in below expectations. Pressure to policy makers step up stimulus efforts. Japanese Prime Minister shinzo abe is expected to call a snap election next month. Abe postponed an unpopular sales tax increase due to start next year, a move aimed at winning the goodwill of voters. Analysts see the early election as a gamble. About the breaking news we had out over the last hour and what is going on with russia and qatar. Are allowed to remain hosts of the next two world cups. Any evidenceo find of significant wrongdoing in the awarding of the tournaments. Lets talk to Elliott Gotkine who is covering this story. Elliott, lets pick up, what did who are they pointing fingers at . What they havent found is more important than the what they have. What they havent found is any serious wrongdoing on the part of qatar or russia in the bidding for the right to host the 2018 and 2022 world cup. What they say is that yes, there were some bidders that had been overgenerous with their gifts to some people on the voting panels , they might have given jobs or money to some of them as well, which carries ethical issues, but according to this internal they were a say very limited scope, going on to say the effect was far from any threshold that would require returning to the bidding process , let alone reopening it. Bottom line, russia will be the host of the 2018 feet for world cup. One of two things in russia happening right now that might present other issues. Qatar will host the 2022 world cup. It at the hosting usual time of the year, june or july, not a great idea in qatar where temperatures get above 50 degrees celsius. That is a fair point. The ruling so far, you may be didnt do what you should have done as you should have, but it is not bad enough to reinvent to reopen the investigation. Lets talk about music wars now. Youtube is preparing to battle with itunes. Ae googleowned site unveiled new streaming service yesterday, giving the Company Another tool to compete with apple. Hans nichols has the story. What is different . Thatat is different is youtube is going to be offering streaming services for your mobile device, video and music. Here is another crucial difference, they are going to charge. Youtube is going to offer 10 per month as a sticker price. They are calling this music key. You need to be invited for it. Youtube has secured rights with some big record labels. That is how spotify has been a challenge for Companies Like soundcloud, pandora. They signed deals with all the big ones. Vivendi, sony, warner. We get to the point of the conversation where we can talk about taylor swift. They have signed up taylor swift. You can get all your taylor swift if you sign on to this new service. Guy has. Genuinely reading my mind. We had to get to taylor swift at some point. Yet we are showing generic pictures. What a shame. Tell us about twitters first ever analyst day. The stock closed up 7. 5. There she is, taylor swift. I just want to talk more about taylor swift. Lets do the transition like this. They have google always impresses their investors. Twitter has the opposite problem. Their stock has been getting clobbered. They turned things around yesterday with some big google ask type ambitions. They have 8 they want to have revenues of 14 billion. That is a 10 times increase. They have convinced investors that they can monetize their passive users and start selling them ads. That is the key for their revenue growth. On the user growth side, they are at about 5 month on month. Hans, thank you so much for that. Producers in our ear talking about some taylor swift mashup. I have no idea. With the rapper . Yeah. Lets keep talking tech. Internet annual noah conference kicks off today in london. Execs from leading Tech Companies network with investors. Us now, Michael Jackson of mangrove capital, one of the keynote speakers for the event. Are you excited about what you see in front of you . Absolutely, really exciting times for technology. The price is falling to a level where everybody can have one. We are going to see products and technology coming to people who have never had access before. That is an opportunity to build businesses in sectors that havent Seen Technology yet. This sometimes feels like a bubble. When you look at valuations, it seems like as long as it is on your phone, it is the next big thing. To see someing Massive Companies come out of this sector. We are going to see industries created. That is what people are buying into now. You can get a product into the hands of billions of people. Then you can have a business. Are moving into sectors music is a relatively small industry on the world level. If we look at construction, agriculture, property, as Technology Comes into those and applications coming to every persons pocket, we are going to see some massive opportunities for revenue generation. Lets talk about the key battlegrounds. No neutrality. You are in favor of it neutrality. You like what obama is saying . Ask i love neutrality. It is like a utility. We want open access. We have open access to water, electricity and road, the internet is an essential part of life. We cant have profitdriven company how that is worked. Facts you think we will . I think politicians in europe are more pragmatic. They look after the consumer more than in the United States. The United States is impressive in terms of broadband speed. We have traditionally had a right to access a normal telephone. Extending those rights onto the internet is going to happen. You can see why the lobby exists. On the other side, you have some Big Companies as well, netflix. What do you make of the argument that the lobbyists for the likes of comcast . They are saying, why should we give free access to build big businesses . Is, because you are charging your customer for the service. Cant make enough money providing that, they have to jack the price is up for providing the access, not the service. We want all pay more. The u. S. Cable companies are tremendously profitable. A different order of magnitude to what we are seeing in europe. One could probably meet in the middle and everybody would be happy. We talked about the internet of things and the fact that the opportunities are endless. Is there one hot topic right now, crowdfunding or something that is the next big trend which we havent really put our finger on . I think we havent put our finger on some of the sectors that can be revolutionized. We have gone into telecommunications and media , music, film, video, advertising. It is a good industry but it is not one of the largest industries. Is the nextmissing generation of product into these massive sectors. They can come from anywhere. Europe, they dont need to come from Silicon Valley. They can come from any part of the world. Lets talk about the global story. Every tech guy i talked to tells me that one of the biggest problems is getting visas, immigration, getting the right people is the biggest about all that they seem to face. We are also having a debate about limiting the number of people that can come in. Put this in the context of the businesses you run. You need those. Really smartre of people in any business you have. The tech business is relatively. Fficient in personnel 20 or 30 great people can transform a business. We need access to these guys to have Free Movement around the world. Build businesses in Great Britain which need people from all around the world. If we start to talk about moving into different sectors, we need people coming here. If we are talking about agricultural businesses in the third world, we need people who understand those businesses and they probably arent found in london just now. Open visa access is going to be important. I recognize the challenges that introduces to society. It is a complicated issue for sure. The more we talk about immigration issues and a possible referendum, does you think it will be almost impossible for Tech Companies to grow in london . There is a tremendous talent in the u. K. As it is. We grew the business of skype. I was involved in that. It was estonia, a tiny country with a tiny capital city. Most of the staff were from there. You can do it with a small and out of people, you just need the right people. I dont think it is going to be catastrophic if that happens. It doesnt make things easier but as long as one has access to visas for the right kind of people, i think it is ok. It has always been possible to get people in and out. Not with the same ease as we see in the eu, but we should see how that changes. All right, michael, thank you so much. Virgin money is going public today, a month later than planned. We will look at how it is doing. That is coming after the break. Welcome back. You are watching the pulse. We are live from bloomberg headquarters here in london. A big day today for virgin. Is completing its ipo here in london this morning. Virgin america, partly owned by branson, is set to ipo in new york later this evening. No business is connected with its founder in the publics imagination as merge and as virgin is with richard branson. He has created ventures from airlines to trains to wedding almost all ofa, those with the virgin name attached to them. Bloomberg has been looking at the virgin brand. Its successes and some of its failures as well. Andnown for its bright red slightly daring branding, the virgin group has more than 400 businesses worldwide. It started in 1984 and has become the secondlargest british airline. In 1999, branson sold a stake to british to Singapore Airlines which valued the company at 2 billion. Today it has a fleet of 39 planes that goes to 30 destinations worldwide. But not every branson brand has been successful. Remember virgin cola . Sir richard claimed it would sell one billion cans a year. It didnt. Even driving a tank into times square to publicize it wasnt enough to take on cocacola and pepsi. Then there is virgin megastore. It opened in 1992 with flagships in london and new york. By 2009, Digital Media struck the company. His recent forays into space have taken a setback. The virgin money expected to be valued at 2 billion and Virgin America expected to raise 320 million, it is unlikely branson will be worried about his past failures. Joining us for a closer look at virgin money is richard parking 10. Virgin money basically postponed its ipo back in october. Why did it postpone and why did it decide that now is a good time . Act in october, the markets were very wild. There was a big swing in stock prices at the time. Caused aone thing that number of ipos to cancel at the time. Virgin was one of them. They decided to come back after the bank of england set a leverage ratio for lenders as a measure of capital strength that was less stringent than expected for the banks. That helped stock prices rise. That gives you a better valuation. The timing was better for them. Who are the characters involved in this bank . It was obviously started, the idea at the height of the financial crisis. Walk us through the history. Northern rock was a lender in the u. K. In 2008. There were people queuing around the block to get their money out of the bank. Since that time, virgin money bought that enterprise. And nowe rebranded it taken it public. In terms of more ipos, these are challenger banks. Are we going to see more entering the market . We will be. There are more ipos planned of these kind of companies. Another similar to virgin money canceled its ipo last month. It is going to come back probably next year. Metro bank is another potential candidate. Richard, thank you so much. Fromrd parkington Bloomberg News. Lets move on. A jobs to talk about boost for the isle of white. Yes, we are talking about the isle of white. Details on a project that will create new positions for the isle of white economy. That story coming up next. Welcome back to the pulse live on bloomberg tv and radio. You have beentime waiting for. Todays new energy top headlines. China is planning to install more solar panels then green houses. That is an effort to meet the goals under the climate agreement it announced with the u. S. This week. Expect to install as much as eight gigawatts of Solar Systems this year, more than 10 times what it built last year. Im concerned about how these greenhouses work. Offshore wind will soon be produced on the isle of wight. We are trying to figure out where the isle of wight is. The move will create 800 new jobs according to a venture between investors. It says that production of blades for turbines could begin as soon as the Second Quarter of next year. Big news for the isle of wight. Byt isnt the isle of wight the way, the pictures we are showing you. According to Bloomberg New energy finance, the majority of that investment came from asia as momentum builds in the relatively untapped biofuel market. Lets change gears. Nato says russia is sending troops and equipment to ukraine. There will be a meeting of eu and u. S. Officials in brussels with sanctions top of the agenda. Ryan has this report. After the United States, it is the next most powerful army in the world and it is growing. Under vladimir putin, russias military spending has saooared. Became thee kremlin third highest spender on defense worldwide. Approachspending will 100 billion, more than germany and france combined. With russias annexation of crimea and fighting in ukraine, has got nato rattled. The climate is volatile. A new report points to 40 event in 2014 that it says could push the standoff into a direct conflict between russia and nato. Russia is sending a political woulde, saying that it is along by while nato the russian border. Military bases dotted across the former soviet union, russias muscle is not what it was in the soviet day but it is increasing and it is seen by nato as a threat. Ryan is joining us in the next hour to talk more about this story. Now, for those looking at the tv, the pulse is continuing [laughter] radio, surveillance is up next, right . Know, the first word is next. I think. Mike lynch, we are going to talk to mike lynch. He is going to talk about what he is investing in. He has some really cool stuff he is investing in. Tensions escalate, russia may face more sanctions. Fifa fails to find evidence of significant wrongdoing. The currency crackdowns. Management. Ealth good morning to our viewers in europe. A warm welcome to those waking up in the United States. This is the pulse. Live from london. Tensions between ukraine and russia already boiling point. Military commander says russia is sending troops and equipment to rebels in ukraine. There are three options. They can expand the list of individual sanctions, personal sanctions on people. Expand the list of Russian Companies. Expand the restrictions that western companies and investors face dealing in the russian market. It looked like it was going to be the minimal option, option one. Then we had nato come out and say russia is sending in troops and tanks. It looks like a two and three are back in place options two and three are back in place. Just one point in the whole toolbox. What we need is a clear pressure to keep it on track. Sanctions are important, but just one integral part in tool box. Deescalation is not on the cards right now. The rebels are regrouping and are ready to fight. The ruble is fluctuating. What impact will more sanctions have on the currency . It makes people nervous. It creates uncertainty. It encourages them to take the rubles and turn it into hard currency, which weakens the ruble. The ruble asing well. Petrocurrency. You have the bank of russia intervening. They are not directly intervening, but what they are doing is saying that they will use the ruble liquidity as a tool to control the buying of dollars to lessen the weakening of the ruble. We seem to be seeing some signs of success. , but ites weakening does seem to be stabilizing. Friday, it was 48. 5 to the dollar. It may be that the central bank is comfortable where it is right now. We are about to talk the world cup. Do you think there is a possibility that that starts to be used as a weapon in all of this . Of her lots of suggestions ivevarious politicians heard lots of suggestions from various politicians. Vfat has been very clear fifa has been very clear. You could see that, boycotts. The sochi Winter Olympics went ahead without significant boycotts. One saw what is happening in ukraine a year ago. To talk about what is happening three years down the line is difficult. Thank you. We will follow that story closely. Qatar and russia will be allowed of the next two world cups. Actually, they said there was wrongdoing, but not enough to warrant taking the tournaments away. Yes. Some individuals may still face a sanction, but ultimately qatar and russia did not do anything wrong enough to warrant being stripped of the right to host the world cup. Were perhaps overgenerous with their gifts, some provided jobs to people who had influence. But according to the internal ifas ethicsf committee, that was not a serious enough offense to change the situation. They say the effects of these minor occurrences were far from any threshold that would require returning to the bidding process , let alone reopening it. Host thepen world cup in 2022. Russia will host in 2018. And qatar, they need to figure out when they are going to play it. Very briefly, it is and it is going to be interesting to see the reaction. Look, the fa and the english were seen as one of the key drivers and trying to get this investigation thoroughly carried russia crying foul on having the right to host the 2018 world cup. This may come back to bite the english on some part of their body. The english of come under some criticism in this report. Have, under some criticism in this report. They certainly wont be too chuffed to see that they are coming under some criticism. Thank you very much indeed. This is what else is on our radar. The head of the new York Department of Financial Services will join a Group Settlement over rate raking, causing barclays to pull out at the last minute. A monitor will review barclays continuing conduct. In. Ames gorman weighed obviously there was allegedly real bad behavior going on in the industry and that is the kind of thing we have got to root out. Needs to operate with the trust and confidence of the public. Any manipulation of any of the markets flies directly in the face of that. They should be fined. And thed of behavior cultural phase the industry went through leading up to the crisis and after it is just not good enough. I think all the banks would tell you the same thing. We have been speaking with the boss of the secondbiggest bank in italy. What could be very important for us is if we have an increasing 1 gdp, we can increase our target. We will bring you more of that exclusive interview later on in the pulse. Up next, the bloomberg exclusive. We will speak to mike lynch about investing in internet startups and a whole bunch of other things. Good morning. Welcome back. You were watching the pulse. We are live from london or tech entrepreneurs and investors are gathering to discuss the state of the tech industry. Mike lynch, the founder of invoke Capital Partners is with us. Good morning, mike. Good morning. There is a pretty wide range of stuff you are investing in at the moment. Does anything stand out right now . It is an amazing time at the moment. There is a lot going on. Be one billion dollars to sequence dna and now it is 1000. That matters in cancer. If you can sequence the cell, it is a bit like playing poker where you can see the other guys cards. Years,y, after many there could be something really powerful coming out of their and that is going to infect there affect ais going to lot of people. People were talking about being able to print organs. Clearly there are some big breakthroughs coming. If you look at the next 1015 years, what do you think is achievable . The more straightforward one is called personalized medicine. Treatments go from being for everyone to being targeted to you personally. That is going to have very significant effects. It is not just the private sector, but the government started some great things with this genomics program. There are problems. There are regulations. Got to overcome regulations on the personal. It is going to make a big difference. What do we need to make it happen even faster . You talked about some of the things that are happening. Anything that needs to happen . Anything that you think could stand in the way of it happening . We are having a lively debate event about immigration. I think we have to be very understanding about what these new challenges need. We have an incredibly vibrant startup scene. How do we get those businesses to become worldclass businesses . Things like immigration do matter. ,f you look at Silicon Valley it draws and phd experts from around the world. To do that. We have to be brave enough to say that whatever the debate is over here, we are still going to welcome the very highly skilled people into the u. K. Things like tax breaks are great. R d tax breaks. Those are great. Re not running our business is all the way to be as big as they could be. We are not scaling up. Capitalto look at the markets. Do they work as well as they do in the u. S. . What we should be having now from this wonderful set of smaller companies, we should see some real giants coming. You think the businesses are standing up and making the case strongly enough at the moment for the kind of story that you have just laid out . You are wellknown in this country. You have achieved so much, particularly in the space where the country needs to do more. Do you feel a responsibility to stand up and talk about the upsides to immigration . I think the businesses have to. I think the Royal Academy of engineering needs to make a case. I think it is to everyone alls benefit. You need to separate the two cases. Whatever you might think about general immigration, it is in a pretty different situation to getting someone who won a nobel prize into the country. It feels like it is being ramped up into the same thing at the moment. I think people into separate the two. We want the best and the brightest here and it is a great place to be here. I dont want my video film suddenly jerking, but i have come down on the side after theg about it technical people are going to learn how to stuff more and more and. In,. You willlm stutters, have gigabits to your home before long. The model will be paying for it and people will not upgrade the network. I think for both parties, in the long run, Net Neutrality is the way to go. It will get Better Service for everyone. Code and create new switches and routers and everything that you need. It is one area that you can see from the curve in the past that people have found new ways to get the bits down the pipes. The u. K. Is different to the rest of europe. Youve got to be careful not to generalize here. The u. K. Is very far drats stinnetts understanding. Everyone loves to criticize government, but this one listens. One of the issues i have is making sure the industry does not go to the wish list of everything. We all want something. The industry talks and comes up with good suggestions. When they do that, the government listens. Things like procurement, tax breaks on investments. I think in the u. K. It is well understood. And some of the other continental european countries, there is an idea somehow that this is wrapped up in some sort of anglosaxon american take over the world. The french came out with their attempts to build their own version of google. It was 400 Million Euros wasted. Are the european strain to beat up on some of the big u. S. Tech companies . Early statements seem to indicate that he is going to beat google up. The tech stuff. These companies are using highly skilled people that have been funded through the universities here and then they are not paying any tax. Sorry, fair dues. If you get the benefit of all of that and those bright people and being able to be in a great country like the u. K. , pay the tax. Do you think that is going to happen . I hope so. I hope politicians will be forceful enough to make sure that the right amount of taxes paid. It is great to make the policy like tax breaks for r d, but that is different from some cunning scheme. That is a different thing. Time do you spend thinking about the implications of what we are doing right now . The impact of genomics is going to be tremendous. When you think about technology and what we are going to be doing and the impact that that is going to have on the labor force, absolutely massive, are we under thinking the things we are doing . Are we thinking beyond the next 10 years . About the late 1960s that thene told you finance department would be relays replaced by a computer. We wouldve had a conversation those jobs being taken away. We are going to have conversations about jobs moving around. Im not a pessimist. There will be Different Things that people will be doing that arise as part of the new possibilities. We have to be flexible. We have to respond to the changes. You cannot hold them back. They are coming. Having fun at the moment . I have great fun. I go around and get to me 23yearolds who all want to change the world and some of them might actually. If their idea is crazy, you cant help walking out of the room and feeling infected. By the enthusiasm. Mike lynch, the founder of invoke Capital Partners. Welcome back to the pulse. We have been looking at risk in the economy. Today, our focus is on the fx rigging scandal. This is the foreign exchange. Listen, there was obviously allegedly, but apparently given the fines, real bad behavior going on in the industry and that is the kind of thing we have got to root out. Needs to operate with the trust and confidence of the public and any manipulation of any of the markets flies directly in the face of that and they should be fined. We need to get this behind us. This kind of behavior and the cultural phase leading up to the crisis and directly after it is just not good enough. These fines are fair . I dont know about the specific numbers. I cannot comment. Out any form of collusive behavior is critical to trust and confidence in the industry. Do you have a more conservative approach . No. We run these companies as businesses. Morgan stanley has 55,000 people in it. We have a market cap of over 60 billion. It is a large, complex global business. Wall street took years to evolve to global enterprises. Processes and systems to control the risks you are operating with. James gorman. Coming up, we are going to talk minister. The u. K. You can follow us on twitter. Just a reminder. Welcome back to the pulse. Markets may make investors a little bit edgy. But one of the Fastest Growing companies in this place space is in israel. Cofounder. E ceo and great to have you with us. What do you do that is different than cnc or ig . We took an approach toward , and toward online trading we put the retail customer in the center. We built a very clean, intuitive trading platform. With thousands of instruments, the most popular instrument in , this is in london whatever you like, whatever interests retail customers. The platform is available with a seamless interface. There is no learning curve between one platform and another. This is bringing the opportunity to invest in contracts. You dont buy the actual share, you by exposure to the underlying asset. Yes. The benefits for the Retail Investor to profit from either long or short positions. Price drops or the commodity price drops or whatever, they can make a profit when they go on the short side. You can do in all of the technology inhouse. Trading platform, marketing on google, you deal all of that inhouse. Fraud prevention, our marketing. It is all inhouse. It is very cost effective. We can then price in a very good way for our customers, so they can actually have to pay less than competitors. We are very competitive in pricing. Helps with our branding. We try to be very transparent so customers know exactly what they pay and exactly what they are getting. They get the full exposure to what they are doing. This builds credibility for customers. I think this is what drives the business forward longterm. s ipo. Aba how do Something Like that translate for more business to you . Our customers do react to Financial News. A figure something from bloomberg, in the press, they react. It can drive even three times more business on that day. It tracks for the whole month afterward. When facebook went ipo, that was a very public ipo as well, and people still trade facebook to this day. Drive the business forward and Financial News drives the business forward. When will you move to the main market . You are quite big now. It seems like a natural move for us. It is something we are considering at the moment. I dont have an exact date, but it is coming up. We look forward to seeing when it happens. Raised 75have only million when they had their ipo. They have already returned it to the investors. Thank you very much indeed. Lets keep on talking tech. Our next guest was the keynote speaker at the conference in london. Speakers have gathered to talk about the future. For coming on,ch minister. Talk to us about the big downfalls to opening up this economy to digital. You need to a trust and attract investment from abroad . Are you when you talk about the immigration debate . There is a balance to be struck. We are a country that wants to attract tech investment. We believe london and the u. K. Are the best place to start a tech business in europe, the best place to grow a tech business. Skills are in high demand and we need to attract people from all over the world to come work. What we want is a fair immigration system. We want to provide the boost for those businesses and we want to make sure people are coming in with the right skills. People who live in this country want controlled immigration, they want to know their borders are secure, but most people know we need to bring in people with particular skills to boost businesses. We work with a lot of Tech Companies. We have introduced entrepreneurs. They talk about how difficult it is to get the right people into the country to get the skills that they need to get the business is buzzing. How concerned are you that you dont get the balance right . How big a risk is that . Wrong and yetthis all we here at the moment is, we are going to clamp down on immigration. We are going to have rules coming from the eu, rules about bringing people in from the world. Those seem to be slightly contradictory. I think you can square the circle. You have heard about people coming here and claiming benefits. What people dont want is people just coming to this country and wanting to claim benefits and take advantage of the public services. We want people to come here and contribute. We want a controlled immigration system. You are not going to find any country in the developed world with a big base that is not saying, skills are a big factor. This sector is booming. That is a huge demand for skills. It is constantly changing and reinventing itself. There are jobs and skills that did not exist three years ago. You are not going to create bottlenecks. We are trying not to create bottlenecks. It is a nice problem to have. You could argue. It is better to have a booming industry that needs skills than an industry that is laying people off. We are creating hundreds of thousands of jobs in this country. Just about bringing people in from abroad. We also want to build the skills in this country. We are the first g 20 country to introduce computer coding into the national schools. We are looking at further education, higher education, apprenticeships. We want to give people the skills to participate in this extraordinary sector. For kidsk the coding is going to create more problems. [laughter] it would certainly give me a headache. Proficiency ial have is programming a video recorder. [laughter] what is the next big thing . We are talking about internet of things. What is one thing you have seen recently that you find particularly exciting . It is machine to machine technology. It is sometimes disparaged in a way. Your fridge ordering your milk for you. But it is much more sophisticated than that. A catalyst to test the technology. We want to test this technology. It is about making peoples lives better. Glasgow has an app or cyclists can load their journeys. You can get all this data and you know the roots were people are cycling routes where people are cycling so you can make it intelligent and monitor noise levels, see you can work out if there are some trouble going on nearby. Sector, therecare are massive opportunities, particularly with an aging population, advances that will allow people to be cared for. You can monitor them remotely. Vital signs, you can get them help. Rather than relying on an analog system of someone knocking on the door to check if they are ok. Poundsabout 50 million into the Digital Economy. Become self financing. They have to prove themselves over the next five years. Is five years enough time . I think five years is plenty of time. They have to show that they add value. The idea is to take Small Businesses that do not have the r d facilities of a Large Business and take big businesses and use them as well to test and monitor. Monitor with other companies. It is a great center for a lot of businesses to come together to look at what innovation. Funding seems to be one of the main problems. Is crowdfunding the solution . It could be one of the solutions. A bold crowdfunding talked about having the largest crowdfunding website and seeing it as genuinely an alternative source of funding and how difficult it is nowadays to raise the money. I think financing is the absolute crucial question for this sector. The amount of financing that is available to take the risks that are necessary, we need that kind of climate in the u. K. We have things like the enterprise investment scheme, specifically designed to allow you to take risky investments in small startup companies. We need to continue to look at the tax regime and encourage investment. Crowdfunding is definitely coming of age. Government can help as well. Where do you stand on the neutrality . Neutrality . It is interesting that the german commissioner wants the digital job. It shows this shift in terms of europe understanding that tech is now front and center. Net neutrality, we have an open incident code. Operators and mobile signed it and we hope virgin will sign it. You dont block people on the basis of anticompetitive behavior. Well also need to leave room for innovation and the internet. America is much less competitive. There are basically two telcos. There is much more competition in europe and that keeps telcos in the u. K. And europe much more honest. Thank you so much for joining us today. Next, more great guests coming from the conference. We will speak with two ceos. Areas of Private Banking want to grow. Grow. Whihcch i want to anotherou live for three or four years, there will be a problem for the eurozone. Mussina carlos mesina speaking to merely are some of the boss of speaking ofme earlier, the boss italys secondbiggest bank. Good morning, fellas. A lot of things happening at the moment. The uks generating a bit of momentum. Momentum has the u. K. Got at the moment . Are we getting overly excited . Today, right now, there are estimations that the Digital Economy is worth about 10 of gdp. It will grow at around 11 per year. It is one of the fastestgrowing digital economies in the eurozone. So we should be excited . Yes. It is a very good sign. It is a positive sign. You have a successful company. Wish that you would get more support . It funding . Is it execution . What are you looking at as your main concern . Are single Biggest Issue is access to talent. We are growing very fast. We have officers in 10 countries. It is really helpful to be able to employ people from any nationality in any country. It is not just about talent poll. We are a global business. We need multilabel stuff in london. Thee were speaking to minister for Digital Economy. He said there is not a problem and that those visas are accessible. Are you saying it is difficult to get them in the country . Or are there not enough people in the industry in your space . There is a scarcity of homegrown talent. This is a shortterm issue. That entrepreneurs visa, exceptional talent, these are good moves. They are relatively limited. We have complexity, bureaucracy. Areas for the the future 50. People are coming out of school, coming out of university. That is a very longterm story though. Isnt it . When you look at the skill sets indigenous to the u. K. , what is the spread between the skills that we have and the skills that we need . Recognitiona global , there is a Talent Shortage everywhere. It is a zerosum game. This industry is growing very quickly. Faster than most industries we are seeing. For that reason, yes, we are seeing some shortage and talent. It is being tackled in different ways. You have coding being introduced in schools. That will give us far stronger grounding in technology for schools. Universities are doing more and entrepreneurship and Digital Skills. Addressing this issue ourselves. Next week we will be announcing the Digital Business academy. It is open for registration right now. We are working with accelerators like tech stars and that combination will make free online courses available to anyone that wants to start, join, or grow a Digital Business. That is how we are addressing this need immediately, so that we have Companies Like unruly, so that they have access to the talent they need. It will take five years at least. These courses will be available very soon. Ive always been told that you start and a company and you become useful after three years. But you are seeing some very positive moves by universities, they are addressing these issues head on. Theyre very much listening to founders and ceos. What else can we do . It is a combination of two things. You have to think laterally. You also have to have very practical skills. A notion of lifelong learning. I graduated from an Evening School in new york this time last year and some of those skills i have learned need to be updated. That is a quickly the industry is moving. We can get people productive and useful and six months. With otherorking institutions and universities, we can get them up to speed faster than that. We want shortterm measures, but we want longterm solutions as well. We are a relatively young company, but we have been around eight years. We are not thinking about just today and tomorrow, we are thinking five years out. We are very supportive of longterm training initiatives. s lending getting too expensive to get business and to do business is london getting too expensive to do business in . There is a shortage of real estate. Rents are going up. It is not limited to london. We have the same issues and will new york, san francisco, singapore. That is not a fundamental issue. You are not constrained by the cost of real estate in the tech department. People want to come work in london . I went into a tech from the other day and they are thinking of relocating because they can attract more staff if they are in a lower cost environment. It does not sound like something you are experiencing right now. There is such density of Technology Businesses in london that it is a fantastic ways to work. We dont have any problem attracting recent graduates. We have a long wait list of people. It really depends on the type of business you are. Londonbased some companys Opening Development firms elsewhere like bristol and birmingham. You are seeing this more and more. Is great for a lot of things, but it is not great at everything. Are seeing other cities around the u. K. Excelling in other Digital Skills come alike hardware in cambridge and Artificial Intelligence in edinburgh. You are seeing companies and other parts of the u. K. Using london for their business and commercial field operations. ,n the advertising business there is a Critical Mass of expertise around advertising a german Games Company here looking to potentially set up a business in london was telling me that a lot of the advertising that is paid for on its inventory is done out of london. Thank you so much for a great conversation. Are back in just a couple minutes. Welcome back. Lets talk about dollar yen. Possibly a snap election. They may try to benefit from the delay of the second sales tax rise that we could see coming through in japan. The dollar was rallying. We have seen it come off the pace a little bit. We are going to keep it right here. This is bloomberg surveillance. Holds itsted nations meeting on a wartorn ukraine. Brent breaks 80 per barrel. Will it break opec . It is so 2013. In 2015. O bitcoin good morning, everyone. This is bloomberg surveillance. We are live from new york. We say good morning to you. Greeley is decidedly off today. It is november 13. I was going to say friday the 13th and then i got rattled because it is thursday. More signs that widespread fighting is about to resume in the u. K. Ukraine. Tanks are moving into the eastern part of the country. The u. S. And europe are considering more economic sanctions. Has negotiated a peace plan and then systematically undermined it at every step