Transcripts For BLOOMBERG The Pulse 20141119

Good morning. Welcome. You are watching the polls. I am guy johnson. Francine is off today. Lets talk about the radar. Ruledmbay high court has this year. The sentiments are waiting for the Prime Minister and his efforts to attract Foreign Investment into turning india into a Foreign Investment hub. Next 35 years, bloomberg spoke to the firms ceo. We have been hiring a lot of senior help and you see that in singapore or australia. And it hascoming been good about the position. Waiting for a better time. Russia is a big issue. It adds more risk to the deflation of europe because of the Energy Prices depending on the supplies from russia. It does not help in the scenario or help the situation. We are not exposed to russian Financial Investment. Is a potentially big market for Financial Services marketis not an open these days. Lets turn to the top story. Of an import eve and election here. Collect a new mp. It is being seen as a litmus test. Joining us for more is the government reporter. Why do we care about the election . Election that gives the u. K. Independence party the second member of parliament. They will because former ministers of parliament who defected from the conservative party because they do not think he has gone far enough on europe. It increases the pressure on chairman to do what many of his party wants. Britain out of the European Union. What classifies as a big win . That is a good question. Polls moment, we have suggesting a u. K. Lead. It depends on a lot of people who have not voted for the u. K. And did not stand in the seats for the last election or turned out for the u. K. I think anything into double conservativeave ministers of parliament who are sympathetic. They are thinking that it is time to make the jump. There are a lot of names. There are a lot of names. They will all deny it. They denied it the day before he announced it. It is friday morning. You have a big win. What does David Cameron say to the Parliamentary Party when they gather and meet to discuss what happened . What is the message he has to deliver and how big of the meeting is its . . Is it i am offering you a serious negotiation. He will get one or two and say he had a triumph. He is saying that he will do something about immigration. Think that what he had to do was reassure them that he is really serious. He has been saying that for months. More than a year. It does not seem to work. There is a section of the party that does not trust him. Moon, aat the vociferous reaction to what is happening. Can we equate the two . First, they would say no. There is a lot of what people say. In the point of view of the voter who wants to hit David Cameron, you can hit david t theon and you can hi leader of the opposition. Is a lot of taking free hits. It is about electing the government rather than punching the government. Said, there are a significant portion of people who have been saying that they will vote for the u. K. Independence party in the next election. Them at theirf of , it is more unstable than the 1970s. Maybe we go back to when we were having a elections every couple of years. Tomorrow is going to be a big moment when we write the history of this. We talk about the labour party being affected by this and we understood this. They were not just drawing voters away from the conservative. They were taking the political dynamic. Ed miliband has a lot of issues to deal with. What happens tomorrow that affects the labour party. Tomorrow is good for the labour party because the at onrvative loses their seed europe, which is principally a problem. By labor untilld 2010. Labor gets it back tomorrow and they have a candidate. It suggests they are nowhere near and ed miliband can see it. Party withopposition the unpopular government and not winning back the seat it held . That is the big question and goes to the heart of the problem. They are not turn into labor. You have the headline and the thing that drives voters to it is immigration. And we have the European Union. On immigration, labor is uncomfortable. To say the least. They do not quite know how to deal with it temperamentally. The party is in favor of immigration. In the heartland seats, they are not. You are starting to see it make moves to say that they would stop people from claiming benefits and that sort of thing. The thing that drives people and immigrants is work. They come here for jobs. Theyre coming here because there is a growing economy. , talking of business and jobs business came late to the debate surrounding scotlands. It made a meaningful impact. Where would you put business right now, in terms of engagement with the process . This feels very original. Very regional. It is not. Britishhis will affect business and have a major impact. Still not getting that. Business was very afraid of the debate and they try to stay until the vote looked like it would go yes. Europe, the cbi has been involved. We had the conference and an interesting moment. The one who looked the most uncomfortable was David Cameron. By somebodyduced who said immigration was good and the European Union. Cameron adjusted addressed that and looked like he would rather not eat talking about it. We will see business engaged. There is another outlook on britain that says that the cbi does not speak for business. Small business is less proeu. Most people have not heard of them. Where they have heard of john lewis, they have heard of british telecom. You get the interventions and people will notice the ones on companies. Multinationals. Most are international in outlook and like being able to move people around. So, so, people would expect them to weigh in to europe. We will be back later. Thank you very much. The government reporter will have more on all of this later on in the show. We will talk about the throw European Union camp and get all of that later on. Whyill go to breakfast and we should be doing that. If you want to join the debate, feel free. This is the business story. What is the Business Case for staying or leaving the European Union . This is where you can join the conversation. We will talk about all of these characters for the next couple of hours. We will take a break. We will see you in a couple of minutes. Good morning. Welcome back. You are watching the polls the pulse. Lets get back to the big focus. Spotlight is voters going to the polls. Is a litmus test. There are votes on implications eons english shores. Votes with implications beyond english shores. No sugar coating, Political Parties have fallen out of favor. The tories are at 23 . The u. K. Is at 32 and labor as at 12 . Poll exit er echoes official forecast. The u. K. Independence party surge has turned into a Major Political fight in a town not unfamiliar with epic battles. This one was triggered. We need to form our political system. Conservatives have banked on the economy. And, their findings support with the electorate that is disillusioned with the establishment. It could take the u. K. Independence party closer to being a power broker in the election. That is the scenario that many business laters Business Leaders say would be a disaster for the economy and the European Union. They hope the recent love melts away by may of 2015. The u. K. The poll. You can see the list of candidates by election on screen now. Take your pick. Be aesults tomorrow could window on where they stand. Scared foraders are the referendum. , he is me now is daniel a proponent of the renegotiated terms. They may be looking for the exit. Casere talking about your and his point was that big businesses have named check recognition and people may listen to them a little more and it is easier. When the boss stands up, he will know what it is. You represent small and mediumsize companies. Have thousands of signatures. It is important and it shows the extent of our support. It is worth saying that, in a felt that they wanted a referendum. I take your point about the business. View from big business. And, of course the future of the es. Try is in sm the interesting thing here is are focused ons immigration, that is the debate that seems to be capturing the political mood right now. Businesses are trying to talk about something else, which is regulation and the onerous issues of how to deal with the financial sector, etc. They feel that is coming at a brussels. Different stories seem to be coming together. But i think they are in the election. Immigration is a difficult issue. The country is a country which is has had immigration for 2000 years. The Current Issue is the rate of immigration and the regulation of immigration. That is why people are concerned. Keep the issue in the newspapers. Have red tape and regulation. They want to see less costs across lines. See a stagnant european that is, of course, the way the exporters are changing. Regulation is one of the cause. Regulationsm impose. Many multinationals see the terms of our relationship with europe change radically. Immigration tends to be positive for business. Most tend to pay taxes and work. Business. Pull is for are you in danger of shooting yourself in the foot if you campaign on the side of a that immigration should be halted . If regulation was applied, you would still have that. That is my straight answer to the question. Ok. Is immigration good for British Business . It can and has been, historically, over 2000 years. What we have is a bit of a watershed and people are concerned, daytoday, about immigration and the way it is being regulated. Policy, ismainstream against the idea and the importance of allowing people to have the contribution to the economy. Where is the line in effective renegotiation for you. I think the many issues here are, the first, getting rid of red tape and reducing red tape from brussels. It is also one of the things we have to look at in Financial Services, interest. The way we are able to block measures we do not like that we consider to be damaging. For instance, we did an analysis of Financial Service regulation and it showed that, over the last 15 years, most of the ones put in for date the eurozone crisis. Most of the others we would not have done ourselves. We had no it is stopping that under the current process. Thank you very much for making the case. Daniel joined us from business britain. We will be back. Join the conversation. Is there a Business Case . Join the conversation. Take a break. We will see you in a couple of minutes. Let me show you the yen and the pound ahead of the bank of england. In threeing up ahead minutes time. Welcome back. Youre watching the pulse live from our headquarters in london. Im guy johnson. Francine lacqua has the day off today. 9 0 on the q. E. Bond purchases. The b. O. E. Majority have a material rangor views when it comes to outcomes. I think what were looking at is a pretty fat tale when it comes to whether or not we will see a significantly delayed rate hike or a rate hike that could come earlier. You can see the bid now gaining a little bit of traction as we start to work our way through the day jegs of this. 1. 5626 is where were trading. Our next guest said the rate hike is likely to be in the Third Quarter of next year. He is a chief economist in the u. K. Good morning. Good morning. It was pretty much what everybody was anticipating. No real change. The communication was done last week around inflation. If anything well look into the minutes but if anything we should expect the minutes to be on average a bit more doggish as well. Two members stuck to their position of seeing Inflationary Pressures in the midterm and the rest of the n. P. C. Becoming more cover thish and focused on inflation data. Basically last week carney and other m. P. C. Members said the market was right in expecting a rate hike in the second half of next year. Some of the statements that have been coming in, part and parcel of the release. Housing activity has slowed. Outlook for u. K. Export demand has weakened. Risk of growth might soften further. The bank of england saying there is a small chance of drifting lower as well. Labor market pressures, signs of slack being absorbed rapidly and mainly due to sterling and the commodity effect. Again, any Material Change in any of those kind of statements . , as far as i can see, no. Months ago, we said we were in the position where pressure would eventually force the bank of england to hike rates. Thats why we had quite an aggressive call on rates. Our understandingor last month m. P. C. Is ation by that the bank of england will focus on data. We also understand when we talk about data, we will be focusing on inflation, wages or labor costs. So far those variables have been growing around 1 . As well to wait for those variables to catch up quite a bit before the bank of england considers any change. What we also understood from several statements is that the bank of england was attaching a different rate to the risk of hike to go soon opposed to hiking too early. Definitely they will go for the later choice if they have one rather than the sooner choice. Lets talk about that mix. You have got back end of 2015 in for when you think the first hike comes. That is the biggest battle. Is the risk to the 2016 side of that and how does the rate ath look to you in terms of a, the gap between first and second hike and where you think rates actually are and how long it is going to take to get to them . End of 2014 will be an interesting time for the u. K. We expect it to slow down. We should expect growth at the end of next year to be lower than what we experience now. At the same time we will have elections, new government. News on fiscal policy. We expects austerity to resume. That the government should announce austerity . S around 1 of g. D. P. Every year for the next four years, so it is not nothing. Well be in a situation where we should expect Monetary Policy to become more restrictive. The fiscal policy as well. In this environment, either you are very confident on growth and you have moved from unsustainable Growth Drivers to more Sustainable Growth drives would be a recovery in productivity. Gaining market shares again, etc. Or youre in this difficult position where nothing happens and youre not in a position to hike rates because youre expecting the economy to slow down further. It will be interesting. If you ask about the balance of risk, there is a risk that it can happen later. Or as two members of the m. P. C. Think, there is a risk that it might happen much sooner as Inflationary Pressure builds up. Around that average scenario, there are clearly more risks that it happens sooner rather than later. If you to choose given the statements by the bank of england, it might happen later rather than sooner. Thank you very much indeed. Senior european economist at barclays. Maybe the minutes are i think it is a marginal call. Maybe slightly more hawkish than commentary we have had over the last week or two. Seen a little bit of a move in sterling but nothing major. Lets take a look at our other top stories. Improving the construction to have keystone xl popline has failed to pass the u. S. Senate. It came up one vote short of the 60 votes needed to bar a president ial veto. The bank of japan has voted to maintain record easing after news of recession. Changing a little bit, that piece of mathematics as the yen continues to depreciate. E b. O. J. Plus there is an election coming up. Frances National Financial prosecutor has opened a probe into possible Insider Trading at b. N. P. Paribas, the countrys biggest bank. A spokesperson for the Prosecutors Office said by phone yesterday he is declined to provide further details. Prosecutors could drop the probe if they find no wrongdoing. As we head into break, lets get a beer check. Brewers big time today as the u. K. Apartment votes to let pubs buy beer from any supplier. Previously it was tied to who owned the lease on their buildings. Well take a break and see you in a couple of minutes. Ok. Lets talk about italys largest ininsurer, generali. It has already reached most of its 2015 target. We the leader the capital measures. That was of course because generali is supposed to be the capital. It was for a long time. We reduced debt. Reimproved the leverage ratio. We will restore this stability in the company. At the time token we have been working to improve the profitability. Our target there is to achieve a return on equity in excess of 13 . This is where were just this close to it and hopefully by year end we will be able to report on that. So what happens next . Are you going to change your target . On hope that we can report achievement of target. Once we do that actually we will move on and start working on new plans. We are already there thinking about the future. Were going to have a new investment day here in london on may 27 where we plan to present and unveil the future of the company and what is going to be the next journey that we will engage on. Did you also change your dividend policy . Yes, because as a benefit of the early achievement of our capital target, we announced and will confirm in a few hours that the dividend, 40 the out ratio is being relieved and now were not forced to maintain this 40 . Actually at the end of this year, im sure they will approve t. I know you want to give yourself a couple of months. Can you give us you sold off a lot of noncore assets. Re there companies you want to invest in heavily . Were looking at an organic development of our business. There is a lot more to do at generali. Generali is a huge organization. Hasnt been performing well for a number of years. N these two years we activated it. There is a lot more that we can do. Before we get into acquisition mode, we want to continue doing best we can for generali. That is something we have a lot of focus on. Of course we will invest and develop the good businesses we have in Different Countries but we dot do not plan to do it through acquisitions. Speaking to francine last evening. It is amazing they are so far ahead on their target. Well have more on that a little bit later. Up next, our next guest wants to plant 2 trillion yes, you heard me, 2 trillion trees. How reinforestation can make the world a cooler place. When we come back. Well see you in a moment. 47 minutes past the hour. Welcome back. Were on the radio, streaming on your tablets and phone. Bloomberg. Com. Wants to plant two trillion trees. Lets find out what the story is here. Lets talk to the founder of this organization. His commitment to being green has led to him not flying. He came by boat. How many trees did you plant last year . Last year just over 2 million. We are douge nearly every year. I expect to be around 2021. I said after 100 Million Trees ill fly again. Well check the air schedules to see when that happens. Hy planting trees . How did you hit upon planth 2 trillion trees as being the way forward . I did a lot of research and i discovered there are a lot of solutions to Climate Change that lot ofnvolve giving up a stuff. Trees make clouds. The little bacteria in the air and chemical ps. Clouds will be a reflection of sunlight. They can be a heat shield. If you plant enough trees around the equator, you actually can cool the planet down and quite quickly. The amazing thing is we have done the experiment before. If you can plant enough, you can actually restore a huge amount of area like to Sahara Desert used to be a rain forest. Who pays for these trees . We like corporates to pay for trees via their customer customers. Were not a charity. We believe in profit. We call it buy two, get one tree. You save half of your costs for a fractional investment and that the o a village near equator where they have been trained and they can get the benefit of the trees by harvesting the crops that come from them. And what kind of companies are we talking about here . This needs to be consumerfacing effectively to make it work. Absolutely. We consumed about 2 trillion cola drinks in the last three years. If you could have added a tree to every one of those, i would be done. What progress are you making in terms of interacting with corporates . If you look at our website, you can see all all the logos. We got a huge response. People love the spirit of the tree. You can actually just know that it is there and audit it. We audit the trees obviously and make sure they continue to grow. People love to own. That r i was having a conversation with you previously and you said the biggest problem getting the d. O. D. To give you satellite space to figure out how many trees you actually planted. I would love to get a realtime feed. Only the d. O. D. Has satellites that can look to that level of detail. You need to have more corporates onboard and changes the model they apply to dealing with the customer. Do you think you actually going to make it to that number . Well, we ourselves as we first, 100 million to i think we as humanity have to make it o that number. Whats wrong with replanting trees . So restore what used to be there, i think that is in everyones interests. We have 20 million square kilometers of degrade land near several billion potential entrepreneurs. Why not go to politicians and say you need this to happen 3. Happen. These guys are there to plant freefments not in the same numbers that youre talking about. Why address it from a corporate point of view rather than a political point of view . Corporates have a profit incentive to do it. Im not talking to the c. S. R. People. Im talking to marketing and branding and people who do mass sales and look for every point for everything they can do. The relative cost of a tree has so much brand power with it that it is actually profitable. Governments take a long time to organize anything and they dont agree on anything. Climate change process requires consensus. 200 countries agreeing with each other. Lets look at the iro . They come from ireland. Who else is in the iro . India, iran . Yes. You run an accelerator and you run what i think is for a guy who has four kids, you run a thing teaching kids how to code. Amp, how do you find time to do all of this and what is the interaction between these stories, trees, technology, kids. How important is it that our kids are not getting involved in all of these processes . You have a startup business and an accelerator. Looks like a lot of fun. It is a lot of fun. That is the point. You have got to get people to do stuff, you have to make it fun. Entrepreneurship ties it all together. He saw as a member of the air stock rassy, people just getting on and doing it. I dont think we give the kids the freedom to get on and do productive stuff. It is a place where they can go and age 517, sit down bring their laptop and mig out how the do stuff with computers. Not play games, but build games. Women becoming entrepreneurial. Getting stuff and getting paid for it even. We have committed ourses to being the accelerated why . Because we want an investment if we give them the right environment, those entrepreneurs do so much better when they see oh, actually it is about traction and getting stuff done. That is really important. It is the same thing in each place. How easy was it to get barclays involved . Barclays is fantastically generous. We had Prince Andrew there sitting next to kids all coding together. Barclays attended that. We have this campaign where were really trying to become the center in our community. This is an obvious fit. Actually it was pretty good getting that relation to happen their equipped all of branches with free wifi. They plemminged on twitter 1,500 branches. We can give the u. K. The most blanket coverage of coding clubs. We have a lot of companies that come through and run the accelerators or are are the accelerators. Most are software. Youre no focusing on software. To. We had a major insight. No one is doing hardware or wet ware. Wet ware . I think i know what youre meaning but i think some dont know. It is actually you know, making new stuff with living organisms. For instance we had a team in the first that actually created milk proteins. So they are actually building vegan milk which is really cool. If youre a vegan. Then where he have a program in china where teams come from all over the world to go to this program because we set it next to all of the different manufacturers that could ever want. Thank you very much indeed. Were going to take a break. See you in a moment. Future in europe. How low with the yen go . Support to have bank of japan slides behind kurodas easing policy. Generali pushes back the date for europes recovery. We will show you francine acquas exclusive interview. Good morning to our viewers in europe. A very warm welcome to those waking up in the united states. Im guy johnson. This is the pulse. Were live from our European Headquarters here in london. Francine lacqua is off today. Were on the eve of an important election in the u. K. Voters going to the polls tomorrow in a small constituency. It is a lit mass test. What is the mood like in russ wra . We sent tom mckenzie to find out. No sugarcoat kg hide it. Britains main Political Parties like many of their counterparts in europe fallen out of favor. Sweet shop owner johns customer polecos official forecasts. An overwhelming win for the United Kingdom Independence Party this picture postcard own. This ones triggered by mark. When the local politician defected from the conservative party. There are ruling conservatives had banked on a growing economy and falling unemployment to keep voters onboard, but the anti immigration and ept e. U. Policies are finding support disillusionedrate with the establishment. Raising the chances of a british exit from the e. U. That is the scenario many Business Leaders say would be a disaster for britains economy and the e. U. They will be hoping the recent ove medicals away by 2015. Melts away by 2015. The critical election for David Cameron but it is also the fact that it is so close to a general election that makes it doubly interesting. Run us through why this is an important argument. Right, this is important because this could see the u. K. Independence party which five years ago was not taken seriously, winning its second seat in parliament. The way it won will have won both of these seat sfs it wins this seat is with m. P. s defecting to ukip which is dangerous to David Cameron. Effectively, it destabilizes the party. How many more potential depect ofs are there . Defectors are there . If ukip wins by a large margin, will we see more defections . There is a 50 50 chance there will be two more before the election. That is really destabilizing for conservative party. What is a big win here, though . Election votes tend to be more protest votes than government changing votes. Election is the chance to kick the government for free. Here is the joy you here is a bonus. You get to kick the labor party as well. What could be more attractive . More than 10 . Right. By less than that and here is the question. To the toris take rochester back in 2015 in the general election because then they will say you are electing a government. Youre not just picking the government. If it is a narrow win, the toris will be going around the tory whips who are responsible for discipline saying you dont hold it. Mark wont hold it in the he al election and when doesnt hold it, well tack it back. There is this lovely line in the office. Every tory m. P. Who lost his seat was found a job. Some of them were not great jobs. Some of them were running the but they all got a job. Thats what we can do for you because we are the tory whips office. There is a lot of threats going on at the moment. A lot of people in the conservative party are getting nervous. That is the kind of the parochial kind of issue of what is going on. This has significant implications what that isfect of the rising ukip been . To take britain closer to the exit door in the European Union. As ukip rose, last year, he promised a referendum. He did not want to be specific about what he would demand efore that referendum. David cameron said he would do something on immigration and he has now allowed it to get out and it is fairly clear that he is going to have to ask for, if he has this renegotiation, he is going to have to ask for some kind of stop to europeanFree Movement. That is not easy. That may it is possible to plot a course where David Cameron is still Prime Minister in 2015. Announces he is having a referendum. Does the renegotiation. Doesnt get enough on Free Movement and is forced to be arguing for britain leaving the European Union. Something he has been pretty clear he does not want to do. Each of those each of these al steps is taking britain closer to the exit door. I can draw you a path that britain is out of the European Union. Thank you very much on that note. Well leave it. Still ahead, a bloomberg exclusive with Francine Lacqua speaking to the generali c. E. O. See what he has to say about flat lining european growth. re going speak with finsburys chairman roland rudd. Good morning, everybody. Welcome back. You are watching the pulse. Francine lacqua is off today. She will be back next week. Lets talk about what has been happening with cable. The british pound surging. Bouncing over the last hour. The reasons for that is that the minutes of the bank of england the margin a little bit more than the line we got last week and also some of the comments we had from carney. A little bit of a move in the terling as well. If you take a more broad longterm chart, we are still that the first rate hike is still being pushed further out to 2015. Lets move on. Lets talk about a bloomberg exclusive. Francine lacqua off today but last night speaking to the c. E. O. Of generali, mario greco. She talked about his companys exposure to russia. Were getting used to this world now. When the crisis started we all wondered when this crisis would finish. We guessed that the crisis could finish somewhere between 2015 and 20 sl. How the we start thinking that it could be later than that. Europe needs growth. I think we all agree on that. It is back to politicians to find ways to restore growth in europe. All of europe is suffering. Germany included. For lack of growth and political initiatives. That is the we cannot solve it. We can struggle through it for some more years. Hopefully we will find a way to move europe outside of this corner where it is today. Do you worry about deflation . Desflation i guess the should be the ultimate worry. We could really get stuck with no grothse. It is. On the other side, i think it is important to remind each other that europe is the biggest Insurance Market in the world. From the standpoint of if it europe, im sure that it has worked. A big economy if we consider europe as one economy. Second biggest economy for Insurance Companies in the world. It is very stable. I hope that deflation wont such a scary thing as it is today in the next years. That the Government Intervention will help us. We spoke about this before. Do you still see italian discounts because youre an atalian company . That is possible. I would say more broadly that there is a european discount. We are opening our share of the business to and americans coming into our and hopefully have other than ats represented in our shareholder business. 90 of our business is europe. Very much we hope that the perception in europe will change. But we see also that in terms of who we are, now, shareholders investors are understanding us much better. Developing trust and confidence. They are entering you are our shareholder basis. What do you think of russia . Last time we spoke, it was a long time ago. Feels like a long time. Possibly a year ago. Now world has completely changed, now especially in that part of the region. Yeah, russia, it is a big issue because it is adds risk to deflation of europe. Because the Energy Crisis in the energy depends on supplies from russia. It doesnt help in this scenario, also to have that situation. Were not exposed to russia unless for a Financial Investment and we have a Russian Insurance Company which we from the past. Russia is a big market for Financial Services, insurance included but it is not a very open market these days. The c. E. O. Of generali talking to Francine Lacqua. He wrapped up on russia there. Lets stay with russia and look at who you the russian president plans to count even with sanctions and falling oil prices. How is he going do it . Bloomberg news got some insight on the kremlins economic policy. Ryan chilcote joins us to talk about what turned out to be a fairly critical meeting. What went on . Last month, the middle of the month, the russian president sat down for his first major meeting with his Economic Team in several months. The commi economy minister painted a picture of gloom and doom and said the russian economy is teetering on the edge. The ruble is plummeting. Get rid ion here is to of the sanctions. The russian president said do you have any good way how to do that . The economy minister said well, we were hoping you did. O. They came back several days later and gave the russian president two days. Stimulus for the economy. Basically governmentsponsored projects to get infrastructure going or a plan they called the initiative which was basically a way of sugarcoating the idea of cracking down on corruption. They were a bit stunned when he said lets go for that though he said it should be called economic freedom. What does this mean . In reality what are we talking about here . Yeah, so were going to have to wait for details when he addresses the russian parliament. Thats when we understand we will hear a lot more about this in december. People have been waiting for years in russia. The most corrupt major economy. 127th according to Transparency International worst economy for corruption in world. What were talking about is going after that. That doesnt mean that he has to put everyone in jail. He doesnt have to arrest number. Changes the way people do business. Effectively. What you can do is remove the opportunity for people to put their hand in the cookie jar to be corrupt. Separate the state from business. Remover regulation because it is when the fire inspectors and the police and the prosecutors arrive that they are allowed that next extort a bribe. So you remove that. Now a lot of people say this is impossible. That is the very sort of essence of the russian state right now, but if there is one person that can do it, it is the russian president. He has complained that this is something he hasnt tackled and i think there is a sense that dissensions are in place for a lot longer than they thought. The depreciation of the ruble shocked everybody. Short of raising tax or spending more money that they dont have, what are you going to do . The former finance minister extremely authoritative, well liked, still a member of the president s economy team said the only real way to go forward if you dont want to increase spending is to cut corruption. There are a lot of people out there that will say this is laughable. President putin has been in power 14 years. If he wanted to cut corruption, he could have done it. We have seen him attempt and reinvent himself before. So watch. We were talking about clouds in last hour. Were talking about Silver Linings now. Thanks. Coming up, a privacy push. Whatsapp preventing s privacy push. Details after the break. 23 minutes past the hour. Welcome back. Time for a beer check. Brewers, big brewers down today. Yesterday the British Parliament voted effectively against government to let british pubs buy beer from any supplier. Why wouldnt they be able to do this . Well, for the last 400 years, brewerries have owned pubs. Those pubs have had to buy the beer from the brewery. It allows the landlords to make up their own minds as to which beer they will buy. This is the regulation in the pub market. You can see the effect s of that eregulation. Deregulation. Spirits all down fairly aggressively today as a result of what happened yesterday in parliament. Lets go from old school to new school. Whatsapp is adding data encryption so users instant messages cant be deciphered by governments or government agencies. There has been criticism around the world. Caroline hyde joins us now. Is this about hackers or the n. S. A. . It is about both im sure. This is endtoend encryption. Before your messages were protected as they went from you to the whatsapp server. They will be scrambled by a key encrippings key. So that encryption key. No one, even whatsapp will be able to read your messages at he moment. Theoretically, it is the most messaging app. At the moment, there are limitations. Only on an detroit. Ot your on android. Your messages will be and meant to be the largest platform that has ever used this sort of scrabble bling. Scrambling. It is much easier now. Terrorists may be get a free pass. How seriously are they addressing this issue . Are they talking about that issue is i dont think whatsapp is at the moment. The chief executive, the founder of whatsapp, what was bought for 22 billion by facebook. He was brought up in the soviet ukraine in the 1980s and was aware of being monitored by the k. G. B. He doesnt care about the institution wanting your data for good reasons. This is why the germans take a different view than the americans. They have a history of dealing with all of these other organizations that break down your privacy. It is a very different viewpoint. Youre exactly right. I think this is a win for the privacy advocate. Not good news for the f. B. I. Or other agencies because it makes criminal investigations that much harder. They have been speaking to the likes of the f. B. I. Saying give us a front door way getting to they see messages. At the moment, whatsapp cant access the messages. There is no front door or back door way. At the moment, what is having the it is much stronger than facebook and apple and google have at the moment but they are all working on it. Thes going to mean more revenue if they are going to be more secure. Were going to take a break asm after this, were going to talk about leaving your money across borders. Well do fa in a moment. That in a moment. Welcome back. Youre watching the pulse live from our headquarters in london. Im guy johnson. Francine lacqua has the day off today. These are the Bloomberg Top headlines. Measure to pass the keystone xl pipeline failed to pass the u. S. Senate. Conservatives vow to bring it back to the floor next year when they have a majority in the enate. Ab certain delaying sales tax increase and boost in stimulus to aid recovery. There is an election coming up. Frances National Financial prosecutor has opened a probe at b. N. P. Paribas. The investigation started in november. A spokesperson for the Prosecutors Office has nod said which individuals may be involved. Those are the headlines. Lets get on the the markets. This is state of play in europe. It is pretty mixed. The ibex down. Solid gains here in frankfurt now standing on top of the dax. The ftse the share index, interesting moves there. U. K. Policy giving us plenty of stories. Yesterday, the u. K. Parliament will let pubs buy beer from any supplier. Really taking some pain in the ftse share index now. He bank of japan said nothing. Coming off the back of five days of losses just after 75. Bank of england minutes. Were they redundant . Nonevent isnt the not quite. They are beginning to raise questions about potential inflation pressures. Everyone else is talking about deflation. Tight engine the labor market and what happens. A gainor. 25 . That one just off lows for the year. Yeah. Watching that one carefully. Thanks very much indeed. Jonathan ferro. Tom keion in new york getting himself keene getting ready for his show ahead. You saw the Keystone Pipeline and immigration nunled to the center. Phil mattingly and peter cook will join us from washington. Saunders ng lizanne will join us. The market that jonathan just spoke about. Will link that into the equity market. We have a nice dove tail of equity into the market. Rob walter will join us as we look at the continued financial repression for savers. A big subject for most people. Thank you very much for that. Tom, thank you very much indeed. Mr. Keene and his team shortly ere on bloomberg television. These three heavy hitters are backing transferwise. The Company Moves money internationally for less than conventional banks. They are looking for backing from regulators as well. Trying to make businesses more transparent as well. Lets bring in transferwise cofounder. Good morning. You want more transparency. You want the public to understand that when they move money from a to b across borders how and what they are paying for . Give me lie of the land in terms of the lands scape. Imagine going to the airport and you are flying to france buying your euros there. They charge up to 15 for doing this and they never it will you about it. Launching a Campaign Today that will put an end to all the fees. You should always know what youre paying for and how much. It is fairly obvious. It is going to benefit the such degree of consumer protection. Ok. But youre in this business as well. You offer this level of transparency already . Yes, we do. We typically we charge 10 times less than the bank or broker. This is when i come to you, i want to move money from my british bank account to my french bank account. Obviously that means exchanging british pounds into euros. I would come to you . Website. Use use our nteryour details enter your debit card. That sounds like fairly straurd deal. Have you talked straightforward deal. Have you talked to the regulators . How hard is it going to be . How easy is it going to be . You can sign the petition. On the lots of reck lators. The regulators are very much in favor of startups. They are all very supportive. Now we need to get more momentum to make sure that we get to a position where u. K. Has the best position for consumers. The is something intech is keen to take advantage of it. Do you get a better hearing than you do if you a bank . Youre trying to make changes. Do you think actually people are more willing to listen as a result of kind of what you are and where youre coming from . I think a little bit of risk is true. I do think that the u. K. Government is very smart and thinking where is the growth coming from in the future . Also, the government is also listening to banks very much. They should. They are a big part of the economy. But i think you need to apply a different a different hearing mechanism. When you listen to banks you need to take away certain things and control certain things. If you talk to startus you need to do certain things different. Im curious. You only have to deal with the British Government to get access to the rest of europe. How does regulatory story work and how would bit if you had to deal with brussels and london . You just have to deal with one. How would it actually work if you tried to make your business work . The larger unified regulatory system. Compared to the u. S. When you have to work in every state. Wrnk that is a great advantage n the u. K. And europe. Every company has to work with a u. K. Regular lator, with brussels. I think that puts the u. K. In a more competitive situation. Would you move your business as a result of that . No, we would not mover our business. I think the u. K. Is great place to be. What is the biggest problem you face right now in terms of a lot of startups, talking about getting the right staff. Visas. They talk about trying to find the right place for their business in terms of of the gee graph cal location. Whether you are a startup or large company, Everybody Needs to put lots of into hiring. I dont think that changes on he size you are where you are. Were in the business of changing peoples perceptions and changing their behavior from using banks and Going Special companies that do the same job in a much better way. Thank you very much indeed. Very nice to see you. Thanks for stopping by. Coming up, well get a business view in europe. Roland rudd up next. Good morning, everybody. Welcome back. Youre watching the pulse. Concerns over what is increase euro skepticism amongst voters in the u. K. Earlier on we heard from visitors to britain. Joining us now is roland rudd. In support to have u. K. s membership of the e. U. Good morning. Britains for britain say the business, actually 16 of them support the idea of an aggressive renegotiation. If we dont get what we want, were out. Is that the sense you get . Are ar absolutely not. Thats not how business works in the real world. Nobody wants an aggressive negotiation. An aggressive negotiation wouldnt work. They want more reform. The agenda that was announced recently under the new commission is very much in line with what britain wants. We want to complete the Single Market. Could be worth over 100 billion to britain alone. Of course we want more reform. Thats where business is. But every poll, not just done by the c. B. I. Or i. O. D. , more business wants in. Im talking about big and small business. No question the businesses want to be in the you and see more reform. There is an internal debate about where we should sit within the e. U. And what we want from the e. U. When we got to the scottish referendum, business was silent until the la minute. We need a healthy debate. It is a very good thing to talk about the type of reform we want in the European Union. I dont think there is a debate about whether we should be in. What type of europe we have and how that evolves is a good point. I think the big lesson that came out of the scottish referendum, if you leave it to late, we had a near death experience. We have to speak out earlier, louder and make these point vrs clear in a very more transparent way and in a way that people can actually hear and not wait until the last minute like we did with scotland. The way it worked was too close for comfort. Debates are being held. It strikes me that the Public Discourse is largely centered around immigration and the business debate is centered around rules and regulation and red tape. The problem is the two of those are being forced together. Is that a good thing or a bad thing is that dangerous . Are we mixing two things up that shouldnt be mixed up . We are. If get to the points that everyone agrees on, which is that we have to be in the Single Market around to be in the Single Market, you basically collapse 28 rules and regulations for one set of regulations that are important and have to be enforced. If we were to have a on the Free Movement of people, who is to say that other member state whors not so keen on the market say we will have a carve out on the iraqi freedom of movement of good. You cant do it. It actually is not achievable. T would be mad for us. When we cap any restraksestrixes on e. U. , migration following the rochester election. We wont get it and will alienate our partners and ultimately if you keep banging on on that basic point youll leave the European Union which will be Economic Disaster for britain. Guest we had on earlier said he felt the debate was toxic. Does that mean that business should stay away from it . It strikes me that immigration is central to the business story in britain. It is about getting the right people for the right jobs. Most imgrants from the e. U. Are net contributors to the economy. We have seen data on that recently, yet this is something that particularly immigration that makes British Business nervous talking about this. I think British Business has to talk about it and we have to get the facts out there. There was a good report that showed that net contribution that is been around 20 billion to british economy. It is not just about economics. It is also about the sort of brirnt we live britain we live in and the sort of britain we should embrace and there are issues about whether there will be a spike of immigrants in particular areas and where government hasnt been as accommodating in terms of resources into those areas. You to have some sensitivity. I think people want to know there are controls in terms of illegal immigration. There are important issues to address but the Central Point is you can only have membership of the European Union with actually having an understanding. You have a Free Movement of people. You cant change that in any shape or form. Do you worry that the rise of the immigration debate is affecting globalization, because if that is the case, it is very hard to change. It is very hard to fight against because globalization and the forces of which are something that are blowing through every economy now and britain is going to be affected as is every other economy is at the moment. Do you worry this is not a debate about europe or immigration. This is a debate about globalization . To some extent. We is that you being played out in scotland during the referendum. The s p got their biggest vote. But interestingly, in all the s p areas, the majority of people voted to stay part of the union. So it is not a question of panicking. It is a question of understanding it. There is a lot of alienation out there and that does get fed into different areas. S p in scotland. Ukip here. You have to be very clear with explain why es and it has been good for britain. Does business need to be very clear . In scotland t. Prices are going to go up. If that happens, it happens. I agree with you. The reason that people actually voted to stay part of the union wasnt because of a love of great britain. It was because economically it was too risky to do otherwise. The same argument i think will play in the rest of the u. K. It wont be a level European Union. It will be the fact that it is too risky. How do you get the message across . You mustnt scare people because if you scare people you end up allowing the other side to have ulet sort of idealism and excitement. You have to be all of the idealism and excitement. You have to explain how the European Union is changing and how it is going to look in the future. We wont leave britain be a britain with a huge influence in world. We will be a shrunken little england. Thank you. Coming up, the polaroid makes a comeback. Looking to save the old school camera. That story after the break. Welcome back, everyone. Youre watching the pulse live on bloomberg television. Streeping on your ipad and on bloomberg. Com. Olaroid cameras used to be ubiqutious. Every family had one almost. An impossible project set in to save the final polaroid film factory from being sold off. Smile, everybody. They were the cameras used by everyone. Instant analog photography a loued the pictures to develop in your hands but the rise of digital led to the fall of the polaroid. The design and built this equipment. This factory in the neither lands was the last polaroid factory on the planet making film. It was due to be sold off when polaroid began liquidating its assets if twates. Enter the in 2008. Enter the impossible project. When polaroid stopped making ilm, the impossible started. Evented 200 million cameras from being rendered useless. Analog instant film is the worlds most chemically complicated man made project. Product. 75 uptick in the 18thatyearold customers just during this year. Which is really fueled a 30 growth in the company year onyear. Celebities have something to do with insignificant photography. After all hackers cant very well steal a polaroid from your Cloud Computing account. It is more than just security that is bringing customers back. These are customers and young people who have been born and raised within the Digital Imaging world. When they take that picture, they not only are capturing the image, but they are watching it develop and seeing all the magic of all the chemistry going on. And making the impossible ossible. Every family had one. I remember them very, very well. Lets talk about the currency market. Lets find out what is going on there. Lets start with the pound. Lets talk about the rise we have seen in the cable rate. As you can see the pound up 1. 5656. Jon here telling us about why this is and the inflation and the growth prospects. Our economist from barclays said you could end up with a story where you see actually the bank of england raising rates much earlier than the market is currently anticipating or further down the road. Were certainly do the left hand side of that bell curve. It is much more maybe on the maybe we were talking about this earlier. The pound 1. 5658. Lets see whats happening the yen as well. This is whats happening with the yen on a medium term basis after kuroda talking. A 10 move in dollar yen over the last month. Part of the debate happening at the fed. The fomc minutes will be out later on. Will we hear more about growth or a low inflationary environment . Well have plenty of analysis here on bloomberg television. Talking about that kind of analysis, going to carry on with it now. Surveillance is up next live from new york with tom keene and the team. Follow this team on 2013 at guy johnson tv and flacqua. See you tomorrow. This is bloomberg surveillance. Senator landrieu of louisiana is crushed when her own party. The democrats win the battle, republicans look for a Keystone Pipeline war in 2015. Call it one great use of cash higher, andrge ever Mainstream Media will be on the edge of their collective seats. John malone holds a media day at his liberty media. Good morning, everyone. This is bloomberg surveillance. Our worlde from headquarters. It is wednesday, november 19. I am tom keene, joining me brendan greeley, once again back to back julie hyman in for scarlet fu. Senate supporters of the Keystone Pipeline came up one vote short. 6941 in favor of the controversial project. Backers needed 60 votes. It was a blow to louisiana senator mary landrieu. Wanted deep approval to boost her reelection chances but only 14 democrats voted in favor. Here is landrieu. I did not ask harry