Transcripts For BLOOMBERG The Pulse 20141202

Chris good morning. You are watching the pulse. I am guy johnson. We will both be here tomorrow. Oil is plunging and gas prices are dropping. Angelae chancellor merkel is hedging. She was sure german Auto Industry is becoming a leader in electronic vehicles. Shes laying get out today. Right now in berlin is where she is talking. Hans nichols is in berlin to talk to us about what Angela Merkels goals are. Electric vehicles and she sees this as a big driver for germany. Excuse the pun. We can do plenty of puns. Ands toward green power bring it to the autobahn. Her challenge really is to start of this german drivers to go electric. How is she going to do that . A tax rebate according to local press. The cost will be rebated back to companies that buy fleet. Of some years you almost 1 3 german sales of buying for the customers which makes up the sales. Heres what you end up seeing. The goal is to explain electric vehicles by 2030. Quite an increase. She was a see 40 fewer of carbon cuts for transportation sector. To go onas a long way the electrical vehicle segment. Take a look at the leaders in europe. This 2013. Nevertheless at the top followed by france and norway. Germany is down at the bottom. 0 vehicles purchased. It does not mean that the rebate Auto Companies are not investing and spending over the weekend, reports that daimler plans to spend 12,000,000,00014,000,000,000. While bmw and that will make their versions of the three available in electrical models. There seems to be huge gap. With the Auto Companies talk about and whats in the demand is pretty low. You look at global sales. Yearllion vehicles sold a even if you do to one million electric, thats only a fraction. I know up in london, there will be exciting news. From somewhereat it useless to another spot and have introduce it here in berlin and you have hard to go in brooklyn. Part of the future. Guy, i know you are a trained guide. You do not bother to drive real i do not. It is electric. You. Hans nichols all Angela Merkel speech she is delivered as we speak in berlin on electric vehicles. Other Corporate News were following. Aviva has agreed to buy friends life. The takeover by britains secondlargest insurance is the industrys largest in 15 years. That is the importance. Matt campbell joins us with more. We knew it was going to happen. It has been flagged it will happen. ,n terms of the drivers everybody is speculating it is ut the fact that the change the rules or cash flow or a Balance Sheet issue. Why is this happening . A combination of all of these factors. The background, the macro context if you like, is the decision by the chancellor George Osborne to make it no longer mandatory for people to buy a noise with their pension. That is really change the business model. Consumers have more choice and have to compete harder for these pensions pounds as it works. The other thing is the u. K. Is a mature market for insurance. In a mature market, we expect to see consolidation. What is interesting is consolidation and in the u. K. Aviva is choosing to spend its currency and shares are in a market deals rather than international dell. Prudential has made asia is priority and expand outside of into a faster growing market. And that is were we will be watching the investor reaction, whether aviva they think is a good move by to bulk up at home at the expense of doing so abroad. What are the downsides and upsize . More money into the u. K. Which is a butcher market. If the investor reaction start out this deal was fairly negative. Today it looks like aviva shares were up slightly and that the be a reflection of the final price is seen as not being less than excessive. Significant premium of but not astronomical premium. It is a good thing. The other outside is it improves cash flow for aviva and allows it to support dividend. It is dividend stocks. This cash yield rather than growth. It is all about and,. On all left income on all levels. Get a deal done. Businesseshese two together. And they are Big Companies and putting them together and making the execution is where the challenge lies. There are a lot of people. Thereve been suggestions, there will be layoffs at friends life after the deal closed and going to be controversial. The big high street names in the u. K. Always get a very well covered in the mainstream press, not just business press. That means layoffs attract attention perhaps that aviva would rather not be getting. That will be a problem. Case,is making the something they need to do to shore up their home market to be the most a leading or biggest Insurance Company in the u. K. Market. They are going to have to take their lumps and make the kidneys to be done. Matt campbell on the pinchruns action news from this morning. Lets turn now to what is happening in russia. The ruble gained a little bit. The first time in six days after weakening to is lowest levels in six years. Talk us through what the reaction was to yesterdays story. Some suggestion that central bank was taking action and that was denied though. It has not been denied. Unless it has been denied over the past five minutes, actually many traders and analysts today continue saying there mustve been an intervention yesterday because it was very odd the ruble started pairing is the client as much as several percent yesterday to a new record low. There was a move and many traders suggested an analyst there mustve been an intervention from the centralbank from maybe 500 million. The central bank does not comment on the jets. On this. The central bank does not comment on normally, so will not really learned. They cannot comment on the intervention. That is correct. Only the data two days later. Will wait for a couple of days. How is the average russian feeling about it . How are they starting to react . What are they doing . An increasing story of them investing into dollars . What is the story . Have been seeing an increase in conversion of rubles deposits into Foreign Exchange dollars a euro deposits. I can tell you from talking to people, ive been going to banks talking to people on the streets and average russians are not panicking yet. They dothem say that not understand why they should convert. They believe in the ruble especially since the Central Bank Governor has been encouraging people to stay in the ruble and not convert. Others, it is a political thing. They say the rubles of valuation is due to the sanctions. We are going to stay loyal to the ruble. Finance professionals and other people who understands what is going on, the ruble is down 36 versus the dollar and they have a converting their savings into dollars or euros. Thank you very much. Joining us from moscow. Stay with russia. Thats right there national gas pipeline. They have scrapped the national gas pipeline. They will move towards plans with turkey to get more fuel to that country. The 45 billion project would take a natural gas under the black sea. The eu objected to the plan because it would reduce ukraines leverage against his neighbor. Russia will focus on another black sea pipeline via turkey. Other stories we are watching. Important for images that your two. What else is on our radar . 500 Million Pounds spent on cyber monday yesterday. U. K. Percolator delivered bad news u. K. Inspector delivered bad news. Means the mail will still be obliged across the u. K. For a single price six days a week. Allows competitors to undercut in urban areas. Backs ukraine. The Parliament Vote on candidates for a new cabinet. The former Coalition Last week and the confirmations will and within a month of uncertainty followed elections are back in october. The ukraines military said a truce was reached fighting in a donetsk. Thousands of people have been killed in the have been killed. The day before George Osborne gets his statement, the man hoping to replace it has been tweeting. A referendum on all british and andership when the a risk these to stay in the eu. We need to stay a member of the european union. To walk away from our largest Single Market would be a disaster. More after the break. Coming up, we will be talking about the statements in more detail. Statementt, that last and the general election next year. What is on the table for British Business and will preview with a wish list . Good morning. You are watching the pulse. Tablet and phone. The man who could be britains next chancellor has been drawing up his about alliance. In an interview with bloomberg, ed balls spoke to Francine Lacqua about how britain benefits with a future in the eu. Need to make sure that our economy is growing at a strong way to do that we needed to stay a member of the european union. To walk away from our largest Single Market on our doorstep would be a disaster to british jobs and investments. We have to win the argument with the public of being a europe and open International Trading could also deliver for them. Feeling theple are economy is not working for working people. Had a referendum, what are the chances of the u. K. Leaving the eu . It is a real concern. I20tted to a referendum 17 when there is little or no prospect of by 2017 when there is little or no chance of prospect and in a sluggish state, pretty dangerous thing to be doing. We want to win the argument with the public to be in your and good for jobs and investment. We need reforms to make it happen. Will forms across a wide range of areas. Will forms across a wide range of areas. Reforms across a wide range of areas. Herenk business and labor are absolutely on the same side saying it would be really dangerous and britains future as an economy. You are speaking to leaders and what do they say . The guest we have one here think it is too much for a risk and why would you put yourself through it . Our partners in europe want us to stay in they have their own problems to deal with in the eurozone. They have also shown that they want to find solutions to work for all of your including britain. Reform. W we need it is hugely frustrated because it always looks to our partners, the current government is making it about only shortterm british politics. When David Cameron stormed out of the stability pact summit a it is of years ago, something margaret thatcher, tony blair and others would never do to walk away. Thought,ur partners that is blackmail. Not something we want to be a part of. Andeed to reset a relation show we could be a strong and good partner and say no when we want to. But in a constructive away. It is not possible for David Cameron to do that. Would argueway, one to keep the u. K. In the eu, the need to grow. When will that happen . I fear not as fast as any of us want. Through the phase in the eurozone to what feels like a long and drawnout chronic period of slow growth. Ed balls speaking to Francine Lacqua. Tomorrow, the man in that ed well talk to secede tomorrow. It will be freezing. They should call it though winter statement. George osborne will discuss business and talk about his economic plan is working. What is really on the table Going Forward . What osborne is selling us, British Business. Lets talk to the chief economist of the residue of directors, james. Good morning to you. Lets start off with a what ed balls was saying there. The big question that everybody wants an answer to. The next two or three years, how much uncertainty will we see . A general election coming up and a conservative party talk about a possible exit. Is it a big, long shadow . Is one of the big shadows. Is of the Biggest Challenges live within the means the government for the longerterm. How will we reduce the deficit . Texas spending cuts and obviously this government think they can do it one term and it will be taking two parliaments to get it through it is proving more difficult to read labor is backing away from reducing the debt. Proved more difficult. Labour is backing away from reducing the debt every duo believe what any of them are saying . The consensus for tax cuts and labour party at one point forgot there was a deficit to be dealt with. As a British Business, youre looking at the landscape and these are the policy with a grip. It is too bad. You have to learn how to read the politics. You need to look at the fine print. One said we are planning on a tax cut and that is the deficit is eliminated. If youre going to vote one way depend on a tax cut, through, you will be disappointed. After the same time, the opposition seems to be backing away that we will be cutting the deficit in any significant way whatsoever. Again, you have to be pretty wellversed in political talk to see what they are really saying. Iswhen you look at what happened from a business point of view into the u. K. , we have growth. What we do not appear to have is a pickup and productivity and in the wage sector. We are given this impression that the british economy is recovering but some of the key metrics you will do so would be recovered are not. Is it a chance we can answer some questions about why it is not happening . It is interesting that you said wages are not wrong and productivity and they are tied together. There seeing a pickup in past six months. Very preliminary data. The reason is because wages have been stagnating. More output on the same wage base. We pulled our members and asked are you plan on giving a pay increase. 2 3 said yes. This is a key but we are planning to do it tied to corporate performance. Tied to productivity. When we can afford it, we will give it. Who would not give up of inflation. We will not give up above inflation. When we look at the eurozone and the problems they eurozone has had, and its been the consistent award up a rice off of productivity. It is appalling. And germany might disagree that they have done. Germany never but others have. It has been a real problem in other countries. One of the key battlegrounds will be income tax. Headline grabber at the beginning of the conversation. Labor is talked about they may take it up . 50 and 50 pence to the pound. In terms of your membership, how significant is this in terms of their desire to do business in britain . The income tax to read is crucial. Year,0,000 pounds a probably a company with 1520 employees and a middle, sweet spot for your sme type company. For them income tax matters. When we pool, one of the most significant and ask them what other things youd like us to take to the chancellor . Number one is raising the threshold was which was never meant to capture policeman and teachers. Res a lot of fiscal draft drag bill into the system. Built into the system. That has been a real problem. One of the things would ask the chancellor is to triple lock the 40p threshold so its always arises. It is not to always capture more to be honest with taxpayers and thats when the big challenges of how to be honest with the test. And a time when the government is facing a significant deficit . We will see tomorrow. James sproule, chief economist. Laterl be talking more area we will be talking about what is happening and fashion. The glitz and glamour. The industry. We will talk about the importance of it after the break. Good morning. You are watching the pulse. We have got details of the russian economy minister, russia gdp to contract 0. 8 , not a massive surprise given the decline in oil prices. Energy stocks are up in the world will is bouncing back. The impact is large across the russian economy. As a result, they catch up of the ministry and we have a russianion now and the economy. The 0. 8 percent. The projection for next year. Lets talk about some of the other headlines we are watching at the Economic Growth forecast continues. The world bank cut is growth forecast for 2014 by the ebola crisis. Will expand next year. It could end up costing 32 billion. Russia and the country has escaped the natural gas pipeline facing eu opposition because of his routes with bypasses that ukraine and will move forward with plans to ship more fuel to turkey and a that withn project the natural gas under the black sea. The eu objected because it would reduce it ukraines leverage against its neighbor. Russia will focus on using a different black sea pipeline to turkey. Hedge funds are at the best prices the financial crisis from the Hedge Fund Research group. Hedge funds have posted their worst average performances since 2011 returning 2 so far this year. Now, lets move on. 20 of cash to be an investor or at least you used to. The israeli crowned funny crowd funding want to help invest in startups chosen by some of the countrys top earlystage investors. Elliott gotkine has more. Thank you. I am joined by a Founding Partner of i angels. Crowd funding platform investments, they are not new. In israel we have one that is well known. How is yours different . What we do is provide individual investors from all over the world with access to israeli hightech which is backed by the topperforming Angel Investors in the industry. We collaborate with the topperforming angels and will provide access to their exclusive Investment Opportunities under the exact same terms with significantly lower tickets. You are piggybacking on somebody else . Not too dissimilar to the way your husband does for stock market investing. Definitely. Us. Was an inspiration for we see below performing significantly better when they are following people who know what they are doing and our Angel Investors are considered smartest people in the room as savvy investors and these are their day jobs. They have had successes. Of people toandful enjoy most of the items in the come out. Them, wering with believe our community of investors are going to have a much higher success rate. Cruise year invested 2. 5 million jobs in 12 companies. One is called travelers box. Chris travelers box travelers box have a kiosk they place at airports where travelers can drop all of their change and converted to virtual currency. You are going to be able to we deem it via gift card but also you will be able to donate as well. They are not just for anybody. Is a memo of 5 it is a minimum of 500,000 but you need more to invest a you need to know that people can afford to lose it. It is to our minimum ticket significantomething but we educate our investors to diversify and crates a portfolio. Not just invest one time. Into people will have a capacity of 100,000 which will be the class angel investment, theyre going to bring to invest in 10 or 20 copies and create a portfolio. Is the only way. What is the objective . Move up to later Stage Funding . Where do you see iangels going . Web a big vision. Will try to develop more features. We have a big vision. To allow investors to come in and out of deals under the umbrella, realtime investment tracking and more social and transparency through the system and also, take it to larger rounds and have a footprint across the lifecycle of the company during different stages. In terms of geography, and amazing edge in is room. A booming ecosystem. It is very unique in terms of the dna at talent. We definitely have an edge. If were considering to go to other geographies, will make sure the quality of deals we provide to our investors is maintained. That would be the next step. A very, very quickly. You can actually now use iangels to invest . It is the perfect time to conduct this interview. Yet so we launched iangels rounds on the iangels form. A rise in from our community to invest as so wouldve opened this opportunity to invest in iangels to our platform some suggest you go to www. Iangels. Thank you very much for joining us. For now, i will hand it back to you. Thank you for much. Interesting stuff. Elliott gotkine joining us. Well talk more monday tech story a little bit later on. Well talk more about the tech story a little bit later on. The first billionaire to come out of silicon alley, out of new york. Started off in photos now getting into the video story. We will talk to him a little bit later on about his business and also was happening and they u. K. To fashion. Fashion has been a growth industry for the u. K. For quite some time even drive to the financial crisis. This value is up 22 since 2009. The British Fashion awards were held last night. Caroline hyde was on the red carpet. Talk a little business with the designers and celebrities. A nonevent. Be it is not a big event. Story aboutl us the British Fashion and how it is a big event when it comes to economics. And how the British Fashion council has put its heart and soul into fostering the growth. Designer ie merging managed to cover woo them. They all said what stands out for British Fashion is the amount of mentoring going on and focus on helping designers grow. The Business Environment has not been that great of late. Industry, the growth 46 billion pounds is how much fashion in total asked to the economy. You have the supply chain industries, spending. Interestingly teaming of celebrities. To woo tommanaged ford. Take a listen. Tics this country shows this country shows where [indiscernible] unfortunately, that was full of green. Green. Ip we will try to get that particular piece. We shall listen to the likes of philip green. Got George Osborne coming up. How is he helping foster business and where is written in backing up versus the rest of an, the other fashion houses . Be [indiscernible] bring new talent out. [indiscernible] one thing you would help with businesses . [indiscernible] it is working now. [indiscernible] no free giveaways. When it seemed he will like to do is control the weather. If we can be colder, i was trying to get to see how things are going. He seems very positive. Budget tomorrow in the middle of december. I think you try to control the weather. By this naming his budget statement. And aggravating retailers. Heres another great fashion icon and there was a savvy businessman. Victoria beckham. Brand of the year and she has proved her naysayers wrong. People were saying how can someone who never gave lowballer could be good at design . People were sad how can someone who married a footballer be good at design . She is killing it. That thing she kept saying it is about the future and the next generation. Take a listen. We should definitely be supporting young talent. And encouraging young people to really fulfill their dreams. Fashion, that if they have a passion, focus and do it. It is very important. On universities and talk to the students. If i can do this, you can do this. Good branda rather to begin with. Relatively famous and able to springboard. She is going to universities and schools. 800,000 jobs are now supported by the fashion industry. Its a really growth trajectory. Thats why you mentioned that the glitz and glamour you had over for the event. Harry styles was there. When the key exports of all is an winter who anna wintour, vogue editor. Recognized by the queen. Fantastic stuff. It looks like quite an event to say the least. Using a nonevent a few years ago. So much money invested. Well talk about it later. Caroline hyde, thank you. Coming up, looking at what is happening with the oil prices. Weve already hit a fiveyear low and investors are anticipating we could go lower from here. Well discuss how opec is changing and again. We will talk to bank of americas key oil person. 45 minutes past the hour. Welcome back. The business of opec changing its role. Prices have dropped. What is going on and what happens next . The lowest levels seen in five years. Adopting a wait and see approach as you michelle continues to have a big impact as u. S. Shall continue to have a big impact. Lets get the take. Good morning. Good morning. The move will be fairly aggressive area. Where is the floor and how long will we stay there . These are all key questions. What basically happened is opec has been dissolved. Arabia, for now. Saudi arabia has decided against some of the other members, the former members that it wants to drive producers out of business. This was not a scenario we had envisioned. Di would have a small cut. There have not been in their interest. They encouraged to much u. S. Production. Equally, we do not think they would hurt themselves as much as they have. In any event, the approach they are taking effectively means a driving up u. S. Producers. Oil production costs are not uniform at all across the u. S. And we will need to see lower prices because the response is likely to be slow and take between 612 months before they react. For now, it will be lower prices from it may hit 60 a barrel. Conceivable that it could go below 60 a barrel. Great for the economy. Hit a data that would significant decline and the u. S. The 36 months, maybe a year lag. For the new guy, the new producer . Am a producer in the states and ive been around as things are already done, how low can i take the price . Where does it go . This is where it gets difficult. We know in some areas especially in the production cost and production is very low, 40 a barrel. It would take a while. For now. Ing those guys however, we have to remember of production isale taken out by private producers. We refer to them as the moms and pops. Some of those guys, they literally they have a Checking Account with bank of america. We do things that acid that are prices areave following, it will slow britain down. You need to keep in mind it is an industry. Any decline rates and the first , we did not need to see a large number of producers laying down their rakes. All we need to see is a slowdown in drilling that will eventually have an impact on total production. And the impact will likely take between 612. Remember, the oversupply in the market is hit. Soltis not stabilizing, thats a first in a very long time. It is not taking barrels, we will see inventory drive and storage. A big lag . It is and it will drive prices lower for now. Its a logo like natural gas. Very simple. It is like natural gas. And very fickle. If i am to project my business forward, i do not think the average price would be were having the same discussion internally. It is very difficult. The lower prices now, the higher they will go eventually. That timing will probably come in the second half of next year. If we go sharply lower now and really hurts a lot of the u. S. Producers and they lay it down and stop investing, we will act in the margin slow to investment into canadian, which have very high costs. Production. Russian in prices could be aggressive. Not just because of demand, massive stimulus to Global Growth to emerging markets and asia and china the foremost but india also. A huge windfall for many of these consumers and many governments around the world. The volatility. That is our big theme. Riskber the geopolitical is still in the market. Something to happen tomorrow. Solved in the middle east or syria and libya and Islamic State area we could still see prices trading in a very wide range effectively. It looks like an interesting couple years for you guys. Sabine schels from bank of America Merrill lynch. Not easy being green. Angela merkel commits to oiltric cars despite lower price we have been talking about. We discussed this in our new Energy Sector after the break. Good morning. Welcome back. Lets hold our new energy. Angela merkel has been talking about electric cars. Hans nichols joins us from berlin. It is a detailed subject. What did she have to say . She put a goal, a number. Angela merkel talking green cars this morning in berlin. She wants one million of them on the road in germany by 2020. Right now, only 27,000 electric cars on the road in germany. Quite a ways to go. Heres whats in the local press has been saying. Her government is considering a 50 tax rebate for companies that buy electric. If you do the math the government will of the, underwriting half a million vehicles. They want to reach a goal by 2030. Here is the thing. Germany from his auto production actually lags behind electrical vehicles, hybrid vehicles on the road. These are 2013 on what were looking at. Pretty low. Germany is a lot lower but behind netherlands and france. If chinaeople say decided go and the electric is in a bit way it will level the playing field. She needs to get these guys investing. She needs to get them invest in two ways, batteries, a huge component parts. And in the fray. Youve seen bmw with the all fiber frame. They are building it in Washington State because the energy is cheaper. Guy . Will take a break. Fashion and tech. We will see you there. That is the biggest deal the Insurance Industry has seen in 15 years. The it is too big of a risk for British Business. Written on the red carpet, models and designers and powerbrokers turnout for the British Fashion awards. We will talk about the fashion business of fashion. Good morning. Welcome to the pulse. We are live from bloomberg headquarters in london. Lets get straight into our top corporate story. They have agreed to buy friends life. This is the takeover by britains secondlargest insurer of one of its smaller rivals. This is the biggest deal we have seen in years. To many peopleg because its going to change the way they do their pensions. It doesnt sound exciting from the getgo, that it will have a thing for our pensions. It always gets people interested in dealmaking in the insurance pace. Its worth it. This the biggest insurer, it is the result of a very significant double policy decision by the government to make it possible to do other things with your pension than by annuities resulting in these companies that have products that consumers are going to want to buy as opposed to being forced to buy. This is a viva looking for a way to shore up its business in the u. K. In thisthe biggest deal space in a decade and a half. They are doubling down on the u. K. Credential is the big rival. They have done very well in an expansion. With this deal, it is very much going the other way. This is the most important place to bulk up and get bigger. Investor reaction has been a little bit mixed. We have some people saying in the market that they dont understand the rationale. Of this is a rights issue in disguise. Cash flows will be coming into the new company and heading off efforts for the need to new debt. Investor sentiment is not uniformly positive, aviva are up today on the back of some of the comments. Whether this will pay off in the long run is anyones guess. Aviva is making its bet and the bet is the u. K. They can put these two companies together. This sounds like an easy thing to do. We will buy you and find a way around dealing with the annuity issue. These are Big Companies with and grindingms them together is going to be something that is going to be a massive challenge for years to come. The challenge starts now. Integration is going to be a significant process for these companies. They have very complicated i. T. Systems and things dont mess together. There is also a headcount issue. Theyre very sand when it that they are going to do layoffs. That is always controversial when there are concerns about the economic recovery in the u. K. Heading into an election next bring. These are brands at the person on the street does know about. Everybody has a pension or insurance. This is going to be a rough ride ahead when this integration proceeds. Matt, thank you very much indeed. Matt campbell with the news in the u. K. Lets head east. The ruble is trading toward record lows. The Economy Ministry has said that the gp will contract in 2015 by 0. 8 . We are joined from moscow. Good morning to you. Was this downgrading of Economic Growth that we have seen in the last hour a surprise or does this bring us in line with what everybody else expects . Absolutely. Everybody basically from a standard and forbes have been warning about this. They are adding to economic fears and the recent oil problems. They have lost 13 last week. This was after the opec decision not to cut production. Ruble is extremely sensitive to this as is the entire russian dependent onh is i oil and natural gas revenues. Talk about the political story behind all this. You talk about what Vladimir Putin is doing. Clearly, there is a big political story behind all this. His decisions at the moment about the currency and oil are very important for the average person on the street. Strategy. Rough this what is he trying to achieve . What is the game the russians will have to play . If they are doing the first half of the year, putins actions in crimea and ukraine and sanctions played a huge role in the rubles decline. Ever that, i would say since the end of september, the ruble has been driven by other factors. The slowing economy. Now by the oil tumble which is not controlled by Vladimir Putins actions. Price isin the oil much more important for the ruble and even the credit default is the highest since 2009. In march. That the annexation of crimea. Dangerous thing in the eyes of investors. Oil is much more important to the russian economy. Thank you very much. She is joining us from moscow. The heo could be is drawing up his economic battle lines. Printing did an interview with him yesterday. Francine did an interview with him yesterday. One of the critical factors in that relationship is growth in the euro zone. We need to make sure that our economy is growing in a strong and stable way. To do that we need to stay a member of the european union. Europe has got to reform. To walk away from our biggest market would be a disaster for british jobs and investments. Weve also got to win the argument with the public for being in europe and open up training to deliver family budgets. I think people are feeling that our economy is not working for working people. By having a referendum, what are the chances of u. K. Leaving the eu . Its a real risk. Referendum, to a there is little or no prospect of getting reform at a time when the eurozone is still in a sluggish state, that is a dangerous thing to be doing. We want to win the argument with the public. Being in europe is good for jobs and investment. We need reforms to make that happen. Reforms are across a wide range of area. Cameronsat david proposal for 2017 referendum speaks more to his weakness and division in the conservative party than anything with the British National interest. Business and labor are on the same side. They say that it is dangerous for writtens future and the economy. What do the other leaders say . The guests we have on here think this is a huge risk. Why would you put yourself through this . I think europe wants to stay. They have their own problems to deal with in the eurozone. Theyve shown through the years that they want to find solutions for all of europe, including britain. They dont want us to leave. They need reform. They are hugely frustrated. We look to our European Partners and the current government is making this only about shortterm british politics. When David Cameron stormed out of the stability pact summit a couple of years ago, that was something that his predecessors would have never done, just to walk away. Blackmail politics. Its not something that we want to be part of. We want to reset our partnerships. We will say no when we need to. But we want to do it in a constructive way. Impossible for David Cameron to be that Prime Minister. The eu needs to grow. When let happen . As any of ust want. As we move from the crisis phase two it feels like a long and drawn out chronic. Of slow growth. What else is on our radar . It doesnt leave the Postal Service is under threat from competition. They will deliver letters and packages across the u. K. Ital mail had argued that undercuts them in urban areas while avoids less lucrative rural delivery. The parliament will talk about a new cabinet. They have formed a Coalition Last week. The confirmation will and more than a month of form in the government. The Ukraine Military said a truce was reached. More than 4300 people have been killed in the violence between ukraine and the prorussian separatists. Club med came just hours before its deadline. Shout the global resort. Expand clubg to meds reach. Say cheese. We will speak exclusively to the Largest Online stock video company. We will get his views after the break. Welcome back. Youre watching the pulse. Lets talk about video. Its founder is a billionaire. He achieve that achievement. How hee to tell us achieved it. In the past couple of years. I guess you would probably know. I imagine it probably is. Done . Easy bit is the hard that coming . I started this company 11 years ago. We started with images. We moved into video. We moved into 20 languages after that. I feel like were just getting started. Video is great in business is growing fast. We are getting into music also. The world needs a lot of creative assets for businesses. We want to be there for them. Tell us what the challenges of video. Im sure its complicated. Putting a bunch of video up on the internet and sorting it and getting it to people in high quality and delivered it sounds like a big challenge. Headache . Guest its a lot more complicated and images are. We started that company. We have a tech team of over 120 people in new york. They are costly working on this problem. One of the big problems that we run into is searching for the content. People are shooting stuff on their phones now and uploaded it. Uploading it. It is greatly expanding. Gettingnt of content consumed is expanding. All of this works together. And problem for assault. That help tech people us solve these problems. You have post a lot talking about there is not enough talent out there. In an ideal world, would you is this getting the guy to write the algorithm to make the compression possible . Business,fastgrowing finding amazing talent is always a challenge. It takes a long time. Its time to find new ways to add people. And the issue of again, how oft the how much of that can you do yourself . This is one of our core competencies. We store it ourselves. Why do you do that . For specific applications, we are a tech company and we can build a cheaper than it would be to store it in a cloudbased service like amazon. I got my numbers wrong. You talked to me about audio. That is another part of the business as well. You talked about music. Youre not getting into competing with beats or spotify . We dont want to be a consumer streaming service. When a Business Needs Audio Content for commercial or for an advertisement or for something to sell their product, we have licensed music. Eventually, they will get all of their music. Market . Ontested is this you different yourself from what you eat we do here. This is something that we have to stay on top of her and have always had competition. Determine players in the space long before i entered it. We are a tech company. We are always going to be pushing the envelope on our interface and search results. . Is it easier you started as a tech company. You started at a something very different. Does that give you an advantage over them . Are they smart enough that they will figure it out . Us starting as a tech company gave us an advantage. I program the first version of the site area i am intimately involved with the details of how the entire operation runs. I think thats important. To be able to be a tech founder h the unicode are in this being a coder. We will continue the conversation when we come back here and we are taking a break. On bloombergulse television. We are live on bloomberg tv on your iphone and android device. We are talking about his business. We are talking about the big picture view of the world. We are sitting here in london. Why berlin and not here . We have an office here as well. We have a team in london to sell to all of the Media Companies here. In berlin, we have an office. We were looking to place a tech headquarters in europe, berlin seemed the best place. What is difference between the talent here in the talent in the states . We are primarily a sales office. Berlin, there are a lot of berlinthat are moving to. There are a lot of startups there. The cost of living being less in berlin. I am just curious. Am curious about the relative advantages. We need engineers. Where we going to find them . We have an office here now. We were able to find tech talent here when we post a job. This is a global job posting. If we found people here we would hire them here. Everybody needs to learn to code . I think it should be like a second language. In middle school and high school when they start to learn a second language, coding should be one of those languages. How far away are we from understanding that . Europe is in a deep recession. Unemployment is at levels in certain countries for people 25. R the age of when you look at the opportunity in europe, if people knew how to code, how big of a boost with that be . Would that offer enough to make that competition worth it . Of datak at the amount that we create every day. Small number of it that the small number that we take advantage of his because of the tech balance that we have. If we were able to process all of that data, there would be a lot more opportunity for everyone. We are creating all these interactions every day during we are creating all of this data that opens opportunities for different efficiencies. Date, itscode to hard not to find a job. Today, its hard not to find a job. I think we would all be able to a lot more done. Thank you very much indeed for stopping by. He is from shutter stock. We have a list fashion east is and celebs. We are going to talk about of the fashion industry with one of the biggest insiders. We are joined by vanity fair next. Welcome back to you are watching the pulse. We are here in london. Francine is off today. She will be back tomorrow i promise you. These are the Bloomberg Top headlines. Itsworld bank is cutting 2014 Growth Outlook for countries damaged by ebola. Light beer it will be the only one to expand next year. The report says that the cost of costutbreak could billions. This is the world bank statement. Russia scrapped a national gas pipeline. Move forward with plans to ship more fuel to turkey. This wouldve taken natural gas under the black sea. It wouldve reduced ukraines leverage. Gassywill be a different black sea pipeline. Report from hedge fund hedgech group says that funds of post of the worst average performance, 2 so far this year. What is going on this morning . Jonathan ferro is with us. We saw a little bit of a rally in germany. They went through 10,000 points. Now they are back to tenths of 1 . Up 5100 here in london. Oil majors are advancing costs. This is a bit political. The focus is on crude. Crude is not rallying. It was up 3 yesterday, but down 1 today. You know the story. I will bring you the story over the last year, its been like this rid oil is moving south. Its down 35 on the year. Between brentip southat is going on, move. How are they tied together . The ruble is getting hammered once again. This is almost vertical. The dollar is worth 60 on the russian currency. They are predicting a recession next year for russia. Contraction is 0. 8 . They were looking for growth of 1. 2 . The relationship between oil in the ruble is this, if we see 60, forget this one. It could go as high as 62 rubles dollar. Thinking very much indeed. It is a five minutes to go until surveillance comes on. Comment team is here. Was an abrupt move in the ruble in the last hour. We have the perfect guest talk about this. Pimco will join us. We will speak with him not only about russia but particularly about that ecb meeting later da. S week and clari we will talk to mr. Dennis about this abrupt movement in the ruble. Russia is front and center. We will talk about the problems with retail as we go through black friday and cyber monday. Its bowtie tuesday, i have anointed it. We will be joined by the president of scarlet fus cornell university. He will migrate to washington later this year to run the smithsonian. We will talk to him about any number of issues in education. I thought every day was bowtie day. Every day is bowtie day. By a bowtie today and then where it. Tom is joining us out of new york. The hottest ticket in town tonight is a seat at the annual the tories secret fashion show. It has beenst time in london. Omberg taught up with caught up with 20 stars of the show. We will find out what it takes to walk the runway. I was very lucky to have a chance. I think that is the biggest thing. We have to work a lot on the way we look. We have to be healthy all year long. To worry about my work out in what ive been eating. I have to feel my best. It opens the door careerwise for jobs. Everybody recognizes you. It takes a lot of confidence. You have to be able to be healthy and take care of yourself and be strong. That is quite a show. We will bring you more on the British Fashion statement with industry insiders who made it her mission to help others get off the ground. Elizabeth saltzman joins us next. Welcome back. You are watching the pulse on bloomberg tv. And we a big is this need to pay a lot of attention to it. Last night, that happened. We had the British Fashion awards. Joins us asltzman does my colleague caroline hyde. You are in the business of making people stand out. You know when they do. Who stood out last night . So many. Everybody was there. The most exciting moment was when people got to see fashion and film or Young Designers or old designers. Having John Galliano there and having naomi and kate, all of the first name people that you have heard of. It was great to see some Young Designers. Fashionell is the industry shining a light on itself . Then they hit the nail on the head . Rihanna was there. I dont think it was hitting the nail on the head just yet. I think they are just beginning. They are creating the structure and showing what its like from a stores perspective, from retails perspective. I think that British Fashion up ineally been on the the business sense. That is the exciting thing. I get excited about the fashion. The connection of the fashion and the business seems to be the missing link. Now it is being made. It is been the missing link in this country. There were rules against it. We dont want to have that, you dont have to be boring. You can be amazing. A lot of brands are showing that. Burberry, what they are doing for fashion and technology. A goode youve got combination. Is that something that generates fashion that is built for the bottom line rather than fashion that is built for the front page . I think its both. I think its early days. I think Christopher Bailey is able to do whatever he wants to do. I think there are no rules. Thats the first rule. You are there to break rules and step out. Why cant he be the director and the start . Look at tom ford. It is an incredible message for startups. Designer, the fashion the two are not exclusive. I think chris is doing it. I think you need a Business Partner when you are a startup. A school or business can help you guide the right way. So many designers dont have that in this country. In america, what do you need to be a designer . An mba. How much does social media change that and make it easier for startups to gain critical because they can develop an instagram following . Instagram, twitter, all the social media feeds are amazing. That doesnt mean you can get your clothes sold in stores and produce on time and get a Good Production Company and get backing. The financial wizards to come in and actually understand your creative mind and the business and get you on a path that is mutually agreed. Who are those financial wizards at the moment . Masse are gaining critical , is it time tested that needs to be injected . I think its great to have the line capitals. They really do structure a company. There can be an insider that knows how to find funding from other people or a Harvard Business graduate who has started a. Com. You never know where its going to come from. If you can land into one of those big ones, great. Its more sexy if you can do something else. If you can merge with someone solid groundhas beneath them and isnt just saying heres some money, you dont want to be filled with a Treasure Chest of money because you dont know what to do with it. You want somebody who knows the business. Who are you introducing them to . How do you make that connection work . How hard is it to make it work . Its all about nurturing the young. You are introducing them to burberryom tom ford or and saying what is your advice . How do we get help for these children . List ofis quite a people to be introducing them to. You just try to get people in front. You have the power. You get them in front of writers or journalists and they can help. They know people. Fashionish founds council is amazing to doing that. There is a lack of interest from the right people. Are they starting to get it . Are they seeing the value of fashion throughout the financial crisis . Absolutely. You hope that they are not just investing and flipping a quick buck. That is another issue that needs to be addressed. She did extremely well. Its interesting. I think a lot of people would love to be in her shoes. Pardon the pond. Thehen youre looking at relationship with the big brands, celebrities are critical and continue to be. You look at what happens on a catwalk. How long is that going to carry on . Does that relationship become more critical . In a big business, do i need to have a celebrity on board to drive my brand value up . When you approach this, and you are embedded in this, how do you look at that . I think there is a yes and no. Some brands you want to lets because themselves that a celebrity. That doesnt mean having a celebrity on the red carpet at the right moment wont give it a boost. If you look at past instances, its free press globally. 20 Million Pounds worth of free advertising if you get the right person at the right time. It carries on for years. Is it something you can quantify . Social media is a massive part of that now. Its always on. Can you quantify the impact you can have with social media . You cant put a financial on that. You can on the newspaper coverage and the oldschool coverage. Thats still current and important. Its very important. Everyonet mean that has to have everyone in address. You have to pick the right people at the right time and keep trying. It doesnt have to be your thing. A lot of people wont land and arent interested. Clients isour major gwyneth paltrow. How hard is that . What does she stand for . With honesty and saying i wouldnt say there is a brand that doesnt stand for her. You would think about the person what youre trying to train understand that this is fun. Its fashion. Its business. First and foremost when you are addressing the client, i am thinking of that person. Im not thinking about the brand or make a deal. I am thinking about what will help her in her business escalate. How tech 70 do you need to be in this industry . Tech savvy do you need to be in this industry . When you look at the next few years, we will continue to talk about it. , howa few predictions important is fashion going to be to attack . Tech . Huge. Its one world. You have to be involved. You have to be aware of the conversation. You have to have the skills and a team that has the skills. I think for tech, fashion is important. Its going to keep going. You might need a phone soon. It might he embedded or in our fabric. Its just everywhere. There is no denying how important it is. Its just the future and the present. The introduction to her making in terms of young it seems to be quite a hotbed in london. We are the ones leading the way. You approach a fashion entrepreneur . I am always surprised at how much there is. Its once a week versus 10 times a day. Thank you very much indeed for stopping by to cfs cs. Elizabeth saltzman of vanity fair. Were going to take a very short rake and then we will continue. We will see you in just a moment. Welcome back. Lets talk about the currency market. Lets talk about the pound. Construction continues to cool off in britain. We are now at level where we are seeing growth slow at the slowest rate since in 13 years. Commercial construction is also beginning to fade. We are well north of 50. Let me not give you the impression that we arent generating homes. It has dropped to 60. 3. It is still well north of 50. We are waiting for the statement. That will be delivered tomorrow by the chancellor. The currency is under pressure today, what is happening with the israeli shekel. That is large across the country currency. Lets go to tel aviv. Lets find out whats going on and where we are. It does look like a question of when rather than if the governing coalition is going to collapse. The key trigger for this impending collapse is disagreements between the finance minister and Prime Minister benjamin netanyahu. The Prime Minister has decided to take israel to unnecessary elections. The breakdown of peace negotiations with the palestinians and tax breaks and a bill that the Prime Minister the law. D to enshrine it would institutionalize discrimination against israels arab minority. He told him he would take him out of the government if he kept criticizing the Prime Minister. How it happens, there are permutations. There is a noconfidence vote slated for tomorrow in parliament. It may not come to that. He might be sacked. Lets say we do get elections, one of the formation of the next government looking like. It looks like that now too would still had up the biggest party. That was just one poll taken. If we do get the government collapsing, we could get elections as early as march. We are seeing the markets not happy with what is going on. No. The central bank has been aggressively trying to do this. Maybe this is the way they should have done about it. There is political instability. This is something to watch for the rest of the day. That is it for the pulse. The statementwe tomorrow. Were going to have coverage. We are building up on an interesting and for the back end of the week as well. We have all of these key events and we will give you coverage of what you need to know and that will continue. Surveillance live from new york with tom keene. I will see you then. This is bloomberg surveillance. Markets stabilize. Oil finds a bid. The u. S. Prospers, japan struggles. What does the news mediocre been for asia . After cyber monday, bow tie tuesday. This is bloomberg surveillance, live from new york. Bow tie tuesday, december 2. Im tom keene starting a new retail trend. Scarlet fu thinks i am an idiot. Brendan greeley. A lot of news. Russia may be falling into its first recession since 2009. According to the economy minister, russias gdp may fall by a full percentage point in 2015. Feeling the impact of the 30 drop in oil prices. Sanctions of really fighting ukraine have heartbeat economy. Leading the ruble to weaken against the dollar. Vladimir putin in turkey