Transcripts For BLOOMBERG The Pulse 20141212

Good morning. You are watching the pulse. We are here in london. Getting somet breaking news out of the International Energy agency. Cutting Global Oil Demand for the fourth time in five months. Despite the fact that the price of oil is going down, demand is not picking up. The fact that they are having to do that for the fourth time in five months tells you about how quickly everybody is racing to try to get in front of this story. The story that continues to see nymex crude getting crushed. Below 60 a barrel. We are watching a number of confluences coming together here. Youve got the opec story, what is happening in the United States, the impact on emerging markets it is substantial. Lets find out how we should be looking at this story. Mark mobius is Franklin Templeton investment chairman. He joins us now from singapore. How should we read it . How should we make the oil story work for our investments . As you mentioned, the impact is tremendous. In some countries, it is disastrous. If you look at nigeria, they are dependent upon oil for a large part of their budget. They have to do something to either revive the economy by re through just suffer very low oil price environments. On the other side, you have countries like china and india who are going to benefit enormously from these low oil prices. From one area of the world and from one country of the world to another. This, i believe Going Forward oil prices will recover. The year after, you will see 80, 90 a barrel again. A lot will depend on the fracking and what happens in the u. S. , which i think will mean a wind down. Many of the production areas are now underwater and would not be able to benefit from good prices. If you think that the oil price is going to recover, in the next 12 months, does it mean that the positives coming out of a Lower Oil Price which means a boost to growth in countries such as india is going to be very shortlived . Thats right. Theres another side to the story. A lot of these countries with the low oil prices have taken the opportunity to cut the subsidies on gasoline and diesel. Indonesia has done it. Indias moving in that direction. China has moved in that direction. When there is a recovery, the local population will be ready for higher prices of gasoline, diesel, and so forth. In some ways, this low price environment has enabled countries to embark on reform measures which are so badly needed. A large part of their budgets were taken up from these subsidies of oil products such as gasoline and diesel. Beater, give us the high trades on this. I was talking to the turkish finance minister, he was telling me the huge impact oil is having on his current accounts. You look at russia and what is happening there, what are the kind of longshort trades . Which countries are at the extremes on this one from those that benefit to those that lose out . Be some ofemes would the countries in the middle east, although if you look at saudi arabia, they have lots of reserves. Some of the other countries, particularly in africa, are dependent upon High Oil Prices to boost their economies. They would be on the bad side of this trade. In asia, most of the countries are going to be benefiting, maybe with a few exceptions like indonesia. I think generally Asian Countries will benefit from what is happening. The countries that are producing in africa and latin america, columbia will suffer, brazil will suffer. Argentina, the big hope for argentina was that they would , ande a big oil exporter they will suffer as a result of this. At least temporarily. You think we will see oil prices at 40 a barrel before they go back up . I doubt it. There could be an extreme movement because of shorting of oil futures or whatever financial manipulations take place. I would be very surprised. If it does happen, weve really got a new game. It will be very exciting. As you say, not exciting for everybody. Just a couple of quick points on russia. Do you expect us to get through 60 on the currency, and do you think this will generate any political change in moscow . Yes, this could go down further. Depending on the reaction of the russian government, because they have now begun to warn people not to take advantage of this. They will take measures such as controls of currency outflows to limit the volatility. They have reserves that can counter big, extreme movements. I think they probably would do that if it gets too extreme. Politically, i dont think it is going to make much difference. I think the population is ready to suffer if need be. They are quite behind putin according to the lowest bowls the latest polls. Give us a sense of where you wouldnt be investing. For a lot of people on the markets, is now the best time to get out of russia, or can you get some returns in the next couple quarters . If there were none of these sanctions, we would be in russia in a minute. Russia is so cheap now. Even if you look at the oil sector, it is very cheap. Russia would be at the top of the list but it is not possible now. Then if you look at asia, the Asian Countries, china, thailand, malaysia, indonesia, korea as well, are going to benefit from this. It would be tilted more to asia, i would say. Talk to me a little bit about china. When we look at the investment story, do i believe the numbers that country is posting right now . Do i believe what is happening in terms of the figures we are getting . I think you have to look at the absolute numbers. The absolute numbers are higher in dollar terms. If you look at the percent change numbers, they are much lower. You have a bigger base. If you look at what happened in 2010, the economy was growing at 10 . About 800 million was added to the economy. Last year, 7 , 900 billion. From a larger base, a smaller percentage will produce even higher economic impact. That is what you are seeing in many areas. If you look at electricity production, it is going up. But the percentage change is much lower. Industrial production, the same situation. I think you have to look at the dollar figures around the percentages. What is your biggest concern . If you look at emerging markets and oil is something we have to watch out for, but either way it is going to go back up to the levels weve seen in the last couple quarters, what is your biggest concern for emerging markets Going Forward . Biggest concern is volatility. Weve seen incredible swings. Volatility will get worse, depending on how you look at it. It could be good or bad. There is a chance to buy low and sell high. Volatility is bad for the investors who are not in the market. They get very scared and they tend to hide in their whole and lose out on the opportunities. I would say volatility is the greatest concern we have right now. Anok, as you say, opportunity perhaps. Mark, stay with us. Mark mobius, chairman of Franklin Templeton investments. Cracks here is what else is on our radar. Has narrowlyrnment avoided a shutdown as the house of representatives passed a 1. 1 trillion spending bill. The senate now has two days to pass legislation. Many democrats opposed the bill because of a banking provision. Some republicans were against the bill because it defers confrontation on president obamas immigration policy until next year. U. S. Secretary of state john kerry has urged participants in climate talks in peru to stop arguing about who is responsible and start cutting emissions. In a speech to delegates, he warned that the world was on course leading to a tragedy. Kerry said the u. S. Would do its part but couldnt act alone. Marcocis ceo patrizio di and creative director Frida Giannini are leaving the fashion house. Kering said its luxury could tour and Leather Goods head will take over running gucci on new years day. Gucci has struggled in recent months as customers switched to labels they perceived to be more exclusive. The company has said it is confident of returning to positive trends in the near future. Coming up, a Second Chance for abenomics. We will discuss what sundays elections mean. Mark mobius of Franklin Templeton will be back. Royalty and popup stores. Howalked to inventors about he has combined new brands with old ventures to create record sales growth. Welcome back. You are watching the pulse. Check this chart. 100 years since the dow jones biggest oneday percentage drop. Dowecember 12 2014, the fell by 1914, should i say . 24. 4 in oneown by day. Ouch. Out you a good way of putting it. Lets move on to japan. Shinzo abes gamble looks like it will pay off. The nikkei newspaper reports coalition will win more than a two thirds majority. We are back with mark mobius. This was a big gamble not because we are not expecting mr. Abe to have a huge majority. How do you see this panning out in japan . This is very bullish for asia. It means that abe will continue to move on that program to increase money supply, to increase the amount of money in the system, and a lot of that money will leak into asia, particularly southeast asia. Be a bigs going to boost for the rest of asia. The japanese have already been have a lot of investments in asia, and they are benefiting asia. Ourism from a lot of the asians are now visiting japan because of the weak yen. Smartpanese are doing things like having visafree travel between the philippines and japan. Hink the whole pitch care picture looks very bullish for japan and the rest of asia. The world had a wobble when the fed started talking about exiting from its stimulus program. Do you think the fed will be able to exit cleanly as a result of the fact that both abe and possibly mr. Draghi could be adding more stimulus to the system . Do you think they will counterweight each other . Yes, definitely. The europeans and the japanese will pick up where the americans left off, so to speak. The American Program is much bigger, but the combination of europe and japan, and china is also in a program to increase money supply, although they have become more conservative. Also, dont forget, tapering does not necessarily mean withdrawing. You have still a lot of cash in american banks waiting to be invested. I think it will be gradual and quite modulated. But do you think the world is ready for it . We have been living with cheap money for such a long time. A lot of the economies are almost on life support. Howd you get out of this . That is the 64 question. It could all end in tragedy for everybody concerned. As you said, this is unprecedented. Howbig question mark is to exit and the impact Going Forward. We now have deflation because of the internet and the efficiency and higher productivity we have seen in so many sectors around the world. The Central Banks have had the luxury of being able to print without having the inflation. It is going to be very interesting as we go forward. Isone of the results of qe meant to be the portfolio effect. It pushes money out of the government markets and into other asset classes. If we are to believe the price of money is going to stay extremely low for a long period of time, what assets am i logically buyin . Am i into equities . Equities, equities, equities. Are nowecause equities paying a much higher rate of return than savings deposits. You are seeing that in the u. S. One of the reasons you have this bullish market is because Interest Rates and banks are so low. In china, one of the reasons you see a bullish sentiment in the asian market is because Interest Rates in the banks are so low. General population is beginning to wake up to the reality that theyve got to move their money elsewhere. I would say it is all equities. Do you buy industries, do you buy regionally, would you buy anything in europe . Some of the European Companies are very interesting because they have lots of emerging market exposure. A good example would be unilever, that has over 50 of their earnings in emerging countries. You should not overlook europe. Then youve got to look at some of the bombed out areas in europe, such as greece. The news is bad, everybody is negative, now maybe is the time to look at those companies that will survive all this chaos. Europe should not be overlooked. Mark, we have seen a big move in em currencies. Can you put an overlay on top of the em currency story, the equity story with the em currency . How do i hedge it out . What is the tactic . You definitely have to look at it and in some cases hedge it out. You have to make sure you make it on a company by company basis. If a company is exporting, a week currency is great. They are going to be doing very well. We have seen that in a number of companies in asia, where the currencies were weak or getting weaker and these exporters were doing well. It is a twosided coin. If you are buying the general market and the currency is deteriorating, then youve got to watch out. But we like to look at it on an individual company basis. There was a time, not too long ago, when the emerging market currencies were getting very strong, almost too strong. You saw that in brazil. It is an opportunity. This volatility presents many opportunities and many dangers. Mark, thanks so much. We will talk about china next. Also coming up, europe puts the brakes on uber. The company waits to hear whether it faces a ban and france. We will look at the regulatory roadblocks with the head of europe. That is coming up. Welcome back to the pulse live on Bloomberg Television on radio. Faces yet another potential european speed bump. A french commercial judge is ruling on whether to block uber services. Berlin. Hols is in he has the story. What are we learning today . We will learn whether or not uber pop, the ridesharing service, a little bit standard different from their standard service, whether or not that can proceed in france. What we see are regulatory and legal hurdles across the continent. Look at the countries where they are allowed. U. K. ,re allowed in the ireland, portugal, austria, switzerland, russia, and greece. They faced challenges in germany, france, italy some of the challenges have been so severe, they have slowed down services during the week. It is only possible in berlin to get a proper uber during the weekend. The red, those other countries where they are outright banned. The question, will more of those countries turn red . Yesterday, the economy minister of france seemed to indicate that he was open to having uber operate inside france as long as they followed the rules. Thought yeah, sure. We know. Seems to have disappeared, the sound we had. We found out when you found out. We will leave it there. Coming up, can uber win in europe . Stay with us for the companys take on its regulatory roadblocks. We will be talking with the european head. Mark mobius will be back as well. We are going to talk china. Welcome back to the pulse. Im francine lacqua. Im guy johnson. These are the Bloomberg Top headlines. The International Energy agency has cut its forecast for Global Oil Demand. This as Oil Continues to slide. Prices dropped below 60 barrels 60 a barrel in new york. Saudi arabia continues to question the need to cut output. Two big departures at gucci. Directornd creative are leaving the company in a statement duties Parent Company, kering, said that its luxury and Leather Goods had, marco bizzarri, will take over running gucci. On new years day. Struggled with customers that switched labels. Alibaba founder jack ma has become the richest person in asia. A 54 surge in alibaba shares means ma has added 25 billion to his wealth this year. Lets talk china now. The latest data shows the company the economy slowing. We are back with mark mobius. Mark, out of curiosity, are you a baba fan . Do you like ali baba . I didnt like the corporate governance, but i should have bought it. It has performed very well. There are other stocks that have performed as well if not better. It depends on your viewpoint. Would you buy it now or is it too expensive . It is a little expensive now, i would say. Have it, you probably want to hold onto it. There may be more upside. Market, ife shanghai you look at the yeartodate chart, it went parabolic about a month and a half ago. It has come off a little bit now. Comfortable with the valuations in china and shanghai right now . The asiamfortable with valuations. There is value. It is up 50 this year so far. Youve got to be careful. There will be corrections along the way. We are now in a longterm bull market in china. As i mentioned before, savings , the in china are so low retail customers are getting into the market. Interestingly enough, macau is suffering now because of the crackdown on corruption. A lot of that money will move to the market. Now, in china, you can short stocks. You can buy options. You can do a lot of things you couldnt do before. That will make the market exciting for those people who have a penchant for gambling. For the investor, there is also great value in asia because the discount in many cases is very extreme. You talk about 30 , 40 , 50 . If you think these markets are eventually going to merge, then either one has to come down or the other has to go up. Maybe both of them move. Publiclieve the chinese is now getting into the market and we are at the beginning of a real bull market in china. This is despite some very weak data we had from the country. Does it mean you are concerned about growth but think the government officials have it in hand . Or do you think that growth is not a problem . I dont think growth is a problem. The percentage changes are coming down. Forget about 12 or 10 growth. That is not going to happen because the base is so large. But the economy is still growing. A lot of people dont think you need any more infrastructure. China needs infrastructure badly. Wasou go on the trains, i on a highspeed train, it was packed on a weekday. There is lots to be done in china Going Forward. Chinashould i price in more aggressive foreign policy, lets call it that, warships in the South China Sea, the islands, there is tension. Do i need to price that in or is that part and parcel of china becoming the dominant force in asia . Think you do have to price it in and watch it carefully. So far, you notice that china pushed a little bit, then pulled back, pushed, then pulled back. They are going to play a very safely and carefully, and build up economic relations with all these companies in asia so that any dispute in the South China Sea can be worked out. Their influence is going to get greater and greater. Most of these countries, china is the major destination of their exports. I think this will be handled carefully by china, and will probably go smoothly. Do you worry about bubbles . In china . Of course. There will definitely be a big bubble in china. Not yet but it is building up. It will be the same story over again. , not onlyen that play in china, but other markets around the world. In the meantime, youve got to be in on this. Particularly if you see value. This is what, real estate . Is it one big bubble or are their pockets of bubbles in Different Industries . We have already seen the real estate bubble. It was carefully handled by the government so that it wouldnt turn into a disaster. Seen so manydy empty apartments and buildings around china waiting to be taken up at lower prices. You could say that was a bubble. The same thing is true of the export industry. Many of these Companies Got started and went bust. This will happen in the stock market as well. On the move, Interest Rates are low, this is a global phenomenon by the way. People in savings accounts are fed up with low rates and they have to find another outlet. The market is the way to go. Would you be happy to buy chinese banks . If you were to think about the debt story, the bubbles expanding, are there better places to put your money . I would say the chinese banks are one of the best ways to play it. If you are able to get into the market generally, there are so many other companies that will have great opportunities. Growing industries, growing companies. At this stage, the state owned banks are interesting. Your downside is limited. They are not going to go bust. Your upside is very good. They are entering into new product areas. Funds,e selling trust you name it. This is profitable business. Low, so theare spread is very good. All these things add up to very nice scenario for these banks. Another story we are focusing on today, baidu is said to be buying a stake in uber, and wants to expand quite heavily in china. What does that mean for you . Are we going to see a lot of disruptors . Uber ifu buy shares in they are so aggressively trying to get into emerging markets . We would definitely look at uber. That is quite a coup for uber. If they are able to get into china, it would be a good demonstration of what they can do in the largest potential market in the world. Yes, we would look at it. Internet grasped the phenomenon with both hands. Perhaps even more than the developed countries. They have been more cautious. There are a lot of regulations against taking over industries. The impact of the internet and internet selling, internet services, has really hit china in a big way. Uber will be able to dig advantage of that. Uber wants to expand in asia. It was interesting after the 1. 2nt round they had, the that they raised. They were talking about using that money in asia. Would you agree that is the right place to invest . Definitely. The growth rates. Asia is growing faster than the rest of the world. It makes sense for them to go into asia and expand. Be china, indonesia, any of these countries. They are wide open for innovation. Do you think the regulatory story is going to be ok . Do you think chinese authorities will be comfortable seeing uber come into their markets or would they rather have a more indigenous startup . I think the tie up with baidu will help them. It will be with a chinese partner so that is a big plus. Veryhinese authorities are adaptive. They are willing to accept new services if it helps the local populations. If it makes things more efficient. I think they are quite open to this sort of thing. It is not a matter of upsetting a whole industry. If it is innovative and it saves money for people, is more convenient, they definitely will adopt it. Mark, thanks so much for your time today. Mark mobius, chairman of Franklin Templeton emerging markets group. Coming up, a russian staycation. Theill look at whether plunge and the currencies has taken the shine off holidays. Where are they going this winter . We will answer that question here on the pulse. Welcome back. Weve already started the conversation we are about to have, which is my fault. You are watching the pulse. Lets talk about russia. The ruble continues its plunge. Hit the Holiday Plans for russias wealthy. The conversation is that we were already engaged in conversation. We talked about christmas already and we were about to talk about what is happening. Russians part of traveling abroad will the currency change . It is down quite significantly. Are we going to have the same relative impact on the number traveling . Obviously, you have the ultra High Net Worth people who are going to be less affected and can travel globally, but the mid tier russians that have aspirations to travel outside of russia are going to notice. Are going to see approximately a 20 increase in their holiday. That means they are going to be more pricesensitive and priceconscious. Have you had any cancellations . You cater for the rich and wealthy. This could be a holiday or pretty much anything they need. Have you seen any russians pulling back . More than that. They are being more prudent and maybe not booking the top suite. I think travel is still a very important commodity to them and they want that in a big way. I still fear they are going to continue to travel. Moreare going to be a lot priceconscious and pricesensitive. They are pushing for better value. If i am a hotel he or hotelier, am i going to be seeing less russians this year . Are they going to be staying at home . We were watching very carefully the sochi olympics. Theyve got some decent ski runs. I think the overall price in the market alone increased significantly anyway. I think there is a lot of opportunity with the Winter Olympics at sochi where is that great resort. The big thing for russians is visas, getting around the world, which is a significant issue for them. Give us a sense of how much how many russian clients do you have, and what kind of things do they ask for . Is it holidays, apartments . A lot of russians have fallen into two areas. They are family oriented and like traveling in small groups. They like to rent nicer ski chalets or villas. They are obsessed with relaxation. They just want to sit on the beach and relax, whereas other europeans tend to be bit more adventurous. What europeans are more adventurous . It is not the italians, i assure you. How would you describe the italians . More of the fly and flop as well. The germans are prolific travelers. As far as the russians are concerned, they really demand relaxing holidays in dubai. At the mid end, they tend to go to more local areas where they can fly in and out on a regular basis like the rest of europeans can. Relationship between the countries that have also seen their currencies slide as well . Are they more attuned to going to a country which has seen a significant devaluation . Back to thehat goes point i made before. In terms of value for money, it is giving them greater spending power. Perhaps they are not drinking quite so much champagne. Flop. Ust love the fly and im just going to fly and flop. This is the new way. Thank you so much for joining us. The ceo of quintessential leaf lifestyle. Flop withly and children, can you . You can try. Coming up, climate talks in peru. How can business capitalize on the new Energy Opportunities . We are going to find out. Welcome back to the pulse live on Bloomberg Television and radio. As the u. N. Climate talks come to an end, we are looking at the Business Opportunities and discussions that have been created for the Renewal Energy sector. All, we should just explain what principles for responsible investment is. Investor basically an initiative in partnership with the United Nations. Weve got 700 of the Worlds Largest Pension Funds and Institutional Investors who basically sign on to six principles, which is about incorporating Environmental Issues into your investment processes. You are not just thinking about the bottom line, you are thinking about a wider it is a wider way of thinking about risk. 45 trillion in funds under management in the u. S. It is a significant part of the investment community. Give us your expectations. There is a big Climate Change talk in peru at the moment. We heard from the u. S. Secretary of state, saying, it is everybodys responsibility to cut gas emissions. Your expectation . Positive . Yes. I couldnt agree more with what john kerry has to say. I think we have been having climate talks for 20 years and we know that the pace of change is really slow, but we are seeing change. We have seen the u. S. And china talk about climate issues. They werent doing that a number of years ago. I think that we will get some outcome from these talks. Remembering that these talks are just a stepping stone to paris, the idea is that there will be some draft that comes out of it. The actual countries saying what emissions targets they will have, that is not due till q1 2015. That leads into the paris talks. When you bring 200 countries , trying to get decisions, it is very difficult. Got everything from very large to very small countries. Youve got rich countries, poor countries, everything in between. I dont think anyone expects the path corporatesat, do need to take responsibility . You talked about the investments that your signatories have at their disposal and the numbers are enormous. Our corporates doing enough . They talk a good game when it comes to the environment, and they have adopted to the rules, but they still spend money lobbying to have those rules made easier. Has the corporate story really delivered for the climate . I think the corporations can obviously do a lot more. Investors are really starting to put a lot more pressure on companies. They are looking at this issue of lobbying. Investors are awake to the fact that you have a lot of companies saying they are doing a lot about Climate Change, making all the right noises, but then talking to governments or involved with associations that are talking to governments to encourage them not to do anything, and talking to governments about the impact on business. Signatories are really starting to engage with companies on this issue. I think once Companies Know that investors are on to them, we will start to see some change. Investors are the owners, after all. They are the ones with the power. Fiona reynolds, managing director at principles for responsible investment. For our viewers, a second hour of the pulse. What have we got for you . We will be talking to the head of europe for uber. There is a big decision for uber pop. We will be asking about regulations across europe. We will be looking forward to that conversation. Also, the shakeup at gucci. Tom ford walked out. Today, we see a change as well. That is the end of the ceocreative director duo. We are back in just a couple minutes. A barrel below 60. The International Energy agency cuts its Energy Demand forecast yet again. Emerging market tightened. Mark mobius tells us why cheap oil is good. The mobile app faces another challenge today. This time it is in france. Out of style. Guccis top two executives will step down as they look to revive rowth. Good morning to our viewers in europe. Good evening to those in asia. A warm welcome to those just waking up in the United States. Im guy johnson. Im francine lacqua. This is pulse pulse live from our European Headquarters in london. It has been a torrid week for the oil markets. In the last hour, they have cut he demand. Lets find out what happens next. Lets talk to caroline hyde. No immediate sign of respite if you are long oil . Precisely. It continues for today. Down more than 10 now for w. T. I. , the American Contract and 9 at the european contract, brent. Keeps ongoing. The International Agency cutting their forecast by a quarter of a million barrelses per day saying youll see demand increasing by 900,000 barrels per day. Sounds like a lot. The fourth time out of five they have had to cut their overall demand prospects. Supplies keep ramping u. Not only do we have the United States pumping out shale oil and gas. You have opec not cutting production which capitalized the selloff and now talk of a price war going on between the likes f saudi arabia, iraq, saying they are going to enhance their discounting to asia. That puts more pressure on the price. Most analysts think next week, more falls, that will be the 11th week we see prices declining. The head of iran, the oil ministry there thinks we could hit 40 per barrel. We could sink even further. Were already off more than 40 . The c. E. O. Said were going to stick around this level for six to seven months. Mobius said we will recover next year. It is a game of chicken basically. Going on between the u. S. And the likes of opec. You were mentioning marc mobius. We talked to him about oil. Lets have a listen. You have countries like china and india who are going to benefit enormously from those Lower Oil Prices. It varies from one area of the world from one country of the world to another. Let me say this. I believe Going Forward, however, oil prices will recover and by next year or the year after, youll see 80, 90 a barrel again. Mark mobius talking to francine and i a little bit earlier on. It looks pretty interesting. Caroline, thank you very much indeed. Changes at gucci this morning. They have announced both the c. E. O. And creative director are leaving the company. For more on these departures and what that means for gucci were joined in paris by andrew roberts. How much of a surprise was this . We have been hearing it in rumor mill. Gucci wasnt doing so well and with every quarter they were performing not as well as the Parent Company wanted, this was in the coming or in the making. Good morning, francine. I think we can put it this way. It is a surprise but not a shock. As you mentioned, gucci has been faultering recently. It has not had a tremendously good year. When we look at the reblame, what is going to happen here, the replacement, what is going to happen, the creative director of gucci since 2006 in total, she has been with the brand since 2002, she is also leaving in february. When look at the two departures, i think the replacement, that is not a tremendous cause for concern. I think were getting a like for like replacement there. It is really just about renewing leadership. I think the market expects to continue dimarcos strategy. Gianninis departure, while she has been one of the most commercially successful designers and has been their most commercially successful designer, that hasnt always been married by critical success. With her departing and there isnt a replacement named yet, i think it is very important that market will be looking at for who is her replacement and what that means for Creative Direction of the brand Going Forward. Just out of interest, 2003, tom ford steps out of this business and goes on to do some pretty good things. Is she going to follow suit . Is this kind of the end of the road . Walk us through what you do as the head of creative once you have left a brand like gucci . Guy, thanks for the question. As not a creative designer, it is hard to answer that one. I think when we look at what she has done. She had a tremendous run at gucci. No one can dispute that. What she does next is anyones guest. She may feel that she wants to go out on her own as ford did and launch her own brand or she may wish to sit back and watch from the sidelines. What is certain is that she has done very well. Dimarco has done very well and they are a couple together professionally and personally. It will be interesting to see what the dynamic duo do next, but it is certainly an end of an era for them at gucci. You are a creative director. Youre one of the snappiest dressers in the news room. Give us a say of what you think about this business being more exclusive and upstale. 10 years ago they had 25,000 products and then they stream lined it to 5,000 products. How do you become more exclusive . Put the price point up or reduce the number of articles . I think neighbor strategy was right. It just wasnt implemented as quickly as it could have been done. The strategy, as you said, has been to narrow the product, the number of products. The company has also been expanding into different categories. O narrow the s. K. U. s. At the same time to rebound some of the stores. Relocate others and perhaps slow the rate of expansion. Gucci enjoyed tremendous success along with louis vuitton. As you expand and reach a kind of degree of saturation in the market, people, particularly wealthy consumers are looking for something that only money can buy and something that is a little bit different. D so raising prices is one aspect, introducing products which are more exclusive and precious. Only for the wealthy elite. But the designs have to follow suit. You cant have something that looks like that you might be able to find a cheaper version somewhere else. It has to that that catcha, that egree of desire. Cache, that degree of desire. That is perhaps the message here with her departure. She has taken the brand as far as she can in that we say gucci is not doing as well as as from such a lower base. In terms of growth. It is two ifferent beasts. What else is on the radar this friday morning if any in washington, the u. S. Government has narrowly avoided a shutdown as the house of representatives passed a spending bill and now it has two days to pass the legislation. Democrats are opposed because of the banking provision they describe as a giveaway to large institutions. Some republicans opposed the bill. John kerry has urged participants at the United Nations Climate Change hawks in peru to stop arguing about who is responsible for Climate Change and start cutting emissions. He warned that the world was on a course leading to tragedy. He said the u. S. Would do it part but couldnt act alone to reign in global warming. At european speed bump. A judge ruled wo weather to block ubers pop service. Well have more on this story very shortly. We certainly will. Well talk to the countrys head f europe and also this hour, pop ups fit for royalty. Record sales growth. What is in store for christmas . Were going to take a break. Fran and i will talk about fashion and all kind o of things associated with handbags but well see in you in a couple of minutes. Welcome to pulse pulse live from bloombergs European Headquarters here in london. Im guy johnson. This here is francine lacqua. Were going to talk about uber now. The company just received more cash flow for its china operations. Probably a good day to talk to our next correspondent, hans nichols. He is in berlin. Hans, uber just keeps gathering the money. Some of it is going to go on legal fees but it has an awful lot to invest and it is going to be very much pushing aggressively forward than it has been. This investment from baidu is for 600 million. It is for cash and noncash assets. It gives you a sense of ubers global ambitions. This is a company that wants to have a footprint in a lot of different countries. Of course there are legal challenges. Yes, they are going to be spending some money on legal cases. Where will they be successful . What will they do to satisfy each local culture. Im interested in hearing your next guest on that very point. How do they take a Silicon Valley approach and meld it to a european time frame that is not sympathetic to that Silicon Valleyout look. Well get information on the ridesharing service. They have bans in spain, potentially holland. Take a look at the map of europe and see where uber is allowed. Where they arent. You see some of the green ones, u. K. , ireland, portugal. We have a lot of different options there. Yellow, they still face some challenges. Red, they are not allowed. Your next guest is much more important than me. Ill stop blabbing and maybe take an uber home. Youre not going anywhere. Youre on the air throughout the day. For more on ubers regulatory problems in europe, were joined be dmitri. How worried are you about regulation . Hello, francine, hello, guy. Thanks for having me. Uber is in 260 cities around the world. I think what were seeing are flecting a situation it is about a company that is innovating the taxi industry, one of the most regulated out there that has never seen any form of competition. You create some tensions and you see increments and you must Taxi Companies trying to sue uber. Is it fair to say, dmitri that what were seeing here is a Market Strategy by uber that says, you know what . First mover advantage is critical. We have to have first mover advantage. Were not the only one in this business. As a result of which, we are going to get into a market. Were going scale that market very, very quickly. Were going to scale into a country very quickly and then well worry about whether or not we have broken any rules later on. Is that a fair description of the Business Plan here or am i being a little simplistic . No. Of course were going to look at the regulation that is out there before launching a market. What you have to see is that ride sharing is something that three years ago when most of the were not contemplating that. I think what were facing is more Regulatory Framework that have not contemplated such innovation. You dont invates by sitting on the side walks. Uber is trying to come up with new ways of moving around cities and that is going to create tensions. That is something to be expected. Yeah. I think your point about the fact that this is a highly regulated sector. I think for some reason that is inevitable and to a certain degree desirable since youre dealing with safety here. Back to the points about scaling. Is there a story here that is that has a grain of truth . You need first mover advantage. Uber needs to get into a market and grow quickly. If you wait and do it slowly, somebody else is going to be doing the disruption and it is not going to be you. Of course it is an interesting opportunities to create new options that didnt exist before. Maybe all of the companies are going to be willing to try to create options as well. We like competition. Of course were going to be liking competeing with other players in the industry. I think it is more reality for what is to be. This number one option that people have in a safe and reliable way, many people are doing that at the same time and i wouldnt say that uber is hitting in every single market. Scaleability is probably your number one concern. Is that fair . Sure. Can you tell us about the number of users and the presence that you have in france . I would say one interesting element is that we care about creating the best possible is a e to users and scale big that i think plays into that. The more drivers you have on the road, the better experience for drivers and the more efficient it can be. That is the best way for you to provide the most efficient and best product for the end user clearly. Emanuel was talking about your business yesterday. How would you describe your relationship with european government at the moment . When you talk to them . When you talk to the regulators, are they positive about what youre doing . Are they nervous about what youre doing . Can you characterize the relationship . The conversations you must be having with these guys. When you walk into the room, what sort of reception do you get . I think there are different resemses get. E first thing you receptions that we get. Some are very supportive to seeing new competition and Companies Like uber enter the market. We are seeing very warm welcomes. It gets to i think behind uber understands what uber can bring to the cities in terms of safety and the of the now of course there is a transition to deal with because you have an industry that as we say is extremely regulated and of course they are going to try to find the right balance. Once we zart to see more and more europe is actually they want to do something about that to have ld take the Dutch Parliament that ride sharing will be included in the new station. The same way that in catalonia, in spain, the parliament is also looking into creating this set of rules to embrace ride sharing. Understanding what uber can bring to the table and they have to with the transition of the industry. Finally, of course, i think that is what you see right now when you read the newspaper. What you see now is the tension created by trying to find innovation. This shouldnt be a surprise. Let me ask you about where you see the most growth. Can you quickly break down the country where youre doing the best sales . Where the growth is the strongest . Does it have a correlation with the countries where you actually have legal challenges in . I wouldnt necessarily say there is a correlation. When you see the strongest growth is in markets that have understood that by slightly lowering the you are able toll create the whole new anchor ystem. That can turn people away from individual ownerships. Regulation where anything goes can become a driver in that three, four, five weeks and with a limited amount of the markets by nature have been a market that have and this is what uber is interesting. You talked about were going to have to wrap it up there. We have an advertising break coming up but it has been great to talk to you and great to get your side of the story as well. A lot written about uber over the weeks. Thank you for taking the time. The general manager for western europe at uber. Sfo welcome to pulse pulse. Coming up, russias most famous dissident. He is doing it from switzerland. One year after his release from prison. Ryan chill chill coat he was not in prison. That was written badly. Well have these two guys talking. There are a lot of fascinating insights. You can follow us on twitter. Guy johnson is at guy johnson tv. Im at flacqua. Keep it here. Pulse pulse continues. We have a cracking show. Mark mobius and uber, western europe. Welcome back to the pulse live from bloombergs European Headquarters in london. Im francine lacqua. And im guy johnson. These the Bloomberg Top headlines. The International Energy agency that is cut its forecast. This as Oil Prices Continue to drop. Trading at the lowest price since 2009. Saudi arabia continues to question the need to cut output. Re r two big depart chers in the i tal fashion house gucci. Gucci has struggled as customers have switched to labels they perceive to be more exclusive. Alibaba founder has become he richest person in asia. A 60 search in shares means he had added 25 billion dollars this year. He is now worth 68 billion. There is a preffed share issue they are talking about. Well flash up the headlines and bring you the details. Let me give you the broad brush of what were get at the moment. There is a 12. 9 billion issue nance preferred shares that are going to be put out to the market. Well have more details for you as get them. A it is been one year since man who was once russias richest man, has been released from prison. Ryan chilcote caught one him in europe and asked him about the chance s of change back home. I think the chances of putin losing power, truly losing power are about 50 50 in the next 10 years. When . I cant say. A lot of people in the west are saying that the collapse in the oil price will create problems for him and speed his departure. O you agree with that . Prices andine in oil western sanctions, individual sanction against putin entourage means putin has far less room for maneuver financially which creates difficulties for him. And as a result, the cost of any mistakes he may make could be ritical. At the same time, i wouldnt count on the regime being toppled only as a result of the mistakes in the economy or the fall in oil prices or sanctions. E need something more. What . We need a black swan event. If ll have plenty more that exclusive interview throughout the day. It is a friday morning with stocks taking a bit of a beating across europe. In frankfurt we are down 1. 2 . London down 1. 5 . It is the miners, the Energy Companies taking the pain on that particular index. W. T. I. And brent in a world of pain. Let me bring you the price of w. T. I. South of 60 a barrel for the First Time Since 2009. 59. 26. Down 1. 35 on the day. The i. E. A. Cutting their Oil Demand Forecast for the fourth time in five months. Exacerbating a move lower in oil feeding into a weaker ruble. That has been the story. Dollar ruble up 3. 82 . That is a weaker ruble. A stronger dollar. 1 gets you 57 russian rubles. That is a record low. Is also fueling the lowflation world that were talking about. It means lower bond yields. 0. 6 . Down three basis points. That is a record low. It is not just european markets moving lower. U. S. Treasury market yields lower. Down by three basis points. The lowflation view of the world keeping prices lower. Those yields the lowest for the year. Thanks. Jonathan ferro on the markets. It is time to take a look at 2014s best books. The bloomberg survey. We talked with policy makers, economists, asked for their favorite reads for 2014. The highlights are in front of you. Who were we asking . Give us a sense. The people, the caliber that we were talking to . It was a great range this year. Steve schwartzman, a billionaire from blackstone give us his choice. John kerry was good enough to list four books he enjoyed as he traveled the world this year. A really great list. About 60 names all on bloomberg now. I love this. This is now bloombergs position. Were now the third year of the best books of the year. Are you surprised more financial books than usual . Were still going to the people who read bloomberg and watch bloomberg and write for bloomberg. The shadow looms larblinger. The survey skewed. Towards the bloomberg readership. The financial times. This was the most popular work. Martin wolf, the ships and the shops. Mong them choosing his book, hildebrand, fisher, his own book was on the list a couple of years. This was one of the definitive guides to the financial crisis. Most of them said when talking about wolf, they didnt agree with everything. What is number two on the list . There was a joint number two. Several number twos. We got a late entry. The second machine age was popular. Ell airian talked about that book. Does that put a positive spin on the rise of the industrial revolution, 2. 0 . I have read some interesting views of the book. This one will crowd in on jobs that that people are able to do. So but he also at the same time presents opportunities. That is the that was the big kind of thematic book of the year. For a bit of history . For a bit of future, world order. Henry kissinger, in his 90s now, but still very popular on the bookshelves. Steve hearts isman, smers calling it a great account of where the world is going and it looks to be a big issue for next year. Thank you. If you havent read them, something for christmas. There are also some fiction books. Read simons survey. Simon j. Kennedy on twitter. He is. Ok. Coming up. The richest man in east. Jack ma becomes the richest man in the east. Well take a look at what put him ahead. And well talk with a c. E. O. Talking about how he hopes public store also get him to sell what he wants this christmas. Welcome back to the pulse live from london on bloomberg tv. Now, we are getting closer to christmas. Lets take a look at the Department Store known as the queens grocer. It is currently under the control of the man sitting in front of me. It is london headquartered. It is 307 years old and last year it did double digit sales growth at christmas. Will it be repeating . Good morning. Great christmas last year. How is 2014 shaping up . Even better. So youre going to repeat the exercise . I hope so. Were very optimistic. Monday we had our best day online in history. It was eight days earlier than last year. Do you have more sales online than the store or will you more sales online in the next couple of years . Online is representing 20 of our business but like most businesses, it is growing. I expect it to be about 1 3 of our overall mix in the next five years. I travel around the world and see you in various places that i didnt expect to find you. Is the nature of what you do and sell changing . I think the primary change in our business over the last two years is that the people shopping in london. We have more domestic business than ever before. Two years ago, 70 of our business was international inform now that is 50 . There are more british, english commerce. More domestic commerce. People are buying more than tea. Our mens Wear Department is popular. How much do you do at christmas over the year . 70 . In three weeks . From the beginning of november the season. Which i call from halloween. We dont really get into christmas until after halloween. We keep the traditions of halloween and then straight into christmas. It is 7 a huge part of it is a huge part of our business. On . What do you do the rest of the time . Were pushing outside the traditional christmas in order to drive people into our store. We have had burberry on the show. Hunter. British heritage brands. How are you taking advantage of that . Just this year, we opened in downtown dubai. That is a very successful launch. Terminal t heathrow five. It is a beautiful boutique. A standalone boutique. Nearly 40 million travelers going through terminal five. Getting the brand out in the world. Just last year alone we delivered to 162 different countries. I barely knew there was that number of countries in the world. They received our famous hampers. Our role of bringing the brand to more people across the world is to continue with our Online Business and identify key cities in the world where people appreciate our brand. How much does that have to do with the resurgence in the fashion for the royals . There is a love in the last three to four years which doesnt have anfect on burberry and hunter. Perhaps people in the past have thought that we existed because the royals because of the association with the royal family. It is true. It is a very strong association. I think we have such authenticity in what it does. We are so good at what we do, the royal family loves to shop with us. The people in the world are starting to recognize when i comes to spending their hard earned cash are looking to buy products that have real authenticity. It is part of an experience. It is a brand, isnt it . Is it a royal brand . It is not a royal brand. It is a brand of great quality, authority, heritage. I think the royal association, we have it is very important. It is the brand i believe people are buying into. I firmly believe in these days when people are being more cautious in how they are doing their spending, they are looking for genuine authenticity in products. Youre clearly looking to the internet to provide you with a big opportunity. How you to invest money to make that happen . Are you spending more money on data capture . Data analysis . How does it work . When you sit down and have a plan, how does that actually happen . Our biggest investment is in a brand new platform we have launched very quietly. We have nearly 1,000 customers who have been invited to shop at our brand new website. It is carefully growing during this very busy period. That is using cloudbase technology. Actually a big part of our resources have been investing in a brand new platform. I think that will be the beginning of, you know, a evolution at fortinum. We were one of the first to actually transact online. In 10 years will you do more sales online . No, i think the stores will remain the bigger part of our business. I think great retailing depends on investing in their properties and making sure the experience of doing retailing is better than before. Online is simply retail. It is no longer multichannel or omni channel. It is just part of how you do business. Customers across the world want product, be it in store or online. Number one thing on the christmas list, what is it and what do you sell the most of . Christmas tea. People love it. More than hampers . In volume terms, christmas tea and biscuits are the top volume line. Hampers for sure as a category is a multimillion pound category. How many hampers . Over 200,000 hampers. In terms of tea, half a million or so. 200,000 . 200,000 hampers. What im sayinging is the half a million on the tea is loose tea. 70 of our tea sales is actually loose. It is great. The best way to drink tea. I think it is a hassle. Im a foreigner. What do i know . Great to see you. Look forward to being invited on to the platform. Im sure francine will be there. Happy christmas. The c. E. O. Of fortnum and mason. Coming up, the new richest man in the east. Jack ma is asias biggest billionaire. Well take a look at what put him ahead. You can follow us on twitter. Im at guy johnson tv. Francine lacqua is at flacqua. Well see you in a couple of minutes. There will definitely be a big bubble in china. Not yet, but it is building up to be that and it will be the same story over and over again. We have seen that play and not only in china but in other markets around the world. But in the meantime, you have got to be in on this, particularly if you see value, which we do see in many of these companies. Welcome back. That was Franklin Templetons mark mobius speaking to us in an exclusive interview earlier on in the program. Lets continue our conversation about whats happening in asia. The regions richest man, jack ma, has claimed the title of the wealthiest person in asia. He is 50 years old and worth 28 billion. Joining us now for more on what you can call a pretty good year r the alibaba founder is rob lafrank lloyd wrighto. Lafranco. If there is anybody out there who doubts this is chinese century. It has not been a race among the worlds wealthiest people. The chinese have dominated this year. Jack ma has led them all. Eople were valuing alibaba below 100 billion. Now it is worth 256 billion. Worth more than amazon and ebay combined. The richest people for years it has been dominated by hong kong real estate. Look at the n numbers. Last year, a year ago today. Robin lee, he is now the second richest man in china. Above him for four people from hong kong. Now they see fifth richest person in asia. It is a complete flipflop. 2015 . Lots of changes. It has been a volatile year. We have seen carlos slim and Warren Buffett change places. Lots of changes in russia. Were eyeing on what will be perhaps soon in new richest russian and china is not done yet. Planning some i. P. O. S for the cinema business. At the top of the list next year, who is going to be there . We want to know about the russian as well . Wholl be the richest . He has been the richest russian since we started. He had a bad year. Russian stocks have fallen. He is also an investor in alibaba, so that is propping him up. Sithing on a lot of cash. That is helping push him up. So this time next year, if you were to pick a name, were having this conversation and you are saying this guy is at the top. Who is it going to be . Receiver richest in world . Richest in the world and richest in asia. In the world, bill gates. No question. Richest in asia . Good question. The man who has the largest cinema business in the world has a good chance. 2 3 of the revenues outside the United States. I would keep an eye on him. Were following it. We dont know what the evaluation is. We were surprised at the evaluation of alibaba. They need to start worrying about baidu. There is so much happening in china. When we do, it is over. Keep an eye on him. It is going to be an exciting 2015. Rob, thank you so much. That is it for the pulse. Keep it here on Bloomberg Television. Surveillance is up live from new york. Tom keene and his team. You can follow us on twitter, guy johnson tv and flacqua. Have a great weekend, everyone. Pelosi breaks through the senate republicans. They flex new muscles. Houston, we a spending bill. The plunge in oil prices creates true global crisis. Is a collapse of venezuela imminent . And news you can use. You can buy the usual case for spring for the 60 case. Good morning, everyone. Were live from our World Headquarters in new york. It is friday, december 12. Im tom keene. Joining me, scarlet fu and brendan greeley. Heres scarlet fu. We head to washington. In washington today, the senate will begin debate on a 1. 1 trillion spending bill. Late yesterday, the house narrowly passed the plan despite opposition from emocrats and republicans alike. Nancy pelosi spoke out against it. Im enormously disappointed that the white house feels that the only way thebling get a bill is to go along with it, and thou