Transcripts For BLOOMBERG The Pulse 20150223

Im guy johnson. Francine and im francine lacqua. We are getting breaking data out of germany. The figure for current assessment, pretty much in line. If you look at Business Climate current assessment, they are less. Guy 106. 8. The median forecast 107. 7. Slightly on the light side. Interesting thing is why german industry feels that it needs to be less optimistic during it i guess there are still ongoing issues with russia. Francine greece. It just finished so there were all these ongoing situations with the negotiations in greece and that huge deal with russia. That would kind of explain it. Guy 113. 28 is where the currency is trading. The u. S. Dollar down by about 0. 5 . Francine after fridays dramatic deal in brussels, greeces Prime Minister has just a few hours left to submit reforms. Guy we have every angle on this story covered. Joining us from berlin, our international correspondent, hans nichols. From the dread, charles. From athens, Erik Schatzker. Hans, lets talk to you first. You were there on friday. Where are we on monday . Hans well, weve seen some positioning from all the finance ministers, prepping their publics for what to expect. We dont have the details yet. We dont know how greece is going to abide austerity measures. They got a little reprieve on their fiscal surplus. They can spend a little bit more. They dont have to reach that 3 target this year, but we still dont have a great deal of details. What are they going to do on privatization, on labor market reform, on the minimum wage . The government had been talking about an increase. Is that still going to be in effect . The greeks are saying they will act responsibly. This is just from a press conference out moments ago. They expect the eu to do the same. If there arent enough specifics, is going to be difficult to get it passed. That is true here in germany, probably in other countries. I will see what the abide is in spain as well. It does look like the german politicians do want to see some specifics. Francine it wasnt just germany pressing athens. Some of the most skeptical audiences have been some other european nations. Give us what schaeubles stance on this was. Ryan hans we have a great story about mr. Schaeuble pressing for a vote. Come together on Tuesday Morning and have a vote. That was rejected by the eu finance economy ministers. The economy minister out of spain said there was a need for some sort of verification and then they decided to have this Conference Call. It is another layer, another safeguard. That could be one of the breaking points that trips this up. Francine, guy . Guy thank you very much indeed hans nichols in berlin. Francine for more on spain and their finance minister, lets bring in charles from madrid. Why is the Spanish Government watching events in greece so closely . It is watching events so closely in greece because they see a big year in spain. We have an antiausterity party which is an ally of syriza and it is riding high in the polls. It is leading some of the opinion polls. The Spanish Government sees a risk that if greece is given a soft route out of their difficulties, that could play into the hands of pdemas. Guy i guess theres a flip side way of looking at this. If he is seen domestically as beating up on some result, isnt there a danger that there could be a reinforcement of podems as . Is there any other option . The government, i think would say that the situation between greece and spain is completely different. Spain, the economy here is growing quite fast now. Recovery according to the government is well rooted. Spain is going to grow quite well this year. The government will say we have made the tough adjustments that were necessary, and we are seeing a way out of spains economic problems. They are taking credit for the tough decisions they say they took, which is helping spain back on the route to growth. That is their presentation of the situation. Francine charles, thank you so much. That brings us to todays twitter question. Is spains government scared of surreys . Tweet us. Guy lets go to the epicenter of this story, athens. We are joined from there by bloombergs Erik Schatzker. Erik, i guess people are trying to figure out what plans we ultimately will see athens putting out later today. What are you hearing . What are people talking about there . Very little thus far. Good morning to you. It is a quiet day in athens. It is called clean monday. The lead up of fasting towards easter, a national holiday, quiet for everybody but Yanis Varoufakis, who is in the finance ministry with his advisers, coming up with this proposal that he has to presented the eurogroup. Hans was talking about that. It is scheduled for tomorrow to decide whether or not greece is satisfactory. We have not heard from mr. Varoufakis. He was tweeting last night. A few moments ago, a Government Spokesperson was on television saying greece is looking for something mutually beneficial. If greece acted responsibly with the eurogroup on friday and expects the eurogroup to acting kind when it comes down to examinees these proposals. The devil is in the details. For the eurogroup and force a result for syriza, so far very little in the way of opposition. Everyone knows that greece conceded a lot and gained very little on friday. Given the fact that the devil is in the details, what greece comments to is going to be scrutinized very closely. We will not see until tomorrow how syrizqa response. Francine it is so difficult to reconcile the creditors demands with their voting pledges, what they promised at the election. Is there talk on the ground that this is a government that may go back on what they promised in the election . Excellent point. It is pretty much impossible to reconcile election promises with what greece has to commit to what it has to commit to the imf, to the European Commission to the ecb. For the moment, it doesnt seem as though there is any danger that the government will fail over this particular issue. People seem very encouraged that Yanis Varoufakis was able to gain four months of additional breathing room. If i could speculate, it may take that long before we find out just how much internal opposition there is likely to be in syriza. If greece commits to aggressive spending cuts, thats almost a certainty, but Yanis Varoufakis then has four months to negotiate further breathing room or further concessions with the eurogroup. That is what this fourmonth extension is all about. That appears to be why he and others are speaking with a degree of confidence. Varoufakis has not emerged in person or on twitter thus far today, but he did speak yesterday. It is worth listening to Yanis Varoufakis in his own words. We are in the process of compiling the list of institutions. We will submit it in good time for them to have as much time as possible to assess it. We are very confident that that list is going to be approved by the institutions, and therefore we are embarking upon a new phase of stabilization and growth. Francine the greek finance minister there with Erik Schatzker who will be covering this. We are trying to find out more about minimum wage, about how to deal with promising so much and having to go back and renegotiate. Guy i think a lot of lessons have been learned on how european politics works. There was apparently some very heated exchanges, raising voices, talking about the need for varoufakis to learn these lessons. They have learned their lessons in fairly short order. What happens over the next few months . Francine i would not want to be in a situation where i have 48 hours to come up with major reforms to keep the eu happy. Guy we are going to take a break. Coming up, hsbc under pressure this morning. It has suffered another blow. Earnings missed estimates. More on that throughout the show. Francine plus, we go backstage at top shops fashion show and talk to the man in charge. Francine welcome back to the pulse. We are live on bloomberg tv and radio. Guy lets the at back to greece. For more, we are joined by a specialist at btb capital. Everybody is talking about what is going to happen over the next month. Lets talk about what happens over the next few hours. Germany and others have forced greece into a position where they are going to have to give a lot of ground. Lets say by the end of the day they dont. What are the outcomes that we should be looking at . Guest i think certainly it is going to be a crucial 24hour period because the germans have forced the greeks into a corner. The greeks now have to come up with this list of reforms today. That will be reviewed by those ministers tomorrow. If theres a situation where the reforms fall short of what finance ministers want then theres going to be a real problem. It brings into question the role of domestic politics. The point you made. Francine the devil is in the details, but we are speaking to a spokesman on the ground in athens. He is saying the greek government will gradually raise the minimum wage and restore collective bargaining. They are introducing bills and upholding protection for closures. It seems that what we are hearing for the moment, and i dont know if it is to give a message at home, but this seems like it is not going in the direction where the eu wants it to. Guest im sure thats the case. You raised a good point earlier in your program about how does the greek government sell this to the electorate . The fact of the matter is, they have a mandate to end austerity. If they fall back on that or lose support, or theres divisions within the government then the next thing is, you are talking about new elections and a government collapse. If i was in the greek government, clearly youve had a mandate. It would be crazy to turn around completely and surrender to the eu and say actually, we are going to have to continue with austerity because if we dont, the banks collapse. Why would a far left party want to support bankers rather than ordinary people . There is going to be a Sticking Point here. There is a fourmonth extension. Guy as you said, this is all kicking the can down the road. It is a timehonored fashion. Guy im just wondering, to get to that, the shortterm politics of this is going to be fascinating. They think theyve cut this deal. Now the reality of it the mandates are beginning to collide. Youve got this spokesman making these comments about the minimum wage, about pensions, about the reforms which the germans are going to be so determined to see pushed through. I dont know what the germans are thinking, but im looking at the screen and my suspicion having covered the story from the beginning, is that that is irreconcilable. Guest i think it is. George soros has made the point that the real danger in terms of the future prospects and viability of Monetary Union is a heartening division between creditors and debtors. A heartening division between north and south europe. Hes talked about a europe that is led by germany. Thats not a viable economic model going forward. It is not a union of equals. It is not sustainable. I think it calls into question the domestic politics. If the greek governments had a mandate from their voters and that is pushed aside, that calls into question the fundamental democratic ideals, whether these elections are francine going too far, and it . I would love to vote for no taxes and longer life, but economic reality settles in. Guest the point is, it is not quite as simple as that. The greeks could quite likely say that theres lots of commissioners who have not stood for election. They are telling greeks what to do. Francine spain and germany. Guest he could be out of a job as well. Hes protecting his own back. There is a fundamental democratic point. Why not just submit the election manifesto to the german finance minister and see whether he approves it or not . Clearly that would be crazy. Francine or they could vote to get out of the euro. That would be the most democratic way of dealing with it. Guest we know that referendums often become neverendums. Weve had all these cases. It is a fundamental democratic point and there is a tension between the greeks. They have to understand how they interact with their partners. Theres also the democratic imperative of what voters want. This has been a longstanding theme of division between the eu political elite and the voters who are now rejecting austerity and worried about democratic procedures. Francine neal, thank you so much for now. Neil mackinnon. We want to quickly look at the markets. Yields were down after these comments. It will be interesting to see that. Guy when we come back, we will talk more about hsbc. Disappointing numbers out of the bank this morning. All of that after the break. Francine welcome back to the pulse. Guy hsbc this morning missed estimates. The Bank Reported a drop in profits. Shares fell on the news. Lets wrap it all up. Anna edwards. Lets go to the numbers first of all. Numbers werent great. 18. 7 billion worth of pretax profits for the full year. That was against an estimate of 21. 5 billion. The shares fell. They had been gaining just before we got those numbers. What is to blame for all of this . Higher costs, essentially. They had to make provisions for various areas. That totals 3. 7 billion. This is a large amount of money. That was a sizable chunk even before we started talking about the foreignexchange markets. The company saying that 2014 profits disappointed. Return on equity is lower at 7. 3 . That is below estimates and below last year. They say that 2015 is starting out in a satisfactory manner in terms of performance of the business. This is a company that has tried to restructure under the ceo. He has executed 74 businesses since he took over in 2011. All that has been overshadowed by other things. Francine the tax scandal that is unfolding. We also found out the ceo has one. The ceo has a swiss bank account. The company expressing the get an expressing regret and apologizing. They are saying this country means their policies. Gulliver referencing historical practices how much work there is to do. Over the weekend, the guardian published details of the Government Owned Bank accounts. He was putting previous bonuses using a company in panama to do that. Hsbc has said that hes done nothing wrong. Even the guardian did not suggest that he broke the law. But they say the structures were in place for other reasons. He has paid his due, is the message from the company. He said that he paid taxes in hong kong and london. This doesnt end here of course. They will talk to you cap parliament on wednesday about the operations. Francine what a story. Thank you, anna edwards. Guy coming up, a shakeup in the u. K. Pension market. We will tell you how one of the top Wealth Management firms plans to simplify personal pensions. Francine just a reminder, you can follow us on twitter. We are back in just a couple minutes. We just found out from a greek spokesman that the greek government hasnt sent a list of measures to the eu. We will go live to athens with Erik Schatzker. Francine welcome back to the pulse. Im francine lacqua. Guy im guy johnson. Headlines out of greece and the last few minutes. The kind of financial reforms the country is preparing to submit. Lets get the details now. Lets rejoin Erik Schatzker. What have we learned . Well, we have learned from a spokesman for the government who spoke to sky news. Ill tell you, we learned what the greek government doesnt plan to do, what will not be on the list of reforms submitted to the eurogroup later today. It is not that this isnt going to be included, but we are not talking about austerity. The Spokesman Says the government is going to gradually raise the minimum wage. The current greek minimum wage is about 683 euros a month. The government would like to raise that to 750. It is not going to happen all at once, but the greek government is going to restore collectivebargaining rights once again. You can see in this an effort to communicate with the greek people with the potential holdouts among syriza. Alexis tsipras and Yanis Varoufakis are walking a very fine line between satisfying members of their own party, living up to the promises they made to the greek people, and satisfying the eurogroup, which wants to see Real Progress on greeces efforts to reform the Public Sector and cut federal spending. The spokesman was quoted as saying that greece is going to uphold protections for foreclosures and introduce a bad loans bill in the summer. We have to assume that some of this is going to be in the proposal to the eurogroup. But none of what i have just told you includes anything about efforts to collect unpaid taxes for example. A tax on the wealthy, which has also been rumored. Efforts to curb smuggling and raise taxes on some of those. That, we have yet to see. Very little coming out of the government. We know that varoufakis is trying to put together the finishing touches on this list of proposals that will be submitted to the eurogroup, 19 governments which needs to be approved tomorrow morning. Otherwise, and this is what we have to emphasize, why is Yanis Varoufakis confident that these proposals will be approved . Because the alternative is a banking crisis and a sovereign default. Even Yanis Varoufakis and his Prime Minister recognize the severity of that outcome. Back to you. Francine i think you are spot on. This is interesting. The spokesman is saying they will send a list of measures today, but they havent sent this list to the eu yet. The spokesman going on National Television saying we wont cut pensions, we will increase minimum wage, to me seems a very political message. We will have to negotiate, but we still have your back. Yes. Again, it is a trite cliche, but the devil is in the details. We may have to wait until tomorrow morning to find out what is in this list of measures that constitutes austerity, and which may provoke a negative reaction from members of syriza. This is a government that swept the power. It is a coalition, but they won almost an actual majority of seats in the Greek Parliament on the strength of promises to roll back austerity. We know that is impossible. Theres no way they can roll back austerity and win approval from the ecb, the European Commission, and the imf. A lot of this comes down to semantics. At the same time, the government has to demonstrate that it is committed to living up to some of its promises. Here, we are getting a sense for what that part of its plan appears to be. The more important half is still waiting to be seen. Back to you. Francine thank you so much, Erik Schatzker in athens. Guy lets change here. Not make ready to shakeup the u. K. Markets. Already one of the top 25 Wealth Managers in the u. K. Lets talk to its ceo. He is sitting next to us. Good morning to you. Guest good morning. Guy youve moved into the Wealth Management business. What are your plans in the pension market . Guest it is really exciting today, because pensions are some of the biggest reserves of assets in the u. K. , trillions of pounds, and yet there is no one that offers a fully transparent online solution. I dont think we are doing anything in terms of brandnew ideas that are mind blowing the complicated. We are simply launching a solution which people have been asking for for a long time so they can see their pension everyday see how much it is going to cost, and have excellent management. You can start with as little as 5000 pounds. This service is usually reserved for people with 500,000 or more. Francine how many clients do you have and how many will you get in the next few years . Guest we are looking at doubledigit rose month on month. We are already over 45,000 users. In the top 25 businesses in the u. K. Hopefully that will be the top 10 by the summer. It is shocking to us that nobody else is starting to provide a service continuing with this. I think the population is picking up on that. With pensions, Everybody Knows that if you are under 45 living in the u. K. , you are very unlikely to receive any Government Support when you retire. The retirement age is going up and up. It is obvious that you need to save. People are getting more involved and they want to see what is going on. Francine i guess that is a personal choice whether you want to go private or trust the government. You can say it, but we cant. Guy other guys are making money on it because of the Fee Structure. Your Fee Structure is different. You are Offering Services which arent available through other providers. How are you going to make money on it . Guest i think the point about charging lots of money is that you justify it by saying, our services are very expensive. Not make is based on technology that allows us to have a low cost base. We can make profit even with lower amounts of money and charging much lower fees. To give you an indication of how important those fees are in belgium, the average pension pot is charged at 50 paces points. Half eight percent 50 basis points. Half a percent. The average dutch person retires with a pension pot that is 50 bigger than the average u. K. Pension pot. These costs make a huge difference. It is our prerogative as an industry to lower the cost of management, lower the cost through technology and provide the better service. Guy you and i were at downing street on friday, and you had a number that you could reduce the cost by 70 basis points. Guest this is incredible. If everybody in the industry would pledge that we would reduce the cost of pensions by 75 basis points, all the ceos of all the pension investors and Big Companies saying we are going to reduce the cost by 75 basis points, we would wipe out personal pension deficit in 20 years. Francine do u. K. Elections make a difference . Do more people use your Services Ahead of the elections or do you get taxed differently depending on who comes in the power . Guest hopefully not. The u. K. Is the foremost advocate of transparency in pensions. It is just that businesses arent picking up. That comes from all sides. We have dialogue with all parties. All of them are keen to provide more flexibility, more transparency, and push for lower charges. To make sure people are participating. One important area that does make a difference is what you do with your investments. You talk every day about the grease situation, the ftse and hsbc. How do people play that out when their only choice if they have a small pension pot is to choose one fund or one equity and what are their managers doing to consider what is happening in the election. How can you know that you are being taken care of if there is no transparency . We give people the opportunity to see what is going on in their pension, give them reports and take into account the big issues. Francine thank you so much. Guy nick hungerford, ceo of nutmeg. Francine time for todays top stories. Guy russian rebels in the eastern city of ukraine. That is according to the Defense Ministry in kiev. The u. K. House commons later says russia risks worsening sanctions if it doesnt change its behavior. Theres a huge longterm price for russia. Far president putin and for his country. You can see that developing even quicker than a year ago. Most of ukraine voted for prowestern parties, so most of the population have been turned the other way. Sanctions will get worse if they dont change their behavior and nato the summit we held in september, nato pledged to increase defense expenditures. The costs for russia of this behavior are mounting. Francine hsbc fullyear profits fell by 17 , missing estimates. Costs increased and the company made provisions for fines and settlements. The ceo, stuart gulliver, has paid taxes after opening a swiss bank account. Guy a big night for birdman. The film won best picture, best director best cinematography, and best original screenplay. Eddie redmayne received the best actor oscar. Julia moore won best actress. Francine all eyes were on the best british this weekend at London Fashion week. We caught up with philip green behindthescenes at topshops catwalk show. I started by asking him how the sale was going along and what is next for topshop. Its ok. No fireworks, no disasters. Francine you put up bhs for sale. How is it going . Progress. Francine in a couple weeks . Weve got interest. Francine anything else up for sale . Topshop seems to be the standout. How much . You wouldnt think of selling topshop on its own . Bhs, weve got so much going on everywhere, i need to freeze my time. It has been 15 years. But really, theres not a lot of things we are doing just the personal delivery attention. A lot more travel this year. Francine give me a sense of we are headtohead of the elections we are ahead of the elections. Are people going to be more cautious . Who knows . We take it day by day. As a retailer, you are worrying about yesterday or today. I am not in the clairvoyant business. Francine the topshop valuation. The last time you sold something, it was valued at 3. 2. You had so many expansions in the u. S. The you have a figure in mind . I think weve got a lot of good things happening. As i said, im really excited about a lot of online work we are doing. Three or four new channels which really looks like they are going to gather some new momentum. Our franchise business is still strong. We opened our first European Store next thursday in amsterdam. Weve got a few others we are looking at. We open atlanta in march. Weve got two or three others getting there. We are thinking about maybe doing Something Different in japan. Theres a lot going on. Francine that was retail billionaire philip green. We will have plenty more from him on the brand, how it is animating online, and how people still like to shop in bricks and mortar next. Guy not for bricks and mortar. Francine right. We have a little breaking news. Guy interesting stuff. Singapore to raise income tax for top earners. A lot of people go to singapore for the low tax environment and the easy regulatory story. The easy regulatory story probably still exists. The taxes, that is becoming a different question. A lot of expats watching this headline. We are back in a couple of minutes. Francine welcome back. Lets have a look at what the oil price is doing. Lets get that chart up for you. Were looking at brent in the break. There you go brent at 59. Guy so around 60 a barrel, which is quite a long way north of where we were earlier this year. Lets talk about how this is impacting the industry, what is next, what really what people really want the answer to. We are joined by one of the United Arab Emirates leading energy companies. Good morning. Lets deal with the easy question first. What is happening with oil . Guest i think for the last few years weve had an unusually stable period. It was 110 for four years consistently. Suddenly, several things happen in combination. We had chinese growth lower than expected and lower than it has been for a generation. We had opec deciding not to react to that, and effectively letting the u. S. Market be the new swing producer. And almost testing u. S. Shale oil and renewables, and seeing what Energy Markets would do and refusing to cut. We saw countries like iraq and libya using more than expected whereas this year both of those countries have come down. Weve seen oil recover faster than many thought, even a month ago. Francine what happens next . These are things that weve been talking about a inday out. It is pretty clear that it is competition between opec and shale gas producers. We have kind of lost control of the market. Is it going to remain volatile . Is it going to hover near 60 . Guest i think they see it as they are the lowercost producers and they shouldnt have to keep making space for the higher cost producer and losing market share. That is what was happening. The reason prices were stable was because the drop in middle east production was being offset by rising production in north america. I dont see a change in opec policy. The big question will be how much u. S. Production comes off the market. There are some predictions of up to one third could come off the market. We are at 60 now with brent. Perhaps prices are recovering faster than expected. The big shock is the speed of the fall, and the impact that will have on investments and on government budgets. It is a big transfer of wealth potentially. The question is, who is going to benefit . There are talks of it being like a tax break. In the u. S. , i would imagine a negative impact on growth. A lot of that growth was being driven by energy jobs in states like texas. The savings from a tax break wont trickle out into the economy, normally for at least a year until consumers are sure it will stay. The big question will be how much of all that money that was raised in the u. S. Will keep deploying. It was on quite a momentum. Guy if there is a desire to get the cap down in the states where is the line for the price at which we are uneconomic . If we get to 70 and a lot of these rigs are uneconomic, we are in for a longer term gain. What is the view on this . Guest obviously, it is not consistent across the u. S. But what is different with the shale oil a lot of expectations that below 60 a barrel a lot of production is uneconomic. What does that mean for shale oil . It is very easy to sort of react with the world on and off depending on the price. It is more like manufacturing than Traditional Oil and gas. You get big declines of 70 to 90 of those wells within a year. The market can react and adjust. From the middle easts point of view, it is punching below its weight. We have half the worlds oil and gas in the region and less than one third of Oil Production less than 1 6 of gas production. Our problems are above the ground. Political turmoil conflicts but actually a bigger challenge we have is on the Energy Reforms that we need. We are the Fastest Growing market for energy. We are consuming too much. Subsidies, absolutely. Half the Worlds Energy subsidies are wasted in the middle east. Francine in terms of crude outlook, what does it mean for pricing . Guest our Big Investments in the region, in the uae and iraq and we are seeing other interesting opportunities coming across the region, a lot of of the u. S. Companies are leaving the International Plays in general, and the middle east first amongst them. For us we see potential opportunities given the lower oil price, given the perception of risk in the area. Countries like egypt, reforming on the price side to give more incentives for investment, it doesnt make sense to pay 2. 30 for gas when you might have to imported at 10. And reforming the energy sector, that is critical. Francine thank you very much. We are back in two minutes. Welcome back. First word is up next. Be talking greece and will be talking politics. And is all coming up. Greeces read a line and the government said they will not cut kitchen stop pensions. A profit miss. Gulliver gets dragged back into the tax evasion scandal. And the winner is birdman. It takes home of the oscar for best picture. It takes home the oscar for test picture. Good morning. A very warm welcome to those waking up in the United States for i am guy johnson. I am francine lacqua. After fridays breakthrough the Prime Minister has to give reforms that will satisfy constituents and creditors. Details are about to trickle out. They said pension cuts are off the table. Our team has all of the angles covered. Lets get out the first to the greek capital. Eric what do we know about the proposals so far . Because it was a message for the domestics how much will they then it take to the e. U. . Good morning, guys good morning, francine. It is a known in athens and we are getting a sense of varoufakis and tsipras when they submit the proposal reform. The government has what varoufakis has referred to as red lines, a line he will not cross as far as further belttightening is concerned and that is why the government will not cut pensions. If you want to achieve targets, you have 2 ways to do so, cut spending or raise taxes. The government is committed to not cut spending. They are determined to live up to their preelection promises. Let me go through what we heard from the governments spokesman according to sky tv. Not to be confused with sky news out of britain. They will assess proposals and the government plans to restore regulations to collective bargaining and like in the Current Situation to the dark ages greece being out of step with the rest of europe. The minimum wage will be raised to gradually. This is going to happen gradually through 2016. There will be protections from foreclosure for primary residences. The government will introduce legislation for nonperforming loans they give the Banking System time to strengthen first. The Banking System has been suffering billions of dollars of withdraws of deposits as the uncertainty grew over the status of the greek bailout. There will be easier repayment terms for overdue taxes. This is finally, francine and guide, where we are getting to where the german finance minister want to see, how is greece going to meet these targets . Can greece and raise taxes . It will be difficult to raise taxes on the middle task. Tsipras has agreed not to. What it would really like to do is collected back taxes and go after the deadbeats. The greek government will introduce legislation that allowed the deadbeat taxpayers to repay their overdue taxes in 100 stallmans. The first inkling of how it will generate the kind of revenue that it needs to meet these fiscal commitments without having to cut ending francine and guy . We are getting a sense, is your sense it is toward the domestic audience . Will we get different when it is aimed at brussels and how different is the interpretation the spin put on the list . Well at the moment, yes. It is a sales jobs to the left wing. A party which has voiced objection over the fact that greece was able to secure very little in terms of concessions from the eurogroup and that agreement on friday. Most definitely, varoufakis is going to have to be much more detailed and offer much more in it revenue collection somehow when he submits the proposal to the group later today. What you are seeing now is an effort, an attempt to build against the risk of the loss of popular support. It has only been a few weeks since tsipras was elected and the likelihood that will be a collapse in support is perhaps small just yet given that negotiated in principle a fourmonth extension to the bailout. It is a very fine line, trying to appease the quasileft wing and satisfy the demands of the germans and the finance minister and also the spanish finance minister, who needs to demonstrate to the populist movement in his country that in agreement let me put it this way. They arent going to give too much. That would open the potential for chaos in spain. Erik schatzker. Hans nichols is in berlin. Give us the german side. In germany has learned green line real read a line excuse me. Nothing eric talked about an admittedly it is harsh to information, what we heard from the greek government doesnt get a lot of indication it will be easy for the German Government to accept. We heard a series series of well more than make greeks debt higher. They gave a little give him a little lower than 3 . If theyre only talking about more spending and raising more revenue and cracking down on wealthy tax invaders, that could be a lack of specifics and could not go down well in athens or brussels. What ive seen from the greek side is not a lot of guilt. They said they would come off with more specifics that if the math doesnt add up, the entire deal could go south. Lets me pick up on that point. Is it possible we end up in a situation where germany goes thats not good enough. If that happens, what happens . I would answer the first part yes. Remember when we went it the negotiations on friday, it was clear that germany could leverage situation where greece left of the euro. If they are not willing to do the requisite things, they could release. On the technical matter, it would be complicated and we would have to turn talk to frank for us theres another attempt. The initial size from athens this morning do not indicate a government that wants to capitulate to much and its too much to brussels. Brussels and that your role finance or have the final say. They can reject the proposal. Thank you so much. Hans nichols. We have spain a waiting on the greek debate. Taking a hard line. Over to madrid. Charles, we understand that took a fairly hard line. Take us through that. And that is right. We are characterizing as the enforcer for this tough line with the greeks. There was a very clear reason behind the governments tough stance on greece and it is really the fact that the antiausterity part two is riding high in the polls and his government doesnt want to give too much comfort. Would you say that de guindos is taking on the enforcer role with greece . Yes, i think so. What is at stake for the spanish to government is the fact they do not want to be given an easy ride and their allies the party integrates to be seen to be having it easy. How would play into the hands of the antiausterity party which is based on opinion polls is the party with the most electrical support in spain. Charles penty. Todays titter question twitter question tweet us. We are getting good answers and we will round them up. Will be back in a few minutess time. The focus on greece and spains role. Well see you. Welcome to the pulse. Another perspective on greece. The list is yet to be submitted. It will be submitted later on to the eurogroup. We understand that we could see some changes in the pension structure but of the greeks are very clear that there are certain red line said they will not go over. Joining us is a chief economist. Good morning and thank you for taking the time. We are beginning to get an indication that the greeks arent may be prepared to go as far as some in berlin and frankfurt and brussels would hope is a word. How critical are the next 12 hours you think for a misstep here . We are setting up for another cliffhanger on that one. There seems to be misconception on both ends. In germany and other countries of the eurozone and the conception that the greek government understood the message and we already heard the greek government claimed that and with a proposal we have heard so far we will have another issue and its far from clear that it will be true and the finance ministers press conference. What are we expecting in terms of reform . We are very thin on the details and everything will be in the details. They are sticking to a minimum wage increase and sticking to plans to protect foreclosures. At the moment, your sense is what . It will be tough for them to deliver the reforms of the e. U. Wants to see . And yes, of course. The issue is not so much of the competitiveness and those issues will basically not help greece to become competitive and therefore, the whole basis of the deal. Stephan, you are deutsche banks general economist a you have your ear to the ground. What are people saying in germany in terms of policy makers if this talk that germany is willing to see greece talk how realistic is it . Is that the core view . Ultimately, there is a lot of posturing going on from both sides so it is hard to tell. I think the patience of the German Government is wearing thin. And they are confident that a grexit would be less than two or three years ago. Obviously some genuine kind of option is that is it doesnt work out, ultimately something that can be missed completely. Stefan you seem to suggest the next 2 days are going to be crunch time. Will be we be clear if greece passes through . These reforms and the next couple of weeks and they will go back on it. I mean if they look at the pattern evolving here for the last three or four years, depending on who was in charge still and the wickedness of the Group Proposals is a good indication it will continue. And the Group Proposals is a good indication it will continue. To clarify and improve and will probably drop on for the next few weeks. Lets react to a more technical questions. If we see the surplus down 1. 5 would it intel a debt restructuring . It might have to go hand in hand. No, i dont see it. I dont think the other government is seeing it. The data levels coming down will be pushed further into the future but it doesnt mean they greek a government will not have the opportunity to repay this part of the debt which is only a minor one. It is coming up up in the next few months. It is probably a nonstarter to begin with and could negotiate the repayment. I wanted to get a more longerterm basis. Theres an argument thats because most of the debt is held in government hands at the moment it is not carrying a payment with it, one of the coupon comes back in, you need to have a big enough cushion to manage that. What a view in the long term want one of surplus is viable given the fact that payment has yet to kick in. I think we are pretty sure that if the proceedings currently do not fall apart there will be a third program. In this program, we will be taking care of the issues and ultimately, in the very longterm, i think there is not high hopes that degrees will repay all of his debt greece will repay all of his debts that it owes. Before the Critical Reforms that actually will be the basis for the longerterm. What do you make of what we heard that mr. De guindos, the spanish finance minister, was probably harder than the greek finance minister . Are you worried about de guindos . Of course, it is de guindos and some other countries and that kind of public support for austerity is not high either. When you have to have the first several years, it is not popular. I think it is very important to see that it is not a showdown. When varoufakis and the German Government, it is basically a crash between the european institutions and the greek government. I think it is a very important step and it just shows it is not just mr. Schauble. Thank you so much Stefan Schneider joining us for frankfurt. Coming up, we will focus on hsbc. We will give you the full story after the break. Welcome back to the pulse. Hsbc missed estimates and they reported a drop in cell and shares will. Anna edwards joins us. Lets look at the numbers. Not pretty really. The stock is down by 5 hitting a 2. 5 year low. The revenue coming in at 18. 5 billion u. S. Dollars below the estimate and down 17 against the last year. Whats to blame . A sizable chunk from finds and provisions fines and provisions. Thats one of the areas where everybody is looking for why the number has disappointed. The company describing 2014 as a disappointment. They have brought down there equity target as well wringing it down to 10 and it was at 12 15 . Theyve talked about some of the reasons, the cost of regulation cost of Capital Requirements going up meaning they are not able to deliver the return on equity they could. They said 2015 is start in a satisfactory way, the word they use and the business is structurally sound. It is a ceo who gotten rid of 74 Business Units since taking over in 2011. On the Conference Call earlier, he said to simplify this firm and said not too big to manage. At adjusting the concerns around the company because theres been a lot of chatter. All about the tax scandal. What have we learned today . There are number of legs to the story. The guardian suggesting that the ceo had ever . 6 million in a swiss account 7. 6 million in a swiss account and that is where he wasnt getting bonuses in a company in panama. Hsbc spoke out and said yes, he did have this account but do not provide tax advantage and was a privacy he had this arrangement and had declared his earnings to the Tax Authority and played taxes in hong kong and london. Their halfing to defend and they are having to defend in the bank. The guardian didnt accuse him of avoid or breaking any laws but shedding a light on hsbc. And this is amazing, both of the Major Political parties that are jumping on this and trying to find ammunition to fire up the funding of their rivals with regards to the dealings with hsbc. You said it interesting line from him. That sums it up. Saying on the Conference Call he is a permanent resident in hong kong and expects to. Of broad. The extent the seo he needs to go the ceo feel he needs to go. Thank you so much. Anna edwards with the latest on hsbc figures and tax scandal unfolding. The latest situation on the ukraine and the response from the aem. From the e. U. Stay tuned on that. You can follow us at twitter. We will see you in a moment. Welcome back to the pulse. Good morning. The greek Prime Minister Alexis Tsipras walks another highway today as he tries to come up with financial reforms that satisfied both the domains of european creditors and his voters. This comes after talks between officials in brussels concluded in an agreement to extend bailout funds for four months. They gave hints to the measures they say redlines still apply, what cut pensions, and still will gradually raise minimum wage. Hsbc profit fell by 17 missing estimates, cost increase the company made provisions. Edges bc clarified this morning the ceo has paid talks is taxes on questions raised by the report of the last few days from the guardian newspaper. Singapore to raise income tax rates for top earners, raising the tax rate to 22 from 20 for the top 5 of earners. The hike will start from 2017 tax year. Take a look at the markets. Early on, we thought we were going to do well in the ftse 100 and then we got hsbc. It was looking very pretty in europe. It was green across the board. We were much higher than this on the dax. I think the headline is a fragile agreement between greece and the creditors, and that remains fragile. We have gained because there is some form of a geary meant agreement. From moment, were the headline, ftse 100 at an alltime high and then became lower, down by 1 4 of 1 because of one stock. It is the biggest loser on the ftse 100 hsbc. Yet in the allegations of tax evasion, it accounts for a most 6 of the ftse 100. That is drug known stocks this morning. It is a bond market. The kneejerk reaction. You saw spanish yields come lower. We saw the strange thing happen in the european bond market. Portuguese bonds, 10year, yield top to 2. 1 and for very brief moment, traded below yields on u. S. Debt. The u. S. 10 year. These twoputted much trading and line coming for the first time in seven years. You cant call that a credit story. It is a deflation story in the eurozone. Yields keep going south. Fx, down. It was a narrow miss an german business confidence. That open the door for a week or euro. Back a bit again. A weaker euro, fragile agreement has matched changed between today and friday . I will let you decide. It certainly seems like the markets are little bit worried than they were on friday. Or they were earlier this morning. In about 25 minutes, tom keene and surveillance. I thought the market activity was terrific on what jonathan pharaoh did, showing the most unusual times we live in. We will go to hans nichols in berlin, Erik Schatzker is in athens as a look at International Relations of the morning. James karen will join us and jim karen on bonds. Youll talk to him about interest rates. A chat about new zealand as well. He is focused on some of the opportunities out in new zealand. We will talk mental block list of 3, 2 with one. We will talk to josh wright on janet yellen. She begins her testimony tomorrow up on capitol hill. A law to talk about this morning. Thank you so much, tom keene in 25 minutes from now. Lets return to europe, more sanctions could be the story. Our next guest says you must ratchet up sanctions if the situation in ukraine worsens. Good morning. Very nice to see you. Thank you for taking the time to come see us. What are you watching for in the ceasefire that exists currently in ukraine as a gauge as to whether or not it is holding, not holding and what is your sense of the situation on the ground at the moment . It is difficult to give a specific answer because it is an untidy front. Military discipline doesnt apply in the british sense. I think what were looking for is there should be less military action day by day, that the heavy artillery and so forth should be brought back as the agreement states the exchange of prisoners should take place. There should be a reduction in tension. It is not going to be clearcut. It is not going to be suddenly peace is breaking out. The sing the whole pressure diminish is what is important. In the goodwill of the two sides is demonstrating or not, as the case maybe. Is there a timeline for this . We still talk about a ceasefire, but when you look at what is happening on the ground, i know we have to wait it just seems impossible to call it a ceasefire at the moment. In two weeks time, if we still see fighting and if we doubt see that diminishing, what happens . It is for the heads of government, not for us to decide, but i think if in two weeks time, there is still significant level of violence and it really looked as if the russianbacked rebels were still getting a lot of support from over the russian frontier, then i think the heads of government should come together and consider ratcheting up sanctions. I dont think one should look at my residence as being a key thing. Minor incidents is is been a key thing. How significant should be rafting ratcheting be . Given where we are now i think it should be quite severe. I think they should be aiming for the people who are closest to putin. I think there should be a real effort to make life difficult for the legal arcs and people oligarchs and people whose businesses are connected with the west. I think a difficult thing is, we dont want to make life more difficult than we can possibly help for the ordinary russian people. One of the dangers of sanctions if life becomes difficult for more ordinary russian people putin can generate xenophobia. Sanctions are difficult weapon. If you look down the road him and i hope to goodness we dont get that far, but if you look right down the road, the option of cutting the russians out of the Swift Financial transaction system in the way that iran has been, that exists. The potential to do damage to the russian economy is severe but it needs to be as targeted as possible. But that would hurt western countries as much, maybe less, but still heard a lot of the western countries. And going down the banking option seems cruel at this point. Youre perfectly right. Another disadvantage of sanctions is they heard the people who apply them as well as those who are applied to. Often in a random fashion. If youre are faced with a situation like this where one country is apparently trying to take over the territory of another and if you dont want to fight a military war we dont want to fight a military war sanctions are the least bad option. Can we talk about how we ended up with the situation. Your committee has been talking about the fact we dont have the necessary resources to analyze and understand what is happening in moscow, therefore, werent fully appraised in the story the way we should have been. Can i ask you where the resources should come from to make sure we bolster our intelligence gathering . It is not so much intelligence gathering, but the ability to read and assess what the russians are trying to do with the power structure is in the kremlin and if you think back i mean, way back, to the cuban missile crisis, one of the very striking things there was almost all the people advising president kennedy had ever intimate knowledge of the kremlin. They knew the people in the kremlin. They knew the pressures on them. There were able to judge very carefully how they were likely to react to different situations and to put in place a ladder down which they could climb. I think we have lost this knowledge of russia we live in a multipolar world in which the threats are not unified in moscow. We dont have a cold war determined by destruction and the level of understanding of the other side is necessary to assure that doesnt take place. We live in a world where the threats are coming out of the middle east, coming out domestically, from a variety of sources. To dedicate that much to understanding the intimate knowledge of what is happening in the halls of power in the kremlin. You make some good points but i would reply with two things. One, the Resources Available to the Foreign Office and the british diplomacy and two other peoples diplomacy not only britons, but other eu countries, has been run down too much in recent years. Secondly i think there is been too much emphasis on the idea of diplomats a salesman rather than diplomats as diplomats. It is not just a question of resources. It is the Analytical Capabilities which used to be rated so highly are now rated less highly than they used to be. When i compare the Foreign Office now with what it is like back in the 1980s, this decline in analytical capacity stewart and house of commons is made a similar point in relation so the world he knows best the middle east and afghanistan and so forth. I think we need to think more of diplomats and a traditional roles rather than thinking of than merely a salesman. Is it very important for the europeans to try to deter the u. S. The arm the ukrainians . Im so sorry . The u. S. Wants to arm ukrainians. Should the europeans fight against that . I would be reluctant to see lethal weapons handed over to the ukrainians and the circumstances were in a present. Im not saying a situation would never arise when that would happen, but i think that really would be escalating the crisis very severely. Lord Christopher Tugendhat thank you very much for joining us. Were going to take a break. Birdman swept the oscars. Eddie redmayne was named best actor. We will talk the oscars and we come back. We will leave you with eddies reaction to his big win. Thank you. Thank you. Thank you to the academy. I dont think im capable of articulating quite high feel right now. I am fully aware i am a lucky lucky man. Welcome back to the pulse. Last night was the biggest that in hollywoods calendar. Birdman won gest best picture. Sab average campaign tends to cost 8 million to 10 million. This is private information. It was reported a few years ago the average cost of an oscar in a campaign is about twice what it is to get a seat in congress. Reportedly, the most expensive when we know about is shakespeare in love. 15 million. It is been shown having an oscar nomination will increase your box office by about 12. 7 million over it not being nominated. The oscarnominated films to 10 to be the best films of the year and better films tend to gross more money. There have been a couple of examples where we can really see money hasnt made a difference. The film crash was a real outsider in 2005. They won. It is widely reported it really helped them. Were always behind this metal and glass. The actresses can cost 3000 to 4000 each night. One of the studios spent 30,000 just on transportation alone. Being the nominee is a lovely experience. You will get a goodie bag. It is a free gift. Electrical equipment, trips, massages. When you win an oscar, one of the terms you to sign onto is if you ever want to sell it, you need to give the academy the option to buy back for one dollar. That is to keep people from selling off oscars. If your oscar is looking chipped, you can send it back to the academy and they will recoded so looks as good as new. The academy is worrying about their image all the way through. How would you get that chipped . What would you do with it . Oops, it fell. Birdman had a big night. Eddie redmayne picked up the best actor for his per trail of Stephen Hawking in the theory of everything. Julianne moore won for still alice. Ben roberts joins us now. Did you say up and watch it all . No, i woke up about 4 00 in the morning and check my phone went back to sleep. A big, big, big day for british film. It a redmayne taking that oscar. What does that do for this side of the pond in terms of the Film Industry . Weve always had actors who could travel quite successfully from making films to to making films in the states. For eddie, and means the cost of hiring eddie goes up quite considerably. I think it is good news for the next film eddie makes. He is about to film another. It elevates their profile and the films theyre working on. Because we share language with the states, which is the biggest audience for film, it helps to kind of raise our game in our profile. What about this film . Is there direct relation with people saying, they won an oscar or maybe it was in a my radar and i want to go see it . Probably. The theory of everything has are ready been a big hit. It is on track to do something between 59 to 20 million quit 50 million to 20 million quid and u. K. It helps the dvd and probably helps the tv rights helps bring the film for the done the line. What is interesting this year i noticed, most of the films are winning awards are on the independent side of the spectrum. The studios continue to make more and more superhero films which are not the type of films the oscars have ever typically rewarded for stopped you have a ceremony now which much like this or money that helps the night before all the independent spirit awards. It was supposed to be the alternative. Now they are pretty much the same thing. From my perspective as some one who works in the independent space, it is great news to have that size of the tv audience seeing an alternative to the type of stuff they can watch. Talking but the money that used to be spent 20 oscars in that package. You can be independent, but you still have to have sufficient resources behind you to compete. It strikes me there are two categories of independent films almost. I wonder if that is where boyhood may have suffered. Going into last night, the were probably two contenders for best picture, boyhood which was released by an independent and then birdman which was financed by a subsidiary of 20th fox. There would come a point where ifcs ability to spend versus fox is Something Else on together. You saw the amount of lavishing of voters in the lead up is quite something. A lot of films are also made in the u. K. Because of the tax breaks. How important is that whoever is in charge next of u. K. Sticks with those tax breaks . It is critical. The tax break is worth something between 18 to 20 of a films budget. Not only does it support the films we make here in the independent it encourages a lot of studios to make films as well. Lester, we released our statistics a few weeks ago, the highest on record for spend on u. K. Film production or Film Production in the u. K. With films like star wars. I think it reached about 1. 47 billion pounds spent in the k last year. That tax break not only supports independent films, but it means our crews are working on all different kinds of films, he meets the studios does it means the studios are full with all different kinds of productions. I dont think theres an expectation that tax break is going away. I think the tax break is investment of lottery money and film is crucial to the healthy independent sector in the u. K. We will have to get ben back to talk about diversity. From film to fashion, all eyes on the best of british at London Fashion week. Bloomberg caught up with philip green behind the scenes at the catwalk show. We asked how the brand is innovating. I think my guys have worked again on Something Special with twitter, which i think is interesting. We have to keep working hard. I think i lot of our were working really hard on International Growth online different places, working really well. You cant not be in that world. It is just a question, hopefully, picking the right things. It is not easy. So many things come at you all the time. Some you get right, some you get wrong. What has changed in the way we shop in the last two to three years . Stating the office obvious, mobile so much choice for the consumer. Interestingly, i had maybe 50 on people from our academy, 50, 60 guys in our office. I set them on a project. What was interesting, their interest is still to go shopping to the shops. Theyre looking at online where they want to go, but all of them virtually all of the people came, three different groups were all excited still to come to the stores and see what is going on. People still want to shop shops. I dont think everybody doesnt want to touch, feel i still think that is part of the business. Philip green talking about challenges to his industry. Lets talk about what were watching for the rest of the day. Lets go back to athens where we find Erik Schatzker. Were starting to get some hints coming out about what the lay of the land is likely to be for the package that the greeks are going to be putting out to the rest of the eurozone. Walk us through how the rest of the day, how the next few hours are going to work. Good morning. What we have heard from the government so far no, were not going to cross any red lines. No, were not going to cut Public Sector pensions. Yes, were going to restore collective bargaining. Yes, were going to raise the minimum wage. That is all novocain. The stuff the dentist pumps and you are gum before he proves that one of your teeth. There is going to have to be pain. It is difficult to see how the government is going to meet the demands of the eurogroup, how it is going to be the demands of the german finance, how it is going to meet the demands of spain without taking some pain. That is what we have yet to see. Once the pain is introduced, we have to see how the syriza party response. These are some of the open questions we hope to resolve before the end of the day. Yanis varoufakis the greek finance spoke friday of constructive ambiguity. He said the statement they had drafted was an example of constructive ambiguity. And judy could work in his favor here. The problem with ambiguity as that it requires interpretation. What this is interpretation of ambiguity . Those are open questions. We will get the details of this proposal, we hope, by the end of the day. Im going to leave it with you there because there is much more to come from athens. And you will be on the ground giving us the breaking news about the day. Erik schatzker, there from athens. That is it more the pulse. Surveillance is next with tom keene and his team. Rebels attack. Kiev struggles to maintain order. Greece against tough negotiation that will send a list of measures to brussels today. Taking the child to disneyland. It will bankrupt you. Let me save you therapy and let it go. This is the pulse. It is monday, february 23, i am tom keene. Joining me, Olivia Sterns and brendan greeley. Lets get to the top headlines this monday morning. Or fighting in ukraine over the weekend. The government says prorussian rebels attacked with artillery and automatic weapons. Both sides say they have completed the first Prisoner Exchange since agreeing on a ceasefire, now a days ago. Another day, and other deadline for greece. Prime minister Alexis Tsipras has until the end of the day today to come up with a new list of financial reforms. European finance ministers will decide of those proposals go far enough