Transcripts For BLOOMBERG The Pulse 20150302

Lacqua. Still to come, the hsbc whistleblower tells bloomberg well bloomberg speaks to the man who lifted the lid on the tax scandal. That is coming later in the show. Guy lets get to another major story. Boris nemtsovs murder. Thousands marching yesterday in memory of nemtsov. Francine Moscow Police estimated the number of marchers at 20,000. A Nonprofit Group of the number at 50,000. Ryan chilcote sent this report. Ryan this is the first opposition protest of the year, but it is no ordinary demonstration. It was supposed to be about economic woes. It is now a morning vigil the Boris Nemtsov, who was shot over the weekend. One of the opposition leaders organizing this very protest. This is the spot where Boris Nemtsov was struck down. He was going for a stroll by the kremlin. As you can see, thousands of people have come here to leave flowers and pay their respects. They just keep coming. There are many theories both official and unofficial, as to why Boris Nemtsov would have been killed. Some say that it was for his opposition to Vladimir Putin others say for his opposition to the war in ukraine. The leader of ukraine says Boris Nemtsov was about to reveal evidence of Russian Troops in ukraine. The russian president has sent his condolences to nemtsovs mother. For thousands of people today it is a day of mourning for one of the leaders of the opposition killed on one of the on the eve of one of the countrys biggest demonstrations. Ryan chilcote, bloomberg, moscow. Guy for more on the implications of the murder of Boris Nemtsov and what it means for the wider world, lets talk to the former British Ambassador to russia mr. Tony brenton. Good morning. Thank you very much indeed for taking the time to talk to us. How should the west respond to this . Guest the west needs to be quite careful. Quite a lot of the i knew boris very well. His death is a tragedy. But quite a lot of the background to his death is a patriotism and nationalism going on inside russia in connection with ukraine. I suspect that those who killed him were inspired by that nationalism to do a very nasty thing. If the west comes out too forcefully again criticizing russia, that was simply compound the feeling in russia that the country is beleaguered, under attack and they need to stand firm against us. Francine will we actually ever get to the bottom of who really killed mr. Nance of . Guest there have been lots of murders over the last few years, and few of them have been solved. I know a lot of theories going around. The worrying one, which is coming out of the regime, is that it was a provocation organized by the western enemies of russia, which to our ears sounds absurd. In todays russia, it doesnt sound absurd. I suspect that it doesnt sound absurd to the regime either. If you believe it, that inspires you to be more brutal in the way you deal with the opposition. Another theory is that this was the kremlin itself. They have denied it. I think it is unlikely to do this on the eve of a big antiwar march, to generate the hostilities and the suspicions which we have seen as a result of the murder. That is a reverse of the sort of results the kremlin is looking for. I think it is more likely that the atmosphere of frenzy and anger and patriotism throughout russia probably inspired some rather nasty rightwing group to go for boris. Guy what does this mean for the opposition . You talked about the fact that this may make life more difficult for the opposition. What does this mean ultimately for the opposition parties . Guest yesterdays march would have been seen in the kremlin. They would have watched it nervously, fearing that this was the beginning of a series of marches and protests similar to those that took place in russia in 201112. My reading of what happened is that it was well below that level of intensity. It was much more a lot of muscovites coming out because boris was a special person to mark respect for him. In a sense, the position of the opposition is probably not substantially affected by his death, apart from the loss of him himself. He was a very inspiring, strong figure. Frankly, moscow is quite a special place. It is more liberal younger more connected than the rest of russia. 20,000, maybe 50,000 people turned out. The opinion polls continue to indicate that over russia as a whole, support for the regime remains very firm. Francine sir tony, you said you knew Boris Nemtsov very well. When was the last time you spoke to him . Can you give us any insight . Guest i saw him about a year ago when i was in moscow. The great thing about boris was, he had a real zest for life. He was in a very difficult position, being a leading oppositionist in todays russia. A very exposed, dangerous seemingly unprofitable place to be. But he was always optimistic. Always had another bright idea for carrying forth his scheme for improving russia. He was wonderful in that way. One of the great things about him, in a political atmosphere which has become increasingly cynical and weary as people resign themselves to mr. Putin being there probably until 2024 as the means of government become more shadowy, he was always uncyncial. Uncynical. Guy lets talk about russias prospects. How does this fit into the story of russias desire to see a larger russiadominated establishment of the hegemonic authorities it once had. How does this story sit sidebyside with that one . Guest im quite doubtful about that story. I think the way russia got into the ukrainian what can almost be described as a disaster was more or less by accident. They saw the fall of yanukovych. They feared a western hand in that. They were elected they reacted more or less instinctively to protect crimea by annexing it. They found themselves dragged into the insurrection in ukraine , and rather unwillingly have landed themselves in a war which they cannot afford to lose. All the signs at the moment to me are that they are very keen to make the second minsk agreement work and move towards peace in the region. Therefore, gradual improvement of relations with the west. Suggestions that they are interested in detail arising the baltic destabilizing the Baltic States, i ask myself why they would want to do that. Suggestions that they would want to see a land bridge to crimea in ukraine mean that what has so far been very limited they continue to describe it as a no nwar has to turn into something much more visible, much more up front, and an attack on a region which is integral to ukraine as a whole. I dont see them escalating things in that way. That is not to say they behave well. But i think fears about russia have been immensely exact rated. Immensely exaggerated. Francine it probably should be back to business or business as usual. The markets have largely brushed this murder off. What does it mean for investors . Should investors take stock and say, the Political Landscape is becoming more dangerous . Guest russia has got hard Economic Times coming. Largely as a result of the fall in the oil price. They are expecting a recession of perhaps 5 falling gdp this year. That is not catastrophic. But it is very bad. A lot of businesses are going to go under. Theres a very serious question about the ability of russias big state and are prizes rosneft and so on to maintain the payment of their overseas debt. They cannot cover their borrowings from the western Banking System. Thats the weak point and the worrying point for the russian economy at the moment. Guy we will leave it there. Thank you very much for your time and analysis. Tony brenton. Francine coming up, more slowdown signs from china. Factory numbers show contraction as the Central Bank Cuts rates. Will it be enough to boost the economy . Guy and we are going to barcelona. We will be live for europes largest tech conference. The ceo of arm is joining us. Francine you dont want to miss that. That brings us to todays twitter question. Will sam suns new mobile really rival apple . Francine welcome back to the pulse. Guy the mobile World Congress has kicked off in barcelona. Caroline hyde is there for us. She joins us now. Airline, over to you. Caroline thanks very much, guy. Me and the 90,000 others in barcelona are pleased to say im now joined by simon, chief executive of arm holdings, which is designing the chips. They are in about 90 of smartphones. All these connected devices we have. It was a sense of how your First Quarter was. You had royalty revenues. Q1, strong . Guest we are still in it. The business is developing, but weve brought momentum into this year. A very strong pipeline of sales opportunities. So far, so good. Caroline give us a sense of whether the demand you saw samsungs latest development yesterday. We want more powerful phones. How are you staying a step ahead in terms of design to ensure the capability is there . Guest it is all about constant innovation. A few weeks ago, we launched a new highperformance processor which we expect to see in phones next year. That product has come about through close collaboration between us and our partners many of whom are trying to innovate to stay ahead, have the best product, to deliver the best user experience. Caroline what about regionally . Where are you seeing the most exciting developments . Is it emerging, the developed world . Guest it is going different ways for these different markets. We are seeing lots of lowcost devices being launched for emerging markets. The forecast for china this year is half a billion smartphones sold, which is huge. There are many lowcost devices in that market. And places like africa and southeast asia, the market for smart phones is big and theres only about 2. 5 billion of them in use today. Theres a big market. Caroline talk to us about the partners and consolidation. We are suddenly seeing developments. Is that good news for arm when you see your clients joining forces . Guest i think when you look at the future of semiconductors, if the device is very complex, you need a lot of scale study on the leading edge. When these Companies Come together, it is a good thing. They have the firepower to invest in the future. In this case, longstanding partners of arm we look forward to working with them. Caroline [indiscernible] other areas of growth that we are seeing in terms of the internet of things, we were talking about billions of connected devices, is the infrastructure there yet . Are companies and providers investing in connectivity enough . Guest it is another case where there is a lot of innovation going on. This week, i think you will hear a lot of people talking about the path to 5g. We are thinking about how the network is architecture for the future. Theres a device that talks across a network to a server. We thinikk that in the future that needs to become a more distributed network, which will enable lower power and better performance. The Network Becomes another platform for innovation. Caroline how many billions to you for see invested in a 5g platform . Is it a scale that we cant even conceive of . Guest it will be big. You look at the Global Market we are still in our growth phase for the use of connected devices. I think the network has a long path ahead of it. Caroline is it too much when it comes to the internet of things . When will it fundamentally change the way we develop . Guest i dont think you will wake up one day and go, the internet of things has arrived. It will be a gradual rollout. We are starting to see focused areas, connected homes connected cars, wearable devices. I think the internet of things is becoming more a reality every day. Caroline we were talking earlier about perhaps you need the hype to ease off. What are the most exciting new products that people are coming to you with ideas for that they need the chip designs embedded in . Guest there is all sorts of interest around wearables continuing. Youre seeing lots of smart watches rolled out. A lot of interest there. And we were thinking about how to architect those devices for long factory life. Long battery life. How do we architect these devices are real power efficiency is one of the things we are looking at. Caroline how are you helping innovation from the Grassroots Level . Trying to help new entrepreneurs . Guest weve been looking at this for a while. There are lots of lowcost development boards. We have University Programs where we are providing materials so that people come out of university with the skills they need to take advantage of all this opportunity for innovation thats out there. With these lowcost devices with the ease with which you can connect to the cloud, program and application, there is a fireman for innovation that weve never seen before. Being in at the Grassroots Level , we think is really important. Caroline is that just focused in the United Kingdom and United States . Guest it is a pretty Global Program that we have. We have land in a box, which is something that we can hand over to any university to be used as part of their teaching material. Caroline how much are you affected by the politics of growth as well . We have china injecting stimulus, people worrying about russia, and they are a hotbed of talent in terms of developers. A lot of young female developers. Does that worry you, that some of the talent and potential growth for arm is extinguished . Guest obviously, some of these big political issues can inhibit global growth. That is obviously a problem. Im not sure theres much we can do about it other than try and make it as lowcost and accessible as possible. Hopefully, talent will find a way through. Caroline where are you finding the best talent at the moment . Europe am a spain for example how are they providing in terms of their digital tuition . Guest we dont have anything in spain, but we recently acquired a company that had an office in budapest. That is something we would look to expand upon. We are looking for talent on a global basis. We have teams in china, the u. S. India, all throughout europe, and we go where the best talent is. Caroline more acquisitions . Guest never rules Something Like that out. Weve had a number of relatively small acquisitions bringing in teams, talent, intellectual property to help round out our product offering. Caroline simon cigars, great to speak to you. Especially at an event like this. Thanks very much indeed. Simon segars much even executive of arm holdings. We are back later, talking all things automotive. Francine great, caroline, thank you so much. Stay with us for more from the mobile World Congress. Caroline will be joined by the run out ceo. Guy that brings us to todays twitter question. Will samsungs new mobile really rival apples iphone . Let us know what you think. Are they on the same page . We will be delighted to hear your thoughts. Francine now time for some of todays top stories. Korea has fired two shortrange missiles into its eastern waters as the u. S. And south korea begin joint military drills. Japans Prime Minister, shinzo abe, has protested to north korea about the launches. Guy israeli Prime Minister netanyahu has arrived in washington. Netanyahu will ask congress to delay a possible nuclear deal with iran according to an israeli official who says israel knows enough about compromises made during negotiations. They are certain a deal would threaten israels security. President obama has said he would veto congressional intervention. Francine coming up, the hsbc whistleblower who lifted the lid on the banks tax scandals. More on that after the break. Guy you can follow us on twitter. We will see you in a moment. Francine welcome back. We are getting breaking news. U. K. Pmi a little better than expected. 54. 1. We were estimating 53. 3. Guy a much better than anticipated number as fran said. You can see the pounds reaction to this an increasing spike. We are still down on the session, but certainly very much up off the floor we found a few minutes ago. A strong number delivered out of the u. K. This morning. It is largely a servicebased economy, but people are paying attention to the manufacturing sector. Francine now lets big about the man who lifted the lid on hsbc. He is herve falciani. He alleges management was aware of lax controls at his bank. Guy what did you talk about . Francine we went through everything from the hsbc list, we also talked about the fact that the swiss authorities are after him and his daytoday life, which is trying to hide and not being found. What jumped out at me was the fact that he told me he can prove hsbc management knew of alleged tax abuses. I can approve that the top management was aware of the problem that was faced by the bank generally. Im surprised that the top management of hsbc are pretending a lot of things. They are not trying even to know what it is about. They did not even try to get inside that. Of course they didnt receive information. Francine i really tried to get out of him who he was accusing. He didnt give any names. He declined to identify any executives or to describe the evidence, saying all he has is logical proof. He says he doesnt have anything signed by the managers. He wouldnt tell us anything but it could be either software that was downloaded in a certain way, or the way the accounts were set up. Guy how have hsbc responded to this . Francine after the interview, they declined to comment. They referred act of the banks earlier statement on this icig report, the data that was analyzed by this entity of executive journalists in washington. He had the hiles for eight years the files for eight years. It was only when he showed it to reporters that this thing blew up. Guy so i guess the next question is, what is next for him . You talked about the fact that he is trying to avoid the authorities. Francine i asked him whether he would go back to switzerland. The attorney general indicted him because it is illegal in switzerland to take data. I asked if he would return to switzerland to fight the charges. He kept that open. He said he is in touch with politicians. We are fighting for me to go there and just really expose the idea of all that. Guy so, thats whats going to happen. I guess the other question that follows from that is is he going to leak more data . What is he going to do with the data he has . Francine he has more data. He said he doesnt really want to talk about it because hes not in the business of leaking things, he says. What he wants is a dialogue with the bankers and other whistleblowers. If that doesnt go through, he says he will have to leak more data to bring it into public domain. It is not about names. It is about mechanisms. It is about i want to go in this show business debate about names. We have many names. We have enough names. We need now to obtain excuses. The next step is just to work together. If it will be not enough, we will have more and still more leaks. Francine again, he didnt give a timeframe for that. I guess a whistleblower that is not blowing any whistles at the moment. Guy fascinating conversation. A great story coming out of frans conversation. This monday morning, the Bloomberg Top headlines. Francine tens of thousands marched through moscow yesterday. Nemtsov, a critic of president putin, was gunned down as he walked through the center of moscow on friday night. Police estimated 20,000 people took part in the march. Guy the man who weve just been talking about, who lifted the lid on hsbcs tax scandal, has spoken to bloomberg. Herve falciani says the Bank Management was aware of lax lacks controls. Francine indias finance minister has presented a budget which raised the estimate for the countrys fiscal deficit. They forecast a shortfall equivalent of 3. 9 of gdp. That is higher than previous goals of 3. 6 . Guy more on what is happening with india and modinomics in the next hour. We will talk to the founder of cobra beer. Francine now lets go back to the mobile World Congress. The Auto Industry is paying attention. Caroline hyde is in barcelona with the ceo of renault. Caroline. Caroline i am indeed, francine. It is carlos ghosn,. Lets kick off with all things mobile. It is also connected cars. Electric vehicles has been an area that you are pushing. How are they selling them . Where is the competition. Guest it is growing. The shares of electric cars worldwide are growing not quite as fast as we would like them to grow, and we understand why. People want electric cars cheaper. We are continuing to cut the cost. Then, they want more infrastructure. They want to be able to charge the car everywhere. Infrastructure is being developed quicker in some areas of the world and slower in other areas. They would like more autonomy. So i think it is a technology which today is the technology of the future. Many carmakers are coming to it even people outside the car industry which in a way, is refreshing for us. We are the first ones to get into electric cars. People have some doubts about who is going to join and now the whole Auto Industry is joining. It is going to be slow and steady. Caroline who is leading the charge in terms of infrastructure. Are you able to provide people with a battery life that will transport you longer . Guest i think first you are going to see many trends, first, the evolution of autonomy. Today, the autonomy is between 100 to 150 miles. We have to more than double this. Caroline you are going to . Guest we are and others also. We follow the technology. We know what is going in this direction. Second, infrastructure. In Companies Like japan, france the United States in other countries, it is much slower. Like any new technology, the costs are going down. There is more efficiency. Im optimistic on the fact that we are going to get something much more competitive in the next year to come. Caroline youve then got autonomous vehicles, Driverless Cars, google uber talking about these elements. Where are you in that timeline . Guest i think Autonomous Cars are a megatrend. It is something which is going to happen because it corresponds to needs. Needs in terms of safety, and in terms of quality of driving. This is not about replacing the driver, just give the driver more power, more autonomy. It is going to come stepbystep. We announced for 2016 what we call traffic jam autonomous driving. You are caught in a traffic jam, you give control to the car. In 2018, highway driving with change of lanes. You are going to be on a highway, putting it on autonomous driving, and the car is going to drive by itself. It is going to change lanes. 2020 is going to the city driving. So you go from the more simple autonomous driving to more complex. At the end of this church of this journey, you may end up with Driverless Cars. Driverless cars are also commercial vehicles. There are a lot of reasons for which im absolutely not optimistic on the fact that Driverless Cars are going to come very soon. Technologically, we are not ready. Second, you have Cyber Security problems, problems with regulators. Before a regulator accepts cars without drivers on the streets it is going to require a lot of demonstration and proof. Caroline have you got a date in mind . Guest i think it is 10 years plus, in my opinion. Obviously, competitors may have a different timeframe, but when i look at the technology will challenge, the regulator interrogation, Driver Security concerns, i think Driverless Cars will take more than 10 years. Caroline you call it a megatrend. What about the trend for sharing cars, the fact that you might be transported within Driverless Cars when you need them, you dont need to the owning a car yourself. Will the next generation not want to own cars . Guest the trend is today particularly in mature markets but it is still a very small portion of the use of the car. If i look at the industry, the industry sells 84 million cars per year. From the 84 million cars sold per year, and on a carpark which is today probably around one billion cars on the planet, car sharing is a very small percentage. It is growing, without any doubt, but it is relatively marginal compared to the classical use of i own a car and the car is part of my home office, something which belongs to me, where not only im being transported but i can live there, i can work there i have my special environment. Caroline lets talk about today. We are seeing protests in moscow, uncertainty once again. You control the biggest car player there. People are saying Renault Nissan is overoptimistic about russia. Do you think you are . Guest our forecast is that russia is going to be down between 20 and 30 . I dont consider this as a very optimistic perspective. We have already postponed the month of january 25 down. I think 2015 is going to be a tough year for all carmakers in russia. Probably 2016 also. But i have absolutely no doubt on the future of the russian market. I think the options that we are acting on today is localizing our production against the decline of the ruble. When the storm will be finished nobody knows how much time it is going to take. But hopefully, much better condition to capture market share and to grow fast when it will rebound. The history of the russian market is very fast decline, but also very strong rebound. We need to be ready and careful for when the rebound will come. We represent 35 of the russian market. We are going to stay there. We are going to probably grow this market share. Caroline january, you had a stellar year in terms of car sales. You were leading the charge with european car sales. Do you think february will be as strong . Guest i think we are going to have a strong year in 2015. We are putting our offensive on cars which have been very successful. 2015 is going to be a year where we have many additional launches of cars which are iconic for the renault brand. You are going to have a crossover that we are going to show at the geneva auto show. We have many new cars coming in 2015. It is going to be a very active and rich year in terms of product innovation. Caroline wonderful not to end on. Carlos ghosn, wonderful to speak with him. He will be jetting off to geneva earlier later. We are going to run off together for a Panel Discussion about the internet of things and the keys to the connected car. Back to you in the studio. Guy caroline guest francine caroline, thank you. Guy that brings us to our twitter question. Will samsungs new phone rival apples iphone . We will see you in a moment. Francine the year of easing continues as china shows its determination to fight a slowdown. Guy joining us now from our is Stephen Engle from hong kong. Stephen, walk us through what prompted this and why now. The economy, basically the slowing economy is deepening faster than they expected. The Interest Rate deposit rate cuts came as manufacturing was showing further weakness. The inflationary environment is quite benign. Disinflation in cpi, wholesale prices in deflationary territory. Authorities are looking to stoke some growth i had of the annual session of parliament that kicks off on thursday in beijing. It is almost a foregone conclusion that the premier will lower the annual growth target that he set to about 7 , down from 7. 5 the last couple of years. Economists say the economy will be very hard pressed to even reach that level of 7 given all the other indicators weve seen so far this year. The shanghai stock market kind of cheering, mildly today, that easing we saw over the weekend. Traders say they knew this since the cut was almost priced in. The surprise was how soon it came ahead of the mpc. The yuan also slumping to a twoyear low today. The economy seems to have taken precedence over the currency. Francine what do the numbers tell us about the slowdown as well . We got the final rating for february for the hsbc manufacturing pmi today. Its popped back into expansion territory, but this is the smaller survey of the two we get. The official pmi came out over the weekend. That is thousands of mostly state owned factories. It showed contraction again for the second month in a row, at 49. 9. That could be a better indicator of the state of the economy. Ranted we are in the Lunar New Year holiday period where there are aberrations every january and february but two months in a row of contraction in china is a bit worrying. That is perhaps why you are seeing that easing today by the pboc. Francine all right, Stephen Engle with the latest on the pboc. Guy lets get ready to take a break. We are back in a couple of minutes time. The twitter question of the day has been getting a good response. Will samsungs new mobile phone do any damage to the iphone . We will take a break. Act in a couple of minutes. We listen to the market when we make a new phone. What we bring to the markets is satisfying the consumer demand. Guy that was samsungs Europe Deputy president speaking to us at the mobile World Congress in barcelona. Sam grobart got a look at the companys galaxy s6 and s6 edge which will be available in april. Samsung isnt showing a new flagship phone at this years mobile World Congress in barcelona. They are showing two of them. This is the galaxy s6 and this is the galaxy s6 edge. Both have a lot of similarities. Both use quality materials like aluminum and glass and they both use those materials in a range of bright and inducing interesting colors. You find the usual set of improvements, faster processors sharper camera, brighter display but one improvement really does stand out. Battery life. You can charge these phones for 10 minutes and have enough power to watch a two hour movie. Charge them for 30 minutes and you will be up to 50 . You can charge both of these phones wirelessly. Of the two phones, the edge is the more radical one. Its curved display adds extra space for things like discrete notifications and frequently contacted people. That side display can also discreetly notify you when you one of your frequent contacts is calling you. You assign them a color and the phone will glow in that color. Heres the thing about the end the highend of the smartphone market. It creeps getting higher. With models like these coming out in april, it is obvious that they are not ceding the market to anyone. Francine he wants to try one. We do. Guy bring it on. That brings us to our twitter question. Will samsungs new mobile really rival apples iphone . Is this a fight that samsung can win . Francine for those listening on bloomberg radio, the first word is next. For our viewers it is a second hour of the pulse. Guy thousands march in moscow. What this means for the west russia, and investors as well. Francine then we talk about the new budget unveiled in india. We will be talking to the chairman of cobra beer. Guy all of that coming up on the post the pulse . We will continue to see your posts on twitter. Francine thousands take to the streets of moscow after the murder of Boris Nemtsov. Guy china stocks close higher after the Central Bank Cuts the benchmark Interest Rate for a second time in three months. Francine sneak peek at samsung. Bloomberg gets a look at the latest smartphone at the mobile World Congress. Guy good morning to our viewers in europe, good evening to those in asia, and welcome to those just waking up in the United States. Francine the pulse this is this is the pulse. We are just getting figures for the jobless rate. We are also getting cpi figures. Guy this is for the eurozone. The Consumer Price level has fallen 0. 3 , slightly better than the 0. 4 that they are economists we polled had anticipated. Francine a little bit of, not a glimmer of hope, but a little less bad than expected. Guy climbing a little bit on the back of that. Lets get back to our biggest story the murder of the russian opposition leader, Boris Nemtsov. Tens of thousands marching through moscow in memory of the man, the biggest show of support for the opposition in years. Police estimated the number of marchers at 21,000. A Nonprofit Organization put the figure at 50,000. Ryan chilcote was in moscow for the march. Ryan this is the oppositions first protest of the year. It was supposed to be about russias economic woes and an expression of protest against the war in ukraine. It is now a vigil to Boris Nemtsov who was shot over the weekend. One of the opposition leaders organizing this very protest. This is the spot where Boris Nemtsov was struck down. It was about 11 00 in the evening on friday night by the kremlin. As you can see, thousands of people have come here to leave flowers and pay their respects. There are many theories, both official and unofficial, as to lie Boris Nemtsov would have been killed. Some say that it was for his opposition to Vladimir Putin. Some say for his opposition to the war in ukraine. Petro poroshenko, the leader of ukraine, says Boris Nemtsov was about to release evidence of Russian Troops in ukraine. The russian president has sent his condolences, but for tens of thousands of people, it is a day of mourning for one of the leaders of the opposition killed on the eve of one of the countrys biggest demonstrations in recent memory. Ryan chilcote, bloomberg, moscow. Guy mr. Chilcote has now traveled from moscow to Eastern Ukraine where he joins us now from on the phone. Lets take you back to moscow. Lets talk about this demonstration. Was it a demonstration of opposition . Was it a demonstration of remembrance . Can you give us a sense of what it was like to be there . How big was it . Ryan is a very good question. It was the biggest demo in three years. The police say there were 20,000 people there. The protesters say they were about 50,000. Thats a good number. There were a lot of people that wouldnt normally show up at a demonstration like this. I think a lot of the people were there simply to pay their respects. When people say maybe this will galvanize the opposition, which has been embattled im not convinced. Im not convinced that all those people will show up the next time the opposition calls a demonstration. They wanted to pay their respects. The polls show us that the russian president s popularity is still very high. Many russians support what russia did with crimea and Eastern Ukraine. Francine ryan, you are now in ukraine. The parliament is voting on imf funding. How does this fit in . Ryan they need to approve a budget in order to get access to the imfs 17. 5 billion of funding. That, the imf will accept on the 11th of march. Now that im on the ground, i have to say, it is quite visual. This country is in dire financial straits. Francine all right, ryan chilcote. I think we have some technical difficulties because he is in the eastern part of ukraine where phone lines arent working that well. Guy lets talk about the Way Investors should be reading this situation. Tim ash is here, the head of emergingmarket research at standard bank. Russian markets up this morning. Is that the right reaction . Guest theyve been rallying for a month or so on the assumption that the situation in row in ukraine may go through a lull. The people may think they are winning and there is a positive outcome. Guy the protests like this, does it change anything internally . Guest i think it happened late on friday. The Investor Base had the whole weekend to think about it. They had time to look at the demonstrations. Investors hate instability. I guess the reality is that the opposition in russia are weakened, despite a huge event. Ive covered russia for 25 years. Nemtsov was a huge name for me. I was shocked on friday evening. And yet, it is a relatively modest demonstration, i thought. I would have thought there could be something larger. It didnt happen. It just underlines how weak the opposition is. Francine he was effectively the other man, the man Boris Yeltsin almost picked. Russia would be different under him. Guest he was a driven reformer a democrat, a market reformer vibrant, full of ideas. Some of them didnt work out. I think theres lots of blame for the problems of the yeltsin era. The west had some blame. Maybe the reform policies were and well thought out. But in the end, yeltsin i think was a decent human being and had the right kind of ideas for russia. Guy do you think this will how does this murder manifest itself when it comes to western policy . If minsk sticks and we dont get new sanctions put on, do you think this will act as a reason in the back of some policymakers heads to give this a little more time . Does it change the dynamic in terms of policy formulation . Guest we certainly dont know who did it. If there was a clear evidence of who was involved, that may shape some of the action for the west but there is a bit of a track record. There is live and i go gaia there is litvinenko, politkovskaya. Guy if you look at the case the lines are easier to understand. There is history here which people will draw on. Guest i think the language and rhetoric coming out of western leaders is clear. They are worried about the direction that russia is taking. Russia is a very different country than we thought it was. The west needs to change its policy towards russia and maybe adopt countermeasures. Whether that is sanction measures are increased defense spending, or just greater focus for example, the foreign commonwealth office. But i think it is pretty clear that a country expanding its borders and testing natos defenses across the board is something that raises bigger concerns. I imagine the Investor Community on the other side of it. Russia is very difficult now to view as an investment play. It is a very unpredictable, very different very difficult to call the macro story. I view russia more as a tactical trading play than an investment play. I think foreign direct investors will be nervous about their assets in russia and attempt asian will be to reduce risk wherever possible. That is a logical step given what weve seen across the board. Francine when will that change . Either russia becoming an important or attractive Investment Opportunity . Does Vladimir Putin have to stop being in charge . You have he is supported by the people because of how he manages to explain things that are happening, which is probably why we havent seen that many people marching yesterday. Guest i think that is very unlikely. Putin is here for a very long time. I think you mentioned the minsk ceasefire process. Hopefully that sticks. Hopefully theres a less distractive approach from russia towards ukraine. A more constructive approach allows ukraine to get on with their own problems. It is hard to see a reset in terms of the russiawestern relationship. I think russias strategy is all driven by ukraine. Ukraine is number one policy problem for putin. I think some normalization or stability in ukraine is key to trying to improve the relationship. Guy we talked to a former British Ambassador to russia earlier in the program. He was suggesting that moscow recognizes that it has made big mistakes in ukraine, it got dragged into something by a kneejerk reaction that was formulated by the fall of its leader in ukraine, and it needed to get a hold of crimea, and it did that. Ever since then, it has kind of not really had a clearly thought out and well understood policy towards ukraine. It has been very tactical rather than strategic. Is that true . Guest i dont agree with that. Russia has had a very Clear Strategy towards ukraine. I think the strategy was to bring ukraine back into russias geopolitical orbit. People suggest that the west was wrong to sign secession agreements. Russia in fact made ukraine choose. It forced it to sign this eurasian union. It was possible to have a side Customs Union with the eurasian union. It wasnt a choice between what are the other. I think putin plays a tactical play in terms of ukraine, but a long sturm longterm strategic objective is clear. It is about he doesnt want a successful Reform Administration of ukraine. No nato, no eu, and you ukraine back within russias border. Francine if thats the agenda he could go after other pieces of land. Guest i think ukraine is so central. 40 odd Million People 1027 years of combined russianukrainian history. If russia brings ukraine and and it has been a ready in the eurasian union, this concern about the Baltic States i tend to think moscow realizes that the article five defense clause would escalate it massively. They are messing around the border of nato to cause problems and threats, to make it pretty clear that russia can be very difficult. [indiscernible] francine tim, thank you. Guy still ahead greece may have won a fourmonth extension to its bailout, but the greek banks are dealing with a liquidity crunch. How will they use their limited resources . We are going to talk to the ceo of one of the biggest banks in the country. That is coming up shortly. Francine welcome to the pulse. Guy lets turn to greece now as the country tries to fulfill its agreement with its creditors. The liquidity squeeze is adding to the pressure. We are joined from athens by the newly appointed ceo of greeces euro bank. Fokion karavias good morning to you. Thank you for joining us. I guess the first question that everybody will want an answer to is, can you give us a sense of what the flow is like in terms of deposits . January was a tough month. What was february like . Guest good morning from athens. Indeed, the greek banks have acquired bad loans since september. It is my estimate that about 15 of deposits have left the Banking System since the beginning of this crisis in december. We are talking about more than 20 billion euros. That has left the Banking System in a number of different ways. However, since the decision of the last eurogroup a few days ago, we have seen a stabilization in the market. Last week was the first week that we experienced positive inflows in the Banking System. The first week since early december. Francine do you have a figure for that, for february . You went through the numbers in january. Guest as i said, my estimate is that we have lost more than 20 billion euros. We know that december was about 4 billion euros. January was 12 billion euros, so you can make an estimate about february. Guy you talk about the positive number that you had. My question in response to that is, is that a stabilization or do you think the bulk of that money comes back, or did you stabilize where you are . Guest it is too early to say. It was the first positive week. Hopefully, more positive weeks are going to follow. To be realistic, challenges remain. No one will be willing to underestimate these challenges. It depends on how fast the government and the European Partners will proceed into a new agreement. Time is of the essence. The faster that we have some news the better it is for the Banking System and the economy overall. Francine give us a sense on why people should keep their money in greek banks. Guest there is a lot of discussion about the capital controls, or even tax on deposits. These are the primary reasons why people become worried. This has driven the deposit outflows over the last three months. As i said before, people felt a sort of relief following the agreement of the last eurogroup and this has been reflected in the behavior of the deposit balances last week. Guy can i ask you about the tbill auction this week . The sense is that the ecb would like to see you preserve your liquidity and not role that auction back into the tbills yet if that tbill auction goes badly and the greek banks dont do that, it will be bad for the country. What are your plans in this auction . Guest let me rephrase what we have said. The ecb has requested not to increase our exposure in Treasury Bills, therefore we can roll over our balances, and this is what we plan to do in the next Treasury Bill auction. But we are not allowed to increase the Treasury Bills that we could purchase from the government. Therefore, what i expect to happen over the next Treasury Bill auction next week is to roll over outstanding balances, but not increase them unless we hear Something Different from the ecb and the bank of greece. Guy if there is a need for the greek government to issue more tbills, what you are saying is that you will not buy them . Guest this is our understanding at the moment. Guy ok. Francine but if you dont participate in the auction then no Foreign Investors will buy those tbills. How does that square off . Guest this is definitely an issue and it is my understanding that the government is already in discussion with our European Partners and International Lenders about this issue. In the context of the agreement of wall street in the last eurogroup it is my understanding that a solution could be found to this issue quite soon. Definitely this is an outstanding issue. Im quite optimistic that a solution can be found. Guy can you give us a sense of what your liquidity situation is right now . How tight is it . Guest at the moment, the greek Banking System is borrowing from the ecb through the ela in numbers which may be close to 100 million euros. We have a sense of how this number was a few months ago. According to fiscal data, it was about 45 billion euros in november. We had a significant deterioration in the liquidity condition of the bank Banking System. It was partially driven by the outflow of deposits, but also affected by termination of interbank lines and the need of greek banks to absorb more Treasury Bill issuance. Francine all right, thank you for your time. Fokion karavias speaking to bloomberg exclusively. Back in just a couple minutes. I still see the domestic market as pretty strong because of the valuation of the ruble and i see [indiscernible] it will be a while until they come back to europe. I still think they are in terms of luxury one of the best consumer groups. Francine that was the Salvatore Ferragamo ceo. Guy coming up, we go back to the mobile World Congress in barcelona where we are going to speak to the ceo the cfo of sp micro electronics. Francine we will also be talking mobile. That brings us to our twitter question. Will samsungs new mobile rival apples iphone . Francine welcome back to the pulse live from the european headquarters. Guy lets talk how the markets have been digesting. Johnathan has the details. Johnathan lets check in on the markets for you. Its a Glass Half Full kind of day. In equities in london, a little higher up on the ftse 100. China cuts rates and gifts a lift. The dax gaining again after seven weeks a gain and its up by a 1 3. If youre a Glass Half Full kind of guy you look at the 0. 3 inflation and say its less bad and better than estimates but its the divergent story that is the story. The ftse up year to date. Fantastic rally in italian markets. But its a story of island versus france that i think is getting a lot of attention this morning. This morning, the manufacturing p. M. I. Comes in at its strongest since 1999, firmly in expansion territory, taking the pain up front and bringing through the reforms. You compare islands to france, different story. The French Market a little softer but the b. M. I. Firmly in contraction territory. The die vergence within europe tells you a much more compelling story than the top line headline numbers for the euro zone in its entirety. In a bond market of course, the big headline last week was negative all the way up to seven years in germany but its not the overall levels some of these bond markets are at. Its the spread between the likes of italy and germany and spain and germany. The extra yield youd ask for to compensate yourself for Holding Italian debt. The takeaway is not much. The yield on the italian tenure 1. 3 and compared to germany at 0. 33 . The spread has come down 100 basis points. At the height of the financial crisis, the spread, the difference between those two 500 basis points. Very, very different times. And what do we see here . A stronger euro, up a bit 1. 1215 against the dollar ahead of the e. B. C. Market. Before a single bond has been bought. I bor a line, a sense of calm but shocks are lurking. Ill sharks are lurking. Francine theyre always lurking especially dealing with the markets. We have surveillance from tom keen. What are we looking at today . Francine well be joined by an expert on greece in the United States and he is a professor of finance at columbia and talk to Charles Calomiris and talk to him talking to germans of the athens leaders talking to greeks and maybe finally will get together in the next 90 days. A lot of people are skeptical about that this morning. Robert dowel will join us on investment before an incredibly busy week on economics. The jobs report coming up on friday. Tom purceli will join us of capital markets. Hes really focused on wage growth as one place to move. Well also go to moscow twice to look at the fallout over the assassination we saw on friday as well. So thats what weve got going on this morning. Francine tom, thank you so much tom keen in surveillance 25 minutes from now. Guy samsung launching the new smart phones and the largest manufacturing producer is hoping its a hit. Electronics makes chips for samsung and apple phones and the chief Financial Officer joins us now. Colin farrell, very nice to have you on the program and thanks for taking the time. So which is the most important show for you, let me ask a very broad question. Youre in barcelona now for the mobile World Congress and we have the Geneva Motor Show coming up in a few days time. Whats the most important aspect of your business now, what happens in barcelona or what happens in geneva . Thank you for the questions. It is very nice associating with you. Here in barcelona. And you see there was a decision to exit the platform for wireless. But weve seen over a 1 billion business in wireless with microcontrollers and all this kind of components that overall are going to converge between wireless and the internet, i think. And there are exciting opportunities. The show in geneva next week, we show a lot of enhanced electronics in the car towards the autonomous driving. And this also is another great opportunity. We do over 1. 8 billion in automotive. Our automotive business grew by 8 last year over the prior year and we are very much excited on the opportunity associated with the advanced driving systems. To give you a number in 2014 the cards adopted in the system. Francine give us a sense, we heard the news this morning theres a lot of m a in the sector and saying theyre acquiring free scale. What does it mean for s. T. Micro . Yeah, theres been this announcement thats really very fresh news. Id say the strategic viewpoint its a very important move and from a creation viewpoint the news is very fresh, is a bit premature for me to comment about that. Guy but these guys are big in the automotive space. Competition in that space is going to get even more ferocious. Do you expect there will be more consolidation as the automotive sector looks more and more to technology . You know competition at the end really is the bread and butter of any business in semiconductor, and we are used to compete in all the values in different applications. In awful we have a very important positioning. We are number one to apply the Semiconductor Market to china and we acquired all the required technologies from the body of the car to the safety to the motion to the entertainment, and we believe it is ready to face competition as weve been doing in the case of the company. Francine can you give us any indication of demand, whether its softening or not in the last couple weeks . The demand in the end is following the affected trend. A few months ago we anticipated some possible correction in the course of the end of 2014 and then this is evolving as expected. We see some positive evolution and we remain overall positive on the Growth Opportunities and revenues for the next quarters and the overall 2015 year for Semiconductor Industry and for us as well. Francine thank you so much, carlo ferro, s. T. Micro chief Financial Officer. Guy samsung revealed its knew galaxy 6s the 6s edge and we got a look at the new models which are available for april. Samsung isnt showing any flagship phone at this years mobile World Congress in barcelona, theyre showing two of them. This is the galaxy s6 and this is the galaxy s6 edge and both have a lot of similarities. Theyre both using Higher Quality materials like aluminum and glass and they both are using those materials in a range of bright and interesting colors. In both phones youre going to find the usual set of improvements that happen every year. Youre going to see faster processors. Youre going to see a sharper camera brighter, more vivid displays. One improvement really stands out and thats battery life. In both cases you can charge these phones for 10 minutes and have enough power to watch a twohour movie. Charge them for 30 minutes and youll already be up to 50 . Now you can charge both phones wirelessly. Of the two phones, the edge is by far the more radical one. Its curve display adds extra space to display things like discrete notification and allow you to access frequently contacted people. That side display can discretely notify you when one of your frequent contacts is calling you and i assign them a specific color and the phone will glow in that color letting you know say, your spouse is calling. Heres the thing about the high end of the smart phone market. It keeps getting higher. And samsung clearly heard calls for more luxurious devices. And with models like these that will come out in april, theyre not ceding the market to anyone. Guy flan is on one of my speed dials, which color do you think it should glow . Francine id say red but dont know if its for red alert to get up or red alert, dont pick that up. Guy some day that may change. Francine it brings us to our twitter question of the day. Of course id make it on a color id always pick up for you, guy. This is the twitter question of the day, will samsungs new model rival apples iphone . Well round up the best questions. Guy mixed opinions following the first fully budget announcement and be live from mumbai. Coming up here on the pulse. Francine welcome back to india now where theres been a needed response to far to the modi governments first year of budget. Lets go to mumbai for more. Well its looking like its got a bit of mixed reaction from the street. The markets have been quite tepid on the monday trade. We were open for trade saturday as well to welcome in that budget. It has been a mixed reaction because what the government has done, it has extended its targets, the consolidation the market is not pleased about and converted from Fiscal Consolidation and announced a higher fiscal deficit target. The ratings say it will not impact indias ratings which is one notch above where it was. And will have a profile going ahead. The big takeaway from this has been the governments big push to the infrastructure with the expenditure on spending has almost been doubled and thats the big takeaway from this budget and is low in detail which is disappointing many on the street. The big question from here on, what does it mean for Monetary Policy and how do the central banker who has been cautious on the refund program, as has viewed this budget from mr. Modi. Guy well leave it there. Thank you very much, joining us from mumbai. Francine joining us for an entrepreneurs perspective on the Budget Discussion is the founder and chairman in a bloomberg exclusive. Guy lets talk about whether or not it delivered for you. The markets, were hearing a little more cautious but did it deliver the expectations and were they matched . This is one of the best indian budgets ive ever come across. Its absolutely extraordinary. Prime minister modi has a majority for the first time in three decades in india. Hes a man of action. Hes governed the state of size of Great Britain the United Kingdom over a decade. He has experience in government. He has a proven track record. Now he has to do it on a National Stage of 1. 25 billion people. He looks on india as three ds, democracy, of course weve seen indias democracy in him getting elected but weve seen indias democracy under his nose delhi get defeated under his nose. Demography 65 of indians are under the age of 35. Its a really young country. The last one is demand. Its a country of huge demand. And of course its all up to governance. Can he, a man of action through Good Governance and leadership promote growth promote efficiency, but most importantly in an insclusive way. Because the experience in the past is when Prime Minister vajpayee led the last Central Government in 2004, they had the india other government and indias economy was prospering and then he was thrown out. They were elected out because their growth was not seen to be insclusive. It was not seen to reach out and help uplift people from poverty, including in the rural areas. So Prime Minister modi is conscious of this and this budget is brilliant, tackling growth but doing it in a very inclusive way. Francine Prime Minister modi was elected on easily doing business in india. You seem to suggest this budget is going in the right direction. Will people feel it that way . It seems that they are a little more conscious than what youd like. Will this give confidence enough to people investing in india to continue doing so and accelerate investment . What everyone looking at india must look at the longterm picture. Indias growth rates in the past have crossed 8 . In fact, for several years its crossed 8 and in one year touched 10 . India is capable of doubledigit growth and what they want to do. Also, they want to do it in a prudent way. The finance minister said he wants the fiscal defendants to come down to 3 which is good news. But also in terms of promoting growth they want to do it in a steady way and not announce big bang reforms and promise what they cant deliver. Theyd much rather underpromise and overdeliver. I think people recognize that. That makes sense. Look at the initiatives to have a g. S. P. Goods and services taxed to be brought in and something thats been talked about for years. Now they set a date and said next year, 2016 well have the g. S. D. And increase indias g. S. P. By 2 . I know from cobra beor, its more difficult doing states and india an countries in the European Union and india recognizes that. Its a huge difference bringing Corporation Tax down to 21 . Something ive been talking about a long time. India should have like we have here an independent Monetary Committee and inflation target that will come into place. All the right steps, encouraging Foreign Investment but also cleaning up india, the gangis need to be cleaned up and clean india is a program and 100 tax relief if you donate to encourage the whole country to participate. Its a wonderful initiative, encouraging manufacturing. Look at us over here. Manufacturing is now down to 10 of g. D. P. In india they want manufacturing to be 25 of g. D. P. Because manufacturing will create the jobs and give india that really strong foundation. All the right things all the right noises. Im very, very encouraged by this budget. Guy hes changing some of the numbers, though, within the economy, particularly the fiscal deficit. Hes pushing that back and wants to invest more money shortterm into infrastructure. Infrastructure clearly is a massive problem for the country but the fiscal deficit is also something that needs to be kept in check. Finding the right balance very difficult, is he going to do it . Guest the key is generating growth and the key to uplifting poverty, 10 million uplifted but on the up hand, 10 Million People every year is joining the upper class. They want to generate the 8 plus growth. If they can, i firmly believe they can with initiatives like making with making india more competitive and think india can achieve those growth figures without a doubt. Francine at the same time the fiscal budget deficit is being pushed back and will be achieved in three years instead of two. Is it reckless and is it not prudent enough . It is prudent because they want to say we want to get down to 3 . On the other hand they realize important areas like infrastructure and they realize the Social Security measures and incluesive numbers encouraging skills and education and areas like defense. Theyre actually taking the guts to go and invest in defense. Something over here where we are not even committing this government to the 2 spending on defense. Theres a nato commitment and think thats negligent. I was in well plea stadium and the british army cant fill Wembley Stadium and are down to meeting any intelligent levels and india is saying were investing more in defense and we can take a lead in that as well. Guy this issue of replicating the china model. Its talked about quite a lot. How big a mistake would it to go down on the focus on export rates. You talked about the demand story, china obviously has huge internal demand but india looks like it will folk us more internally than china is. Thats the big difference between india and china is the democracy aspect. The first of the ds i spoke about. Of course, also, where the Chinese Government can push through a lot of the reforms in india it has to go through a democratic process. Also in india, its been much more the demand. India has been a very consumerled growth, combined with exports and of course it really helps with the low oil prices and helps india a lot and will help it achieve many of its targets. If india can encourage the make in india and encourage manufacturing and be competitive and encourage the skills base, india can be not only consumer demand but also export as well. It can have the best of both worlds. Francine thanks for your analysis. Kolb yeah beer chairman and founder. Well head to ukraine next. Guy plenty more coming up right here on the pulse. Francine welcome back. Now for a look at what were watching the rest of the way day, were joined by ryan in Eastern Ukraine and yesterday were in moscow in the moscow march. What did the rally really say about the strength of opposition to president putin . You know, it was an impressive gathering for the op thinks, their biggest in three years. The protesters say that 50,000 people showed up, the police say 20,000. In any case, tens of thousands of people were out. Some of them were there to protest against the russian president but i think many of them were there simply to pay their respect to the leader of the opposition. Many average russians who remembered him as deputy Prime Minister and opposition perhaps activist as well. To what extent people say this is galvanizing the opposition, to what extent thats true. Its difficult to say and will have to wait until the next demonstration to see whether this is a trend to any real threat of russian president s popularity which is at an all time high. Guy give us the story on ukraine the rest of the day. Well im in Eastern Ukraine , at the Ukrainian Police headquarters picking up press badges because im going to go into the separatist controlled area and the situation here is very much a military one. Theres a ceasefire in place but i was just told by some soldiers some small arms fire here and mortar fire continues. The story in ukraine is in kiev where the parliament is set to approve the budget for next year and have to do that if they want to get the i. M. S. Billion dollar aid package that theyre hoping for and is a country in economic crisis. Contraction looking at 12 and currency has fallen over the last year and the big issue is they have hyper inflation. Youve got the conflict but then have the economic woes as well. Francine all right. Ryan, thanks so much. Well have plenty more from ryan throughout the day. Thats it for the pulse keep it here on bloomberg tv. This is bloomberg surveillance. The state of the american economy, the Global Deflation and the Great American distortion will it derail an improving economy or are we in a fedinduced bubble . In moscow, thousands protest the assassination of a former deputy Prime Minister, is the death of nemtsov a turning point for putin and russia. And nokia failed in iphones, now its chinas turn. There will be bill combrons and billions of cheap smart phones. Good morning, everyone, this is bloomberg surveillance. Live from our World Headquarters in new york. It is monday, a snowy march 2, i say. Im tom keen, Olivia Stearns and Brandon Greeley are joining us. Lets get to the top headlines once my voice wakes up. Heres olivia. Olivia thousands marched to protest the activist. He was gunned down friday night and a was a former deputy Prime Minister who had spoken out against Vladimir Putin and had been working about a report of his fighting in ukraine. He says hell personally oversee the investigation into his