9 00 tuesday morning. Welcome to the pulse live from bloombergs european headquarters. Were here in london. Im guy johnson. My colleague, Francine Lacqua in dubai today. Japan kept its record stimulus unchanged. Kuroda said he cant rule out a dip below zero. The the bank of japans 2 target slipping away. All of this money and still inflation moves south. Guy yeah, it is not a happy place for a central bank to be. Kuroda said a lot of this has to do with oil prices and he is expecting it to wash through the economy and get more growth and for maybe wages to kick in so the number also start heading back in the right direction but it is hard to see any evidence of that right now. Guy if that is the case do we get more stimulus or is he happy where he is . Guy i think guest i think the bank of japan is going to have to do more in the fall. Then you might be looking at a renewed q. E. Effort where maybe they target different types of asset classes. There is some talk about regional bonds being in the mix and then they have to hope that the wage spiral starts heading back in the right direction. Toyota and other companies are talking about increasing wages, but it is going to take a sustained effort to really make a difference. Guy is the political story still backing the monetary story now . Any sense that maybe they are a losing faith in the banks ability to deliver . Guest im not seeing evidence of that in any kind of public statement. There is a nuanced statement with the yen. They would love to take the yen down eeverpb further further. That would be one way to generate inflation. That is very sensitive because a lot of Domestic Companies cowl get absolutely crushed in that scenario. Guy to you very much indeed. Brian bremer joining us in tokyo. The fed kicks off its twoday policy meeting. Almost 90 of the economists we surveyed said official also cut the to be patient. That will bring the fed a step closer to raising rates. Well bring you that decision tomorrow right here on bloomberg. Looking forward to hearing from janet yellen. Lets talk about the more narrow view of whats happening the world. The u. K. Here, the election is coming up and the budget is also tomorrow. Lets bring in economist rob wood. From a u. K. Economic point of view what is more important . Guest the budget always has big tax and spending changes. He is boxed in at the moment. He doesnt really a have a lot of room to do anything because the deficit is very high and his Coalition Partners wont let him do anything dramatic. Tomorrow i think the budget is going to be a pretty small deal and the fomc decision more important. Guy when we look at the budget and figure out what it is going to tell us about the politics, how important is this from a political point of view . You must be trying read the ruins of what is going on politically. People are beginning to talk about tomorrow maybe being the story that breaks the logjam, that changes the narrative going into this election. Guest it is a big moment. It is only a couple of months until the legs. This gives the chance to set the ground work for that. That story is going to be we will cut spending a lot more than other parties. We will give you your money back. I think that maybe one reason he is targeting or at least budgeting for a budget surplouffers 20 billion pounds by 2020. He will probably take some of that surplus away to reduce the spending cuts. That is one political aspect of it. The other is he will say look at all of that money. Im going to give you that back as tax cuts. Guy in term of what it means for business, there is a dearth of investment. The Investment Trends are not moving in the right direction. Do you think were going to see any continuation of generous levels of investment allowances that are guaranteed at the moment but will fade off fairly soon . Guest probably. There have been a lot shortterm measures from this chancellor that he renewed every budget. It is helpful for investments. The u. K. Is short of investments. The big problem is living hand to mouth just renewing this investment allowance every year is not helpful for longterm planning. We need a better longterm framework than this. Guy the way i see this budget is the end of stability. You had four years of relative stability for British Business and yes, there has been some hand to mouth stories emerging in the way we have renewed stuff. By and large that he had stable environment to operate in. That is all about to change now isnt it . Guest there is a big risk of course. You look at the election and almost anything could happen with the poles as tight as they are. Prepare for some uncertainty in the coming months. That being said, you look at these outcomes and there are some really bad ones for the u. K. Outlook. S p labor tieup for instance. Many of the outcomes i think are fine. I think they are not great. It would be better to have a stronger majority government. If the next government finds it harder to put through some of the extreme policies they are talking about, cuts to the ministry of justice that wont possible to be put through, on the labor side, some messy tax rises, lots and lots and lots of tax rises, there will be more spending. Im not too concerned about that. Guy would an unstable government though detract from investments . We saw what happened in the scottish referendum. Im not talking about the im just talking about the lack of stability we would have. Do you think you would see would you have to take your numbers down on what you expect it to look like . Guest to be honest, this has been coming for a long time. Personally ive been factoring in some troubles. Not serious but some weighing on investments. To be honest again, there are some bad side scenarios here. Things like labor, s p, Green Coalition for instance. Maybe there is no feasible coalition. I think it depends how powerful that is. You can have scenario where is a minority government can work because they have just enough seats to get some Business Done and you can have one where it doesnt work very well because maybe the opposition is more united and can vote down a lot of the government policies. It is an awkward answer but it depends. For most of these outcomes they weigh on investment a little bit. If the government doesnt do anything for the next few years, im not sure that is a terrible outcome for the u. K. So, yes, im factoring in some weighing of investment but nothing enormous 80s. Guy ok. Well talk about Monetary Policy in a few minutes. Stay with us rob. A look at what else is on our radar. Israelis are voting today. The contest is too close cal with netanyahus party trailing herzogs zionist union. Irans oil minister said his country would raise oil exports by 1 Million Barrels a day if International Sanctions were lifted. They are working for a deadline at the end of march to tend decade long over the program. European car sales growth accelerated in february. The European Automobile Manufacturer Association said it climbed 7 from a year earlier. More than 958,000 vehicles. Signs of a strengthening economic expansion. A drop in fuel prices too. Volings wagon, b. M. W. And renault were stand out winners. Well have an election day interview with the c. E. O. Of one of the countrys biggest Global Players that Warren Buffett invested in. Well look at how the weak euro is helping the luxury market. And it being march 17. You know what march 17 means dont you . Everything is green, including our photographics. How are you separating stsm patricks day . Some would say this is a country that really stands out from the crowd. Let us know what you think at flacqua and at guy johnson tv. Guy good morning. Welcome back. 14 minutes past the hour. Youre watching the pulse. Were live on bloomberg tv. On the radio. Streaming on bloomberg. Com, on your tablets and on your phone. Ok. Lets talk a little bit about the u. K. A little bit more. We have the budget coming up tomorrow. We are going to continue now our conversation with rob wood chief u. K. Economist. Before the break we were talking about the political ramifications of the various permeations that result from this general election. When the u. K. Is seen from the outside, when the u. K. Is seen by investors, we run a fairly big deficit. I think ill being polite about that. Do you think there is anything do you think that the International Investor is going to be put off by the noise, by whats happening around this election in any meaningful way. If you were a chinese investors if own these big kind of sovereign wealth funds and are putting them into the u. K. , is the u. K. Still the better option . Guest i think you look at the uncertainty around the general election and maybe you can think this is a shortterm investment. If it is 25 years, you put it to one side. You look at that amount of noise and think maybe if i wait 612 months and see what happens. That might be a good strategy. Here if youre thinking about foreign investors, what really matters is the u. K. s position in the e. U. It is not nevada necessarily whether there is a minority government. Countries around the world have a minority government and operate fine over that period. Especially countries like the u. K. It is not italy or greece. In essence, maybe a minority government. That is scary. What might be more scare ji the u. K. Leaving the e. U. Whether youre a car company or investing here to sell across the e. U. , that is a really, really big deal. Guy i get this from more small and medium sized companies. If they are not scared of leaving the e. U. , they genuinely say it is a massive problem for our businesses. The level of red tape is constricting in our ability to do what we want to do. If we cant if we cant actually reform the e. Frumbings the inside, do you think there is a growing case to be made for leaving . I dont think so. I think the gains to us staying in the e. U. Outweigh the costs. Of course there are costs for some companies more than others. But we are part of a really the large single market. Which brings a number of benefits. One which is important for u. K. Productivity. It allows us to export to the eurozone more easily by removing Tariff Barriers to trade, not just tariffs which is hugely important. You add those things together it adds up to a big benefit to the u. K. You look at the costs and regulations, if we were not part of the e. U. We could bend thousand s of market regulations. What would we put in instead . It is not that we would regulate cars or computers or hoovers. We would have our own Product Market regulations. Could our politicians mess those up just as much as those in brussels . Yeah, they probably could. It is not like the day after, if a potential vote to leave the e. U. Would suddenly rewrite the hole of the u. K. s market. We would probably just keep the e. U. Ones. Guy when the businesses talk took into account banks that they feel constrained, there is more of an emphasis placed on welfare rather than business expansion. Do they have a point in that . Guest there is of course the working tone directive. Two things that would come up here. It is worth remembering if we look at Something Like the oecd labor market. The oecd measures how tough regulations are in the labor market. The u. K. Is in the top five in the oecd not withstanding being part of the e. U. Were number 10 in the World Economic forum. Do you think we could move from 10 to number one overnight by leaving the e. Sumbings delusional. We have flexibility labor markets and Product Markets and we benefit from those in a single large market. We turn around our industries. Guy thanks very much indeed. Now when u. K. Chancellor George Osborne unveils the budget tomorrow he is expectinged expected to unveil a huge tax break. We have come full circumstance until the u. K. On the tax on the north sea. Bloomberg spoke to three people about the risks and the opportunities facing the north sea oil industry. The north sea completely starved of investment at a time when it needs the investment the most. I think that unless something is done this could be a nail the coffin. I havent felt this concerned and this anxious about a downturn since 1986. 1986 was the worst ive experienced in 30 years in industry. The production has come to fruition. I think i can see a lot closing down and many thousand workers leaving the industry. Have been through five of these. What will happen is we will get busier than ever. They have got flabby. They have got fat. We fully expect that to intervention. If the bubble bursts, do wednesday up looking a bit like a ghost town here . One persons problem is another persons opportunity. One equity firm owner said to pleently you have to love the downside. Separates the men from the boys. If youre going to get through this difficult period, healthier for the future. Guy big issue tomorrow. For the budget for the chancellor. How much will he give the north sea operators in terms of returning the tax story back to where it once was. Well be tackling all of the issues leading up to the u. K. Election. It all kicks off effectively tomorrow. We have a new politics show that is going to air every day at 11 00 a. M. London type. It will be kicking off therefore right after the pulse. It kicks off tomorrow as the budget is revealed it will continue right up to and probably after the general election. The euro is quite weak. A lot of people from the u. S. From china from asia. Very convenient. Guy that was c. E. O. Jean christophe. Were going to continue on that conversation. Well talk with ferragamo c. E. O. In the next hour. Well talk to him about what happened in china with the euro. How does that affect a business . Well find out a little bit later. Plus also coming up the Israeli Company that was famously backed by buffett. Well talk to him and ask him how the israeli election will impact the countrys business climate. That is coming up from tel aviv very, very shortly. You want to join the conversation and talk about anyor these issues, well be delighted to hear from you at guy johnson tv is where you will find me but it being march 17 we want to ask you an irish related twitter question. How do you celebrate st. Patricks day . Let us know. Lets light it up in green. Join the conversation. Well see you in a moment. Guy welcome back. You are watching the pulse. Live from london. I am guy johnson. If he wins today, Benjamin Netanyahu will become israels longestserving leader. Continuing a remarkable story of political survival for a Prime Minister who has as many enemies as friends. Elliott gotkine reports on the power of the man they call bibi. [applause] elliott he sets hearts aflutter in congress. Even if it annoys obama. In paris, even if it annoys hollande. In gaza, even if it irks the world. To netanyahus fans he deserves another term as Prime Minister. Thanks to netanyahu comedy world has become aware of the act essential threat of iran getting the bomb. Hes going to be persistent. The other thing is the economy. If you take all the data production exports unemployment, israel as a successful economy. Mr. Netanyahu has played a dominant role in achieving that. Elliott tens of thousands turned up to this antinetanyahu rally. He has done nothing to lower living costs. This group was created to rows of to vote for parties at the center or left. This is part of the trend we are riding on. People are aggravated. They have a problem with the rightwing government. If they want to change the government, they have a good reason to do so. It could be economy, security. Elliott this could be former commanders last till at high office. Israelis either love him or hate him. If he wins these elections, he will become the longestserving leader. Surpassing even david bengurion. Even if he fails to win, netanyahu may have enough allies to form the next government and keep his job as Prime Minister. Elliott gotkine, bloomberg, tel aviv. Guy now for more on todays israeli election, lets go to elliott in tel aviv. Over to you. Elliott thank you. One of the key questions for us and our viewers is what does this election mean for business . Ive got one of israels most highprofile business people. The former chairman of the company sold to Berkshire Hathaway for 7 billion. Great to have you here. Thank you for joining us on the roof in tel aviv. For businesses and the business community, do the elections matter . They do. There are winds of change in the air. Nobody can make prediction but we all want to live with the rest of the world. If you want to get big, you have to go outside. Israel is a small market. Amazing amount of entrepreneurs in the jewish and arab sector everywhere. People want to do things, they need more markets. We have no reason to be there, we want a leadership that will find how to live with the rest of the world. The old models do not work, you have to do something with the future. Elliott i do not want to get too political but currently the relationship between netanyahu and president obama in the u. S. , israels second biggest market, is not great. If netanyahu wins and makes good on his promise to forget about these negotiations, there could be isolation from your. From europe. Is that something you feel . There is peace. At a hospital in haifa, the doctors are arabs and jews, there is peace. In the political area, there is polarization but in real life in his there. There was peace a long time ago. I do not think anybody can live isolated. It does not work. Business people live not to be in an environment that looks forward and helps everybody. If you want somebody to do good to you, you have to be good to them. The blame game disturbs the atmosphere. Business has not got so many rules. If you sleep on the floor, you are not going to fall out of the bed. The man has to be in the center. If you put the ego in the center, you do not have room for the brain. The weakest dog bites first. Its not that complex. Elliott what would you want from the next government . One potential finance minister moshe kahlon, he says he will fit with any government that allows him to be banks. There are concerns about tougher regulations. Is this an environment liable to attract Foreign Investment . Does someone need to wake up and do things likely to be more appealing to investors . The future government has to keep the word and not change the contract. It is critical for any investor. The governments have to remember one thing. If you want to give money out, fine, but you have to make it. You cannot only give it without making it. The amount of income created for the country is critical. , there are three types of economy one that creates value and industry, one that you keep the value then you have the transitory economy that moves money and that is a different story. I care about creating value so lets bring something new. There has to be creativity and new ideas. The world is hungry for new ideas. We are putting that together with berkelee in boston, the music school. A startup between music and technology. The world needs it. There are wonderful people in boston and wonderful people here, just put them together. Im doing the same thing in new york with cornell and technion. Israel has to be part of the game. Even i have a mother in law. Bibi should find a way to live with whoever runs america. It is part of the game. Elliott on the oil and gas sector, we have seen tougher regulations. Talk about breaking up the owners of the major gas field. That could delay things. Egypt is getting investment. Has israel already let that ship sail in terms of the investment and the bounty it was going to receive from oil and gas . I do not work with government but i see everybody else working with government who needs government for what they do. In a very difficult strait. Some are impossible, too many regulations. You cannot drive a car if the road is not there. I dont think they are doing the right thing. I dont want to the capitalistic or socialistic, be whatever you want. Elliott former chairman of iscarm thank you for joining us. Hopefully mr. Herzog and mr. Netanyahu are listening. Since we are in the holy land, the average time of forming a coalition is 38. 7 days. Thats going back to 1996. 40 days and 40 nights. A bit of time before we get the next government. Polls close at 8 00 p. M. U. K. Time. Guy the u. K. Will be watching carefully. Some say it could take that long to form a government here. Elliott gotkine from tel aviv, covering the israeli elections. Head to bloomberg. Com p are you can read more about why israelis are weary of Benjamin Netanyahu. A little wary about choosing a new rival to replace him. Were going to take a break. We will be back in a couple minutes. Guy good morning. You are watching the pulse, live from london. A recent report from the u. K. Accounting regulator, the Financial Reporting council, said Public Companies need to do more to shape cultures to improve corporate governance. The frc wants improvements to gender balance onboard spirit joining us to discuss this is chairman of the frc. Good morning. Lets talk about the latter. Im fascinated by the Capital Markets union. We are at a position in europe where mario draghi is going to have to move heaven and earth to get the banking channel to work again to deliver credit to small and mediumsized companies. States do not even worry about this because they have a different way of Financing Companies and businesses. How much effort is there a necessary inherent to deliver a better financing model . And how much effort will it take to get the Capital Union off the ground. The american model is quite different to the european model. 70 is through Capital Markets and 30 through the banking system. In our case it is the other way around. There is an important advance we need to make. That does take all kinds of things. How the investors look at this the security. I think it can be done. Under lord hill, in advance has been made. It has been desired by Jeanclaude Juncker to have the Capital Markets union. I think it should play to the benefits of london. Guy some argue london would be one of the main beneficiaries. Is that going to be a force with which detracts in continental minds for making this happen . Sir bischoff i think europe is going to be the beneficiary. Small and mediumsized companies. The secondary effect will be an advantage to london. Guy why is it a better way of doing it . Sir bischoff it is more certain. Capital markets supply money on a longerterm basis than banks. They supply usually on the basis of a fixed rate, which is useful. There are certain disciplines involved. Some Capital Markets instruments will need to be rated by rating agencies which exert a certain amount of discipline. You want to have a mix you do not want to rely on one channel of finance, banking. Guy you talked about rating agencies and structures necessary to be created or enhanced if we were to go down this road. The europeans felt burned by the financial crisis. They felt burdened by words like securitization. Do we need to, can we overcome that resistance to this kind of structure . History has not been kind. Sir bischoff securitization as we now has got advantages. There are advantages to securitize asian. Securitization. From a banking point of view there is regulation against securitization. We have to overcome that. The hill report states that securitization is a good thing but it has to be policed well. It has to be securitization in relation to not just, if i might call it, subprime property assets. Guy right. Where do you see this going . As you said on this side of the atlantic, we have one model. The americans are completely the other way. Do we want to go as far as the americans or do we want to find a middle ground . Allowing the banking channels to operate, it is good and financing certain kinds of businesses. But and praising the Capital Markets union to allow a more balanced approach . Sir bischoff there are advantages to using a banking channel. You have a relationship. It is quicker. Capital markets, there are all kinds of documentation needed. If we have an aim, we should aim to get to 5050 rather than 5070. I think it would be seen as a triumph if during this European Parliament we might increase from the 30 Capital Markets to 50 Capital Markets. It would be a big step toward. Guy do other things need to happen . Financial services is something the u. K. Has banged to the drum for. What other things need to fall into place . Sir bischoff the Capital Market union looks at all of this because there are different kinds of legal requirements different kinds of security requirements, different kinds of informational requirements. I think it can be done if brussels focuses on it. I do not think all countries will have title convergence, the major countries will. If one can think of italy, which has a left small and mediumsized companies, germany the u. K. , france. I think it will permeate through the rest of the european union. Guy how will this change the perception on business . At the moment, we have this very difficult relationship with business in europe. Which we need to overcome. And you wonder if we change the way that we finance business and change the way that we perceive business that we will change the overall relationship. Do you think this is part and parcel of that . Sir bischoff it may be . I think it is not that business itself is bad, it is the governments that has not been good. We feel strongly about this. If the governance is right, many aspects of business that most of us would say creates jobs, it provides services, it has a Multiplier Effect on the rest of the economy. There are many advantages. Where we have gone wrong in the last five or six years is the governance. Guy if we were to reduce the importance we place on banks, banks are critical to the european economy. When we have a problem with the banks, which we have at the moment we have to focus on the banks and we end up regulating them quite heavily. If we were to reduce the dependence on the banks, the nature of that relationship changes. Sir bischoff i do not think it should be the primary objective guy it is a derivative. Sir bischoff yes, it is a derivative. Absolutely. Of the Capital Markets union and less reliance on banks and more reliant on Capital Markets and Capital Market providers insurance companies, etc. Guy because we have more transparency and more control. Sir bischoff i would agree. Guy you were a man who wears many hats. This is just one of them. When you look at the landscape in front of you, what do you see . You are here to promote the Capital Markets union, to talk about better regulation. To talk about the fact that we need to build trust and Business Needs to do more with Building Trust with the general public and politicians. Where are we . Give us a situation report. Sir bischoff bosses of banks financial companies, the corporate sector generally realized that business is not held in as high regard as it may have been seven or eight years ago. Something has to be done about it. Part of it is governance, it is the culture surrounding corporate. And people have to do something about that and i think they are doing something. This is not going to be done overnight. There are all kinds of there is all kinds of skepticism about business at the moment. About all institutions. Businesses are large institutions and there is skepticism. Guy lets hope the Capital Markets deliver what you say it will go a long way in solving these problems. Mario draghi, they are sitting in frankfurt hoping the qe program will work but hopefully this will be part of that story. The frc chairman. Currency meets the catwalk. As the weak euro gives a boost to the luxury market, we speak to the ferragamo ceo. Guy you are watching the pulse. Another day another skyhigh valuation. Pinn terest raising 367 million. The company is valued at 11 billion dollars. The number has gone up. Caroline more than doubled in less than 12 months. We caught one billion dollars Valuation Company unicorns. Now we have decacorns. Airbnb, uber, pinterest, getting enormous valuations at a quick pace. Pinterest, social scrapbooking. You pin pictures of your favorite decoration. When i say that my house is obsessed with it you are discovering holidays, that is how you use it. Founded in march 2010 and worth 11 billion. This is about their fundraising series. It is about expanding. Guy what are they going to use money . Caroline expanding internationally. They are doubling international users. 135 International Growth rate it is 40 of users. They have offices in tokyo and sao paulo, they want to expand their focus. Start monetizing. You cannot buy what you are clicking on, they need to show that and wrap up advertising. They will be launching in the u. S. Gap is using it, now they are going to have sponsored inpins in the u. K. , this is the way theyre going to cash in. Guy caroline hyde, thank you. A decacorn. A horse with lots of spikes on its head. Thats it for our u. S. Viewers. Whatever we got coming up . Tom keene and his team. For this side of the atlantic, we are joined by the ferragamo ceo. Michele norsa is coming up on the pulse. This is bloomberg surveillance. Tom Oil Continues in search of a bid. Can janet yellen ignore signals of a Global Oil Patch . Polls open in europe. Is unity government the future . Its st. Patricks day. Brendan greeley is at a bar. Top of the morning to you. This is bloomberg surveillance. That was my irish accent. Brendan was that romanian . What was that . Tom joining me, olivia sterns. Brendan greeley, i wore a green bow tie. Olivia i wore celtic. Brendan i have a green tie i forget to wear. Tom i am sort of from ireland but mostly wales. Olivia israel the voters are casting ballots in an election that is too close to call. Benjamin Netanyahus Likud party is trailing isaac