Transcripts For BLOOMBERG The Pulse 20150512

Greek officials have persuaded german light creditors they are serious about delivering the. Guy even though both sides have had their redlines, there was common ground. Lets get to tom. Red lines by necessity are inflexible. But there is common ground. Francine lets go straight to tom in brussels. Theres still a very tight timeline. Do we have a more positive tone . Tom yes. We are looking at the timeline of six weeks. But there has been this rapprochement after the acrimonious meeting they had in riga three weeks ago. The euro group coming out with a statement saying they are seeing positive intent from the greeks. No details on the policies. Though there was a little bit of detail from the european commissioner of economic and financial affairs, who said there had been son movement on vap, some movement on the management of greek revenue. It has given britain space, possible a couple of weeks to the greeks who are being propped up by the ecb. The ecb less likely to strike to tighten the screws. The euro group leader spoke to us and said there is a lot of hard work, very little time. I only know one timeline which is that the program runs out at the end of june. Between now and the end of june we have to find improvement, and find an agreement and get the approval of parliament. Then there can be disbursement. All of this in six weeks left to go. Very tight timelines. Tom guys a development this morning. Spanish newspapers reporting the imf is not happy to do a second bailout deal with the euro group. They have made those noises. They told him they are not content with doing another bailout because this comes after the 7. 4 billion greece is looking for. They will have to look at another bailout possibly 50 billion. The split looking like it is growing. Francine tom mckenzie in brussels. Guy puaaul donovan joins us from ups. We continued to incrementally move a little bit further forward. Two step backs, one step forward. A june deadline. Are we going to see shifts before that deadline . Do you think a deal gets done . Paul one of the scary things they has been suggested is that they might do incremental reform, which means we could be going to this every three months. A horrendous thought. I think a deal is done. Everybody knows the consequences of greek exit would be horrendous. Guy everybody does not seem to know that, because i keep your reports that germany suggesting they are the view that you could let greece go. Paul the people that matter in germany realize that greece doesnt walk alone. Francine are you thinking of portugal . Paul it could be any country because when monetary unions fragment it is because local Bank Depositors lose faith. Francine keep it there, because we have plenty more to talk to you about including inflation. Guy carlsberg out with reports today. We are joined by the ceo on the phone. Good morning. Thank you for joining us, sir. How bad was russia . Talk me through the situation on the ground for russia. That is what everybody seems to be focusing on when it comes to your business. It still does despite russia is a lot smaller for carlsberg today now less than 20 of our profit. The market is still challenging, so from a consumer point of view, it is a challenging situation. That is being felt by the economy. Very strong in terms of market development. In western europe and asia. Francine when do you expect the trenton Eastern Europe and russia to reverse . Could take years . With the lifting of the sanctions, with that in six mo nths, would we see an improvement . Joergen i wish i knew. Nobody knows really. The issue is driven by politics. So, i think what i can say i do believe at some point in time the situation will improve and that the benefit, that will benefit carlsberg. That is just a matter of when, and that i do not know. Guy how do you and press the Analyst Community at this stage with this bit your business . 35 analysts cover your business. Only four of them have a buy rai ting. How do you change hearts and minds in the Investment Community . Joergen a lot of that uncertainty has been driven by what is a big market for us russia. I said before 80 of our earnings would be from outside russia. It is really coming from big time from western europe and asia. A growing environment. I think perception will change over time. And many Start Talking about the opportunity in russia now is quite significant. When we get to the point in time where we start to see improvement in the macro situation in russia, it could be a major opportunity for carlsberg. It is just a matter of when. I think perception will change and we are really performing strongly in a big part of our business. And im sure we will see over time, also, more and more people looking at carlsberg realize that. Francine i know it is difficult to predict, but in terms of what you are expecting for the ruble, is there any way that carlsberg can hedge themselves against future swings in the ruble . Joergen it is something we have been analyzing for five years. It is still in our minds. Too costly to think about hedging the ruble. Guy what is your advice to your successor . What kind of handover are you giving . Joergen we are in close dialogues. I think it is a good handover first of all. And its really about talking him through the strength of carlsberg, but also what can be challenges in carlsberg. But i think it is also a lot about building on many strengths carlsberg has. We talked about western europe and asia being strong for carlsberg. Our russian business is strong but in a very challenged market. Another strength i believe in carlsberg would be the organization people. We have a lot of passionate people in carlsberg. Strong capabilities built on that. So it is very much about building on strength but of course also say prepare and plan and do scenario planning for challenges and still being very much about Eastern Europe. Francine what are you doing . You are retiring. Do you have plans . Joergenn i certainly do. It is not like im completely stepping down and going to retirement. I will pursue a career now being more in non executive positions and also have a little more flexibility in life. I can do other things. Be a little more with family. So i have a lot of interests i have not been able to pursue for years. I look forward to that. But i look very much forward to staying very much involved in business through nonexecutive positions. Francine best of luck. You have to come and see us in london in our studios. Guy lets take a look at our radar this tuesday morning. An easyjet share price has fallen after the company says strikes in france and the timing of the Easter Holiday will weigh on firstquarter earnings. That came after it posted its first lower profit in more than a decade. We will still see if youll benefit. Remember, as we see the fuel benefit, we are passing it through to passengers. So we have not even though we have a Strong Revenue half, our shares are lower year on year. Francine well have the latest as secretary of state john kerry prepares to meet with Vladimir Putin for their first direct talks in two years. A period filled with tension over ukraine. Guy a new record for any artwork sold at auction. Going under their hammett the hammer for 179. 4 million. Francine now, that of course brings us to our todays twitter question. Is there a better way to spend 179 million . You can tweet us. Weve had some pretty funny responses. I heard a lot about buying or shorting bunds. Guy there are more imaginative things to do than that. Francine more fun definitely. Guy at 9 30 we are going to hear from bill gross about his philanthropic efforts. Find out how much of the source and he has given away. Francine at 9 40, we are joined by the Athens Chamber of commerce ceo. Guy and we look at easyjet earnings. Shares slide sharply. Francine has greece dodged a bullet in brussels . We will be speaking to many guests from greece and also from brussels. Guy come here with a clear mandate to improve the relationship with the rest of the eu and reform the eu so that it increases living standards. We will hold that referendum on british members of of the European Union. Having conducted this negotiations, we go into the negotiations aiming to be firm. No one should underestimate our determination to succeed for the working people of britain and t he whole of the European Union. Francine George Osborne days after being reappointed. He plans to start talks about britains relationship with the eu. He is now the chief negotiator for the u. K. We are back with paul donovan. Author of the new book the truth about inflation. If you look about inflation in europe, how likely is it theat all rates stay as they are . Paul very likely. Dr. Draghi has been disingenuous in claiming there is a deflation threat in europe. There is no deflation threat in europe. Deflation is a decline in prices. We do not have that in europe. We have one price that has fallen oil. People behave differently. Ironiciallally, in europe the one country that can make a claim that has deflation is greece. So the threat of deflation was conjured out of thin air by mr. Draghi. Guy is Monetary Policy appropriate for the inflationary environment . Paul as far as the eurozone is concerned, the quantitative policy we have got does not make a great deal of difference at the moment, frankly. The general policy environment is reasonably appropriate. But inflation will come back in europe. In germany, it could come back strongly this your. Elsewhere in the world, we are coming to the point where Central Banks will need to tighten policy. That does not have to mean interest rates. It could mean regulation quantitative policy. Elsewhere in the world, inflation pressures are slowly starting to build. They are normalizing a bit more. Francine is q. E. Working . We are still on the fence. Is it working to the full extent you were hoping it would be . Or were you more pessimistic from the start . Paul lets look at the states. Three phases. The first phase in 2008 that worked. The world was desperate for dollars. The second phase did not really do very much. The third phase did do something because the banks are prepared to lend. I think in europe we are in a situation very similar to the feds second phase, where the banks are not doing much with the money. Next year, we could be more optimistic that banks start to lend. Right now not doing very much, frankly. Guy lets talk about the u. K. First of all, your expectation for a u. K. Economy that is unshackled from fear about the general election. Because we know what policy formulation is going to look like. Still under the cloud of ane eu referendum. Paul the economy carries along regardless of what politicians are making noise in the background. The Election Campaign and the risk of uncertainty, i think it created a certain amount of concern that we might have a little while on the consumer, a walking on sterling. But if youre going to be investing in the u. K. On a 25 year view you really do not care. Guy dothe eu . Paul the eu is slightly different. We have got to remember. We do not have huge trade barriers if the u. K. Leaves eu. Free trade does not change. The difference is that the u. K. No longer has influence over regular policy which would affect the regulation of trade with the ueeu. Francine perception as if im a big bank, why would i keep my headquarters within london if i can move elsewhere . Paul for the same reason you put your headquarters in london in the first place. You have got rule of law, a clear legal system that works to your advantage, local flexibility, the right skill level. Those are the decisions that its made on. The issue is selling into your. Into europe. Europe will have a set of regulations that the u. K. No longer influences. That may work to a disadvantage for the u. K. You have to trade under those regulatory regimes regardless of whether you are domiciled in paris, frankfurt, or london. Francine think you so much. We will talk about russia next. Guy up next, the pulse, john kerry prepares for his first meeting with Vladimir Putin. The first time these two sat down in two years. Francine welcome back to the pulse, streaming on your tablet, phone, and delivered. Com. On blooomberg. Com. Guy Ryan Chilcote joins us more with more. Ryan according to the wall street journal, he has just arrived in sochi. There is a very good joke. The secretary of state going to customers is asked for his name. He says john kerry. He is asked occupation. He says, yes, it is, stop lying. A joke to the annexation of ukraine. First talks since the ukraine conflict began. The reason there has been no talks and the relationship has been so frosty is because of ukraine. U. S. Officials telling us they are concerned another offensive is in the cards. The russian backed rebels could push to the south or even to the north. So, concern remains. But what john kerry wants to do is to other things. One, he wants to talk about syria. Of course, russia is assads closest ally. If they are going to make progress in finding peace in syria, they need the russians. Finally, and most important they need russias help with iran. We have got that end of june deadline to get a deal with iran between the united states, its allies, including arussia and iran. Wendy sherman the head of u. S. Negotiation is on the plane. Well be at the meeting with the russian president. As secretary kerry along with the russian foreign. So they are hopeful to keep russia on board on other issues if not ukraine. Right after they got the tentative deal in switzerland over iran, the next day the russian president announced that russia would go forward with s300 antiaircraft weapon sales to iran. They want to make sure the russian and american positions are more calibrated. Francine thank. Ryan chilcote with the latest on russia. Guy paul donovan still with us. We are talking to the the currency swings in the ruble. When you look at the outlook for the russian economy, it seems to have firmed a bit. Is that a fair reflection of reality . Paul oil prices are stabilizing, so russia is stabilizing. That is pretty much it. With the increase in oil weve had itll grind higher over the next couple years. That is providing more stability. Francine when you look at risks around the world, we mentioned greece equity and the u. K. Leaving the eu russia is a big unknown. Paul one of the problems markets have and this is an increasing problem politics is back. 20 years, nobody care. Politicians were an irrelevance of the background as long as Alan Greenspan was running affairs, all was right with the world. Politics is back. The markets are not good at pricing Political Risk. And politics is never like that. So this is one of the problems. The Political Risk we have got general in asia, in russia, in the whole euro area. In the middle east and in the states as we enter a president ial election. What we end up with is the risk of increased volatility and that is problematic. Francine paul donovan global economist at ub. S at ubs. Guy after the break, we will hear from bill gross about how he has given away 700 billion and he plans to go even further. Just because im away from my desk doesnt mean im not working. Comcast business understands that. Their wifi isnt just fast near the router. Its fast in the break room. Fast in the conference room. Fast in toms office. Fast in other toms office. Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. Francine welcome back to the pulse live in london. Guy data emerging from the uk. Manufacturing output rising 0. 4 . Industrial production up. 5 . Better numbers. Beginning to firm on the back of this. The pound has been having a few straight sessions in which it has done well. Friday. Monday not too bad. Today up another. 1 . 1. 5601. Francine here are the top headlines. Greek officials have bought themselves more time to finalize Economic Reforms by assuring jet by assuring german led creditors they made progress. The two sides have commandant. Greece has agreed to pay the imf 750 Million Euros today. Guy john kerry travels to sochi to speak with Vladimir Putin today. Francine easyjets share price has fallen after the company says striking funds and the france and the timing of the Easter Holiday will weigh on earnings. Guy a 7. 4 magnitude earthquake has struck nepal near the border with china two weeks after the country was hit by devastating 7. 8 magnitude earthquake. Last months earthquake killed 8000 people and injured 18,000. Tremors were felt as far away as new delhi. Francine the dutch and belgian grocers have entered talks to combine. Caroline of course, yesterday we saw the huge rally it in shares. 1 billion in market capitalization being added to these companies on the back of reports they could. Be combining. This would form a huge retailer. This would have in excess of 6000 stores. It would have 25 billion euro market capitalization. It is not quite as big as tesco. And nowhere near as big as walmart. It is creating a force. And one that what had significant presence in the united states. This is where the overlap does make sense. Because ahold has stop shop and delhaize has food lion. They get 60 of their sales from the united states. This would remove some of the concerns over margins, over profitability. It would be a juggernaut in terms of sales. 50 billion euros in sales for the two together. Some analysts have been running numbers. One looked into the creation of cost savings. 400 Million Euros could be saved by these companies merging. Both groups benefit from this transformational deal. We have got to hold her horses a little bit because if you look at the quote in a statement, delahaize group entered into discussions to explore the opportunity. But you have got to remember it may not result in a transaction. They always have to say that. Back to you. Guy thank you very much, indeed. Francine alliance said firstquarter profit we spoke with the companys cfo. When you look at the trends, in total, half of the outflows of the First Quarter and the monthly trend is showing in the right direction and actually also, april outflows confirm very much the trends we have seen from january to march. Francine meanwhile, the man who cofounded pimco, bill gross says he has given away 700 million in will donate his remaining fortune. Gross said that figure was staggering. Bill gross success these days is still performance. I am still obsessed with that. But it is also i extending benefits to other parts of the worldn. Erik im going to ask across question. A crass question. How much money have you given away . Bill gross at this point probably 600 million to 700 million. The Gross Family Foundation of which are kids are part, that is the secondlargest Philanthropic Organization in orange county. Erik goodness me. Do you share the same goal that other people have which is by the time it is said and done, i will have given it away . Bill gross yeah. We give everything that we have other than our home away to either philanthropic causes or to the foundation. Erik that will amount to billions of dollars. Bill gross yes, which is staggering even to me. Erik really . Bill gross it is hard to sync it in terms of what effect it could have. For others. Its hard to sink in. Francine coming up next has greece the bullet in brussels . We will speak to the president of the Athens Chamber of commerce next. Francine welcome back to the pulse. Guy greece and its creditors continue to negotiate over a bailout. Hank paulson has told bloomberg he is optimistic about a deal. I spoke him last. To him last night. Hank paulson i assume that some how or other they will figure out how to keep greece as part of the euro. That is not the problem. The problem is fundamental structural flaws in euro. I am more concerned about what is going on england, france, spain. I worry about it, because mario draghi is a hero. You but Monetary Policy will only do so much. The key to europe is stepping up on some of the structural issues and dealing with labor reforms and smomree more fundamental things. Guy there are people in berlin i am hearing this in the conversation you think that greece is ring fenced. You can lead a country like that go. You have got experience of unintended consequences. Do you worry that doing such a thing would be a lehman like moment . Hank paulson theyre all kinds of things where we there is unintended consequences. We are dealing in a world where there is no playbook. There is unintended consequences of Monetary Policy which we have needed for a long time but maybe we do not need i am not saying europe does not need. So, in terms of unintended consequences, of course, i worry about unintended consequences, but to me, what i worry about more which i think is underlined you talked about the lehman moment i think the fundamental problem have been the fundamental flaws we have had an structural flaws in our economies for some time. Francine as greece seems to be making progress on a deal lets get straight to athens. Joining us is the president of the Athens Chamber of commerce. Constantine, great to have you on the program. Give us a sense of how relieved you are that we seem to be making baby steps but at least some progress between greece and its european creditors. Constantine there seems to be some progress made. The environment in terms of communication was much better yesterday at the eurogroup meeting, if one competitor to the meeting last month. However, the economy remains in state nation. This lack of liquidity. And of course we have had the greek finance minister stating that the state has funds for the next 15 days. Although we fulfilled our obligation as far as the imf was concerned yesterday to the tune of 770 Million Euros, there is a heavy amount to be paid in various states during june starting from the fifth of june totaling 300 Million Euros always up to the 19th which is well over one billion in total, which will be very difficult if not impossible to fulfill and less there is fresh liquidity coming and from the ecb. We are running out of time as far as the economy and the private sector is concerned, which is the only leverage against this crisis. If we do not begin to have enhanced policies for growth in the immediate future, then i fear the worst as far as the Business Community is concerned simply because we are having an increasing number of lock ups on a weekly basis. Guy lets talk about the Business Community. The government says there is no plan b. Do your members have a plan b . Constantine the Large Business entities have not only just a side plan b, but in some cases implementing it by moving the production process to other neighboring countries with more competitive taxation rates and more Competitive Labor rates. So i think for quite a few with in the Business Community, and especially those that can afford it, the plan b has already been executed or is being executed as we speak. The question, though is not so much what is happening for those Large Businesses, but for the small and Mediumsized Enterprises in greece who forms the backbone of the Greek Economy . There are 700,000 such businesses. Although some of them have the ability to be able to bring in the necessary funds. Unfortunately they cannot simply because there is no working capital coming in from banks that have been excluded as a result of the crisis and the restrictions we have at the moment. So, overal, the overall the situation is tragic at the moment. Francine what does it mean for small and medium businesses . Are they having to close down . Whats happening a second to them . Are they just trying to hang in there for them . Constantine hoping for an honest and mutually beneficial agreement that will come as a result of the discussions that have been taken place over the last two months with the ecb the eu and the imf. We do hope there will be at least a political solution in the next few days. And i do hope it is a next few days because literally we are running out of time. Unless we restore liquidity and begin to implement necessary reforms not as a result of the austerity package or any memorandum that has been signed with our eu lenders, but as a necessity for the greece itself. Guy we had Michael Oleary who runs ryannair on the set and he was saying he would expect a massive pickup in bookings if greece were to leave the euro zone and have its own currency because that would be cheaper. Do you have a different view of those who work within the Tourism Industry on the advantage or disadvantage of eurozone membership . Constantine it sounds promising for some one who is not actually living in greece to make such an assessment however, the return to any National Currency for a country that does not have the Production Capacity for its basic needs. Remind our viewers that greece produces only 48 of basic food requirements. 52 meets to be imported. We only produced internally 18 of our energy requirements. 82 needs to be imported. So you can imagine that it will be at absolutely chaotic situation the greeks will have to face, at least for the first year, if such a scenario was to be implemented. I have got the opportunity to reiterate that greece has second first to great deal to become members of the European Union and a great deal more to become members of the eurozone. So we will not be throwing away this identity, and to be honest any pull we have seen over the last two months has indicated that the overwhelming majority of greek citizens want to remain within the euro. They are seeking an honest agreement with our partners and lenders. Francine at the moment, do you think a deal is possible in the next couple weeks if we hear from your finance ministers saying, you will run out of money into a spirit why is there so many left in banks . Constantine i think we will be having an agreement with a referendum or without a referendum simple because the majority of the people do want an agreement with our eu partners. I think the main issues we have got the vat, which seems there to be an agreement between the government and the eu. We have got the national insurance, the pension scheme. And the labor relations, which are Still Matters that are being discussed. Im sure within the next 10 days we will find the Necessary Solutions to satisfy both our lenders and partners. And the locals here in greece. Guy constantine im looking at a story that ive been looking out for the last five years. You and i have had conversations during that period that i have to say have been remarkably similar. How long if we do get a deal done this time round, will it take for greece to get back on its feet . Do you have any sense of optimism the clouds are going to clear and that greek business will find a way through this . Because i struggle to see that situation. Constantine unless there is a government that realizes the necessity of the deep reforms that the Greek Economy requires, and implements them as soon as possible, if we have an agreement, there are major advantages. The prime advantage is that we can become part of this quantitative easing policy that the ecb has commenced and take it in the share of the 60 billion part month that is made available. We can also take advantage of the juncker investment package which would mean 17 billion euros provided that the necessary reforms a new taxation system simplification process for operating businesses in greece and reducing red tape, and of course combating tax evasion which remains the major problem in greece. If managed to reform these main issues, and i think the government is beginning to realize the necessities that are awaiting, then i am still optimistic but for a solution that needs to come very quickly so that we can Start Building towards that direction. Francine thank you so much. President of the Athens Chamber of commerce and industry. Guy top headlines this money. The royal bank of scotland could face damages over the sale of its orders backed securities. The charges claimed both banks misled fannie mae and freddie mac in what amounted to an enormous deception. Francine Royal Dutch Shell has won approval to resume expiration off the arctic coast. The u. S. Interior department has endorsed exploration the summer. Guy the picasso painting has set a record. Going onto the hammer for 179. 4 million. The painting breaks the previous record paid for Francis Bacon cryptex in 2013. Francine our twitter question. Is there a better way to spend 179 million . Tweet us. Weve had a couple of jokes. With 179 million, how many german bunds would that buy you . Guy still to come, we talk about easyjet earnings. That story, an interesting story. On one hand, good news. On the other hand, as you can see by the share price, not so good news. Francine welcome back to the pulse streaming on your tablet your phone and bloomberg. Com. Guy lets talk about a good newsbad news story. Easyjet has posted its first winter profits but warned that things could be cooler in the tird quarter. They are blaming the french and the church. Right. Lets talk to our European Airlines reported. The good news first. Because that was what this was trailed as being. This is a good news story. It was set up to be a good news story. First profits in 2002 for the first half since 2002. The first half is a lossmaking quarter. A couple Different Things coming in here. Fuel was helping them out, currency. But lets give credit to Carolyn Mccall. Since shes been at easyjet, she has narrowed the first half loss. Now they have a profit. It goes down to what they are doing it key airport and goes down to their strategy for targeting business customers. Getting a from your image. All of that stuff is working for them. And really worked in the first half and also all those things contribute. Francine the share price is down 7. 4 . They blame the french because of strikes or the threat of strikes. Kari this is the thing about easyjet. Theyguide in march for what the first half is going to be like. They are setting themselves up for everyone focusing on the outlook. The shares are reacting to the outlook. The outlook is saying that Third Quarter revenue is down 3 . Two factors playing into this are the timing of easter was earlier so the revenues are falling in the first and second half. Then the french strikes. I was on the phone with Carolyn Mccall and she made the point that the strikes were supposed to happen in march. The germanwings accident happen. Another factor weighing on bookings. The strikes were pushed back into april. There was a threat of strikes. So, in addition to having actual cost of the strikes, which resulted in 600 flights being canceled. 25 million pounds. There was also the fact that a lot of people were like, im not going to book if my flight is going to get canceled. Guy fair enough. Francine thank you so much. Our European Airlines reported. Guy for our viewers, it is the second hour of the pulse. Francine in its latest imf payment as european ministers set out in brussels. Stephanie john kerry and russia for his first meeting with Vladimir Putin in two years. Erik francine easyjets outlook sends shares lower. Guy good morning to our viewers in europe, good evening those in asia and a very warm welcome to those just waking up in the u. S. I am guy johnson. Francine i am francine lacqua. This is the pulse, live from london. Guy greek officials have bought time to finalize Economic Reforms. They persuaded creditors they are serious about delivering policies to escape a default. Finance minister Yanis Varoufakis told bloomberg there was common ground. Mr. Varoufakis red lines are inflexible, guy but there is common ground. Guy we got to athens and a couple minutes. In brussels, tom mckenzie is with us with the latest. Talk us through the timeline. A more positive tone but a tight timeline. Tom they have managed to do it again, kick it into the long grass. A couple of weeks of breathing space for the greeks now that they have had this rapprochement as they are calling it. A statement that the ecb, which was preparing to tighten the screws to step back. We will get more clarity tomorrow when members of the Ecb Governing Council meet to discuss that pension give the greeks meet to discuss that. Should give the greeks a couple more weeks. Refinancing of 1. 4 billion euros of t bills in july and august they have about 6. 8 billion. As the leader of the eurogroup told me, mr. Dijsselbloem told me there is little time to turn this around. Mr. Dijsselbloem the program runs out at the end of june. Between now and the end of june we have to find an agreement, get an approval from parliament, the implementation has to be done and then there can be disbursements. All of this with six weeks left to go. Very tight timelines. Tom one development this morning, the imf reportedly, according to the spanish media, telling the eurogroup they do not want to be involved in any other bailouts of greece. Even if the greeks managed to get a 7. 2 billion euros by the end of june, theres another bailout they have to consider. That is what they need possibly around 50 billion euros. There is a division between the imf, the eurogroup and ecb over who will be funding this. The imf has to prove that the debt in greece a sustainable. Most people acknowledge that the 240 billion euros is not sustainable. A lot to play for. There is tension despite the positive Statement Last night from the eurogroup. Francine thank you so much. Lets get the view from athens and speak to marcus. There is a statement did the statement go far enough for greece . Marcus they are not dancing on the streets yet. But greek banks live to fight another day, so that is something. Expectations were so low before the meeting. The statement contained the word positive, that is probably enough to ensure that the ecb tomorrow will not increase the haircut imposed on collateral of the greek banks for the liquidity operation. Thats probably close enough for celebration. It is also very much Yanis Varoufakis mentioned how much liquidity greece has, he talked about a couple weeks. That will not as into june. And sense of debt we do not have payments until june but there are some pensions at the end of the month. We are going to have to figure out how we are going to get into june. Guy we will leave it there. Thank you very much. Mark is joining us from athens. We are still looking at chunky payments in a short period of time. Equity markets francine they are down. Guy lets look at some numbers. Dax down by 1. 79 . Across Europe Health care and utilities getting hit hard. Stocks like easyjet under pressure. The bond markets reacting fairly well. Big reactions as we head to the u. S. Market open. Big moves. The dax, on my board, is down by 2. 47 . And little bit of a discrepancy. Nevertheless, big moves on the downside. Francine i dont know if we have a bunch art. And a lot of stories on the bond markets, as guy was saying greece is still an issue. A lot more volatility on the markets the bond markets as investors are sanguine about qe. Guy its there seems to be a number of factors. The european bond markets and u. S. Treasury markets, it is almost the tail liking the dog in terms of the way the market has been reacting. Sterling this morning, interesting to see that the early reaction from bloomberg in terms of what the numbers, the ip number did, the pound jumped. Strong manufacturing and strong ip data. Probably not Strong Enough to cause an upward revision to the gdp estimates. We are getting a pickup in data out of the Manufacturing Sector probably not enough to move the dial when it comes to gdp. Francine europes Largest Online fashion retailer has reported firstquarter results. Guy the berlinbased company which began by selling shoes on line has turned profitable for the first time. Lackluster performance and its ipo in october. Shares have been on the rise. For more, were joined by zalandos managing director. What is going on right now . Starting to hear evidence that the european consumer is back spending money. Are you seeing evidence of that . Yes. We spent today announcing our results are growing close to 30 . We have been reaccelerating our growth significantly compared to previous quarters. That is due to a positive market environment. You mentioned positive Consumer Spending trends. It is also due to many investments we have made over the last year. We think momentum in the business is good. Francine you are also hiring. What kind of people are you hiring . Data crunchers, programmers Something Else . That is where you are trying to grow. Mr. Ritter we are set at the beginning of the year, tack hiring will be a major investment in 2015. We set a target to reach about 10,000 employees at the end of the year. We are hiring in all areas operations, fashion but predominantly in tech. We looks to double our team. Currently we employ about 750 tech people in berlin. In order to grow, we have recently opened a new tech hub in dublin where we expect to hire up to 200 engineers. Guy how hard is it to hire engineers . Every tech Company Tells me this is the real challenge talent. Forget about consumers, forget about figuring out how the strategy is going to work. The biggest challenge to any tech business is finding the right people. Mr. Ritter i would not say forget about the consumer. We should never forget who our customer is. But hiring tech talent is a huge challenge. We have been very successful to scale our team in berlin that we see the market the coming increasingly competitive. On the other hand, zalando is becoming more and more effective as an employer so we are confident we can reach targets in europe. Opening dublin was the first step. We are looking to open more tech hubs to broaden our scope. In berlin we will continue to hire a lot of talent. A lot of our future growth is going to depend on whether or not we can build the best tax lotions for the customer. We need to make sure we had the best engineers. Francine are you thinking about having a foothold in the u. S. Or is it to competitive . Mr. Ritter we have any focused on europe in terms of our business. We are operating in 15 european markets. We are targeting a 420 billion euro fashion market. We still have a tiny market share so there is a lot of room to grow. We want to make sure we is on europe we focus on europe. That will be enough to have the option to build a 10 billion plus revenue company. We do not have any plans currently to move over to the u. S. Guy is your biggest competitor in europe . Do you think that story is going to change . Icm is amazon pushing into the fashion space and other brands upping the digital presence. The u. S. Is coming to you. Mr. Ritter i think many people have understood that it is an interesting and fast growing business to sell fashion on the internet. Our success has probably encouraged money to invest more in the space. At the same time, underlined by fast growth in the First Quarter, i think we have been doing a good job to convince customers to shop with us. To be honest, our biggest competitor is everybody who is selling fashion. It is an extremely fragmented market. The biggest Fashion Companies only have small market shares. I think we are on a good track to continue to win market share in this competitive market. Francine you have managed some deals, im thinking of top shop and gap. When will we see a direct translation in your sales . Mr. Ritter we watched top shop last year, quite a Success Story on zalando. It has proven how big brands can use zalando as a platform to conquer europe. We launched a campaign with top shop featuring a model which we have played across europe and which has shown Great Customer engagement. I think that is a great example. The gap campaign will come over the next couple weeks. It is our job to continue to bring the most attractive brands to our european customers. That has been an important part of the accelerated growth in the First Quarter. Guy what is more important to you right now sales or margins . Mr. Ritter i would say the customer. I think we really try to focus the company on putting the customer and the customers interest first. Making sure we build the best product. That will be the basis for us to gain market share and show great revenue growth. For us, it is important to work with a positive margin. We have reached profitability last year and and the First Quarter we have seen continued progress on our margins. For the next year, our focus is on the customer and longterm projects like tech hiring and to kill our business to gain market share. Margins and to grow our business to gain market share. It is too early just to focus on profitability. Francine thank you so much. Rubin ritter of zalando. Guy easyjet share prices falling after the company said strikes in france will weigh on earnings. Posting its first winter profit in more than a decade, helped by a decade, helped by low fuel costs and Favorable Exchange rates. As we see the field benefit wei are passing the benefit to passengers. Even though we have had a Strong Revenue half, our fares are lower year on year. Francine john kerry prepares to meet with the Vladimir Putin for their first direct talk in two years a period filled with tension. Guy public because it Pablo Picassos les femmes dalger set a record, 179. 4 million. Francine that brings us to todays twitter question. Is there a better way to spend 179 million . Tweet us guyjohnsontv, flacqua. Guy greece could do with the money. We have come here with a clear mandate to improve britains relationship with the eu. And to reform the eu so it creates jobs for all. I do not think anyone is in doubt we will hold the referendum on british membership of the European Union. We got into the negotiations aiming to be constructive and engaged but also resolute and firm. No one should underestimate our determination to succeed for the working people of written and of Great Britain and the whole of the European Union. Francine George Osborne days after being reappointed. Planning to start talks aboug britaints talks about britain. Greek officials have bought more time to finalize economic performance. We are joined by head of multiasset strategy at nn investment partners. We are seeing a big selloff in the market. This seems to suggest it is a selloff in bonds not think anyone that is having repercussions on the markets. Is it technical . To a large extent it is still technical. Last week, the german bund market seemed to be driving sentiment. It started in the u. S. Yesterday with a selloff. Today there are headlines over greece that it is a spike in bund yields that is the dominating factor. Guy is janet yellen right, are stocks getting topic choppy . I think stocks are not as expensive as bonds. The fact that bonds are moving away from the extreme value proposition, that is creating people that is having repercussions are in positions. That is what we are seeing last week. It seems to be starting again today. Francine is this a more normal place . Guy to some extent, it is. We are moving away from the extreme position in the extended bond markets driven by the qe story and fears that were exaggerated early in the year. We are normalizing to a bit of volatility. We are moving to a more balanced world more fundamentally driven. Maybe ever the next couple weeks i think earnings, janet yellen when she speaks, will be more dominant. Guy ive been hearing people talking about inflation. Has that been factored in . That we are getting in inflation pushed towards the back end of the year . Moving from one extreme to the other. We were all about deflation and all of the site we have all of a sudden we have an inflation risk. We are seeing tentative signs of Inflation Expectations moving higher. It is not going to be an issue in terms of wages and market pressure for the next one or two years. I think we will have more calm. Guy frisk on, risk off. Risk on risk off. If you are in a crowded place and you get this shock, the machines have preset levels and you get mechanical risk. Francine what should we be worried about . A greece exit . The impact is going to be less than it was two or three years ago but i think it will create a shock. The scenario will be tight but in the and we are having a referendum and then some kind of a deal. Thats my best case. The bigger risk for markets is how the fed is going to deal with the second half of the year. You see how sensitive markets are, we have seen francine plugin back to posting come code from london. Im francine lacqua. Greek officials have bought more time to finalize reforms by assuring creditors they has had progress on policy. Nice varoufakis told bloomberg the two sides have common ground. Guy john kerry is set to meet Vladimir Putin for the first time of direct talks in two years. Ukraine sanctions, iran and syria expected to dominate. Francine easyjets share price has fallen after strikes in france and the Easter Holiday will weigh on thirdquarter earnings. Posting its first winter profit in more than a decade helped by love he will cost and Favorable Exchange rates. Guy an interesting morning for the markets. How interesting . Lets ask jonathan ferro. Jonathan pretty interesting. Getting ugly in the European Equity markets. Three days of gains and then equities fall out of bed. Dax down, heavy losses on the periphery. Almost 2 in spain. Easyjet is getting slammed on the ftse 100. Equities, same story. The global bond rout. Overnight, japanese bonds getting hammered. Australian yield on the 10 year up. In europe, italian yields high. Still up by nine basis points on the 10 year. A global bond rout getting traction. In greece yields a little higher to 11 on the 10 year. Today was the day they are scheduled to pay the imf 750 Million Euros. We are told they are going to get paid on time. Heres the catch, they are tapping reserves from their imf holders account to meet the loan payment according to a greek newspaper. They have got to replenish those reserves within a month. The read is a, the struggle is to get money to pay bills. B, a month . They need a deal by june. The fx markets, euro stronger against the dollar. Bills. Bthe story this morning is the dollar. The dollar getting hammered. One pound, one. 56 73. These are highs for 2015. Up half a percent against the dollar. There is a key u. S. Story playing out. Treasuries plunged yesterday. Yields on the 10 year of the the story this morning is the dollar. The dollar getting hammered. Most 42015. The 30 year most since june 2013. 2. 32 as the yield on the 10 year. This could get tricky for the treasury. They come to the market this week with 64 billion worth of debt. To that you are going to get a 24 billion auction for threeyear notes. The u. S. Is coming to raise money. Look out for that. Guy on a historical basis they would be happy with that. I want to talk about greece. You could argue that they have missed the payment. I cannot see the difference between missing the payment and having a month to make the payment or making the payment game and having a month to replenish the money. Somebody has made a calculation that one is better than the other but the margin is fine. Jonathan it is an elaborate way of not falling into arrears. Maybe a backdoor route of getting the money. The imf paying the imf, yes. But it is allowable as long as they replenish the reserves within a month. That is the key. The tone was better yesterday but did anything change in terms of getting a deal imminently . We are told the deadline is the end of june. They have to replenish before the end of june. Francine it is unclear whether it is a month or two weeks that they have to repay the money. That would be a worse situation. Guy the clock is ticking louder. Francine thank you. John kerry heads to russia to meet Vladimir Putin for the first time in two years. Ryan chilcote joins us with the latest. Thank you for coming. How significant is this . Ryan it is significant. First time since the ukraine conflict began. The ukraine conflict is the reason it has been two years. That has frozen u. S. Russia relations. He will be with the foreign minister of russia and putin. I am sure they will talk about ukraine. U. S. Officials quietly tell us they are concerned there could be a new offensive. Additionally, the u. S. Is keen to talk about other areas where they cooperate with russia like syria. Russia is assads biggest ally. Like iran we are not far from the june 30 deadline where we need a deal. The u. S. Wants to make sure they are synced up with the russians as to how the end of sanctions would work these of the iran vis a vis iran. The u. S. Wants it to be coordinated. Everyone was surprised when the russian president came out after the tentative deal and said we are going to start selling antiaircraft systems to the iran ians again. The u. S. And a lot of europeans said that is getting ahead of ourselves. They want to make sure they are on the same page. How flexible as the russian president willing to be not talking about ukraine. Guy the oil industry is going to be paying attention. Going to take the temperature of what is happening vis a vis sanctions. Walk us through what expectations are and how putin is playing that. Ryan russias Largest Oil Company rosneft has been hit by sanctions. Difficult to raise money in foreign debt markets, difficult to raise money and capital markets. Theres a question about how they are going to service a significant amount of debt 23 billion coming due in the short term and 60 billion of debt altogether. One of the things they have long wanted to do, the russian government, which has a 70 stake in, they have wanted to sell a 20 stake in rosneft. The share price is below. Igor sechin does not want to sell below the market price. They are talking to the chinese the chinese says we will not pay belowmarket price. Like when you have to pay the parking meter and you are scrounging around in your car and you discover there is a stash in the glove compartment. [laughter] i normally look in my childrens pockets. In russia today, there is speculation and we have a great piece about this, that that pocket could be another oil company russias fourthlargest oil producer. It has a market cap of 25 billion and about 34 billion in cash. More cash than market cap. Guy that is a glovebox. Francine what does it want to do with the cash . Ryan it might want to do with what the russian president does. The ceo of the company is an old confidant of the russian president. This could be the secret stash that they could use. If the company uses the 34 billion, their preferred shares are falling today, if they were to use that to buy the stake, the money would go to the government. They could kick the money down to rosneft. The big issue right now in russia is this liquidity crisis and the inability to raise money. That would help rosneft. That would be a backdoor to get around john kerry. Francine Ryan Chilcote on russian oil. We needed a venn diagram. Guy greece and russia similar in ways the money is maneuvered. The excellent story is up bloomberg. Com europe. Francine carlsberg posted earnings today that highlighted its exposure to the deteriorating russian markets. Caroline hyde has the latest. Caroline share prices falling. Seems the market continues to deteriorate when it comes to carlsberg, booze in russia. They did manage to drive up sales 4 , a beat. Looking at the net loss, it is still in the lost territory. Strip out the ethics issues then it does drive it into an operating profit. On a net basis, carlsberg posting a loss. It was at the exposure to Eastern Europe that was a problem. Strong performances from western europe. Volumes picking up 5 ever there were helped by pricing. The driving up the amount of pounds. Asia, india, china, they are making acquisitions in china and helping turned what was a loss into growth in china. Theyre managing to hold onto their fullyear growth forecast. Many felt they were unrealistic to be posting mid to high single digit organic offering growth organic growth. Deutsche bank said it was unrealistic. They seem to the holding on. This is the weakness. Eastern europe is where we are seeing deterioration. The number one brewere in russia. It bought baltica in 2008. Since then, deteriorating the russian market deteriorated 9 . Ukraine is off 14 . We know the political instability. There is regulation and the russian beer market. You will not be able to buy it at the kiosk anymore. That is a headwind, not to mention the ruble. That hit numbers. They are managing to control it, upping their prices in russia. They also said overall they managed to increase their market share. This is still a deteriorating market. This is the challenge for the next chief executive. You just spoke to Juergen Rasmussen he is handing over the reins. He has a new chief executive. Amen and the dairy industry is the first non dane to be taking over this Company Since carlsberg was founded. He has stagnant 14 . We growth to turn around. That was really interesting in your interview with the previous chief executive. He says russia is still a longterm that. Have a listen. Mr. Rasmussen i do not think anyone knows. A lot of issues are driven by politics. What i can say, i do believe that the situation will improve and it will benefit the beer category. Its just a matter of when, that i dont know. Caroline moodys agrees. The Ratings Company has come out saying they think russia in the longterm in a bet on beer market growth. And the short term, nothing but volatility. See it with the recommendations on carlsberg. 4 analysts say buy 18 say sell. Guy up next, we speak to the business woman of the year Catherine Garrett cox on the pulse. Francine welcome back. Live from london. The business woman of the year Award Ceremony took place last night. Were joined by the winner Catherine Garrett cox. Congratulations. Does an award mean anything . Do we still need business awards for women . Ms. Garrettcox we should be but i do not think we are. I was overwhelmed to be awarded last night. I think and financial services, we are sitting in london. The reality is that despite many good attempts, we are still not as far forward as we should be. I am delighted to accept this award on behalf of so many women and finance who are probably unsung heroes. Guy why do you think it was you . Ms. Garrettcox that is a great question. I am not representing the judging panel but when you think about madame clicquot, she was widowed at the age of 27 and she really embodied courage, tenacity and a desire to want to swim against the tide. Perhaps reallyi like being against the tide. Perhaps some of those characteristics are things i have embodied. Francine your business is going through a tough time. Talk about the fighting spirit you need. Do you do these things differently or is it no different . Ms. Garrettcox i like ultimately it should not make a difference. I have yet to meet a Business Leader who has not faced challenges through their career. When i sit back and reflect, it is not how far you fall, it is how quickly you bounce back. Resilience is a really important quality in any Business Leader. It is about looking forward. I cannot change anything that has happened in the past but i can influence the future. The organization has a bright future, we have a supported employee base. A difference. I have yet to meet a Business Leader who has not faced challenges through their career. We are determined to do a great job in the future. Guy a lot of people would like to see in the next year some significant changes at your business. Are you going to change your business . Ms. Garrettcox the point is that successful businesses generally do it over time. We understand we have to do things that are going to be very reflective of progress. At the same time i do not want to jeopardize the hard work we have been doing. Organizations do take time to get things right. We have had to change a lot the business has been transformed. As i look forward in terms of the opportunities we see we are very excited. At the end of the day, people we are very optimistic. Francine when you hear from Rupert Murdoch he never chooses anyone who has not had a tough timewe are determined to do a great job in the future. Guy and then come back. What is the number one advice you give anyone going through a turbulent time in business . Ms. Garrettcox ultimately it is probably important not to read the press too much. Guy or watch television. Ms. Garrettcox actually, they really important piece of advice as you have got to believe in yourself. You have to have an inner strength. You have to have a clear purpose. For me, i feel the weight of responsibility very heavy on my shoulders. A lot of people that have come to work in the business have come because i have asked them to come. I never want to lose sight of that. Be true to yourself and stick to your mission. Guy do you think you are shareholders would be surprised that you won . Ms. Garrettcox you have to stand back and reflect. This award is something that i believe was given to me because of my career over the past 25 years. On balance, throughout this past years, i have done some pretty brave things. I moved to scotland, everybody said i was bonkers. It has been a pretty great career move. I would like to think that people have the ability to look slightly through noisy press. He has not had it, whether you are in politics or business or a celebrity. On balance, people will sit back and say that is pretty good. I have had a wonderful support. Francine what do you make of the scottish win . How is that going to play out with westminster . Ms. Garrettcox we are in for an interesting period of time in politics. I think nicolas sturgeon has done a great job marshaling support for the snp in scotland. I was not particularly surprised. We need to say is this going to work, we have the scottish elections next year. I suspect the buzz word will be after cooperation, probably both in terms of government and promptly from a business perspective. Guy does it worry you that this might make another referendum more likely . Would that concern you . We saw a lot of business disruption surrounding the last one. D think it is more or likely . Ms. Garrettcox i think it is too early to say. Politicians generally do a good job of saying they will rule nothing in and nothing out. Were an organization a bit like Veuve Clicquot that has endured many years. It is up to the is business to deliver for shareholders. Francine now that you have won, what is your biggest business challenge . Ms. Garrettcox it is about continuing with the Extraordinary People i have been the business doing a great job for shareholders and continuing to drive so people know that what we stand for. Francine doable in one year . Ms. Garrettcox absolutely. Guy i was talking to hank paulson last night. He has an interesting view of what happened early financial crisis. Do do you think if there had been more women in that period we would not have seen that happen . Ms. Garrettcox i would like to say yes but i have been a champion for balance. It is not really men versus women. Diversity of views is a good thing. When im trying to recruit people, i try to make certain i do not recruit people that look and think like me. You need constructive debate. Francine thank you very much. We are back in two. Guy welcome back. May i suggest a double espresso . European markets are having a tough morning. The u. S. Session could be choppy. Dax down over 2 . Equity markets being hit, bond markets are flat. Francine that is it for the pulse. Next is surveillance, watch out for the markets. Announcer this is bloomberg surveillance. Tom athens uses somebody elses money to pay the imf. John kerry and Vladimir Putin meet in sochi. It is a snowy relationship. Designing the perfect whole the perfect hole. This is bloomberg surveillance , live from our World Headquarters in new york this tuesday, may 12. Im tom keene. Joining me is brendan greeley. It is a deflated bowtie. Brendan we are always wondering what is our story. Here is our story. Tom brady, above the fold. Tom barbara has tom carried he tom grady tom brady on the cover. There is vonnie quinn. Vonnie good morning. Nepal has been rocked by another powerful earthquake, less than three weeks after an earthquake killed 3000 people. It hit