we begin with the highly anticipated results of the airport commission study. among the plans chosen from more than 50 proposals is the contentious idea of expanding heathrow. >> caroline hyde has been following this story. walk us through the key proposals, what is in and what is out. listat is not on the short is birmingham airport and the thames estuary. let's look at the three proposals. what howard davis said is needed is one runway by 2013 and potentially 2 additional runways by 2015. they're looking at one option with gatwick airport to build a new runway to the south of the easiest thing runway. the other two surround heathrow, our biggest hub and the most busy airport in all of europe. one new runway in the northwest and could be an extension of the existing runway. they have not listed thames estuary, saying it is too uncertain. they might look at it again in the first half of next year. boris johnson coming out today saying, it is not dead. they are not being considered. >> businesses are certainly trying to campaign for boosted airport capacity overall. >> they really have been raising their voices. it is a cacophony of noise altogether. they put forward this pro- expansion campaign. there are about 100 signatories on. much the retailers. universities are being represented. solicitors. even daniel leavy, chairman of spur saying we need airport capacity. exports 40% of british are delivered by aircraft. notably, the aviation sector reduces about 3.8% to the gdp. they are saying the business case is there today. version coming out and saying -- virgin saying we need heathrow to remain a hub. british airways and iberia saying we need consensus. >> on the business leaders, we tried to book these guys to bang the drum and make the case. i have to say, very hard. i am wondering whether a higher level of commitment would be useful. that's talk about the politics. yeti of this commission was to make no decision. post-2015decision election. howard making it very clear that he feels heathrow needs to be expanded. >> in this last week or so, we had taken to the airwaves the transport secretary, trying to say, look, after 2015, this could be back on the table. he could see heathrow being analyzed for an extra one right. -- an extra runway. we could be analyzing that again. goldsmith is from the conservative party, saying it would be an off the scale betrayal if the prime minister backs heathrow expansion. certainly, there will be real political dangling. not to make a is decision until after 2015. i think this will be front and center of the next debate. i areseems to be pro-and runway and conservatives are said to be against. n extra runway and the conservatives are said to be against. >> howard davies joins us at the top of the next hour. >> and we will get his reaction to the report. >> new car sales in europe rose for a third consecutive month in november. at is the longest period of gains in four years. how much of this has to do with spain's cash for clunkers program? hans nichols joins us from berlin with the latest. >> what we have is a slight increase. it is just a slight increase, when nine percent for the month for the month .9% of november. it does mean three straight months of growth and could mean that things have finally bottomed out in europe. you look at the last four months and these are numbers that are slightly different. august,it was down in five percent. again, and up, up then we have this month strong increase. driven in part by spain. the cash for clunkers program was extended another month in october. we also see declines in italy, germany, and france. it is not all good news. look at individual companies. holds lagging, the clear winner. renault up 8.9%. more bad news for peugeot. bad news for gm. down some 5.8%. overall, you see middling numbers. folks are taking these numbers and saying it might mean that the worst is over. it is also really hard to extrapolate a trend from november. not exactly a hot month for selling cars. year on year, it does look like 2013 will be the worst in at least the last six. >> there are questions about how long spain is going to be able to maintain its program. you wonder whether or not we could see a situation in which these numbers turn around fairly dramatically. can you run us through the details of -- you have run us through the details of who is up and who is down. will the whole market is down one spain backs off? >> when spain take their foot off the accelerator, you would not be surprised if you see an overall decline. all of this is driven by spain. you have seen declines in germany, which is supposed to be growing, italy, which is not. the question is, can the strong growth in the u.k. offset some of the weaker growth elsewhere and it spain pulls back, we will have to dig more into the numbers. it does look like, at first glance, that if spain ends its program and nothing fundamentally changes, we could see declines. this is not a healthy industry. there is no question about that. the question is, is it at the bottom? >> compare and contrast to the united states, you saw what gm had to say yesterday. ain't you very much. hans nichols joining us from berlin. reported the first profit in six years earlier this morning. manus cranny has the latest. what did we learn from the numbers? they are doing pretty well. >> the stock is up 83%. it was the leader at the open. as with all good stories, somebody out there in the market making land has decided to take this stock lower, i think on the margins. it is number one here in the u.k. and number two around europe. focus on the u.k., sales up nine percent. where they ares focusing as well. like for like sales up, but nowhere near as impressive. falling, but they are making headway. you look at the product range and he has got everything in their from tablets, a fantastic christmas in the marketplace. it is about the experience. i have been in one of these for challengey technological advances like myself, using the hardware and the software, getting lessons and finding out about services. it is not just about show how, it is about know how. the stock being marked down ever so slightly. margins seem to be where the market makers are focusing today. >> it is a good run. i do not think it is that dramatic to see the drop we have seen today. it is about experience. i can buy some of this online. why do i need to go to a store? what has sebastian james done to make me come in to one of his stores? >> customer service. you walk into one of their stores and i was in one near my own home. i can go in not only to purchase a product, but to get help with other product that i have. geographically, it is a focus. it is a transformation. comment went out of business -- went out ofomet business. a lot of retailers would say, we are fine. we do not need to do anything. they have grasped the retail nettle by the head and they have gone with it. the analysts that i caught up with yesterday said he is still going to close down more stores, probably from 500 down to 400. profitability is rising and he has rid himself of some of the worst parts of the business. to likerancine is going this one. what do you like doing? i know you like cooking. >> ironing. she is a big fan of ironing. >> the only thing i do is -- the other thing i do is eating. we are all baking crazy. >> thank god for mary berry. she is an icon in this country. ceo, thank god, i have just religious sized it. they are selling more ipads and samsung galaxies as well as the old surface tablet. >> guy johnson is actually quite a good baker. >> occasionally. have one of those machines. i cannot remember where i bought it from. maybe it was dixons. >> thank you. here is what else is on our radar. >> amazon workers in germany companyelegation to the headquarters to reinforce their strike for higher pay and better eu toldditions read the a german newspaper that regulators may strike during a german holiday. >> tech regulators are headed to the white house today. byy are those invited president obama. the meeting is being held at the nsa. >> speaking of the nsa, a u.s. judge have ruled that the collection of domestic phone records is probably illegal. that allows a lawsuit to go forward. the first time a district court judge has ruled on the nsa program, which leaguer edward snowden brought to life. >> coming up, angela merkel locks in her dominance of germany. the chancellor prepares to be sworn in for a third term. >> we will head to berlin to see how much of her agenda for europe she can realistically achieve. ♪ >> good morning, everybody. welcome back. you are watching "the pulse." we are streaming on bloomberg.com, your tablet, your phone, and any windows own as well. angela merkel has been confirmed as the next german chancellor. votess elected by 452 ing. 9 abstain this is in the lower house of germany. david tweed is on the other side of the brandenburg gate and walk us through what is happening this morning. and what happens next, i guess. >> no surprise to see that angela merkel has been formally elected as germany's chancellor for a third term. overwhelming support. this is a woman at the absolute height of her political powers. germany's most popular politician. 68% approval rating. you can see pictures of her right now. she has just been formally elected in the last two minutes or so. she has said a few words and now she is going to head over to -- the germant president, who will give her her papers to become the next chancellor. there will be a swearing-in ceremony here in berlin at 11:00 central european time. tomorrow, she is going to go to paris and meet with resident francois hollande for a pre- european summit meeting, something that she used to do with president nicolas sarkozy. of course, at the end of the week, it is back to brussels, european summit, number one on the agenda, european banking union. >> mario draghi not pulling his punches on that very issue yesterday, saying effectively you guys are making a mess of this. it is too complicated. and it is massively underfunded. is really concerned about is also the way it is being set up. you have these resolution mechanisms, which will be created under existing european law, but it will be managed by an executive represented by various governments from around europe. at the same time, you are going to have the resolution fund. that will be a whole lot of different compartments and national funds. is saying that it is just too complicated. >> responsibilities for supervision and resolution need to be aligned at the european level. councilurge you and the to strictly set up a robust single resolution mechanism for which three elements are essential in practice. a single system, a single authority, and a single fund. is, if youis saying have a bank that is going to be wound up, it needs to happen almost instantaneously. you cannot have hundreds of people running around, consulting each other about whether a bank is viable. that is his message. that is how europe makes decisions, isn't it? thank you very much indeed. president isian trying to secure bailout loans. for more on the latest out of ukraine, it is ryan chilcote. thentially, what do ukrainians want from the russians? >> they want to borrow as much as $15 billion. that is right, they want cash. they also want cheaper gas. they get about 60% of their energy right now from russia. they are going to spend about $11 billion on that this year. we understand they may get a discount of is much as -- of as much as 25%. that does not mean they would pay less for gas, but what they would do in return is agreed to buy more russian gas, albeit at a lower price. >> this is basically the ukraine cozying up to the russians. how does that go down with the crowds in kiev. >> everybody likes cheaper money, but probably not very well. their concern is that russia would do this with strings attached, even if those strings were not necessarily announced. the people on the streets in square arece where -- convinced this is part of russia's plan to increase its clout in ukraine. they want just the opposite. >> thank you so much for that. we will come back to ryan shortly. he will have more on ukraine. campaign for of a egypt's new draft constitution has gotten off to a bad start. organizers misspell the word egyptian in arabic amongst other problems. elliott gotkine is following the story. walk us through the blunders that these guys are making. >> they were manyfold. you mentioned the most conspicuous, which i imagine anyone would have spotted immediately, except the organizers of the draft constitution campaign. you look at the poster that was hanging radical -- rather largely behind them launching this campaign, some eagle eyed saw there was no beards or no avail. who are these people? a simple google search for businesswoman, the first picture on google images is that lady, who appeared on an irish recruitment website. the doctor previously appeared on e-how to get rid of stretch marks.com. syndrome man with down the first one of pictures for down syndrome. the egyptian information and says itlogizes was a civil society organization promoting the draft constitution campaign, which made the unintended heirs. >> it is quite spectacular, the amount of -- the level of mess made by these people. this is actually quite a serious story. the egyptians are having a vote on the constitution and they have to do this next month. >> the interim rulers hope it will have three effects. they hope it will lend of theacy to their rule democratically elected president. they have to strip the long aspects of the constitution that was overseen by mohamed morsi. a new constitution is necessary to pave the way for new presidential and parliamentary elections. a new constitution, new elections will help calm things. of course, the run-up to that vote in january, we could see tensions increasing rather than decreasing. >> thank you very much indeed. our middle east editor in egypt covering the story from tel aviv. a reminder, as we had to break, you can follow us both on twitter. taking a short break and we will be back in a couple of minutes. ♪ >> let's check the pulse of the markets now. manus cranny at the touchscreen with your asset check. >> the biggest rally in europe in almost two months. dropping. what does that have to do with? it is possibly more to do with the discussion about tapering as we move into the next 24 hours. we wait on u.k. inflation in the next few minutes. could be a bit of a lifesaver for mark carney. waiting for confidence numbers to come out from germany. later on today, we get inflation data in the united states. guy takes it away for the next two hours, which is the swedes cut rates by 25 basis points. the view from the market seems to be that there could be more on the way. innorwegian krone rallying the swedish krona to getting to fall. volatility is rising all across the map. >> thank you very much indeed. gatwick ceo weighs in on the controversial findings of the airport commission report. we are also getting new runways at heathrow, by the looks of things. what will he make of that? ♪ >> welcome back to "the pulse." i am francine lacqua. >> and i am guy johnson. the u.k. inflation rate has just crossed the tape before the last month. the media forecast 2.2%. we are getting very close to the is anment targets, which sensibly set for the bank of england as close to two percent. as we get closer to that, some would argue it is making mark carney's life a lot easier. >> let's have a look at the pound. it is probably one of the things that mark carney will be looking out for over the next couple of quarters. fairlyas gone up drastically. a depreciation of sterling will certainly work in favor of the u.k. economy. mark carney, the suggestion is that he will have to raise rates sooner than he anticipated. a lower than anticipated inflation rate will probably drive that a little bit. let's get back to our big focus as we gear up for the busiest time of the year. we are debating how to accommodate overcapacity at london's airports. toy will take forward proposals for new runways at gatwick and heathrow. >> joining us is the chief executive of gatwick airport, which lies to the south of london. the morning. it seems that today's news is good news for gatwick. we will talk about heathrow in just a minute. stance that is no longer on the short list. you guys are still on -- longer on the shortlist. you guys are still on the short list. sire welcome the fact that howard has narrowed it down to a two horse race. you look at the proposal that gatwick has put forward. essentially, the runway will be aster and cheaper and have significantly smaller environmental impact than the alternatives on the table at heathrow. gatwick can use its mix of legacy carriers to reach out to the emerging economies and also -- acrossope and europe to offer affordable fares. >> talk about some of those issues in a moment. first, you have indicated that you probably have a lower budget if heathrow were to expand significantly. today's news looks like very good news for heathrow. it looks like heathrow will be expanding significantly. what is your reaction to that? is not a deliverable solution. in the last five years, they have tried and failed. it is just in the wrong place. it is to the west of the city, meaning it pollutes more people. for us, we look forward to foreting with each other the location of the next runway. we really do not think it will be delivered at heathrow. >> when do you think we will get a formal decision on this? >> we are expecting a final decision to come through for the davis commission. if we push ahead with a second runway at gatwick, it would be somewhere around 5 billion pounds. that would result in a runway 's,ning in the mid-2020 probably five years faster than any alternatives at heathrow. we offer flexibility. low-cost models for the next generation. what will be achieved on affordable fares and environmental impact. restrict only the legacy carrier fares and that means it will be higher >> how much of this will actually be a political decision? >> i'm sorry? >> how much of this will be due to politics? will be looking at politics? >> well, i think if we look at political issues associated with expansion, it brings you back to the locations of the airports. i think the reason that heathrow is politically toxic is because it is to the west of the city and that's why the flights fly directly over a densely populated area. it is a difficult magnitude. our noise impact will be less than 5% of heathrow's noise impact today. i think noise is what makes this issue political. that's why we see the action that we're seeing this morning against heathrow whereas gatwick can weather the environmental issues more easily. we offer choice to the passengers of low cost fares to europe and the legacy carriers. >> >> it might be slightly stretching the point. let's talk about whether or not you can become a hub airport. you're only ever going to have two runways. it is a stretch to think about you having three. heathrow, we need a hub airport. it looks like the aisle of grain has been pushed out into the long grass. given today's announcement it looks pretty clear that heath vow a serious contender and probably the frontrunner to become the hub airport for the united kingdom. if that is the case and you just highlighted the reaction this morning which is so high because -- what are you going to do? are you going to spend less money on gatwick as a result of that decision or do you think you're probably now with a second runway in place looking to spend what it was you were originally suggesting? >> what heathrow is proposing is a megahub. offering the services thatst that it offers. it has been exaggerated in recent years. that is a fact that we should be focusing on. at gatwick, we have demonstrated that we have roots to china, ndonesia, russia and also -- putting another single runway in is simply not going to be enough to solve the capacity problem. we're going to need more runways than simply one. plus we're going to have to spend an awful lot of money on infrastructure. first of all, we need more than one runway. would you agree with that and do you think the linkage costs that are associated with these programs? >> it is -- looking at this ssue in quite some detail. now essentially drawn the conclusion this is about where does the next new runway go? if you look at demand going forward, there is only -- for ne runway. nce that run sway full, it should be looked at again. >> ok. thanks for your time. stewart wingate, the c.e.o. of gatwick airport. >> we'll continue to conversation later on on "the pulse." > let's stay with the aviation theme. boeing. rob, i want to get your comments on gatwick in just a moment, but first of all, boeing. people that have suggested this industry and boeing has a large defense side to it. it is going to be struggling going forward. this is a very positive vote of confidence in this business. >> absolutely. it is also part of a reward for the investors. on the defense side, actually, the outlook isn't great. there is more uncertainty after the budget agreement in the u.s. at least there are some parameters on which you can size your future defense business. >> does it mean the dream liner shoes are behind them? >> there is a new version that will be fielded next year that looks much more -- slightly larger and that program seems to be going much, much better. boeing is entering a cash-generated period. they are going to start delivering a lot of airplanes now that 78 7's are going outside the door. 777, we don't have the same level going forward. >> it is much easier. and it is much further out. it is not going to be eating a lot of cash for another couple of years. this is a good period for boeing to do this. >> what did you make of what the c.e.o. of gatwick had to say? >> they don't dictate their own fate. for gatwick to grow, heathrow can't. their prospects are smaller. he has to bang the drum, the do not grow heathrow. that's what he is doing. >> between flight delays, cancellations and endless ques how you go about flying your own private jet? >> >> it was using private aircraft these days? customers break down into four groups. you have your charter companies. downant to take the gang to miami, you have a spare 10 grand lying around, you have a plane. next are your prepaid plans. instead of getting 1500 minutes of talk time, you're getting 25 hours of playing time for $100,000. then you have fractional ownership. it is like a timeshare. you can use it when you want, but you have equity, so if and the otherh, option is to own your own plane. companies like jet aviation is worlds apart as an experience. pilot who to meet my is waiting here for me inside the terminal building. it is nice, but nothing special. you will not be spending a lot of time in it. your aircraft will be waiting outside. there is no tsa line. if you want to charter a plane from jet aviation to take you from peterborough to london, it would run you between 75000 and $95,000. you would get pilot, copilot, and a flight attendant. you may be wondering how this feels, it feels amazing. i have to fly commercially next week and going from this to see 34f is going- seat to be a letdown. >> i could see you on there. happen is ahat will whole different story. >> mario draghi does not see signs of deflation. pimco's mikee with amy. is the pack so, it has lots to deliver. ♪ >> welcome back. u.k. inflation fell. the eurozone inflation reading comes at the top of the next hour. mario draghi sees no sign of deflation. is mike amy.w we will talk about the fed as well. let's start off with inflation. the inflation story, pretty much everywhere, is softening. central banks have different kinds of ways of approaching this, but the train -- the trend is pretty similar. -- fed-re in set-land land -- >> you have no issue with inflation. you have healthy growth. enough to stabilize unemployment rate and leave you whole for the next couple of years. if you look at europe, once you get inflation numbers below one percent, in reality, to get an largee below, you have a portion of inflation numbers that are negative. when you get into that kind of ofuation, you are at risk deflation being embedded in the system in large parts of the economy. have a risk.you to come ups going with a banking union which probably isn't set with -- sit with purpose. you have an inflation rate that purpose.ot fit for what is the policy option? >> it was as much about the euro as anything else. europe is one of the weaker economies and has a currency that keeps going up. that is part of the reason why the inflation rate is slow low -- so low. ecb has beens, the keen on trying to tell the politicians that they should not be the only game in time. -- in town. it didn't work. >> the inflation story is going to get worse if the euro keeps on climbing. >> our assessment is that for now, they want to sit and do nothing. if the inflation rate continues to go down in the euro continues to go up, they're going to have to redress what they do. there is an issue of negative deposit rate, but that is a big deal. we think if you look at the movement isst rate priced into the latter part of 2015. if you look at europe as a whole, we would say it is a pretty tepid recovery priced japanese rates if you go on the backend. inflation rate is staying low and it gives you a lot more room to leave rates lower when you have a much deeper your co-. i start to signal a taper and we get in next month. given what happened in the summer to control the front end and do more that. >> the whole game post-september ,s to separate the end of qe which most central banks don't want to engage in qe, from bringing forward rate hike expectations. to some degree, that sales process has been and will for a couple of months. week'sey doing in this press conference, they're going to do more heavy lifting. maybe they lower the unemployment, that would be a good way of doing it. whatever they do, the one thing they want to do is get the message out there that there are -- they are in no rush to raise rates. >> lowering of the threshold, if that happens, how much is priced at the front end? >> we think that is the safest lace to be because you have 10 year rates that call at three. you have the first rate hike priced in by the middle of 2015. foreems a bit of a tall ask them to get to the point where they want to hike rates by the we think 2015, but that is the safest bet out there. rates over 2015 and early 2016 potentially on hold. >> pimco portfolio manager, mike amey. >> it is good for your conscience and your wallet. find out how you can help the earth i -- and save resources. ♪ energy,day's new biomass heating systems, heat pumps, and even solar thermal. financial to chief officer, david ray. thanks for joining us. when we talk about renewable heat, why is it important? you are saving the earth and saving money, but you have to spend up front. >> that is correct. the right thing to talk about is why heat is so important. the viewers don't know, over a percent of the energy that we use and the majority of heat we use in businesses is for heating. we are not talking about wind, we're, talking about heat pump solutions. is doing isinsol about the renewable heat industry and raise awareness amongst consumers and businesses. spend up front. how much do i have to spend? >> the important thing to understand is that the running cost of renewable heating solutions are lower than what they are for fossil fuels area -- fossil fuels. wood pellets are cheaper then gas, which means they are a lot cheaper than lpg or oil. for my home, i am putting a pellet system in. an what theeaper th big six energy suppliers would charge me. >> there are government schemes to support people that want to make the shift. memo that is to pay for the increased cuts in the cost to the system. to my imagine, in regards property, it is a five bedroom detached in kent. my system cost would be about 18,000 pounds. that is a large amount. i will be saving over 200 pounds a year by switching to a renewable heating solution. receiving roughly 3.5 thousand pounds from the government. >> who is eligible for that heat incentive sponsored by the government? toany one that would like install a renewable heating solution. that is probably applicable for about just over half of the buildings and the u.k. or people could benefit from a renewable heating solution. some --ion heating slip heating systems are replaced each year, and most people don't know about the renault bowl heating solutions. -- the renewable heating solutions. >> thank you for that. , there.e cfo at innasol. >> a second hour of the pulse is coming up. runway, howard davies will be joining us. he is wrapping up a press conference. the rise of the selfie. 's --berg's businessweek will be joining us. you can follow us on twitter ,@guyjohnsontv,@flacqua. we will see you in a moment. ♪ >> project runway, the u.k. airport commission backs expansion of heathrow. we are live with howard davies in the next few minutes. >> cashing in on clunkers. european car sales pick up speed thanks to an incentive program in spain. >> the fed meets today. assets are bank's set to top $4 trillion. good morning. a warm welcome to those just waking up in the united states. i am guy johnson. >> i am francine lacqua. this is "the pulse." we are getting numbers and they are smashing estimates. >> the estimate was for a headline number of 55. we have come in at 62. this is a survey of investors and this is telling you a lot about investor enthusiasm for what they are seeing in germany. is broken down into two components. expectations are smashing. situation, not bad either. it is 32.4. we were expecting a figure of 29.9. we have some inflation data. >> consumer prices for the euro area, they are up 0.9% versus a year ago. november consumer prices are down 0.1% versus the review this month. what this does, it highlights the problem that mario draghi and the rest of the council has as concerns about disinflation leading to deflation continue to grow. >> let's move to the u.s. markets are reflecting on the phrase, the coming months. that is when the fed said tapering could start. our markets compared -- prepared? -- are markets prepared? >> i want to show you three snapshots. government bonds, that is what the mortgage market is rice off. -- priced off. we have gone from 2.8% to 3.8% from the low point this year. 100 basis points. bond traders have a view that you're going to see higher rates come through as the tapering begins, whether it is january, february, it does not seem to matter. s&p, a little bit of money coming off the table. the unemployment rate is at a five-year low. it begins to play in the psyche and thinking of the markets. ready the ever trader, you have a little protection. the vix, protecting yourself against volatility and equity markets, has ridden -- risen. gains inack-to-back the unemployment numbers of over 200,000. it sets up the table for whether it is tomorrow, january, 34%uary -- it is that of traders that think the tapering will come tomorrow. that is still a minority. >> they're going to set it up for next month, start to give the market even more of an option to prepare itself. the balance sheet is enormous. that is going to be a point of discussion. it won't be getting any smaller anytime soon. >> this is something we have a great story talking about the concerns for all parties. you are looking at, even if qb begins to taper, -- qb begins to per, quantitative easing is still going to happen i stepped down process. happen at a stepped down process. i think this is about financial stability. that is according to a former vice-chairman at this fed. i will finish with this, andrew wilson came in here this morning, he is one of the leaders at goldman sachs asset said whetherd he begins tomorrow, weather comes in january or february, it will be a brief moment of upset that we will have. in six months time, it will not matter. , therajectory of the usa growth is 3.5% in terms of growth and the hikes, mid-2015. actually, goldman sachs says that you could be looking at bringing that view forward and we are underestimating the momentum of the u.s. recovery and that could force the fed's h and. >> manus cranny, our markets editor. david tweed is in berlin. what happens next? angela merkel has been formally elected and at the moment she is visiting the presidents. he is giving her the nod to take .ver it is back to the bundesbank where she will be sworn in. it has been flowers all around for angela merkel. index come out quite nicely today as well. the end of this week, it is back to business. it is europe again. she is the european summit in brussels and she will be looking at banking union. >> thank you so much. david tweed with the latest from berlin. we will be looking and continue to look at these live pictures out of berlin. debate onne to the how to fix overcapacity issues at one of the biggest airline hubs in the world. the u.k.'s airport commission study is out with its list of recommendations. on the list is the idea of expanding heathrow. caroline hine has been following the story. walk us through the key proposals. they have come up with three proposals on the shortlist. we do not need one by 2030, but two new runways in the united kingdom. where are they can that be? one option is gatwick airport. the other two options focus on heathrow. one brand-new one way there or extend one that already exists. that would enable that to operate as two independent runways. estuary three -- thames is going to be reassessed come the first half of 2014. not on the list is birmingham airport. it is all about that wake and heathrow. -- gatwick and heathrow. memo very much about heathrow. let's talk to the man at the center of this conversation. he is howard davies. he just wrapped up a press conference. good morning. the overwhelming consensus is that you have given a big green light to heathrow's expansion. >> i don't know why you have that view because there are three options which are of equal weight in our report. one of the misuari second runway -- one of them is a second runway at gatwick. more than all the growth in the last decade has come in a low- cost carriers and they are interested airports outside heathrow. one of the big uncertainties and how demand will develop in the future. to be more hub tied or will it be more low-cost carriers? those are the questions we are going to be wrestling with the next few months. >> they expect the isle of grain option to be back on the short list, is that a realistic expectation? >> that is not with the report says -- what the report says. we will do studies and decide if it is on the short list. i would like to be responsible for decision-making because we will look at this in an objective way. is the isle of grain still an option on the table? >> we have found it difficult to compare options developed by existing airports, which know how to manage airports, know what a new runway would mean. proposals of the new airport on another hand. these are different propositions. we have rolled out a few of them on grounds of cost and plausibility, but we think in order to make a safe decision, which will last on whether the isle of grain as a possible option or not, there are some additional pieces of work you need to do. implications,al on the cost implications, and also on the impact on the economic development of the southeast. this is a major that on shifting the economic gravity in london. we need to do more work on that. i don't think it is surprising that this requires further analysis, but we will do that as quickly as we can and decide if it is a plausible option or not. there are obstacles to overcome. optiondo you consider an for heathrow that was not put forward by the up -- and by the airport itself. that oneou looking at that is not something heathrow has proposed? >> it looks to be an interesting solution that has innovative elements to it. the idea of using a superlong runway to takeoff and landing is not something that has been done before. the civilnsulted aviation authority, they were not able to say to us that it was impossible. they thought it might be possible, that we need to look at the safety applications and it does have some sophistication elements because you are just extending an existing footprint rather than putting a runway in a different place. it has different implications in terms of the disruption to the local area. it also has innovative ideas of public transport links to the airport which are different than those put forward by heathrow. it is worth looking at those options alongside the ones put forward by the airport itself. >> given the legacy of poor decision-making, or lack of you talkedking, about the need for an additional runway by 2030 and then possibly by 2050, why not get ahead of the game, or catch up by proposing two new runways, one at heathrow and one at gatwick. >> i understand that point, but the issue is that we, here in the u.k., have a unique model. we have airports that are in private ownership and where you depend on commercial funding. it is clear from gatwick and heathrow that the chances of the two of them simultaneously funding new runway development are small. that theiro be sure runways will be commercially viable. we are in a different position from places where airports are publicly owned and where it is a political decision how much you put new capacity in. we have to consider commercial damage. our judgment is the demand forecasts are such that the likelihood is that only one new airport would be built on that timescale, whatever we recommend, and therefore makes more sense to decide on the prioritization, which is the best chance of some new capacity being developed in a timely way. >> are you not concerned about the growth of other european hubs and that london will fall behind if there's not enough capacity being created? you look at what has been going on in the european aviation market, the big thing you notice is the growth of the dubai. they have some particular advantages which is difficult for western european airports to do -- replicate. there are competitive dimensions, but i think that we have to look at what makes sense within the london market. airportsof looking at as if they are competing on some league table is not a meaningful way to think about it. andou go to those airports talk to them, you will find that they face similar constraints. cap just overning what heathrow's planning cap is and the chances of that increasing are very small. frankfurt has built a fourth runway, but it is not being used much and there are many controversies in frankfurt about how big that airport should be. i don't think it is the case that london is losing in some european race against these other airports in any economically significant way. final question, some would say that we may be underestimating the potential costs of the secondary transport, getting people to and from the airports, preferably not using their cars. what extent do you think you have a firm handle on the underlying costs of establishing new rail networks, etc.? report, weook at the have inflated the cost estimates given to us because we know that projects cost of these and up being higher than people say. we have included a 40% allowance with a 50% optimum bias. asking thee promoters to do what they can to increase the torsion of people traveling on public transport. , buthave interesting ideas also the proportion of passengers that reach the airport using public transport. that requires public bodies because it is not just airports, but also what kind of public investment in airport surface access is put in. it is going to be an important part of the decision-making of the environmental airport -- impact of the airport and how people get to and away from it is an important feature. >> howard davies, chair of the u.k. government airport commission. thank you. >> still ahead, it was oxford dictionary's word of the year, the selfie. find out why we sell -- snapped this one. ♪ >> good morning, everybody. you are watching "the pulse." let's look at foreign exchange action. let's talk about the euro dollar. we saw a strong number out of germany reinforcing the euro that we now have. we had in inflation number out of the euro zone. it has weakened since last month , reinforcing the problems that mario draghi faces. inflation, deflation, one of the themes that we are going to take into 2014. this is ahead of the said. -- fed. the sweden bank is siding concerns -- citing concerns about inflation. are we going to get further rate cuts? it is an open question at this stage. >> the launch of a campaign and save it of egypt's new constitution has gotten off to a bad stop. is followingne the story. mammoth this is the most conspicuous of the blunders. >> this is the most conspicuous of the blunders. anyone who can spell and arabic, it was obvious they misspelled injection and it looked like the word for determined. egyptian and it looked like the word for determined. doctor, the young businesswoman, if you do a good goal -- a google search for businesswoman, hers is the first image that appears. she was also on an irish recruitment website. the young man with down syndrome, he appeared in an arizona magazine and can be found by searching on google. even the soldier, who is egyptian, was ripped from a blogger's website it was criticizing the army. ejections -- egyptians will vote next month, right? hope the vote will do three things, it will put legitimacy to their role and the ofct -- the injection mohamed morsi, they hope that the constitutional strip the islamist elements that were inserted into the new constitution and they hope that this will pave the way to elections sooner rather than later. >> thank you. up, a $10 billion increase in stock buyback program, the largest in a company's history. ♪ >> welcome back. let's take a look at some companies on the move. manus cranny joins us at the touchscreen. >> have a look at cgg. they do seismic readings on oilfield exploration. dropping 15%. they say there is a lag on closing deals. they are numb -- dixon, number one for electrical retail. the margins dipped in the overall top line profitability reports that they deliver this morning. that was the first top line, pretax profit. thank you, indeed. you can't get away from the selfie. resist.we couldn't find out why self these are the selfies that keep -- are the currency that keep silicon valley happy. we will see you in a few minutes. ♪ >> welcome back to "the pulse." i am francine lacqua. >> i am guy johnson. these are the top headlines. >> mario draghi criticized plans on how to deal with failing banks. he says the proposals might be too complicated. leaders are meeting in brussels to work on a bank resolution for the regions financial crisis. angela merkel has been sworn in for a third term as chancellor. leaveslition platform -- cabinet ukraine's president is in russia for a bailout loan for as much as $15 billion. he meets putin in a moscow. antigovernment protesters reject the loan and are pushing for ties closer to the european union. manus cranny is at the touchscreen with more. . >> despite optimism, the word that you used is confidence was smashed. terms of the inflation story in the united kingdom. coming back towards the two percent target. , excluding food and energy, that is still rising. it is still a structural problem. let's check in on u.s. futures. indicators are flat is how you can best describe them. showing slightly off by a point or two. volatility is rising. >> thank you, manus. boeing has increased its dividend by 51%. authorized a $10 billion share buyback plan. rob wall joins us with more. this is a big chunk of change handed back to investors. why? >> boeing is going into a cash generative fury. they're going to be delivering a lot of planes, they have to do something with the cash. the last 10 years have been about plain development. planedevelopment -- development sucks up a huge amount of cash. >> it is good times for the next few years. their 737, production is really high -- >> they have taken a low cost option on that. >> even that doesn't come for a couple of years. of 787 is coming at a rate 10 a month. good times. we extrapolate this into airbus? >> they came out last week promising a dividend and more stability in their earning. of scale --ind >> not the kind of scale, but similar. >> in terms of risk, what are the risks to this money not appearing? there are going to be challenges ahead. the program is just back on track. andhe risk for both airbus boeing is what happens in the supply chain. can the smaller guys keep up? if you are moving the airbus there's a small part missing, it can be a low- cost part, suddenly you can't -- the plane and that is the biggest risk to both of them. >> ea ds doesn't have the big defense arm that boeing has. how much of a drag is that going to be? >> it is a drag. -- of a to think as boeing is 50-50, but it is not that anymore. there is a lot of emphasis on international. they are closing the c-17 production line. can you keep the cost in line with the declining top line? they are being aggressive on making that happen. >> very interesting story. rob wall, thank you very much, indeed. made -- maybeoup on the menu for buyout. investors are eyeing them as the next big target in the packaged food sector. what is the appeal of campbells to a buyer? the appeal is, for some of -- someone like mike buffett, campbell is all about brand and the food industry is all about brand. -- goldfish, campbell soup and i can, everyone knows this. it is in the warren buffett labor. he owns fruit of the loom, staple kind of clothing. heinz, he purchased with 3g last year. the iconic ketchup bottle. these are things that people use and are not going away. you have some pricing power because it is a brand people recognize and a brand people are willing to pay to stay with. that is the industrial deal. on the financial side, it is cheap. campbell, when you run it up against other packaged companies, they start to look a portable relative to its earnings. that could draw in someone like warren buffett. he likes brands that are recognizable. he is a fan of drinking cherry likes things he that people recognize and identify with. >> what is amazing is that for everything that has changed in the world, whether it is technology, health care, telecommunications, natural resources, the consumer sector on the food side tends to be stable. able associate with these brands, mayra member them from childhood, they do not go away. likes to say that the ideal time to hold stock is forever. ongive us an overview possible m&a activity on the food sector. see a few things happening. it is very consolidated. gigantic companies, nestlé, unilever, procter & gamble. companies will do some reshuffling of their brands, but one thing that is curious and does have to be asked about these big deals is what antitrust regulators are willing to put up with. these are visible products. people buy them every day. when pfizer sold its instant nutrition unit, there was antitrust concerns from china. there could be other concessions made like that, should we see another big merger in the packaged food space. >> thank you for that. matt campbell. minutes, "bloomberg surveillance" with tom keene. he joins us now. memichael mckee will join and we will talk about this today fed the meeting. the consensus is that we will not see the taper here. there will be a lot of discussion about it. you saw the rate cut out of sweden this morning. look at the meeting, michael mckee will give us his perspective. ofwill talk to adam parker morgan stanley. what you should do. , or a been reluctant cautious bull. he looks for prices to elevate in 2014. -- o war than anything, beyoncé changing the music does this in the last 48 hours. the talk of new york city is how well she has done on itunes with her new album. she sold the whole thing as an album. some of the songs are pretty good. no marketing. this has smashed records on itunes. offadio bought the music itunes and played on the radio stations. you talk about disruption as being the word of 2013, beyoncé disrupts the music business. huge impact. lost to -- lots to also talk about. we go to peter cook on a budget vote today. >> tom, thank you so much. with "bloomberg surveillance." tom's -- going on this week. million -- 94.5 million is the estimated number of americans are estimated to travel over the christmas holidays. that is according to aaa. it is the fifth straight year of holiday traveling gains. start your engines. it is going to be quite a ride. coming up, three months of car sales growth in europe. we are going to look at what is driving. if you want a clue, it is spain. we will see you in a moment. ♪ to "the pulse." let's get you some company news. a u.s. judge has ruled that nasdaq must face investor claims about the facebook ipo. nasdaq must face negligence claims over software, but not a risk decision to allow trading to continue. goldman sachs and credit suisse have been added to add -- to help with charter's time warner bid. beyoncé's surprise album has smashed sales records on itunes. the self-titled album sold more than 800,000 globally in the first three days of release. it was released on friday morning, exclusively on itunes with little fanfare or promotion. looks go from music to cars. european car sales may be improving, but gm is focusing efforts elsewhere. they are investing in five plants in the u.s.. is ian us to discuss richards. he is the director of global automotive practice. also joining us is hans nichols. hans, let's start with you. europe, butm gm on using beneath the surface of these numbers, it doesn't paint a pretty picture. of europe are out decent. they show an increase. it is the third month in a row that you have had the increase. it is on the backs of spain. ceo of gm, i don't know if he had a sneak peek of the numbers, but he was bullish when he spoke yesterday. >> i think the european market is starting to show light. some are doing better than others. we have made a commitment that we're going to be in europe. >> there is a 15% increase in spain that has been driven by cash for clunkers. these are like sugar highs. if there is a lot of demand, they are legitimate, but if there is not demand, all you do is boost performance and then you have a crash later. up seven, the u.k. percent. italy, france, germany down on these numbers. >> let's bring in ian richards. a sugar high. we have seen it before. you are bringing forward demand that you would roll out over a long period of time. that is what we are seeing in spain. how bleak is it? what is the real story? >> it is difficult in europe for carmakers. if we go back to well over 60 million, getting up to 17 million car sales, we will be lucky if we catch 75% of that. buts telling a good story, they have suffered the worst. manufacturers and the low end market entrants have done best in this particular market. that it is going to be spending money in the united states, they are hiring another 5000 mark -- workers. putting money be into five plants. the smart play is in the states, not europe? >> absolutely. you would have to be a brave man to see substantial recovery in european car sales in the next two or three years. longer term, it would have to come back. we are driving older and older cars. at some point they're going to stop running. you will have to buy something else. there has to be some growth, but it is seeming to be a long way off. >> let's bring in hands again. -- hans again. >> what should the annual sale numbers be and who is doing right? ,s it ford, see it -- fiat volkswagen? you have to say that volkswagen is doing it best in europe at the moment. they are the only one that seems to put a multibrand strategy that is working. competing successfully with the likes of bmw and mercedes. volkswagen is sitting in the middle looking very pretty. is the fiat underperformer, but things aren't too bad. ford has done a little better -- van general motors in europe. they have the whole issue with the chevrolet brand that they brought across that has not done too well. you say chevrolet to most europeans and we think corvette, exciting performance, and terrifying fuel consumption. well.idn't sit bring up fuel economy. as companies like gm look to vehicleinvestment united states in a euro, what are they going to miss him outside? different way.a it is much more expensive. fuelation when it comes to economy is being driven out of europe. if you look at conventional a lot ofchnologies, the gains have been made on the conventional engine technologies and a lot of that has been european-based. it goes wider than that because if you look at the market innovations in automated is, they have been european center to a degree, particularly when you look at the electronics. electronicsest suppliers, both are european- based. many innovators for the german luxury brands are innovating in the spaces and are european- based companies. you can see why investing in north america and asia is attractive, but there is a risk if people take their finger off the european pulse. >> thank you very much, ian richards. ongoing thanks to hans nichols. still ahead, what have we got for you? no escaping the selfie. it is the word of the year. we're going to tell you why silicon valley is hoping this is a trend that isn't going away yet. ♪ >> welcome back. you're watching "the pulse." let's talk about the currency rate. the norwegian krone forces the swedish krona. it was largely expected, hence the rate is changing from unchanged. about theou a story disinflation concerns that exist in europe. the ecb has a real problem with it. that is enough of that. there is no escaping the selfie. they are everywhere. who can we blame for the rise of the selfie? the suggestion is not a kardashian. withdon't have a problem the selfie. it is a human instinct to capture yourself in a way that you would like to be remembered. this is how artists used to be -- used to survive. it is possible that having a camera in your pocket has perverted this ancient and natural human instinct and turned it into narcissism. we have to remember the role of the selfie industry. a selfieakes you post when you sign up. if you don't have a selfie on facebook, it will remind you until you have selfied yourself on the page. these are not social clubs. they are companies and they need you to selfie so they can make money. the selfie that is my twitter icon was taking at a photo booth in my wedding. my facebook profile picture is me walking away from the camera with a child on my shoulders. nobody gets out of here alive. you cannot be a part of twitter or facebook or instagram without making some kind of decision about what you want the world to think you would like to be seen as. silicon valley is run on selfies. ing,hey can keep us selfie- they have no reason to exist. when i am done with this video, i am going to put it on facebook to see what my friends from high school say. our narcissism is the currency they keep sheryl sandberg happy. i don't think it has to do with a decline in humanity -- humility. it is a business strategy. >> it is just a business strategy. >> it is. for me, it is fun. hans nichols, our resident selfie taker, i bet he does. i bet he sneakily takes selfies. avoid thatg to question and get into the history of the selfie. did cavemen do selfies? i don't know. to do a stick figure on the wall, is that not a selfie? i'm going to say that is the first selfie. >> some selfies are worth quite a bit of money. >> budget talks. vote in theave a senate. it is important. obama is meeting with tech executives. look to see how much blowback there is on privacy. ♪ >> this is "bloomberg surveillance." >> senate republicans will support a compromise. the federal open market committee begin two days of meetings and will focus on this morning's inflation report. brady orare not thomas peyton manning, the rest of the nfl lays three seasons and they are done. the money runs out. good morning, everyone, this is "bloomberg surveillance." it is tuesday, december 17. joining me is scarlet fu and denver broncos fan michael mckee. we need a morning brief. >> the broncos look good this weekend and they are playing the worst team in the league. >> is that the jets or the giants. wax unfortunately, it is used in. mark carney who is sitting in the catbird seat. he came over to fix the bank of england and the economy is soaring and and uk inflation unexpectedly slows in november, the lowest in four

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