Transcripts For BLOOMBERG The Pulse 20140110

This is what is coming up. Ensys raises inv sales forecast. First, our big story of the day is jobs in the United States. Economists expect payrolls had it to show the u. S. Strongest year in employment in eight years. Jonathan ferro joins us with more on the numbers. We are expecting 197,000. That would be 2. 20 7 million, ion, the 2. 27 mill best year since 2005. A friend got in touch with me and said that is only 100,000 jobs better than 2012. The fed has pumped 1 trillion into the u. S. Economy and bought an extra 100,000 jobs. Now 4 Balance Sheet is trillion and we still have not recovered all of that 8. 8 million jobs lost from the u. S. Economy. The appetite for jobs in the u. S. Is remarkable right now. Southwest airlines put out 750 openings. 10,000 applicants for those 750 jobs in just two hours and five minutes. Big numbers we are seeing out of the u. S. A lot of these jobs are part time. A lot of people are dropping out of the workforce. That is why the Unemployment Rate is coming down so fast. People drop out of the workforce and they are not counted anymore. He had seen so much bad weather. We have been covering on the pulse for weeks almost, will that have an impact . You look at the jobs number today and one of the reasons for that will be the weather. Not just this month, but december as well. It is a very typical approach. It is not highbrow economics. And it is cold, you do not go aside go outside as much, travel as much, billed as much. Jobs growth could be hit by this. Strong growths and a lot of of people think the trend is still intact. That. Nk you so much for of course, that is the big story of the day. That will that is what will decide what investors will do not only in todays trading session, but the next couple of months. Indias secondlargest software annualr is raising its sales growth forecast for the second consecutive quarter. That is thanks to the recovery and that is spurring europeans to spend more. Hans nichols joins us to discuss the results and how European Tech shales i shares are moving as a result. This is on the strength from european companies. Europeanstrength on companies and stable growth in the states. Infosys has a new executive. Hairman one of the cofounders came back. They have had their strongest quarter in two years. The other side is a resurgence, a vote of confidence in tech stocks and the tech situation in europe. It is about growth in europe and growth in the states. Look at two movers in europe. Sap up 1. 3 . Cap gemini is up around 2. 3 . Stocks in the European Tech sector are moving as a result of this. A story this as not about just infosys, but another macro trend that shows slightly positive direction. The crisis in europe is over. There is a little more spending. Almost mores to be spending taking place in europe than in the United States. The United States is still strong, but we are seeing a little bit of strength in the macro trend story. Sourcing, think about it must be a lot of British Companies that do that and maybe something easier from europe just because of the regional closeness. Fair point. Take a look at the breakdown between growth in the states and growth in europe. The percentage of sales is almost a quarter of their annual sales. It is almost down a little bit to 60 . You saw a one percent uptick in downtick in the states. There might be a slight re ifghting towards Europe Europes recovery is indeed taking hold. Thank you so much. We will have plenty more from hans nichols throughout the program. The bestperforming european stock in 2013 was ocado. Today, the company kicks off a tie up with supermarket morrison. Caroline hyde is here to tell us more about their ambitions. They need to deliver more products. Lets talk tech. This is front and center to what this company is. It is a technology company. It has developed its own software and build Distribution Centers that are stateofthe art. It has managed to use the most cuttingedge Gaming Technology to build 3d replicas to start delivering your groceries in the most fast, efficient, cutting edge manner. Haveechnology that they bill, that software, can be licensed to other businesses. Oft is why investors, some the savviest investors on the street, have got so excited about this stock. That is why they bought big stakes in this company. That is why we saw the share last year. 410 they are at a new record high this year. It is all about the potential to move away from groceries and into other areas of retailing and not just in the u. K. As we mentioned, they have morrisons under their belt now. But they are looking abroad. The chief executive saying, we have been inundated with queries from companies around and abroad who want to get in on our technology. Our analysts telling us that there is not a single retailer, a Single Company that does not can a bit of what ocado provide. It is stateoftheart and second to none. It certainly is. So far, the grocery business are their forte. How have they expanded and what are they doing . When they sign this deal with morrison, we saw the share price start to wrap up. Ramp up. They are licensing intellectual property and their technology. Today, it does live in the midlands. You can start getting your groceries delivered. Guys who developed it are X Goldman Sachs bankers. They claim the groceries are the hardest thing to nail because the volume is so enormous and the value is little. If you can do it efficiently, you can expand it and start doing pet products, baby products, all types of retail and expand outside of retail as well. That is where the potential is at the moment. Already, delivering some 35,000 food and drink products. That amounts to 70 of the u. K. , where you can be delivered to. Havesons claims that they managed, in a quarter of the time and a fraction of the price, given then the technology , the online capability that is so needed. Yesterday, morrisons warned us of a profit warning. They said, our profits are down. They are not going to be in our range because we are behind in online. Now they go live and morrisons will be hoping it turns around their fortunes and ocado will be hoping that it gets more investors looking at them. Thank you so much. Caroline hyde with the latest. Here is what else is on our radar. Swatch shares are rallying. It is having a strong start to 2014. Sales jumped more than eight percent from the previous year. The owner of omega and Harry Winston sees a clear gain in market share. French president francois he deplores the sevenpage spread of an affair he is allegedly having. Statementcording to a that he gave. He says this is an attack on his private life and he is considering legal action. He filed a legal complaint with the paris prosecutor in march. And chinese imports rose the most in months, indicating that domestic demand can support Economic Growth. That comes as the country claim the title of the worlds biggest traitor of goods. Still to come, do not call it a victory just yet. Aghi claims that the euro crisis is over. His commitment to do whatever it takes, next. And call it a case of the x files. Google secretive Research Group has met with u. S. Regulators who oversee medical devices. Or perhapsses something more powerful . That story later this hour. Welcome back to the pulse. We are live on bloomberg tv and streaming on bloomberg. Com, your tablet, your phone, and now any Windows Phone as well. Mario draghi says it is hisature and strengthened from this to keep Interest Rates low for an extended period. Our next guest says his bold statement starts to unravel after you take a closer look. Napster of research at National Australia bank. You cannot take away from the he has not spent one single euro sent and yet it is having the right effect. The markets have confidence in him. He can make these bold statements which everybody believes. Analysts believe he never has to do anything. It is a wonderful trick when markets believe you and you have credibility. You can make these statements and you do not need to back them up. He does have the tools to deal with another crisis if something were to emerge. He could perhaps do some form of quantitative easing. If we get a deflationary impact, they could do some asset purchases. Poetically, politically, this is very difficult. Would we get another . I think the ecb would be constrained. Can they really do asset purchases . The warning yesterday was to money markets. The ecbying to delink from the fed. If you start pushing up rates, we will do something. It could be a negative deposit rate. Probably a second order, maybe another lt ro. Backll push those rates down. The key message is, we are not the fed. We are not tapering rates for long. Most,t worries you the the specter of deflation or the fed raising Interest Rates, which we do not think will come this year . It is the whole tapering conundrum. That is a reduction in asset purchases and pushes up yields. Do we see european markets are to react . In the u. K. In europe, we have seen a different reaction. Credibility. Re rates are slightly lower. In the u. K. , we have seen some backup. Tenyear yields are rising lockstep with the u. S. In europe, push comes to shove, we will see another lt ro. They will go for another increase in assets through the banking system. He have the asset quality review coming up later this year. Despite the fact that Capital Markets are open to banks, they are only open as too many banks rates funds. What is the biggest concern in europe right now . Lack of demand lending. What about france . Ultimately, france this year will be interesting. We could see a huge potential for disruption. We will wait and see what the european elections give us. We could see it within europe perl assist if skeptic rds form a fairly large block in the european parliament. Outside france, which could enter recession, it is the lack of bank lending. Ishave talked that the eib going to step in. Credit growth is nonexistent. Financial fragmentation, which the ecb should be stopping they have tried a variety of things and nothing has worked so far. It is about time we got over some of this repressed nation on this issue. I want to come back to some tination on this issue. I want to come back to mario draghi. Are you concerned about sterling and the fact that, at some point, he will have to raise Interest Rates . He does not want to raise rates. Unemployment is coming down. If we think about the Second Quarter of this year, sometime we will get back to the output levels we had in 2007. That is seven years later. Around 14 of gdp. He does not see inflation as being a problem. Maybe it is slightly below where the mpc read easily have thought. Really asleep have previously has thought. The markets do not believe him when he says he is going to keep rates at hold. His problem is, markets do not believe him. The market the potential in the u. K. Is we may see a return qe in the second half of the year if we do see rates go up. They have a very difficult problem at the moment. We need more speeches and more contact, reinforcing the idea that rates are not going up. We are already seeing markets react. That is what the governor was trying to say. You are absolutely right. On the u. S. , do we put too much emphasis on the jobs data . No, because that is what the fed is targeting. Janet yellen will be accommodative. She will be, but the Housing Market has recovered. Into coreto bleed inflation with about a 20month lead. About 48 of core inflation. The fed will be expecting to see some increase in inflationary pressures. That inflation will not remain well behaved. We will start to see some increase in core inflation towards the second half of the year. Though tapering continues. With a payrolls report, we know from the adp survey that anything below that will disrupt the market. As long as we see jobs growth of over 2000 all 2000 per month, i think it will continue. Tom, the director of research at National Australia bank. Time for todays company news. Alcoa has agreed to pay for hundred Million Dollars to resolve a u. S. Criminal and civil investigation after one of its divisions admitted to paying bribes to members of the royal family and officials of state to win business. Google sent staff with ties to its secret Research Group to meet with regulators to oversee medical devices. The meeting raises the possibility of new products that may involve biosensors. Google, the company has started shuttling workers on a ferry from San Francisco to Silicon Valley as Tech Companies come under criticism from overburdening the city with buses. We will look at this airlines 22 billion gamble, next. Oflets check the pulse the markets. Jonathan ferro is that the touch screen with your asset check. Lets get another look at these equity markets, pushing higher in europe. Nice little gain on the ibex down in spain. Stronger than expected Industrial Production data out of spain. Pushing higher for the first full trading week of the year. Game in town one and it is u. S. Payrolls, expected to come in at 197,000 for the month of december. We could have the biggest yearly gain for jobs since 2005. We have had some strong data throughout the week. Deutsche bank saying we could post a jobs number at 250,000 250,000. 1. Is, one euro is 1. 36. Pretty much flat. Southwest airlines recently posted available positions and the response was overwhelming. Airlines are finally hiring again. For the first time in more than three years, Southwest Airlines is looking outside the company to hire Flight Attendants, offering Employee Perks like free air travel for themselves they are families. Flying at a record pace of 10,000 in two hours for only 750 spots. That is about 80 per minute. Southwest is not the only airline to be inundated with applications. Delta received 22,000 resumes for 300 jobs in 2012. Before merging with american, u. S. Airways got 14,000 applications were just 420 openings. Total industry hiring still felt. 8 last october, but that is the smallest decline in 13 months. With profits forecast to rise 53 this year, airlines are finally flying high again. Speaking of airlines, Norwegian Air is opening new york and florida crew bases. The carrier plans to hire as much as 300 people. Tell me more about these developments. They want to be the cheapest longhaul carrier in the world. Right. The lucky indeed. Good luck indeed. We just talked about southwest, you have ryanair in europe, air asia and asia. Those have been shorthaul operations or medium. Norwegian is trying to bring that model into longhaul. Other models have tried and failed. They are making another run at it. Said that has always he wants to offer cheap flights from new york to london but has not done so because he has not bought the planes. Michael oleary has talked about this forever. It is always the next thing he is going to do. His argument has basically been he needs very cheap planes to get the cost base down and he for not think the prices the planes they can do that route are hugely popular. Have notrers discounted them. He is waiting for weakness in the market. Norwegian air has bought 787s. Now there are all these problems with the planes. Correct. The ceo is the biggest advocate of the 787. He says that plane makes it possible. It has been criticized, or operations have been disrupted. It is kind of entertaining. Thank you so much. Rob wall, r Bloomberg Aerospace and defense reporter. Coming up thomas first of all, here is todays pulse number. 1. 7 million, that is how many u. S. Intelligence files the pentagon says Edward Snowden downloaded routes that is according to lawmakers. The chairman of the u. S. Intelligence Committee Says the pentagon was bound to notice. The pulsethe pulse welcome from bloombergs European Headquarters in london. Guy johnson is off today. It is time for todays top headlines. Could 2013 be the best year for u. S. Jobs in eight years . We are waiting for december payroll reports. The additionecast of 197,000 jobs. The projected game would bring the annual increase to more than one and a quarter million. Chinese imports rose the most in five months in december while inbound shipments rose more than 8 from a year earlier. Chinas government says it became the top trading nation in 2013. French president Francois Hollande says he deplores the seven page spread of an affair he is allegedly having with an actress. It is according to a statement he gave. He says his private life is his right and is considering legal action. For more, Bloomberg News reporter mark joins us from paris. This . Ch of a shock was there has been this rumor on the internet in the past. Internet rumor is one thing. When Francois Hollande himself comes out and says he is considering legal action, that is another. The fact it is essentially the Statement Today which has brought this to the front pages across france and i think pretty soon, elsewhere in the world. And it is not a complete shocker in the sense that there were rumors of this. , so whether this is true or not, if we just leave it to one side this is going to have an impact on his reputation. This is a president that already is not popular. This would implications for the business community. It is very difficult to say what the impact is would be on his popularity. Thingsnt countries take in different ways. I think there is a sort of puritan and stressed interest in politicians private lives. That doesnt necessarily mean it will make a more popular. I less popular, sorry. I suspect the french will shrug it off. The things people do care about our jobs and purchasing power and pensions and that sort of thing. It is true that it makes for a bit of a rocky start to 2014 at a time when hollande is low in the polls. It is certainly a rocky start. Mark, thank you so much. Now, lets turn to company news. Ubs is considering a spinoff of its Investment Banking business according to analyst. Bancang us now is a medio banking analyst. This would actually make sense. I think the key factor here is that swiss regulators are making it increasingly difficult for swiss banks to carry out Investment Banking activities and that is a strategy which is designed to make the banks safer after the problems of the bailout during the crisis which was a big political scandal. Do you have any idea of timing . Think clearly, the timing is all about the hurdles you have to overcome to get through this. Suggestreports that 2017 is the most likely time they could get such a transaction carried out. That will be ahead of when these rules finally come to place in 2019. At the moment, the banks are working towards 4. 2 on a swiss basis. What the finance minister said was, we think six to 10 is more relevant. When she said that that could mean the banks are going to have to look at the Investment Banking business. Ubs are very smart people. They want to plan ahead. This could be part of their longerterm planning. Are there any other banks that may follow a similar path . You look at Goldman Sachs and Morgan Stanley. It is clear that Goldman Sachs wants to remain an Investment Bank. Morgan stanley going more down the Asset Managers route. Cases, thein most Investment Bankers are very much an integral part of the business. The argument ubs would make is that the Investment Bank works closely with the Wealth Management people in dealing with individuals. My view is that it is not beyond the wit of man to come up with very robust servicelevel agreements to work on that. We have to face the fact that regulators are taking a tougher line. While the Investment Bank that they have created since they changed things in october 2012 is much more robust, it still has risks. If they do spin off the Investment Bank, what would it means for shareholders . It could be quite positive. In our report we do a case study of when americans did the same thing for Lehman Brothers in 1994. It turned out successful partly because we had good tailwinds in financial services. 1998, ityou look at was the oneyear lehman shares went down because it was the russian prices. American expresss went up. That was what America American express wants to do. Leave the Wealth Management to ubs and you understand the logic behind the argument we are making. What would they do with the Investment Bank . Would it be on the market listed as Something Else or would they sell it off . Think there is a market for an Investment Bank at the moment. Price wouldnt be American Express realized this. They try to sell Lehman Brothers two years earlier. What happens is the shareholder has now got one share in what we call the Investment Bank and one share in the new ubs. It is up to us what we do with those shares. We have the Investment Banking business earning about a 14. 5 return on tangible in 2013. The magic of it, it will have no legacy assets. You mentioned Goldman Sachs, Morgan Stanley and jpmorgan, they all have a host of legacy assets. Ubs shifted them down into a runoff unit. I think it will have all the excess capital. Thank you so much for all of that. Now, lets focus on swiss companies. Swatch shares a rallying today. The watchmaker is optimistic on its 2014 outlook. Here with more is caroline hyde. This is a strong start to the year. This is the owner of the omega brand. It is. It is very diverse and it is a real bellwether for the entire watch industry and for the entire jewelry industry. It owns 20 brands, omega among them as well as the swatch brand itself. Not only does it take watches, it makes components for other watchmakers. Two thirds of the swiss timepieces made have swatch mechanical movement. It really is the bellwether. They even on retailers. They are looking optimistic. Sales for 2013 did slow. A were the slowest growth we have seen in four years. It did live up to expectations. They grew eight percent well ahead of the market. They say look, we are gaining in market share because the rest of the export watches were only up 1. 8 . They are outperforming the market for 2014. They are looking positive. Even though we are seeing really some headwinds for this company. At the same time, there are concerns over the strength of the swiss franc. That is the headwind i am talking about. They flagged it again and again. We can see it in the numbers for 2013. Swatch sold more than 100 million swiss francs knocked off their sales because of what they call the extremely adverse currency situation. The swiss franc is too strong against the dollar. They say it is overvalued and these currencies went are eating to their theyll eating into their sales. More than a quarter of all swiss watches exported. They are camping clamping down on giftgiving. That has reined in spending. Overall china and hong kong saw a drop of more than 8. 5 in terms of imports. Nevertheless, swatch still looking boy and for 2014. There was a fire in a component workshop which has been a concern but nevertheless they are looking boy and despite these currency concerns. That is why shares are higher, one of the best performers in europe today. Caroline, thank you so much. Google ornses from maybe something more powerful. Employees with ties to the company secretive Research Group have met with u. S. Regulators who oversee medical devices. Hans nichols has more. It is all very secretive. That is why we all want to know. What do we actually know . We know from the public calendar of the fda in the United States that the group that regulates medical devices for eyeglasses and cardiovascular devices met with members of googles staff who had a connection to this group ask, this Secretive Group. This could open up the possibility for biometric devices, devices that monitor you. What is fueling the speculation about contact lenses is that one of the engineers at the university of washington, he is on staff at google now and he holds the patent for something that connects to a contact lens that has an electric connection to monitor what is happening in your body. That is what is fueling speculation about this. It is really exciting. Yes it is. They are a really innovative company. Lets stay with tech and turned to twitter. Its stock has been sinking for four straight days. To be a trend. There is no new information. You have a series of analysts ganging up on a stock who say they dont believe the revenue forecast. They dont like the prospects for growth. Is based on new information. We wont get earnings out until february. What we have is a stock down 20 . It is still up from its ipo more than 100 , down to 57 a share right now. Goldman thinks it is worth 26. So many analysts are saying, cell. Sell. This is really an analyst driven event. Hans, thank you so much. We will talk tech again with hans in a couple of minutes as we turn our attention to Service Providers and talk more about infosys. To some ofshoemaker the fastest man on earth. We will introduce you to the man responsible for formula one racer niki laudas feet. Lets get straight back to hans nichols. We have just been talking about twitter. Lets look at another check tech giant, infosys. This Software Company has raised forecasts. They have raised their forecast. They have had their best quarter in terms of profits in two years. Their cofounder is back at the company. They may have sorted out some of their issues. And you look at their profits in this quarter, 464 million. Their stock is up. I have a bullish outlook on europe and the United States. I dont know if it is sure to say the i. T. Outsourcing business is back in india at full strength precrisis that these are encouraging numbers. You have a guest coming up. I suspect you will get at some of those issues. We will ask them about that. Lets discuss the case for investing in india. We have an emerging markets strategist. Great to have you on the program. Thank you for coming in. We have a lot of retailers wanting to go into india. It is difficult. There is a lack of transparency. When our things going to become easier . Is it right for companies to want to enter now . If you have a longterm view on the markets, this is a great entry point. I would say valuations are quite attractive. If you want to do change the growth story, india offers very much in the long term. He expect a significant pickup in growth over the next few years starting from a relatively low base. India has been highlighted as countries facing some headwinds. This is looking up. About whatme companies should go into india more aggressively . We talk about the retailers, tesco. Is this going to be one of the distributors or do we have to look at construction . Investment is going to be key. I expect a pickup of growth to 6 to 7 over the mediumterm. That is going to potentially place india on par with china down the road. , the problem that we have india was a real disappointment. Youre talking about medium to longterm. What happens in the short term . That is going to be critical. And basedctions on the selection. I need to see a stable coalition. When we get that, we will get a stronger polity framework and that is when the good news is going to start coming in. , would say compared to china the momentum of news flow is going to turn positive. We are talking about problems in the shadow financial sector, slowing Economic Growth. In india we are looking at things in a more positive way. This is a country that really disappointed. We saw a huge selloff in the last three quarters because structurally it needs to change. Definitely, but it is not the only emergingmarket that needs to change. I would say india was, along with other countries, polarized by this obsession about em fundamentals from the topdown perspective. Lets not panic about those fundamentals. If you look at global emerging markets, fundamentals are stronger than they were in the past. Thank you so much. Ets focus on the formula one anything associated with the sport is big business including what racers wear. We caught up with the shoemaker for legends niki lauda. Known in racing circles as the master, francesco has been making driving shoes in sicily for over 50 years. His customers included World Champion niki lauda. 70s, raise shoes didnt exist. I had to invent them. In 1975i got a phone call from a race team. I was dumbstruck to get an order from ferrari. Big sponsors or deals in formula one push him out. That hasnt stopped hollywood knocking on his door. The glamour of 1970s racing last year immortalized on the ilver screen in hush rush immortalized. Being part of the movie was such a bonus for me. Now i can die a happy man. At 78, he still makes handmade shoes for private clients the same way he always has in a lowkey workshop. He claims they are still the fastest shoes on earth. Tom gibson, bloomberg. There is so much buzz going around formula one. That is where guy johnson is today. Look out for that feature in the next couple of weeks. If you are a shoemaker to formula one racers that people idolized, it may be a good entry point to make a little bit of money. Up next, air quality is back on europes agenda. Is it enough to clear the air . We will discuss that next. Welcome back. Carbon prices are poised to rebound from a slump this year. Of a planed in favor to toughen the Carbon Trading system. Am joined by matthew carr great to have you on the program. What sort of Energy Policy with the eu proposed this month for 2014 . Carbon traders are hoping they will rely more on carbon. Was2020, with the eu did have these overlapping policies. The renault noble energy bucket has printed a lot of the countries to put in place really expensive subsidies. Has reduced the need to have a strong carbon price. The eu is trying to reject that address that over the next few weeks. Surprised if that slips. It is always complicated. Nothing can ever be easy. One of the questions you have to ask is whether this will supersede everything. That is one of the fundamental problems with the negotiation process. Some countries want to retain their control of energy. Others are more willing to let europe take a stronger role. The bottom line i think is that they have to sort out whether or not they are going to have a target for energy efficiency, emissions and Renewable Energy or just one of those. A lot of the smart money and business is for one carbon reduction target. Seven countries including germany who are still pushing for Renewable Energy targets as well. What about the u. K. And specifically the city of london . That is a fascinating scene. The u. K. Is quite keen for a single omission reduction target. Loggerheads with some of the other big players in europe. It will be fascinating to see how it all plays out. Poland is saying, we need to go a bit slower. The omission reduction target that they are proposing, 40 for 2030, that is still much lower than the most costefficient path to get to 2050, 80 emissions reduction targets. A lot of interesting decisions going to be made over the next few weeks. Thank you for all of that. Those listening on bloomberg radio, the first word is up next. For our viewers, a second hour of a second hour of the pulse is coming up. What will the fed do . That will have implications for the ecb and the bank of england. We will discuss this. Does the future looked bright for logistics . We speak to the managing director for the logistics from dont miss it. It is job stay in the u. S. The nation is set to cast the best year for jobs since 2005. Is google about to go the on biosensors . Back from its secretive Research Group meet with medical device regulators. Shares are taking a press watch. Taking up for swatch. Good morning to our viewers in europe. Good evening to those in asia and welcome to those just waking up in the United States. I am francine lacqua. I am Ryan Chilcote in for guy johnson. Fromis the pulse live bloombergs European Headquarters in london. This is our main story of the day. Jobs data in the United States. Economists expect todays payroll report to show that the u. S. Cap it strongest year for payroll in eight years. Jon ferro joins us with more on the numbers. We care so much about these figures because it will give us an indication of what the fed is watching. Aspect ofbeen a big Federal Reserve policy and you have seen numbers coming in around the 200,000 mark. We are looking for 100 97,000 jobs added to the u. S. Economy. 2. 27 million jobs that might have been at it through the year in 2013 would be the most since 2005. The u. S. Still has not recovered those jobs lost in the recession. 8. 8 million of them. Still not back at those levels right now. Someone reached out to me and two byhey only just beat 100,000 jobs. A lot of work has been put into this. We still havent recovered those jobs. The weather, how big of a factor could it be . Christmas gives you two things, busy shopping, great for jobs and also cold weather. If in doubt, blame the weather. Freezing, not just this month but the back end of last month as well. Highbrow economics. If it is cold, you dont go out as much. That means youre not traveling as much. You are not building as much. Those to injure shes industries, leisure and travel, these are the industrys that added and contributed to jobs growth in the u. S. In the last year. You could see softness there. A lot of people say the trend is intact. Jobs per month added to the u. S. Economy. John, thank you so much. Jonathan ferro with the very latest on the jobs report. Call it a case of the x files. Googles Secretive Group has overseeing met with researchers who oversee medical devices. Hans nichols joins us with more. What is the story . Here is what we know. In the United States, they are outside of washington dc, from their public calendar, they had meetings with googles employees. The group that the fda is the same group that monitors cardiovascular devices. As well as eyewear. You put two and two together and you crosscheck which google employees were actually at the meeting some of them are google employees that work for this research x lab that came up with google eyewear. They are always innovating there. One of the names for you ryan otis, a professor at the university of washington. He is a parttime employee at google. He is on leave from the university of washington. He holds a patent for a wireless contact lens. That is driving some speculation. Google has been very open about wanting to innovate and go forward. Potentially as we get more into wearables, it could be a possible offering. Lets stay with tech in terms of twitter. Its stock has been dating for four straight days. This is a trend. It is under attack by analysts. A lot of analysts saying, the evaluations dont quite match up. There is no new information driving this. It is down almost 20 , the stock, and the last week. It is way up from its ipo, more than 100 . It is down to 57. You see a lot of the calls on this from analysts. Some 11 sell calls from analysts. They dont have a single sell call on either google, facebook or linkedin. This is an analyst driven event. It is not to say they are not right but it is driven by analysts saying pinging the stock is overvalued. Thinking the stock is overvalued. We will keep our eye on twitter. Is getting your groceries online the next big thing . Amazon already offers it in select u. S. Cities. Today, ocado kicks off a partnership with supermarket morrison. Caroline hyde is here to tell us more about the companys ambition. Is on has something to worry about with ocado. Is going to help other retailers around the world give amazon a run for their money. Get them online faster, quicker, more efficiently and cheaper. Ocado is basically a technology company. That is why investors are getting so excited. You go into their Distribution Centers, they have two huge ones in the u. K. They have to build from scratch software that helps build these Distribution Centers in 3d. They are able to find the most efficient ways of getting your groceries to you in the most stateoftheart manner. Look at these cranes. Up to 20 Kilometers Per Hour according to the likes of ocado. That is why the savviest investors have been building up stakes in this company. That is why its share price , bested 410 last year performer in the whole of the european stoxx 600. Even though it never once generated a profit. It is not just about delivering groceries. It is about exporting this to other types of retail. Saying, babyre products could be delivered. This could go global. That is what the chief executive is thinking and that is why there is so much opportunity. I am still trying to get my head around those robots going at 20 Kilometers Per Hour. That sounds pretty dangerous. So far, the grocery Delivery Business has been ocados forte. Explain to me how they have expanded and what they are doing for morrisons. They have been doing it for several years now. They were set up by Goldman Sachs bankers in the 2000s. In may of last year they struck a deal with morrisons for 216 Million Pounds offering them their technology. This is where the opportunities are. They are licensing intellectual property, technology and the just ask services. They claim they have allowed morrisons two, to the market in a quarter of the time and in a fraction of the price. Yesterday, morrisons came out with a profit warning because it was so behind in terms of online and convenience stores. Today, they are going live. In theirble to order website and get it delivered in the midlands. They are playing catchup with tesco. To get online quicker because of what ocado is providing. 75 of the u. K. Population. This Technology Licensing is the future, so say investors and analysts. , therecord online ordering potential is huge. Caroline, thank you so much for that. In just a few minutes, we will look at the logistics of delivering food with the managing director of one of europes largest transporters. Here is what else is on our radar. China has become the worlds biggest traitor of goods. Chinas imports rose the most in five months in december indicating domestic demand could support Economic Growth as they are hoping. 25trade surplus topped billion. Swatch shares are rallying. It is having a strong start to 2014. Sales jumped more than 8 . The owner of a mega and others says it is seeing a clear gain in market share. French president Francois Hollande says he deplores a sevenpage spread of an affair he is allegedly having with an actress. That is according to a statement he gave to the afp. He says this is an attack on his private life and he is considering legal action. She filed a legal complaint herself with a paris prosecutor in march against the internet rumors that proceeded it. Anyone would say that it is deploring to have a sevenpage spread. Still ahead, it is jobs day. Investors are awaiting the all important economic indicator. We will we see an employment boost . More on that after the break. Welcome back to the pulse. Lets have a look at dollar sterling. Is the Industrial Production and manufacturing number that disappoints. They were just back on this big level of 164. Goldman sachs has a new view or perhaps a slightly more bearish view. In three months it will be at 103, in six months, 107. In 12 months, 110. Goldman sachs getting slightly more bearish on the yen. Fran, back to you. Venice, thank you so much for that. Is getting your groceries online the next big thing . This shift to ocado, to deliver all things is booming. Ocado is making deliveries for the u. K. Supermarket, morrisons. Is this a sign of a major transformation in how we buy food . Or are there places in the world where this just wont work . Joining us now is now homeless of, the managing director one of europes largest logistics and transportation companies, Norbert Dentressangle. One,top clients include dan tesco and marks and spencer. People like me, i am a veggie person. I have kids. I shop online. This means that for you, you need to figure out the logistics. You are transporting stuff. What is the biggest challenge for your company day today . One of the Biggest Challenges is really just predicting what will be required in the future. The investments and infrastructure to design the software, the systems, the warehouses, the development of the people. Some of our facilities can have upwards of 2000 or 3000 people at the busiest time of the year. Also, the more practical matters of selecting the carrier for delivery to get the product to the end user. Place he wanted, the right time, when he wanted. The most important thing, is it software . Do you have to crunch data and analyze data to predict the next big thing and how differently people shop and transport . It is software but it is the combination of all the different aspects that provide the consumer with that certainty. Whether you are shopping online, clicking on the item, you want the certainty to know that the item is going to arrive when you wanted to arrive in good condition. It is all of the aspects, the infrastructure, the people, the software, that go into making that happen. That is really the successful organizations have got that right. Dont people want to actually look at their groceries . I am obviously oldschool. Of fresh vegetables, sort look at the head of lettuce with their own eyes, is it enough . How is the industry getting around that . There is strict Quality Control in all of the warehouses. In reality, most of us are just happy to order online and receive the product that we ordered. Side, is itsiness the case that this is really capital intensive, setting up a Distribution Network . I can just imagine all the trucks, people driving the trucks. You really dont know how many people are going to buy in the early days. I occasionally see the milk trucks and stuff, around but they always seem to be just dropping off at one house on my street. There is definitely economies of scale. Instances, there is big capital intensive investment. Reports oflier automation, these aspects. It has to be blended with people. In terms of the actual final delivery, this is where economies of scale can come in. If companies can harness areiples than they delivering a lower cost solution for everyone. Tesco, danone, continental tires, is that much is that much bit more difficult to deliver fresh food . In the warehouses, we have to be very precise in terms of temperature control and Quality Control. In reality, it is as important to the guy that is ordering the tire as it is to we who might order some shopping online that you get the product on time and in the right condition. That is really the important aspect that we see. This didnt just come out of nowhere. It will use to get flowers delivered. I have done that. Pretty lame, right . Ryan is so retro. When you look at the Way Logistics are run, what is going to be the main trend in the next 10 years . Are we going to radically change . Are people like ryan going deep online . I would try it was. I bet a lot of people try it once and then dont try it again. It really brings home the importance of that certainty of service that the retailer provides. If you try it once and it is a good experience, youre going to repeat that. How many people do repeat . It is a significant take. More than half . Easy to imagine that online shopping. It is clearly going to double over the next three to five years. I am addicted. We talk about online. Theont often think about logistics behind it. Give us a sense of the scale of business that you do. In our organization, around europe, we are operating over 7000 trucks. Then, a multitude of Partner Organizations working with smaller deliveries which would typically affect the online delivery that you or i may order online. For groceries, it hasnt really picked up in france yet. Is that going to pick up . I am sure that what we are seeing today in the u. K. , we will see in most of the european markets in the future. I think shopping trends will evolve. We see that already now. May be more pronounced in the nonfood areas but i think we will see it running into food. Which country do you see where the consumer is going to be the slowest mover . I think we have to also imagine that in some countries, the transport infrastructure is not quite there yet. You have to have that really certain. For that, you need all the different aspects. Malcolm, thank you so much for that fascinating interview. Malcolm wilson, managing director of logistics for Norbert Dentressangle joining us today. Coming up, the u. S. Jobs report is set to reveal the biggest annual gain in employment since 2005. We will have more on that last details on the strong start of the year for swatch. Stay with us. Welcome back to the pulse live from bloomberg European Headquarters in london. I am francine lacqua. I am Ryan Chilcote in for guy johnson who is out playing with formula one cars today. Lucky him. He is trying to one of me from yesterday when i was in the roles. Anything associated with the sport is usually big business but it hasnt always been that way. We caught up with a legend in the field for his coddling. Tom gibson reports. Known in racing circles as the master, francesco has been making driving shoes in sicily for over 50 years. His customers included World Champion niki lauda. Didnthe 70s race shoes exist. I had to invent them. In 1975, i got a phone call for a for ari race team. I was dumbstruck to get an order from ferrari. Big sponsorship deals in formula one pushed him out. That hasnt stopped hollywood knocking on his door. The glamour of 1970s racing immortalize the last year on the Silver Screen in rush brought business back. Ron howard asked him to make an identical copy of the shoes he made for lauda. Being part of the movie was such a bonus for me. Now i can die a happy man. Makes78, he still handmade shoes for private clients the same way he always has, in a lowkey workshop off a couple sicily and street. He claims they are still the fastest shoes on earth. I have a pair of racing shoes. It makes a difference . When i hit the pedal of my kia hard, not much happens. I would like to think of racing shoes help a little. We will get a picture of what guy johnson is wearing today. Manus has nice racing shoes. Lets get to our markets editor. He doesnt wear them to do the market check. Smart city shoes for fx check. Lets have a look at these guys. They had oil wealth that didnt prove last year. The stock was at fiveyear lows. Hsbc raised the stock. Today, the telegraph has a story. Keep an eye on them. Lufthansa, europes number two airliner has new planes. Mean less costs. That is what the market is very happy about. They spend 200 Million Euros less on fuel. Lets have a look at this. What are they doing . A transmit electricity. In spain, there is a big reregulation of the market. Mocon stanley saying that will prove pretty good for these guys. Price target, 51 euros. Trading slightly above there at the moment. Acta you. Back to you. Airoming up, norwegian becoming the worlds cheapest airline. We will look at its 22 billion gamble next. Just a reminder, you can follow us on twitter. If you have an opinion on the jobs data, tweet us about it. We will discuss it. Much more to come on the pulse. Welcome back to the pulse live from bloombergs European Headquarters in london. I am Ryan Chilcote. Here are bloombergs top headlines today. Could 2013 be the best year for u. S. Jobs in eight years . We are waiting for the december payrolls report and economists forecast the addition of 197,000 jobs. The projected gain would bring the annual increase to more than 2. 2 5 million, the highest since 2005. Chinese imports rose the most in five months in december. Inbound shipments rose more than 8 . The trade surplus topped 25 billion, one upping the United States. Chinas government says it became a trading top trading nation in the world. Ubs is considering a spinoff of its Investment Banking business. That is according to analysts at mediobanca. Demands from regulators are for more capital hindering efforts to boost returns. Lets stay with swiss companies. Swatch shares are rallying. The biggest swiss watchmaker is optimistic on 2014. Here with more is caroline hyde. Strong start to 2014. Have a watch. People are still buying them. They are. Swatch watch on either. And they make like 20 brands. It would be more than just swatch. It is a real bellwether. It is the biggest switch swiss watchmaker. It has 20 brands. It also makes the components that go into thirds of all swiss watches. It is the bellwether for the entire swiss industry. Also, jewelry. Warned ofh they headwinds in the market, they still met expectations. They still posted growth last year. You saw a 8 increase in sales. They say this is stealing market share. We have outperformed our rivals. Take wristwatches. Climbed just 1. 8 . Swatch saying, we have got 8 in 2014 wendy 13. 2103. But swatch says the swiss franc is killing them. It is. It is a key concern. That had been has been talked about again and again and it is not going anywhere. Look at the numbers of the end of 2013. Million swiss francs off their sales. They are saying it is overvalued. The swiss franc is overvalued against the dollar, the yen. It is hurting sales. This is a company wanting to expand outside of asia. They want to make inroads into the United States. China is slowing down. Look at the dependence of the swiss watch industry on china. More than one quarter of swiss watches are exported to china. Exports dropped. And there arent too many people betting on the depreciation of the swiss franc at this point. Not that the moment. Despite this ongoing strength in the currency they are on fire. I have and i swatch. Lets leave it at that. Ryan chilcote with caroline and latest on the swatch. Norwegian air plans to open new york and florida bases this quarter. The carrier plans to employ as many as 300 people. Norwegian air basically wants to become the cheapest longhaul flyer. E are talking london or europe u. S. How cheap could it be . They are offering fares below 200. Which is great. If you think about it, in the recent years, prices have been going up. That has been very good for the airlines. They have been able to charge more. Passengers are looking for alternatives. Good demands seen for its product so far. We have a lot of Lowcost Airlines doing very well but they are usually shorthaul. Ryanair is one of the first that said, i want to fly to the states that they havent yet. Michael oleary has always said he is looking for cheaper planes, the pricing on the current planes is too high. He is looking for the market is often. He said that is one of the issues he is looking for. Whereas Norwegian Air, they have bought a load of 787s. It is very funny. The ceo is a big fan. He says he couldnt do this business without that aircraft. Now he has the airplane and it has had a lot of technical glitches. He is still a huge advocate. At the same time, he is a huge critic of the fact that it is not working as he wants it to work. How difficult is it . We know that it is nofrills. They try to keep the cost down. How it can out on a seven hour flight . That is going to be difficult. It is very interesting. There are Big Questions whether lowcost longhaul can really work. Makeay Lowcost Airlines their money is the use the aircraft area often, 20 minutes on the ground. On longhaul, you cant do that. Even if you talk to michael oleary, he says it is not going to be all economy class. You need a premium product. You cant think of it as just taking the shorthaul business into longhaul. It is adapting. You have to find a different model. What they will tell you is they have some sales prices that are as good as norwegian. They will often say, norwegian cant maintain some of these prices he cause there are so many fees on international carriers. Carbon emissions fees, landing charges. Prices these fees, norwegian is charging are basically lost making. Ba makes a lot of money in is this class. We have any indication as to whether these will have all three classes . Oleary has said, you will need a premium product to get premium pricing. Exactly how that handout, we will have to see. The norwegian experience is too new for us to see how it goes. Thanks for all of that. Rob wall. Lets take a look at how european markets are trading. Manus cranny is at the touchscreen with more. Delivered three quarters of one percent gain over the space of the week. Let higher by banks, insurers, telecom, basic resources that have been a laggard on the european map today. We wait for those number to come in from the unemployment in the u. S. With that in mind, lets check in on the u. S. Futures. 197,000, you have the numbers from johnny. We will talk about it before the end of this show. U. S. Futures indicated up by 0. 2 . China, china importing more. That is good news for everybody. The bad that is the message that is coming through on the job state. With that in mind, lets check in. We are getting back to normal. As far as the weather is concerned. Lets have tom keene. Still uti, still wti trading higher. , has tom in of that running the heating oil . Venice, thank you so much. In just 20 minutes, surveillance with tom keene. He joins us from new york with a preview. We are looking at 31 degrees in new york. Let me come over here and click that centigrade. Negative one centigrade in new york. Manus is right. It is balmy. We have a little bit of warming up this morning. We are going to warm up in luxury goods. We have a man from saks fifth avenue. We will talk about that aspirational idea. Of course, it is job state. We will talk to one of the great optimists of the American Labor economy, john herman of mitsubishi is adamant the Unemployment Rate is going to come down fast and furious. We will talk to john as well. Very excited about that. Our chief economic correspondent will join us as well. Looking forward to that. The big jobs data, the one the fed will be watching and the rest of the world will be watching. That is later on. Tom keene and his team will have everything covered on that later. Ryan. Fram, before we had to break, here is todays pulse number. 1. 7 million, that is how many u. S. Intelligence files the pentagon says Edward Snowden downloaded. Wonder how long it would take to read all that. That is according to u. S. Lawmakers. The chairman of the House Intelligence Committee said a pentagon report found committed snowden committed the biggest theft of u. S. Secrets in history. A report is the First Official assessment of exactly how many documents were taken. We are back in two minutes. Welcome back to the pulse live from bloomberg European Headquarters. That get some company news now. Alcoa has missed estimates. The u. S. Aluminum giant is dealing with an excess of metal used to build aircraft. That loss was more than 2 billion compared to net income of 242 million a year earlier. Infosys has raised its annual sales growth forecast for the second consecutive year. They say the economic recovery is prompting clients in europe to spend more. Ford swore he would never make sneakers but he has just introduced them into his latest collection. They are made of velvet. He has announced the new design this week as more than 60 designers in london showcase their latest menswear collections. The issue also comes in leather. Thank goodness for that. Southwest airlines flies more passengers in the u. S. Than any other carrier. When they recently posted new Flight Attendant jobs, the response was overwhelming. Airlines are finally hiring again. For the first time in more than three years, Southwest Airlines is looking outside the company to hire Flight Attendants. Offering Employee Perks like free air travel for themselves and their families, southwest so resumes fly in at a record pace. 10,000 in two hours for only 750 spots. That is about 80 per minute. Southwest isnt the only airline inundated with applications. In 2012. 0 resumes he for merging with american, u. S. Airways got 14,000 applications for just 420 openings. Total industry hiring still felt 0. 8 from 381,000 last october but that is the smallest the klein in 13 months. Rising, airlines are finally flying high again. Called theeen jobless recovery. Today, the payroll report in the u. S. May see the end of that. M joins us from new york. Decembers a role report showed cap a year that produced the biggest job gains in the u. S. Since 2005. Almost 2. 3 million jobs. It is not a number of a lot of people might have anticipated. December hiring should continue to close that gap. The forecast which you have been talking about has moved up now. 000 jobs, 200,000 in the private sector. The government is issuing revisions to the Household Survey for the past five years. That is the one that produces the Unemployment Rate. Could be an interesting day. We could see the Unemployment Rate move for reasons that have nothing to do with job creation. It might go under 7 . That might take wall street a bit of time to digest. Be prepared for a little volatility today. Pay attention to that kind of move, right . No, they will ignore that. They will look at the jobless number in general but they want to see the Labor Participation rate. How many people are actually out there trying to find jobs . That is actually a good sign even if it holds unemployment a little bit higher. Stay with us. Economistg in a chief. Great to have you on the program. Fed,ay for not only the but the rest of the Central Banks and all of us. What are you expecting . It is pretty clear that there has been a bit more strength in employment after a low summer. Right but we about think the risks are to the upside. We had a survey of this over the past week showing employment components in both surveys have strengthened. We had a pretty good adp survey. Small businesses are beginning to step up the pace of hiring. It would be surprising would not be surprising to see the figure up. Although it is bad weather, people might not go out as much. Is there a benchmark that if it is below 200,000 we should start worrying . Are think payroll numbers december andink whether, particularly worse than usual. I am curious how investors are going to see the improvement in the u. S. Janet yellen is coming in with the same problem that mark carney does. You have an unemployment threshold that they may hit faster than they anticipated. That is certainly the case over the past year or so. Statement last month made it fairly clear that the fed was really jettisoning its unemploymentbased threshold. So, in terms of the way the more oftenl react, than not over the past few months, markets have been spooked by Firm Employment numbers than they expected. The yield curve has steve and and that has frightened market investors. This time around, i think markets are fairly convinced that the baseline for fed tapering is going to the 10 billion per fomc meeting. There may be a tolerance range around consensus this time around and it might take a particularly strong implement report to spooked equity markets and bond markets as well. It wouldnt take a whole lot to spooked them in the other direction. We have had a seasonal pattern where at the end of the year we have had strong job growth and then it falls off. Really tellu cant too much by one month of employment data. That is certainly the case though you may well see if the figure is way away from consensus, you may see a knee jerk reaction. Again, markets no these things are volatile. Q4e got a few corporate earnings kicking off in earnest next week. There will be a different focus from next week and perhaps even this afternoon. I am going to be devils advocate. Why do we care so much about jobs data . You have janet yellen in charge. She is very we should be happy. Perhaps. Obviously, the employment numbers tell us a lot about the economy in the u. S. At a relatively early stage in the month. But it is backwards looking. But if you are looking at job creation, you may be looking at spending looking forward as well. Mandate tothe feds maintain full employment is certainly relevant. The point about janet yellen, obviously she is on the dovish and of the spectrum but wasnt ben bernanke as well . What we have is continuity between fed chairs. Philip, i guess the one thing we have to look out for is this number being much stronger, if tapering will come quicker, if tightening may happen quicker, how can the ecb and the bank of japan fight rising rates . I think it is very difficult. Since mayjune last year shows that yield cuts are linked across the various economies. The way that Central Banks actually fight market speculation or market moves is by taking action. That is what we saw with the ecb in november last year when mario draghi made pretty clear that the eurozoneht yield color curve was inappropriate. That adjusted the yield curve. I dont think the Central Banks can talk yield curves down successfully but they can cut rates. Iqs a much for all of that. So much for all of that. As we had to break, just one day dy announced his meticulous venture, so has justin timberlake. It will be available in select markets early this year. The premium tequila is triple gave. D using about a using agave. Meantime, we will be back in a couple of minutes. Welcome back to the pulse. Time for a quick guarantee check. Where will the . In 2014 . Say dollaryen is going to move lower more quickly than anticipated. In three months, 103, in six months, there 12 a consensus around 110. I have seen calls for 120 before the end of the year. Menace, thank you so much. Jonathan ferro and hans nichols are back. I know we have some juicy news out of france. I want to start with jobs. The big numbers. Get excited. 197,000, that is the consensus estimate for the month of december. 2. 1 a 7 million, that is how many jobs they have been at it 2. 271 a 7 million million, that is how many jobs have been added over the year. What about we are watching , hans has his eye on twitter. Twitters have been following for the last four. They are up since the ipo. More importantly, we have this scandal now in france or alleged scandal with the french president. What do you know . Here is what i am going to be watching. I am watching what sort of legal action hollande takes against this magazine. They have published a report and they are claiming that Francois Hollande is having a relationship with a woman who is not his livein girlfriend. Because there are legal issues involved, i am going to toss the question to francine who is very libertine. What does she think constitutes an affair . A lot of the debate in the newsroom was whether if you are married or not. It will probably give you street red. That is it for the pulse. Bloombergght here on tv. Surveillance is up next with tom keene and his team. Of course, you can follow francine on twitter. I am Ryan Chilcote. Have a great weekend. Will do job report move markets. Governor Chris Christie is maintaining, and temps to salvage his president ial hopes. In twitter, tanks. They go from buy to hold to simply fail. Good morning, this is bloomberg friday,ance, on this january 10. Erik schatzker came back for more. Messier themark hockey great yesterday. Drydeni talked to ken the other day. We have to bring a goon in to give us perspective. In the u. K. , industrial and manufacturing production unexpectedly stagnated and construction fell the most in the year sugges t