Transcripts For BLOOMBERG The Pulse 20140625

Jobs of france. We will introduce you to the tech billionaire. We are live with the ceo as tensions in russia escalate. If they needabout to reduce Energy Reliance on the country. Lets continue with that theme. Tensions with russia are the top story again. Of theat specific areas russian economy, including energy and technology. Lets take a look at where we are and me impacted that the sanctions could have. Ryan chilcote joins us. They prepare the sanctions and they decided when to implement them. It is not surprising that we are hearing about them now. The Obama Administration has a habit of talking about sanctions before the eu meets. These will be on the Technology Used on the oil and gas industry. Whether it is the discovery of oil and gas or moving the oil and gas production. It is effectively a restriction on technology. Has, ona administration a casebycase basis, denied the transfer of the technology. It is interesting that the chamber of commerce, the association of manufacturers, are trying to get ahead of this. They have a piece in the u. K. In the afp where they say in the fp where they say this. American businesses are sounding the alarms that we heard german Industrial Companies do when the sanctions were starting. The key to making the sanctions work is presenting a united front. The europeans do not seem to be on board with a third round of sanctions. Could the u. S. Goal long . Go along. People frome three the Obama Administration also said that it may be that the United States has to go it alone. Sayingds of state are that the u. K. Welcomes the words that we have heard from Vladimir Putin earlier this week and would like to see action on stop at a something we hear from the Obama Administration a lot. Yesterday, Vladimir Putins spokesperson announced that the president had asked for the parliament to rescind authority to use force in the ukraine. He has no intention of using Russian Troops overtly in the ukraine. That does not resolve the issue for everyone. They believe yes. Yes. We had a Helicopter Shot down by a separatist in the east of the country. There are European Countries that are concerned about the economic consequences of lifting sanctions and point out that the relationship with russia is much greater than the United States. We will have to see. Merkel, before Vladimir Putin made the accommodating juster gesture, said that she would like to see more sanctions and is not satisfied with Vladimir Putins actions. The bigcome down to consensus among so many countries. There is a sense that there has to be something out of this meeting. It may be as little as them areeing that, if he crosses line, here is what we will do the next time. Ok. We will be bit there. Thank you very much, indeed. Younger says that he is confident that he will be picked. Lets bring in our International Correspondent, hans nichols, who joins us from berlin. You caught up with him. What was the takeaway . You can remember that he was addressing the Defense Security industry group. You can only walk away from that thinking that he is very confident, indeed, that he will be the next commission president. I asked him and he had one word. Confidence. Do you have this in the bag . Yes. Absolutely . Thaterything is indicating the decision will be next friday, i guess. Guys, it could be an awkward meeting in brussels later on in the week when we have this meeting in brussels where he is expected to be not anointed formally approved. David camerons domestic opponents will make it difficult for him. Listen to what nigel had to say about how he is perfect. Perfect for eurosceptics. He is our man. He refuses to believe that the public has a proper understanding of the grand european raw check. He belongs to that Outdated School of thinking. Project. He belongs to that Outdated School of thinking. Is speaking right now in parliament and reiterating her support. This seems like a formality, at this point. There will be difficult policy decisions and personnel once. She says ones. She says she is still seeking a consensus and the lines are pretty clear here. What is a consensus . T. S. Merkel at her crafties she is still seeking consensus. If you have an outlier, is that a consensus . If you have four outliers, is that a consensus . What they want to claim is that there is a consensus on this and that he is the right candidate or the job. I do not think there are going to be any differences swept away when he is installed, if, he is indeed installed. Hans nichols joins us live from berlin. Will bring youwe Prime Minister questions later on today. David cameron will be asked about the showdown. A few issues around the recent court cases. Agm season and there is focus on executive pay. Potential shareholder revolts this week. Joining us now is gregory. Good morning. Good morning. Has had a few shocks. Will we get any shocks this time around . Kilter . Tive pay out of i do not think we will still have the same revolt. We still have shareholders who are unhappy. Year, 20 of shareholders voted down pay and we may see Something Like that again now. He received a pay package last year. Up 70 from the year before. There is a new policy in the u. K. And you can vote on pay policy. It is not just a nonbinding vote. Where he could see an annual maximum bonus up to four times of his salary. A huge amount of money. We 7 million. If you are looking at the performance of stock, 54 in the last year. A lot of this comes with a longterm incentive package and that is why it is up so much from the year before. Exactly. A trunk of it was tied to fiveyear performance. So, yeah. I think you will see shareholders more accommodative when they are making money. A company that is in a different position and is also is majority owned by the british government. You can understand why people would be a little bit sensitive about big pay packages. What about rbs . Hsbc ran into shareholder trouble with paid packages. Packages. Ot pay they did not do great. And the that backdrop u. K. Government said, earlier this year, that they would not support the bonus limit. This is not Senior Management at rbs, is it . Broader story, given the fact that banks in the states are being paid larger sums than those in london. It is a competitive thing. On top of that, the way they have gotten around it is these fixed bonuses. It defeats the purpose. Exactly. You lose flexibility. We will leave it there. Thank you very much for stopping by. Gregory elders joined us from Bloomberg Industries. Still to come, the batter over the battle over uncker. Aude j what David Cameron needs to do, in terms of damage control. Good morning, welcome back. You are watching the polls. It comes out of italy the pulse. It comes out of italy. The operation out of the gulf has agreed to buy a 49 stake. It hass of principle, been agreed. This has been a Long Time Coming and people have been anticipating that this would be the case. They would come up and take a stake. Competitive,dibly as in aviation market, at the moment. To lose tens o lufthansa and air france have been critical in the past. It will be interesting to see if this mitigates that. Now, they have a significant foothold in the market. News corp. Faces corporate charges related to phone hacking. They raise the prospect of charges, including bribery, throughout the trial. The former news of the world on onewas found guilty charge of phone hacking. For more on this story, lets bring in Ryan Chilcote. The former communication advisor to the Prime Minister was found guilty. Rebekah brooks, the top lieutenant to Rupert Murdoch, cleared of all charges. He looked like he was going to come out unscathed. Will this change . Not completely unscathed. Rupert murdoch may be interviewed by the british police. He has been notified that they would like to interview him in the u. K. , according to the guardian. That is one thing to keep in mind. One thing is that the prosecutors may pursue corporate charges and may charge news corp. , itself. That is not particularly new. It came out during the trial. That went on for eight months. Reporters were not allowed to report it because of u. K. Law that is designed at making sure that the defendants get a fair trial. They were not allowed to report it because the jury did not hear it and they did not want to prejudice their decision. On a couple of occasions, the prosecutors told the judge that they may pursue corporate charges against news corp. , itself. The results of the trial, rubric wasooks Rebekah Brooks found not guilty on all accounts. Was found guilty of phone hacking and faces more charges. We will have to watch that, as well. Let me pick it up. Employed by the Prime Minister. Question time is coming up. How big of a deal is this for british politics . A big deal. Quitred colson after he the news of the world. He said if he had asked him if he had any wrongdoing at the news in the world the news of the world. Said thate allies, he he had not had any hand in the wrongdoing, even though many people were making that allegation. For the Prime Minister, this is a problem. He said that he apologized. He promised that if there was a guilty verdict, he would apologize. He did that yesterday. What of people are saying, why did the Prime Minister higher someone who was a criminal, at the time. Chief. He communication it does not look good for the Prime Minister. He will have to do some quick thinking in the parliament. Like you so much. As you said, David Cameron came out and apologized today. He is extremely sorry that he hired andy colson. It was found that he was hacking employees off the the royal family. Heads could roll. It was not until three years ago. He apologized question time is going to be a little interesting today. We will be taking you live, if you want to tune in, on the u. K. Feed. Lets turn our attention to the Telecom Industry. New details about frances six richest man. He is the founder and he has, what many consider, i guess you could put it this way, an auspicious career start. Here is our billionaires editor. Robert lafranco. Websites and that sort of thing. Lets go. But, the impact that he has had on French Business and the Telecom Industry, in particular, has been hermetic. Why is he worth 10 billion . He bucked the system and is a rebel. The richest person, or the second richest, is a rebel, as well. He is a capitalist and a board room raider, if you will. Cut from theably same cloth. Here is a guy who came into the Telecom World of french telecoms. Nd undercut the price by half he took all of the customers away from vivendi and the other competitors in the market. You mentioned the fact that he is dating the daughter. He has such a different background. It is a boys club. You have to go to the right school. Company. A here comes this disruptive guy who used to write code. And, he is rather proud that he grew up in a workingclass and tough neighborhood. He said the streets were difficult. Aud doesnt aurn care. He is operating on his own wavelength. What about the start up . He is pushing forward. What is never really existed was a groundof entrepreneurial spirit. Groundup entrepreneurial spirit. He wants to create a of of wherereneurial thinking, tech savvy french people can establish the cars of tomorrow, if you will. Thank you very much, indeed. Robert lafranco. Billionaire added or. Editor. We see if the company can stay ahead of the competition. As we go into break, check this out. This is an unusual take on skiing. A skier in colorado. I think they do this in your up every once in a while youe urope every once in a while. Of course. Potro gohe del pro . I have not yet. Se. Stay with the pul we are just Getting Started on this wednesday morning. We will see you in two. Welcome back. Lets find out how these markets are trading. Our markets editor is manus cranny. Thank you very much. The equity markets and stocks, more specifically, on the longest streak in four weeks. By 1. 4 or 1. 5 . And the potential splitting up of iraq. The potential escalation of american involvement in iraq. The ukraine and more sanctions from the u. S. What will the europeans do . There is atomized risk in the market. We will see a more dramatic reaction in brent crude. Down. 6 . 13. 77. Yes it has been higher. Yen is just beginning. It is now coming in little bit lower. Flat. T otherwise, we will get wound up in semantics. Allhavens are not at timeout with what is going on in the equity market. 22 billion in hedge funds in may. 93. 3 billion so far this year. That is the best year since 2007. There is a focus for the market. German confidence is better than estimated and the highest since 2006. The French Business confidence numbers missed. The u. S. Delivered their set of numbers on growth. It is expected to contract. This is a know the revision. If it is any worse than that, you will see a dramatic response from the market. The nasdaq and dow are virtually flat. Back to you. Manus cranny, thank you very much. Will bring you back to the back we will bring you back to the battle of john claude john claude jeanclaude. I am olivia sterns. Welcome back. You are watching the pulse. Here are the Bloomberg Top headlines. The first 130 military advisers have started operating in iraq. As many as 300 troops will be sent to help the Iraqi Government. The white house is working on a plan with the United Kingdom on reducing tensions in ukraine. Present obamas president obama spoke to David Cameron by telephone. President obama is said to be ready to issue sanctions against various Russian Industries. News corp. Faces possible corporate charges related to phone hacking. Charges include bribery. The former news of the world editor was found guilty on one charge of phone hacking. Rebekah brooks was cleared on all charges. Tolets bring the focus back mjuncker. He is pretty confident that eu leaders will pick him. That is not stopping David Cameron to make a lastditch effort to block his appointment. This has implications for britain and europe. Good morning to you. Cameron found himself in a situation where he had been so badly outmaneuvered guy number of fronts, by a the countryly run the size of [inaudible] behind the scenes, Angela Merkel gave some assurances to cameron that she would try to find an alternative option. German Public Opinion strongly in favor of juncker. Strong came out very thinking at the support of germany and other countries. That was a strategic misstep. He was given some mixed messages from other parts of europe. George osborne says there is a big difference about what people are saying in public and what theyre saying and pirate in private. I think he has a great deal of backing now. Mr. Cameron, unfortunately, fell out not just to the germans and fell out badly with many of the smaller nations. Cameron has responded by being very aggressive. He has moved out of middle ground consensus forming into threatening to stopping albania from coming in. He really is isolated. It will be interesting to see if the fear of the u. K. Coming out is sufficient for europe to bend over the other way. Lets assume that he will get the job. David cameron has done a lot of damage. Europe has this builtin mechanism for not letting anybody stray too far. Do you think we are in a situation where the rest of europe will try to rectify it . They are bound to try something as a friendly gesture towards the u. K. We have new commissioners coming out. Trade. Something like to try to pacify the relationship with the u. K. I am sure it will make a lot of difference, but cameron is really boxed in now. He will have to debate very forcibly with europe or just give up. Perhaps this is politically savvy because the polls do say that he is doing well domestically. He is clearly got to regain the popular vote. He is trying to do it by being more extreme. It is remarkable how he has course ofer the several years. He is quite aggressive, we need to do this or maybe he is playing it well. It depends on your definition of well. Is he going to give himself a better chance of being reelected . He is playing it the right way. If it is ending up with a more functional europe, he is not playing it well at all. He is quite aggressive, we need offered,s say internal markes with the danger be that we do not put somebody serious enough into the position. The commission has had reputation of being seen at a british as something you do when you have failed our need to be moved sideways. Do you think britain is going to make the same mistake again . There is a risk. When you go to europe, there are a few things you need to have. Need to have someone who has a pragmatic view. There is not a permanent set of tools. You need to go there with the right approach. It is so led from the top from cameron and a cabinet, it will tie in closely with his overall strategy. There have been names bandied around. If you are sending him to other europeans, they may not see him as hostile as some of the other names mentioned. Could we rescue this by sending someone serious . Looks you have to find you have to find someone who wants to do it. Most of the population has no clue as to what the commission does. Job on theo a other side, it is not necessarily the way to fame and fortune. Cameron wants to achieve the ambitions of renegotiating the terms of berdych membership. British membership. He needs somebody who will nextffend anybody in the two years. He takes the risk if you put views. In with forcible the commission is more the civil service. That will be the technical negotiations around financial regulations. Cameron will still be the one leading it. That is important to recognize. The person on the ground in brussels will not be doing much in the way of communicating. If you look at the other people put up by other countries, the former french Prime Minister the former french finance minister has been mentioned. Lots of finance ministers and Prime Ministers mentioned. It is quite hard to find the right person with that kind of background. Who wants to do the job. The list is quite short. Gentleman, we will leave it there. Our u. K. Viewers will be able to see print ministers questions time today Prime Ministers questions time today. He will be asked what is andy caulsonth the qnd case. Benedict, why is this an attractive asset . Said theyre coming closer to an agreement. On them takingd a 49 stake. We do not know any financial details. That is something that will be hashed out over the next couple of weeks. Alitalia is attractive because it has a large domestic market. It sits at a crossroads they could funnel a lot of the traffic from italy through abu dhabi and onto asia. They will need to prove that they can turn this company around. How will this be perceived by the rest of europe . One of the sore points among the european carriers. Emirates is the largest middle east traveler. We have the profit warning from lufthansa a few weeks ago. The transatlantic market is under a lot of pressure. Putting a lot of capacity into the market. They already in germany with air berlin, another unprofitable company. Base with the support of the deep pocket middle east carrier. To the south and italy, that will deftly be a concern for them. They are not taking control. They have very limited firepower in terms of what they can do to stop the advance of the middle east carriers. Thank you. Ipo is set. We will discuss the staying power of the wearable camera maker. Good morning, everybody. It is time for todays hotshots. A camera with a view. He attempts to cross a tight rope suspended between two hot air balloons. He does not have a safety line. These are some of the worlds best bikers. Theyre competing in a 2014 Thunder Valley motocross. Net,d not have a safety but he did have a parachute. And he did have a camera on his neck. This guy came to the desert to visit friends, he ended up staying. Everybody else jumps off with the parachute, but how does this work . At least he has a good sense of wearing a camera. These videos were all shocked on go pros shocked on go pros. A market value of about 3 million. Our next guest is confident the company will be able to stay ahead of the competition. The into gadget european editor. Why on earth is a camera maker being valued as a Media Company . It seems so much like something that could be easily replicated. They understand something that traditional camera makers have not. You have a company like me nikon. How could that have happened . The hardware is important, what you are selling an experience and you can create a soldier of marketers. I do like this polar bear video very much. Relationshipsood with athletes. That is something that nikon never really learned to exploit. It is quite a casual relationship. Is it just because they were the first . It is a natural place. It needs to be able to lock these people and. If you think of it as being a hardware maker, but the channel. As a sports like espn . Youtube, facebook, instagram, it is highly ranked as a brand channel. Owns the project. The big question is whether it can make money from its content. That is an enormous question. Why would you buy into an ipo with a giant question mark . All of these videos are there to market more cameras. The big risk is saturation. Red bull has a marketing empire, but people by red bull every week. Has todware business grow. Were watching the world cup. How fun would it be to see of players point of view. These guys will be experts in stabilization and have money to invest. They would be able to get even further i had. They can make deals with adcasters how much better that the technology need to get . They reasonably they are reasonably clunky to use. Hardware could get a lot better. Of suppliers. Technology moves so fast. In these the investment to create superior hardware. The same applies to go pro. Whether it is for News Coverage or delivering. They will be in a good position to be masters of that sort of thing. I am sold on this. Case. S the investment it was trying to be the largest car jump in the world and it failed spectacularly. The pictures are absolutely incredible. If you are looking at how the evolution of the hardware works, do you think go pro sticks with it . Do you think youll be able to make the jump . It is about the people believing in it for a long time in an already has the technology called advantage. We can be pretty sure that the bulk of it is going into if you look at Something Like dropped cam. You cannot do anything with its content because it is private. Hat shows the was brought on by ware business i am still skeptical, but i am less skeptical. We are being told to wrap up. Well be back with more in two minutes. It is time for todays new energy. The world cup is causing a power surge problem. Do toan great operators stop that leading grid operators do to stop that leading to blackouts . We are hearing stories of outages because people will turn on the microwave, turn on the teakettle. How is this years world cup measuring up . Surge in demand around englands games. Youve you an idea, to give you an idea, lastly, there was a 1. 1 gigawatts surge in power demand. That is equivalent to 440,000 kettles being switched on at the same time. What event holds the record . It was the world cup semi final between west germany and england. That is not quite the biggest search demand ever. That was during a Solar Eclipse in the u. K. You are reading a lot of cowboy headlines right now. Are the lights going to stay on. The National Grid is preparing for that. U. K. Energying consumers to reduce their demands this winter. They will have this program over the next four winters. Thank you so much. Well be back in two minutes with more. Lands a deal, buying a 49 stake in air et al. You. U. S. Penalties on Russian Industries as separatists in ceasefire. Ate a it is in the bag, juncker tells us he will be president of the European Commission by the end of the week. Good morning to our viewers in europe, good evening to those in asia, and a very warm welcome to those just waking up in the u. S. I am guy johnson. I am olivia sterns, this is the pulse, live from london. Coming up, meet the steve jobs of france. The tech billionaire who got his start in a scenic business. Live with the head of the Spanish Power giant con asking if europe needs to reduce reliance on russia. Tension with the nation continues to ask late. Breaking news. Etihad will buy a 49 stake in alitalia. The Italian Company was bailed out by the government. What does as he had what does etihad get . One of europes biggest air travel markets. s Business Model is around as much traffic as possible in abu dhabi, where the local population is not that large. Hear theot wait to concept i cannot wait to hear lufthansas response to this. They were saying they had an unfair advantage. Is this another example . Certainly, the ceo has said he sees the gulf carriers as the biggest threat. There have been rumblings of discontent about etihad increasing its stake in another company, buying convertible bonds. We are certainly going to see rumblings of discontent. Air france has a stake in aitalia, they will be, to degree, party to this. It declined to increase that stake. Alitalia, how does it fit into etihads strategy of building the lines. It seems that all the gulf carriers are trying to buy stake in big european airlines. Emirates has always stood alone, it does not invest, it just builds up its own airline and hub. Qatar airways has allies. Etihad has invested in airlines other people would not go near. Airlines that have been losing lots of money. In serbia, airberlin. Of the mostone unprofitable airlines, historically, in the industry over the last couple decades. It is a heck of a task. If you are watching this, are you thinking we have got a bit of money behind this airline now. Are we going to start seeing more at craft being ordered . Are we going to see a revitalization of this airline . Be lots of going to reorganization. There are fleet requirements. They rebuilt the shorthaul fleet and while that, there will be a long haul orders. The question for alitalia, what happens to its longhaul network. Etihad does not need longhaul. They will went longhaul but a lot of flights have already been directed to paris with the air france linkup. Etihad will one to divert other flights to abu dhabi. Will lookew alitalia like in terms of fleet, size, and where it flies remains to be seen. Thank you, chris from bloomberg news. Speed. S bring you up to u. S. Preparing sanctions aimed at areas of the russian economy, including energy and energy technology. Lets get details, Ryan Chilcote. Obama administration is preparing sanctions that would focus on Technology Used in the oil and gas industry. This would effectively be an expansion of some sanctions we saw the end of march, when the u. S. Banned the transfer of detonators units in the oil and gas industry. The idea is to focus on the energy industry, which is the lifeblood of the russian economy. At the same time, stop short of the sectoral sanctions. Simple transfer of technology restriction. The Obama Administration would be able to, on a casebycase basis, review the technology that u. S. Exporters would like to send to russia and either grant permission or deny it. Set of sanctions aside, u. S. Business increasingly concerned about the cost of sanctions. We have learned that two of the biggest business groups are going to put out oped pieces in american papers tomorrow, and the ft saying no more russian sanctions. Those american jobs will be ceded to countries that do not impose sanctions. There is a chance that the u. S. Could go alone if it imposes sanctions at this point. Seemsould ask you, it pretty obvious that the effectiveness of sanctions really depends on having a united front. How likely do you think it is that the u. S. Would go it alone . If only we could read the tea leaves. What we know from two of the ferry officials at the Obama Administration that great cost what we know from two of the the obamacials at administration that briefed us, they believe the eu might not join them on this batch of sanctions. The eu heads of state meet on friday, there have been rumblings about how they believe these sanctions should be increased against russia. We heard Angela Merkel say that earlier in the week. Then we saw a well staged presentation from the russian president , the parliament of russia this morning about 20 minutes ago resend it a russian s authorization to use force in ukraine. The russian president asked the parliament and unsurprisingly received permission to not have that authority. He is overtly telling everyone he is not going to send Russian Troops into ukraine. Not everybody is convinced, there is still a troop buildup a Helicopter Shot down by separatists in the east of the country. This will be a topic with the heads of state gather on friday. I am not convinced all 28 of those eu states will find consensus and impose more sanctions. Thank you, Ryan Chilcote bringing us up to speed with ukraine and the russian sanctions story. Claude juncker, he is confident leaders will pick him to be the European Commissions next top executive. Hans nichols is in berlin. You caught up with juncker, what did he have to say . Gave aught up before he speech to the Defense Industry group. Shows how confident he is. He made a joke about being transgender. We will leave that where it is. When i asked if he was confident, he had a oneword answer. If you could tell us how confident you are, do you have this in the bag . Yes. You will be the next eu commissioner . That is a decision that will be taken, but everything is indicating that they will take a decision next friday. Clearlyis a man that is preparing to take charge of the commission. He is talking about making policy reforms in the middle of july. He obviously has a difficult challenge ahead. Fences with David Cameron. David cameron is being taunted by his opponents at home, we caught up with nigel cronje, he could not imagine a better outcome than jeanclaude juncker. He is perfect for the eurosceptics. He refuses to believe that the public has a proper understanding of the european project. He belongs to that very Outdated School of eu thinking. Here is how the next couple weeks are going to unfold. More personnel decisions on how and who gets what jobs in the commission. Then there is a question of policy. I know we like policy as much as personnel. Then we can really dig into the weeds about any potential changes to the stability pact. I heard you call me francine, im going to make you tell me the transgender joke over the break. Took, we will look forward learning the punchline. Angela merkel at the bundestag, talking about the fact that poroshenko is going to the meeting friday. What is she saying visavis juncker. Him,as clearly supported she almost has. Nevertheless, is she giving any hints that there is going to be some sort of help for David Cameron . Or is she going to tow the line on this and get it done with and then maybe try later. Latter. Ems to be the seems they are not going to make promise on this notion that whatever party won the most seats in parliament has the right by default to lead the eu commission. Where you might save a concession where you might say concessions, there has been speculation in the german press, will there be a loosening of the stability pact. What sort of policy changes will be made . That is a discussion, a very serious one with serious consequences. Watchingalians are that one really carefully. Thank you very much indeed come our International Correspondent hans nichols. For our u. K. Viewers, we bring you Prime Ministers question time later. David cameron in a showdown with juncker. Focused onders executive pay. Some of europes biggest all face potential shareholder revolts. In meetings that come this week. Joining us now is Bloomberg Industries gregory. Lets kick off with the bpp. Sir Martin Sorrell set to get a 70 increase, is he worth that . That is a different question. Upset overs got very his big pay raise two years ago and they voted it down. Last year they made some reforms. You has shareholders unhappy, 20 percent voted against it. We will probably see something similar. A lot of shareholders venting their fury at the pay and potential pay policy, a new thing the u. K. Shareholders get to vote on on forwardlooking pay policy. Wpphe argument would bee stock is up in the past year and the figure is a longtime compensation plan. I think a lot of shareholders accept that and that is why you would not have the same unhappiness. He was still the highest paid the laste ftse 100 for three years. There is a focus on executive pay. Play the , just to other side of the argument. Lets talk a little bit about these votes do not always go against. But the fact that they are being held and taken seriously probably does has an impact. Remuneration committees look at what is happening, what has happened in the past and what is happening now. And it has an impact on policy. And we see that. In the u. S. As well as australia, we have had consistent Pay Reporting data. We see that companies with less than 90 approval rates, on average, their pay falls the next year. If you get a majority voting against it, 20 drop on average and pay the following year. Is an ongoing process. Definitely boards are responding. They do not want to be investors sites for bad pay practices. Certainly not, we will leave that there. Pulse, to come on the five gross things you did not know you have been eating. Behind some common foods that might have you thinking twice before you take a bite. Back, you are watching the pulse. Lets talk about the currency markets. Yesterday marcon he was described by one member of the Treasury Select Committee as and ,nreliable boyfriend flipflopping on Forward Guidance and not delivering on clarity. This is the reaction to that. The pound surging recently that starting to be him around. This is the euro versus sterling, it seems clear that may be the Mansion House speech was the more hawkish end of this unreliable boyfriend then the one delivered yesterday. We do not know when the next rate hike is coming, this year or next year, wait and see. He is hot and cold on interest rates. It is a segue to our next guest, who runs the spanish utility. A bloomberg exclusive. One of europes major energy producers. Does europe need to reevaluate Energy Reliance . Lets put it to Ignacio Galan. Thank you for coming on. Looks like we are headed towards crisis in ukraine, what to findines options alternate supplies and what should change in terms of policy . A in the countries we have presence, like spain, we are not dependent on russian gas. We are importing gas from and abouto about though, norway. In the case of spain, we have a lot of places for regulation. We have pipelines connected with north africa. In our case it is not affecting us at all. In this particular moment, we are diversifying our supply. Forave reached an agreement bringing gas from the states, the south of texas. The plan will be ready by the or 2019. E decade, 2018 we are not affected. One of the big opportunities , plantss in this moment with the pipelines and spain bringing with africa, gas from other places into central europe. It is needed to increase in a collection between is needed to increase interconnection between spain and france. Weeed a d secrets rids around europe. The next eu commissioners job should be to hook up europe, we have options but none of them are connected. How do we fix that . Noturo, four years, has made policy. The director has been relying on the Member States. It has not been applied in gas or electricity. There are certain Member States that have a lack of interconnection between the south of europe and central and northern europe. Interconnection is less than 3 . That is nothing. Similar with britain and the continent. Has theian peninsula same situation with britain with respect to the continent. It is a pity. Nows a great opportunity for increasing these interconnections. Because we have facilities that are useless in this moment in southern europe, especially in spain. We can provide most of the gas gaspe needs, refine this from russia and other countries. Same with electricity. Wind is not going at the same time in European Countries. This wind onevery ceo that runs Electricity Company in europe tells us the same thing. Why isnt the industry banging on brussels door and getting them to fix it . A year ago we created a group. Companies largest discussing everything. We have already met with almost all the Prime Ministers, heads of state, in recent months. We are aware of gasquet things. Are aware of we two things. The lack of energy policy, we can use in a better manner the existing energy on the continent. The second is related to competitiveness. For years, europeans have been charged with taxes and obligations. Today, the bill we are paying is more than double the bill in the americas. It is not because they have cheaper gas. It is not because the europeans are paying less than americans for our network. The americans are charging all the subsidies to the national budget. The europeans are charging the bill of consumers. That is affecting the competitiveness of the european industry. You would rather be charged . I think the point is we would like promoting and incentivizing. , we are theola greenest of the green. We are a european company. We are the company and we have more investors. You only wear green ties . Green ties. [laughter] even our traditional color was blue, we were a Hydro Company and we changed to green to show everybody that we are ready and committed. Staying with a green focus, you are big and renewables. The subsidy landscape in europe is changing. Spain scrapped a subsidy, which a lot of people had spun out of control. How will that impact the business . Those things that are already lets try to go back of it. Directors i said, the it is time for revising things. Terms nal target in has to come from renewable sources. Globally, how much reduction of carbon has to be reduced. Subsidize is that we technologies, green technologies, which are very inefficient and produce very little and cost a lot. Most of the solar panels have already been imported from china. , but why doot mind we pay 400 euros or 400 pounds for the technologies as green as can be the wind, costing five times less. The second thing is the contradiction in countries. Increasing the cost, in the case of spain, increasing the missions. , their plans that are producing more, the carbon price has fallen. That is the thing we would like to be revised. We hope the next meeting of the European Commission, all these things can be discussed. Could have a meaningful impact when it comes to energy. Is ge buying alstom a good idea . They took the decision mainly because it is a good idea for them. In global terms, we have already a Good Relationship with both of them. I am personally a good friend of jeffrey immelt. General electric is a very important supplier to iberdrola, 80 of gas lines. Alstom is a good supplier. Both of them are already supplying equipment for wind. It has logic. You are big in latin america. Mexico. Hows the Business Environment down there and how concerned are you about slowing growth . Ofin mexico, the government the ricci opinion . En the government of every rique pena nieto has transformed mexico. Openingetitiveness, the of the market, the Energy Reform is going to be great. Mostly, they give the opportunity for the next chance to have access to Cheaper Energy in better conditions. I think it is great. We were in mexico for many years, we are the secondlargest producer in mexico. Most of the energy has to be managed through the state owned company. There is a massive number of consumers. Thats going to be a real revolution in the country. In brazil, the situation is not as bad as somebody said. It is a good country. Nice to see you, thank you for your time, Ignacio Galan of iberdrola. Good morning and welcome back to the pulse, live from bloombergs European Headquarters in london. I am olivia sterns. I am guy johnson. The first 130 u. S. Military advisers have begun operating inside iraq. They will gather intelligence and establish operations in baghdad. As many as 300 troops will be sent to help the Iraqi Government combating a growing islamic insurgency. A the white house working on plan with the u. K. On reducing tensions in ukraine. President obama spoke with David Cameron by telephone. They agreed to coordinate counter members if they agree to corner countermeasures if russia fails to deescalate. Obama to increase sanctions. News corp. Faces charges, including bribery, throughout , a trial of andy colson former media adviser to David Cameron, was found guilty on one charge of phone hacking. Left look at how european markets are trading. Manus cranny has more. Very little has changed. European equity markets are lower, day four of the decline, down nearly one point 5 . Some reprieve in portugal and italy. You have got the longest set of losses in seven weeks. That is the European Equity story. You will get a little data later in the u. S. U. S. Equity futures flat at the moment, a shade of green on s p 500 for those of you listening in the states. It is still not a huge momentum. You will see what the u. S. Gross domestic product is contraction. Another revision to the first quarter. Contraction of 1. 8 , tying up with the consensus opinion. That is u. S. Equity futures, unchanged. European a little bit lower. With iraq, ukraine, the potential for more sanctions from the u. S. , that you might see a little bit more flow into haven trade. Brent crude not really reacting, lower by. 6 . 120 seems to be the breakpoint in brent. Were you would have to see special reserves released or a critical issue and supply. , no coming down by. 5 money in immediate danger going into this haven asset. Dollar yen, 101. 93. 22 billion has gone into hedge funds of the past month of may. That takes Hedge Fund Investment 93. 3 billion in 2014. That is the american complexion, the asian complexion. Equity markets and hedge funds have taken in the biggest amount of money since 2007. A bit of a tricky time after 2007. Time, it isnutes surveillance with tom keene. What are you looking at . A busy day. The collection in washington, Mark Halperin will join us in the 7 00 hour. Mohamed elerian will join us. We will talk to dr. Elerian, he is egyptian. We will talk about the sunni versus shia sectarian strife in iraq. From jpmorgan us to look at the equity markets. A special guest, always controversial, carly. Anyill talk to her about number of issues. Her new philanthropy, we talk about women in technology. I want to speak to carly about a deeplyackard, troubled company. I think her perspective is very valuable. Looking forward to that. Also looking for two gopro pricing later this afternoon. Could it really be worth 3 billion . Im surprised you are not doing your show with one of those little cameras. I usually sleep with one on. I look at gopro dont have an opinion on the valuation other is ait is interesting that profitmaking Hardware Company and theyre trying to be something else. Adam johnson will touch on that on surveillance this morning. Can they really be valued as a Media Company . Looking to that on surveillance in 25 minutes. Thanks. Lets get you into another bloomberg exclusive. 10 the lights on in a minute. Postalek, portugals service announced a partnership with be in the part about this week how portugals Postal Service announced a partnership paribas. Will it spur slowing sales . We ask the ceo. How big is the opportunity in Financial Services . It is important to understand when we are compared to our peers in europe, we have a big difference from the other ones. They have a big parcel business. Ecommerce is still small, it is a very important growth lever. Another lever is Financial Services. Wet is as important as what expect. What we intend to do in Financial Services is reviving our partnerships, putting more services and products to be offered in Financial Services. The idea is to get the best lawyers in terms of product. We will get the best networks to offer these products to the population. We have more than 50 Years Experience in financial service. You do cover almost the whole country. Some people say you are too dependent on the domestic market. And he plans to expand overseas and reduce your dependency . Business, wecel have a presence in spain. We have also a presence in africa and portuguese speaking african, mozambique. Apart from that, we do not have far term plans to expand. Still developing our business in portugal. Just some months ago, we privatize. Putting a lot of effort to bring the most value we can in the business in portugal. In mail, parcels, and Financial Services. What is holding the Arsenal Service back at the moment . When are we going to see it taking off. What needs to happen . Is it that retail needs to get better, foreign competition of the world. Zons what needs to happen to get that going . And International Players in ecommerce are ent in portugal, not with a local presence but international platforms. We buy products from amazon from the u. K. Platform. What we need is the local retailers to become the retailers. You need return of domestic consumption in portugal. We had a very harsh year. People had disposable income cut. Retail is investing. Networkhave physical with domestic consumption contracting, they were worried about getting profitability of the physical network instead of building a new pointofsale online. They are now going online and we see this as the trend. We saw some big players going online. But not yet penetration and consumers, it is not yet like in other countries. We were doing a show last year and talking with other countries like the u. S. Most of the people now by, more than 50 of presence is online. In portugal, they buy less than 10 . The opportunity is massive. It will be massive in the future when the market becomes online. You expect revenue to be stable this year, wendy think it will pick up . Correios de portugal at our a detective to objective this year is stabilize. We believe we can still have growth. To be compensated by the growth and Financial Services and parcels. Top linedoes the po pick up . This year we havea expectations to have the topline growing. The government might sell stake earlier than anticipated, what kind of spin deep get on what is going to happen . Of the governments intentions i do not know. Untilave a lockup period september. That is something you need to asked the government. Would it be good for you . We prepared ourselves since the beginning to be sold by the government, that was the intention in the agreement that the government had to sell cdp. If theyre going to do it or not, you should ask them. Troche get some things right . The country did a lot of things right. I dont know if it was that or not. Your business is healthier now . Yes, although we were a very good public company. If you look at cdp, it was a very good company. Now since the end of last year, stock has done very well. I imagine some of that has to do with the fact that you pay a very attractive dividend, 6 . How stable do you think the dividend policy is, isnt that 90 of your profit . 98 of ourr it was profit. More or less 50 of our Free Cash Flow. We have a big generation of Free Cash Flow because we have a low capex. It is a big dividend payout, 98 , it is light compared to our Free Cash Flow generation. Theyre in mind we have a debtfree balance sheet. We have the ability to use as parcels picked up are you going to have to pick up debt and invest in the business . , for thenot relevant Overall Company it is around 20 million. Where parcels could play a role is not relative to growth in the parcel business. We will use the platform. We have Spare Capacity to do so. We have the ability to adjust. It is more people we need to invest than shane doan machinesy. Than and technology. We will continue to have strong abilities to keep up a stable dividend growth. Thank you for taking the cfo ofndre costa, portugals Postal Service ctt. Live pictures we were going to show you pictures of a rally going on in north korea where people are gathering for the 61st anniversary of the start of the korean war. We will be back with the pulse in two. Welcome back to the pulse, news corp. Faces possible corporate charges related to phone hacking and bribery according to prosecutors. 98 month long trial that led to the guilty verdict of andy colson, former news of the world editor and advisor to David Cameron. Ryan chilcote is here with more. The way a lot of the british papers are painting this is that the Prime Minister David Cameron is the one who has been hurt most by the scandal. Ultimately, Rupert Murdoch has gone u unscathed because rebecca brooks was cleared, this might change of corporate charges get punished. To watch, mr. Murdoch has been asked by the police to appear in the u. K. For an interview according to the guardian. The is not terribly new but prosecutors are considering corporate charges against news corp. Itself. The reason it is not new is because the prosecutors told the judge that on a couple of occasions that they were considering this during the trial. Because of u. K. Law, to ensure defendants get fair trials, the reporters were not allowed to report that and the jury did not hear that because that might prejudice the jury. The trial is over and we can report back. It is not over for Rupert Murdoch yes. Of course, in terms of the trial itself, we know the result, Rebekah Brooks, a top lieutenant in the u. K. , she was found not guilty on all counts. Andy colson, who was the editor at thenews of the world time, was found guilty of phone hacking. One more charge, bribery for buying the directorate in the u. K. Out ofdoch not entirely the woods yet. It is fair to say that perhaps it has been more damaging for the Prime Minister here in britain considering he did hire mr. Coulson. Ryan, thank you very much indeed. Ryan chilcote talking to us coming up ant little later, Prime Ministers question time is going to be on Prime Ministers questions. Question time is a different event. He will be grilled on the subject about his relationship with the former media adviser andy coulson after yesterdays verdict in the news corp. Trial. That is london time here in the u. K. Lets turn our attention to telecoms. Midi details about frances sixth richest person. Ant some might consider inauspicious career start. Here with more is rob lafranco. Lets start of the beginning. Have a very interesting start. A guy who has a teenager was triting code for a sex cha service in france. Into creating Internet Services for an online a prodigypany, he was at aol. He sold the company and then moved on into telecoms. A very different start, writing code for online sex chat rooms. He went to a different type of school. A lot of the ceos went to the same private, elite universities in france. What else sets him apart . He grew up in a rough neighborhood, he describes the streets as tough. France is good about protecting their industries and we see it now with the taxi protests, uber and that sort of thing. The Telecom Industry is much larger and more protective. He came in and turned the industry upside down by offering the settop box for free and a discount service, which started sucking customers away from the main players. He introduced mobile services two years ago. Now we see vivendi exiting the market. This guy has created a 19 billion Value Company in 10 years by turning the tables on the established players. Whats he going to do to be worth more . One way he could do it, that is very longterm, what about the shortterm . He will start lowering prices and grabbing more customers. He has a new venture, eight tech investment intcubator. This is not really existed in paris. That is why he is rare. He meets with entrepreneurs and funds with him, trying to see the next generation of french entrepreneur is in the style of his russian of entrepreneurship, more the american style. Go in and do it rather than protect interests. He is dating the daughter of bernard arnault. That is a longterm strategy. [laughter] you have to wonder if that gets him entree into the boys club of the ceos. About thetalk to him dinner conversations in the arnault family, he told us why he moved a lot of his fortune to belgium, bernard arnault, not lawsr niel, france has about how inheritance can be passed down. I think they think around the same lines. Bodes well for him if he marries her. Thank you, rob lafranco. Pulse,g up on the human hair to sheeps wool. Five gross things you eat regularly. You might want to tune in after the break, you might not. Welcome back, you are watching the pulse. Worlds biggest beer companies, anheuserbusch and miller coors have announced they will start listing all the ingredients that go into making up their beers. You think it would be a simple list, apparently not. Some of those ingredients will not weird you out. There are plenty of foods that have things in them that you have no idea about. Lets take a closer look at five things that will gross you out that you are probably eating. I dont know what is the most disturbing, i think it is the fish bladder. Or the antifreeze in the soda. That will not stop me drinking guinness. Very unlikely. Lets talk about how the currency markets are working. Euro sterling. An unreliable boyfriend is how described. Was we will take a break, see you after that. This is bloomberg surveillance. Democrats turn out in a republican primary. The gop establishment stays off the tea party in mississippi. Existing and new home sales surge, is the new normal a new Housing Market . This goes public afternoon, filming how to tie a blood type. Tie a bow tie. Month go . Here did the joining me, scarlet fu and adam johnson. Heres adam. In japan, Prime Minister shinzo abe has declared inflation dead, is over. Get back to growth mode. Maybe. A third revision to firstquarter gdp and they are going to send a lower again, this time they are looking for 1. 8 percent. Have lowered it from about. 10 this is old news. The Second Quarter number will be robust as payback. A lot of this was weather related. Also at